SECURITIES AND EXCHANGE COMMISSION

(Release No. 34-85488; File No. SR-FINRA-2019-008)

April 2, 2019

Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of 

a Proposed Rule Change to Establish a Corporate Bond New Issue Reference Data Service

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)1and Rule 

19b-4 thereunder,2notice is hereby given that on March 27, 2019, Financial Industry Regulatory 

Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“SEC” or 

“Commission”) the proposed rule change as described in Items I, II, and III below, which Items 

have been prepared by FINRA. The Commission is publishing this notice to solicit comments on 

the proposed rule change from interested persons.

I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule 

Change

FINRA is proposing to enhance the collection and dissemination of new issue reference 

data for corporate bonds and charge associated fees. 

The text of the proposed rule change is available on FINRA’s website at 

http://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference 

Room.

II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the 

Proposed Rule Change

In its filing with the Commission, FINRA included statements concerning the purpose of 

and basis for the proposed rule change and discussed any comments it received on the proposed 

rule change. The text of these statements may be examined at the places specified in Item IV 

 

1

15 U.S.C. 78s(b)(1). 

2

17 CFR 240.19b-4. 
2

below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most 

significant aspects of such statements.

A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis 

for, the Proposed Rule Change

1. Purpose

FINRA is submitting this proposed rule change to establish a new issue reference data 

service for corporate bonds, consistent with a recommendation from the SEC’s Fixed Income 

Market Structure Advisory Committee (“FIMSAC”). 

Background

On October 29, 2018, the FIMSAC unanimously approved a recommendation from its 

Technology and Electronic Trading Subcommittee to establish a new issue reference data service 

for corporate bonds (“FIMSAC Recommendation”).3 Specifically, the FIMSAC 

Recommendation urged FINRA to establish a consolidated, comprehensive, and accurate data set 

for corporate bond new issues. Today, market participants rely on corporate bond reference data 

providers for this information. However, each reference data provider collects and disseminates 

new issue reference data from different sources and at different speeds that vary by a few hours 

to several days, resulting in data that may not be consistent, timely and accurate across reference 

data providers.

The FIMSAC Recommendation states that reliable, consistent and timely reference data 

is necessary to support the efficient trading and settlement of bonds. A centralized reference data 

source is increasingly important as market participants rely more on electronic trading platforms, 

 

3

See Recommendation to Establish a New Issue Reference Data Service for Corporate 

Bonds, (October 29, 2018), https://www.sec.gov/spotlight/fixed-income-advisorycommittee/fimsac-corporate-bond-new-issue-reference-data-recommendation.pdf. 
3

so that all platform participants price and trade bonds based on consistent and accurate 

information.

In considering the need for improved corporate new issue reference data, the FIMSAC 

looked to the municipal bond market, where there is a centralized reference data service. The 

Municipal Securities Rulemaking Board (“MSRB”) requires the underwriter of a new issue of 

municipal securities to communicate information to ensure that market participants have timely 

access to information necessary to report, compare, confirm, settle and clear transactions in the 

new issue. Specifically, under MSRB Rule G-34, underwriters must submit new issue 

information to the New Issue Information Dissemination Service (“NIIDS”), operated by the 

Depository Trust and Clearing Corporation (“DTCC”). NIIDS then makes this information 

immediately available to reference data providers.

To achieve its purpose, the FIMSAC stated that FINRA should expand its existing rules 

so that it can similarly collect and disseminate comprehensive reference data for corporate bond 

new issues. Currently, under Rule 6760 (Obligation to Provide Notice), members that are 

underwriters of an initial offering of a TRACE-Eligible Security are required to submit certain 

specified information to FINRA prior to the execution of the first transaction of the offering to 

facilitate trade reporting and dissemination of transactions.4 The information required by the rule 

generally is limited to the fields needed to set up a bond on TRACE for trade reporting purposes 

(e.g., the CUSIP number, the issuer name, the coupon rate, the maturity, whether Rule 144A 

applies, and a brief description of the bond). FINRA disseminates some of this new issue 

 

4

In cases where a new issue is priced and begins trading on the same day, Rule 6760 

requires certain data elements—those sufficient to identify the security accurately—to be 

reported before the execution of the first transaction, and all remaining data elements to 

be reported within 15 minutes of the Time of Execution of the first transaction.
4

information as part of the Corporate Security Daily List; however, electronic trading platforms 

generally require more information to make new issues available to trade.5

The FIMSAC Recommendation asked that FINRA build on the existing Rule 6760 

requirements to establish a new issue data service with more comprehensive information. The 

FIMSAC stated that FINRA was best situated to carry out the Recommendation because it would 

be an incremental addition to current practices, both for FINRA and the underwriters that must 

report new issue information.

Proposal

In line with the FIMSAC Recommendation, FINRA is proposing to amend Rule 6760 to 

specify a number of data elements, in addition to those already specified by the rule, which must 

be submitted for new issues in corporate debt securities.6 Under the proposed rule change, 

 

5

The information distributed on the Corporate Security Daily List may only be used to 

support trade reporting and may not be redistributed. The Daily List includes some 

mandatory new issue information currently collected from underwriters pursuant to Rule 

6760, which is then made available at no charge through an application program interface 

(“API”). The Daily List would not be impacted by this proposal.

6

In connection with the proposal, FINRA also would make two technical, non-substantive, 

clarifying edits to the definition of corporate debt security that is currently located in 

FINRA Rule 2232 (Customer Confirmations). First, FINRA would clarify that the 

definition of corporate debt security is limited to TRACE-Eligible Securities. This 

clarification reflects the original intent of the definition and is consistent with current 

FINRA guidance. See FINRA Fixed Income Confirmation Disclosure FAQ 1.12, 

http://www.finra.org/industry/faq-fixed-income-confirmation-disclosure-frequentlyasked-questions-faq. 

Second, FINRA would update the definition of corporate debt security to exclude the 

class of assets defined as Securitized Products in Rule 6710(m), rather than Asset-Backed 

Securities, defined in Rule 6710(cc). When the definition of corporate debt security was 

first drafted, FINRA did not yet have a defined term for Securitized Products, only AssetBacked Securities. Since that time, FINRA added the term Securitized Products, which 

includes Asset-Backed Securities. Accordingly, this is a clarifying change that simply 

updates the terms referred to in the corporate debt security definition; this clarifying 

change also reflects the original intent of the definition and is consistent with current 

FINRA guidance. See FINRA Fixed Income Confirmation Disclosure FAQ 1.11. 
5

underwriters subject to Rule 67607 would be required to report the following additional data 

elements: (A) the International Securities Identification Number (“ISIN”); (B) the currency; (C) 

the issue date; (D) the first settle date; (E) the interest accrual date; (F) the day count description; 

(G) the coupon frequency; (H) the first coupon payment date; (I) a Regulation S indicator; (J) the 

security type; (K) the bond type; (L) the first coupon period type; (M) a convertible indicator; 

(N) a call indicator; (O) the first call date; (P) a put indicator; (Q) the first put date; (R) the 

minimum increment; (S) the minimum piece/denomination; (T) the issuance amount; (U) the 

first call price; (V) the first put price; (W) the coupon type; (X) rating; (Y) a perpetual maturity 

indicator; and (Z) a Payment-In-Kind (PIK) indicator.

These data fields, together with certain data fields specified in the current Rule, reflect all 

but one of the fields that were described in the FIMSAC Recommendation, as well as additional 

fields identified during supplemental industry outreach conducted by FINRA.8 FINRA also 

 

FINRA also proposes to relocate the revised definition of corporate debt security into the 

TRACE Rule Series. FINRA believes it makes sense to include the definition in Rule 

6710 where it would sit alongside a number of other TRACE definitions for fixed income 

asset types. FINRA would make corresponding technical edits to Rule 2232 to refer to 

the relocated definition in Rule 6710.

7 As part of the proposal, FINRA would amend Rule 6760(a)(1) to clarify that underwriters 

subject to the Rule must report required information for the purpose of providing market 

participants in the corporate debt security markets with reliable and timely new issue 

reference data to facilitate the trading and settling of these securities, in addition to the 

current purpose of facilitating trade reporting and dissemination in TRACE-Eligible 

Securities.

8

The one field from the FIMSAC Recommendation that FINRA has not included in this 

proposal is “Calculation Types (CALT).” FINRA understands from industry outreach 

that this field, as it is included in the FIMSAC Recommendation, leverages calculation 

methodology that is specific to one data vendor’s protocols and may not be readily 

available to all underwriters that would be required to report information to FINRA under 

Rule 6760, or to consumers of the data. The FIMSAC Recommendation noted that the 

preliminary list of data fields was developed based on discussions with market 

participants, but that it should be finalized based on further analysis by FINRA and the 

SEC. See FIMSAC Recommendation at pg. 3 n.2. 
6

notes that several fields specified in the proposed rule change are already required to be reported 

or are reported voluntarily on the FINRA TRACE New Issue Form.

9

 FINRA has attached as 

Exhibit 3 a detailed list of the corporate bond new issue reference data fields that specifies 

whether the fields are currently mandatory or voluntary and includes a description of each field. 

In addition, for the fields that FINRA added to the proposal based on additional industry 

outreach ((T) through (Z) above), Exhibit 3 describes FINRA’s rationale for their inclusion in the 

proposal. These attributes were indicated by market participants as important in liquidity and 

risk assessment. Issue amount is an indication of potential liquidity of the issue in general and 

also in particular as it is in many cases among the criteria used for index consideration. Other 

proposed fields (coupon type, PIK, perpetual maturity indicator and the complementing put 

information) provide further context and are descriptive of the cash flow profile and 

considerations in risk assessment and pre-trade compliance efforts. Additionally, FINRA utilizes 

ratings to determine TRACE grade (Investment Grade or Non-Investment Grade) which in turn 

determines dissemination volume caps. 

The proposal also would require that all data elements be reported for new issues in 

corporate debt securities prior to the first transaction in the security. Currently, for information 

reported under Rule 6760 for trade reporting purposes, the Rule allows phased reporting in some 

cases. Specifically, for an offering of a security that is priced and begins trading on the same 

business day between 9:30 a.m. and 4:00 p.m. Eastern Time, Rule 6760 requires certain 

 

9

The FINRA TRACE New Issue Form is used by firms to set up securities pursuant to 

firms’ existing obligations either under Rule 6760 or 6730 (Transaction Reporting). It 

allows for the submission of data fields required by these rules as well as additional data 

fields that underwriters often report voluntarily. As part of this proposal, FINRA would 

codify in Rule 6760 the specific fields that have been deemed necessary under current 

Rule 6760(b) and therefore are mandatory for successful submission of the TRACE New 

Issue Form. 
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information to be reported before the first trade in the security and remaining information within 

15 minutes of the time of the first trade. Otherwise, the current Rule requires all information to 

be reported before the first trade in the security. 

As noted above, FINRA is proposing to amend Rule 6760 to require all data fields for 

new issues in corporate debt securities to be reported prior to the first trade. FINRA alternatively 

considered maintaining the Rule’s phased reporting approach for offerings in corporate debt 

securities subject to the proposal, with certain core information required prior to the first trade 

and an extended 60-minute window for remaining information, given the additional data fields 

that would be required to be reported under the proposal. However, FINRA believes that the 

proposed approach to require uniform pre-first trade reporting better supports the stated goals in 

the FIMSAC Recommendation to increase the efficiency of the corporate bond market and 

promote fair competition among all market participants. Specifically, a uniform reporting 

approach would allow FINRA to collect and make all of the data available immediately to 

market participants, resulting in a more consistent, timely and complete data set that will support 

more efficient pricing, trading and settlement of bonds. FINRA also believes that the proposed 

uniform reporting approach better advances the element in the FIMSAC Recommendation 

stating that managing underwriters should be required to report the data elements to FINRA no 

later than reporting such data elements to any third party not involved in the offering, including 

reference data vendors. Uniform pre-first trade reporting furthers this element, while not unduly 

constraining the sharing of data that may be necessary as part of the underwriting process.10 On 

balance, FINRA believes the significant benefits of uniform pre-first trade reporting outweigh 

 

10 See FIMSAC Recommendation at pg. 3.
8

the additional burdens on underwriters, but invites interested parties to submit comments on this 

(or any) aspect of the proposal. 

Further in line with the FIMSAC Recommendation, FINRA would disseminate corporate 

bond new issue reference data collected under Rule 6760 upon receipt and provide subscribers 

with access to the data for fees determined on a commercially reasonable basis. 11 Under Rule 

7730 (Trade Reporting and Compliance Engine (TRACE)), FINRA would make the corporate 

bond new issue reference data available to any person or organization for a fee of $250 per 

month for internal purposes only, and for a fee of $6,000 per month where the data is 

retransmitted or repackaged for delivery and dissemination outside the organization. 

This data would be accessible by all member firms and other market participants and data 

users, with the fees assessed only on those that choose to subscribe. The $6,000 charge for 

redistribution would apply to any retransmission or redistribution of the data to any party other 

than the subscriber. For example, the redistribution charge would apply to a firm that displays 

the data on a website to its clients or customers, or to a clearing firm that displays or otherwise 

makes the data available to its correspondents. However, FINRA notes that because the charge 

includes unlimited redistribution rights, FINRA would assess it only once on the party that 

subscribes. Accordingly, FINRA would not assess any charge on firms that receive the data 

from data vendors or other market participants that have subscribed for redistribution rights, nor 

would FINRA increase the amount charged to the subscriber based on how often it redistributes 

the data. As discussed further below, FINRA anticipates that many market participants, 

 

11 Under proposed Rule 6760(d), there may be some information collected under the Rule 

for security classification or other purposes that would not be disseminated. This may 

include, for example, information about ratings that is restricted by agreement. In 

addition, CUSIP Global Services’ (“CGS”) information would not be disseminated to 

subscribers that do not have a valid license regarding use of CGS data. 
9

including clearing firms and correspondent firms, will receive the data from data vendors 

consistent with what they do today. 

If the Commission approves the filing, FINRA will announce the effective date of the 

proposed rule change in a Regulatory Notice to be published no later than 90 days following 

publication of the Regulatory Notice. The effective date will be no later than 270 days following 

Commission approval. Based on implementation of this proposal, FINRA would evaluate a 

potential expansion of the new issue reference data service to include other debt products.

2. Statutory Basis 

FINRA believes that the proposed rule change is consistent with the provisions of Section 

15A(b)(6) of the Act,

12 which requires, among other things, that FINRA rules must be designed 

to prevent fraudulent and manipulative acts and practices, to promote just and equitable 

principles of trade, to foster cooperation and coordination with persons engaged in regulating, 

clearing, settling, processing information with respect to, and facilitating transactions in 

securities, to remove impediments to and perfect the mechanism of a free and open market, and, 

in general, to protect investors and the public interest. FINRA also believes that the proposed 

rule change is consistent with the provisions of Section 15A(b)(5) of the Act, 13 which requires, 

among other things, that FINRA rules provide for the equitable allocation of reasonable dues, 

fees and other charges among members and issuers and other persons using any facility or 

system that FINRA operates or controls. 

 

12 15 U.S.C. 78o-3(b)(6).

13 15 U.S.C. 78o-3(b)(5).
10

The proposed changes to Rule 6760 are designed to improve transparency and efficiency 

in the corporate bond markets, consistent with Section 15A(b)(6).14 The proposal would do so 

by providing market participants in the corporate bond markets with reliable and timely new 

issue reference data to facilitate secondary trading in and settlement of these instruments, 

particularly during the period when new issues first start trading in the secondary markets. As 

discussed throughout the filing, the proposal would advance the FIMSAC Recommendation, 

which was intended to address the lack of a reliable and timely centralized source for corporate 

bond new issue reference data. The FIMSAC Recommendation explained that reliable, 

consistent and timely reference data is necessary to support the efficient trading and settlement of 

bonds, and is increasingly important as market participants rely more on electronic trading 

platforms. FINRA believes that the proposed new issue data reporting and dissemination 

requirements in Rule 6760 are designed to and will support and further the efficient trading and 

settlement of bonds, provide uniform and timely access to important new issue corporate 

reference data, and otherwise promote the objectives of Section 15A(b)(6).

FINRA further believes that the proposed fees for the corporate bond new issue reference 

data service contemplated by Rule 7730 are fair, equitable, reasonable, and not unfairly 

discriminatory. As discussed in the next section with respect to anticipated economic impacts of 

the proposal, the proposed fees would price the corporate bond new issue reference data service 

as a utility, using cost plus margin pricing, which FINRA believes is a reasonable means to meet 

ongoing operating costs related to the initiative. The data service would be available on the same 

terms to any party that wished to subscribe with two flat prices, one for internal use only and one 

 

14 Related changes to the definition of corporate debt security in Rule 2232 are technical, 

non-substantive, and clarifying, and are intended to support the proposed changes to Rule 

6760, consistent with Section 15A(b)(6).
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for redistribution. FINRA believes that the proposed fee structure will allow for broad 

distribution of the new issue reference data to market participants, and that the fees are 

reasonably designed to cover FINRA’s ongoing operational costs. Specifically, the proposed fee 

structure reflects FINRA’s estimates of the ongoing operational costs related to the new 

proposed data service, including direct staff allocated to the initiative, and related functions, 

including technology, legal, billing, and finance. Accordingly, FINRA believes the proposed 

fees are reasonably designed to recover the costs of the data service with equitable and not 

unfairly discriminatory charges based on subscribers’ use of the data for their business purposes. 

FINRA notes that the proposed fee structure, with use-based tiers that are based on projected 

costs, is consistent with fees the SEC previously has approved. The SEC has stated its belief that 

a “use-based approach is consistent with equitable distribution of fees” and approved use-based 

fees when reasonably related to costs.15

B. Self-Regulatory Organization’s Statement on Burden on Competition

FINRA does not believe that the proposed rule change will result in any burden on 

competition that is not necessary or appropriate in furtherance of the purposes of the Act. 

Economic Impact Assessment

Regulatory Need

Currently in the corporate bond market, new issue reference data is not collected 

consistently or with established data standards, nor is it uniformly distributed to market 

participants in a timely manner. Data providers collect new issue reference data from different 

sources, typically underwriters, which often results in incomplete and inconsistent data. This 

 

15 See Securities Exchange Act Release No. 72280 (May 29, 2014), 79 FR 32351, 32353 

(June 4, 2014) (Order Approving File No. SR-FINRA-2014-018) (approving fees for 

ATS data that varied according to use and discussing the Commission’s prior approval of 

similar use-based TRACE fees).
12

holds true for any individual data provider and for the aggregate data collected; that is, even if a 

market participant gained access to all commercial products available today, the data may not be 

complete, reliable or timely for all new issues. The speed that data providers collect and 

disseminate data also varies and can be as long as several days. 

There are significant frictions in the corporate bond market that have made finding a 

solution to this problem difficult. First, because data is provided voluntarily by underwriters 

today, data providers may not be able to assure the completeness, accuracy and timeliness of the 

information. Second, underwriters may have differing incentives with respect to the importance 

of providing the information to data providers.16 Finally, because data providers are paid, at least 

in part, for the data they collect, there is little incentive to share information among themselves.

The lack of accurate, complete and timely corporate bond new issue reference data 

imposes costs to various market participants. Incomplete new issue reference data prevents 

traders from identifying and evaluating newly issued bonds for trading.17 This may lead to loss

of trading opportunities for traders, loss of business for trading platforms, and less demand for 

the initial subscription of the bond issuance, all of which can hurt issuers and underwriters, 

decreasing demand and liquidity for bonds. Variation of reference data completeness across data 

providers puts small traders who cannot afford multiple data providers at a disadvantage in 

accessing the new issue market. For trading platforms, clearing firms and electronic trading 

platforms, inaccurate reference data creates inconsistencies in trading and the settlement process 

 

16 For example, underwriters may provide the information to data providers who also 

provide services in the underwriting process like modeling and pricing of the bonds, or to 

data providers who also provide trading platforms. 

17 According to one trading platform, its reference data provider would only provide data 

relating to new issues the morning after issuance, which resulted in the firm’s clients not 

being able to trade the bond when it began to trade (usually the previous afternoon). 
13

and increases transaction costs. The lack of centralized data sources forces data providers and 

trading platforms to manually collect or correct data, which can be costly.

Baseline

This section explains the current dissemination process of the new issue reference data in 

the corporate bond market, including summary statistics on the new issuance market and 

underwriters.

In 2018, 22,385 TRACE-Eligible corporate debt securities were issued, including 

corporate bonds and equity linked notes. New issue reference data is generated by underwriters. 

It is usually aggregated by data providers and then sold to various market participants for 

consumption, including trading and clearing firms, electronic trading platforms, broker-dealers 

and bond investors. As noted above, FINRA conducted outreach to understand the 

dissemination process, direct and indirect costs imposed by the process, and ways it might be 

improved.18

To facilitate trade reporting, as discussed above, underwriters are required to report 

limited new issue information to FINRA under Rule 6760. Underwriters also often provide 

additional new issue reference data to FINRA on a voluntary basis on the FINRA TRACE New 

Issue Form. Besides regulatory reporting to FINRA, underwriters follow different practices to 

report reference data on new corporate bond issues to other parties. To facilitate trading of 

corporate bonds, underwriters usually report some of the data to their clients, which are generally 

institutional investors. Some also report to certain aggregators and media vendors. No standard 

exists among underwriters on whom to report new issuances to, what fields to include and on 

what timeline, so the dissemination of new issue reference data is fragmented and inconsistent. 

 

18 FINRA talked to four data providers, three underwriters, two trading platforms, and two 

clearing firms. 
14

Based on FINRA’s conversations with data providers, no systematic ways exist for data 

providers to obtain complete, timely and reliable reference information on corporate bond new 

issues. Individual underwriters send new issue reference information to some data providers, 

often through email or term sheets. However, data providers rely on various sources for 

collecting the reference data for other new issues, including preliminary deal documents, issuers, 

vendor data, pricing wires and final prospectuses. Since information is collected through 

different sources, the coverage of new issues varies by data providers and, as a result, data can be 

inconsistent. The speed at which data providers collect reference data also varies. Any 

individual data provider might have reference data for only a subset of the newly issued bonds on 

the pricing day when bonds are sold in the primary market. The coverage may rise through the 

trading day and reach its steady level several days after the issuance.

FINRA understands that individual firms typically gain access today to new issue 

reference data by purchasing the services of one or more third-party data vendors. Introducing 

firms may gain access to the information via their clearing firm, which provides the data as part 

of its services. Similarly, some firms may grant access to the new pricing information to their 

clients, either directly or through some research product.

FINRA understands that trading platforms typically subscribe to data providers and 

augment their reference data from other sources, such as term sheets and websites to collect 

missing reference information. Clients of trading platforms rely on the platforms to provide new 

issue reference data. 

Electronic trading platforms capture a significant portion of the corporate bond trading 

volume. The U.S. Treasury Department estimates that electronic platforms have captured 20% 
15

of investment grade corporate bond trading.19 According to Greenwich Associates’ 2017 U.S. 

Fixed-Income Study, almost 85% of investors in investment grade instruments surveyed use 

electronic trading, and close to 73% of investors in high-yield instruments do.

Economic Impacts

Pricing of the Proposed Service

New issue reference data is essential for the pricing and trading of bonds and the proper 

functioning of the corporate bond market. However, building such data requires extensive 

coordination among market participants and manual data collection, compilation and cleaning 

efforts for each data vendor. By using a regulatory requirement to centralize data reporting to 

FINRA, FINRA could reduce these duplicated efforts and thus costs, while improving the 

accuracy, completeness and timeliness of the information made available. FINRA is proposing 

to price the reference data as a utility, using cost plus margin pricing. This ensures that market 

participants get accurate and timely reference data, while limiting the price of new issue 

reference data as a barrier to entry to bond market participants.

Besides improving the quality of new issue reference data available to the market, 

FINRA believes that the data service will promote fair and reasonable pricing for reference data 

by introducing an alternative source in addition to what is provided by the incumbent data 

providers. As discussed in more detail below, currently underwriters have relatively few 

incentives to report to data providers other than the prevalent incumbent data providers. The 

incumbent data providers face less competition because of the complexity of building the 

database as discussed previously, leading to a relatively high barrier to entry. By providing an 

 

19 See Jake Liebschutz and Brian Smith, Examining Corporate Bond Liquidity and Market 

Structure, (March 7, 2016), https://www.treasury.gov/connect/blog/Pages/ExaminingCorporate-Bond-Liquidity-and-Market-Structure.aspx.
16

alternative option for the data at cost plus margin, the service will exert disciplinary pressure on 

the current pricing for the data. The proposed service may not be the only collector of reference 

data. Data providers may continue to collect data from their existing sources and on a range of 

bond reference data beyond the limited fields provided in the proposed service. By lowering the 

barrier to entry and allowing data providers to compete on other dimensions and value-added 

services, the service would promote competitive pricing of the reference data. 

Benefits

The proposed service would be a central source for collecting and disseminating new 

issue reference data, and would provide market participants with more complete, accurate and 

timely data about new issues. FINRA expects that the new issue reference data service will 

increase the transparency of the corporate bond market, especially around the issuance period. 

Historically, TRACE implementation has demonstrated that transparency has facilitated trading 

and improved market quality.20 Thus, FINRA believes that the increased transparency as a result 

of the proposed reference data service will also benefit the market. 

Accurate and timely information about newly issued corporate bonds would allow 

potential buyers the opportunity to evaluate the bonds for investment, especially right after 

issuance. This likely increases their investment choices. Index operators would also have the 

opportunity to evaluate new bonds for timely inclusion. This helps ensure that the index 

accurately represents the concurrent bond market condition. 

Accurate and timely new issue data also would benefit trading platforms and clearing 

firms by reducing broken trades and errors in trading due to inconsistent information. It also 

would increase trading speed by removing delays due to manually correcting reference data 

 

20 See FINRA’s website for a list of TRACE Independent Academic Studies, available at 

http://www.finra.org/industry/trace/trace-independent-academic-studies.
17

errors. Accurate and timely new issue reference data may also increase trading volumes that 

might otherwise be lost when traders do not have reference data on newly issued bonds. 

A central source for new issue reference data would likely benefit most data providers by 

providing them with a complete, accurate and relatively low cost source of data. It would reduce 

the need for data providers to manually collect missing data or correct errors in the new issue 

reference data. 

Issuers and underwriters may benefit from the service as well. The new issue reference 

data service may reduce trading costs and increase trading volume as discussed above. To the 

extent that this results in increased liquidity, it will lower the cost of capital for issuers. 

Increased awareness of the new issuances may also help underwriters in marketing and 

underwriting. Underwriters may also benefit from the reference data that underwriters 

collectively submit by reducing the need to manually research other reference data sources for 

proper procurement of information. 

Costs and Negative Impacts

The proposed rule change may impose costs on underwriters to report the additional 

reference data to FINRA. Currently, underwriters provide limited corporate bond reference data 

to FINRA, some required under Rule 6760 and some voluntarily, and they may provide 

information to one or more data vendors. The costs associated with providing the new proposed 

reference data fields to FINRA depends on underwriters’ current reporting systems, the speed at 

which they currently are able to provide this information, and the timing with which they report 

the data today. Reporting additional fields to FINRA as outlined in the proposed rule may 

require upgrades to their current system for reporting to incorporate both the new fields as well 

as to meet the new timing required by the proposed rule change. Underwriters may also incur 
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costs when they choose to use third-party vendors to report the reference data, although FINRA 

anticipates that underwriters will decide to report themselves or through a third party based on 

their cost and efficiencies. Based on conversations with underwriters, FINRA understands that 

underwriters do not anticipate incurring significant costs for reporting under this proposal. 

The underwriter market is highly skewed towards large underwriters, with 71.24% of 

dollar volume being led by the ten largest underwriters in the first three quarters of 2018, 

according to Bloomberg league tables. This may create a concern that underwriters that 

underwrite fewer deals may be burdened disproportionally if there are fixed costs associated with 

amending an underwriter’s reporting system to meet the additional requirements for new issue 

reference data submission as set forth in the proposal. Additional burden may be alleviated 

because reporting to FINRA would reduce or eliminate the need for underwriters to report to 

other parties, or by the fact that underwriters can leverage investments already made in the 

existing reporting system necessary under Rule 6760. 

Subscribers to FINRA’s new issue reference data service will incur a subscription fee and 

setup cost. Subscribers may pay the lower fee for internal usage of the data or pay the higher fee 

for redistributing the data. Firms redistributing the data may pass on the cost to their clients; 

however, FINRA will not charge redistributors anything beyond the flat $6,000 per month 

charge regardless of how often it redistributes the data. Thus those firms gaining access 

indirectly, for example through a clearing firm, may be charged by the clearing firm as part of 

their agreements. However, FINRA expects that any incremental additional cost charged by a 

redistributor to cover new issue reference data may be relatively low because FINRA would 

allow unlimited redistribution rights for the $6,000 monthly charge. FINRA also believes that 

the incremental additional costs charged by redistributors may be relatively low compared to the 
19

current cost that subscribers incur to obtain new issue reference data for corporate bonds. 

FINRA anticipates that many market participants will receive the data from redistributors, 

consistent with what they do today.

A centralized source of new issue reference data is more efficient than the current process 

of sourcing reference data, and FINRA intends to price the service as a utility provider. 

Subscribers would be able to access the full data stream from a single source rather than have to 

engage in multiple contracts or limit their access to data. Direct subscription to the reference 

data service is completely voluntary, so any subscription indicates that the benefit outweighs the 

cost and thus, it will not impose a regulatory burden on subscribers. For those firms that gain 

access indirectly through another subscriber, costs may decrease if the costs to subscribers to 

obtain new issue reference data is lower and some or all of those savings are passed onto the 

firms.

Finally, a centralized source of new issue reference data may create a single point of 

failure in the new issue reference data market if data providers stop collecting data on their own 

and solely rely on the data service. We expect this is unlikely to happen because data providers 

will likely continue to collect a range of bond reference data beyond the limited fields provided 

in the proposed service in order to provide value added services to their offerings.

Competition and Efficiency

The proposed service will likely affect competition among market participants. FINRA 

believes the service will promote competition in general while ensuring the essential functioning 

of the bond market by providing accurate and timely data for pricing and trading of corporate 

bonds. 
20

The proposed service may increase competition among data providers. FINRA learned 

through discussions with market participants that the quality and timeliness of reference data 

varies greatly across data providers. Underwriters provide the reference data and in return 

receive a benefit. Given the prevalence of the incumbent data provider’s service, underwriters 

have less incentive to report to other data providers. This might create a high barrier to entry for 

other data providers.21 By providing an option of complete and timely new issue reference data 

to data providers, the proposed service would promote competition by lowering the barrier to 

entry. Data providers can compete on other dimensions, such as presentation, ease of access, 

integration with other data, supplementary fields and other value-added services.

The proposed service also would promote competition among firms by lowering the 

barrier to entry for broker-dealers trading newly issued corporate bonds. For example, accurate 

and timely information about newly issued corporate bonds at relatively low cost would 

especially benefit small broker-dealers that would otherwise have less access to such 

information. 

The proposed service would increase efficiency by providing data providers with the 

essential fields on the complete set of new issuances on which they can build their reference 

data. It reduces the need for data providers and trading platforms to manually correct errors and 

fill in missing data.22

 

21 For example, one trading platform/data provider told FINRA that a reference data 

contract with the incumbent provider of new issue data is prohibitively expensive, so it 

has to use other less expensive reference data sources and a higher degree of manual 

intervention.

22 For example, one trading platform told FINRA that in addition to the cost of their 

contract with the reference data provider, they hired an employee specifically to maintain 

the integrity of the new issue reference data and the estimated cost for the person-hours 

needed for this is about $150k/year.
21

Alternatives Considered

FINRA understands that for the municipal bonds new issue reference data service 

required by the MSRB and operated by DTCC, costs may be recovered from generally 

applicable connectivity fees to underwriters, service providers, and information vendors that use 

NIIDS. FINRA has determined that rather than imposing connectivity fees on underwriters, 

which could be ultimately passed on to other users, it is more appropriate to recover fees from 

parties that choose to receive and use the data for their business purposes. 

FINRA also considered whether there was an appropriate alternative approach that 

involved an expansion of the DTCC’s NIIDS service to include corporate new issue reference 

data. However, based on operational and commercial reasons, including inefficiencies with 

integrating the existing FINRA reporting infrastructure with a separate DTCC infrastructure, 

FINRA concluded that expanding the current existing FINRA reporting and dissemination 

framework was a more effective and efficient approach. In addition, the current proposal reflects 

the unanimous view of the FIMSAC, which stated that FINRA was best situated to carry out the 

Recommendation because it would be an incremental addition to current practices, both for 

FINRA and the underwriters that must report corporate new issue information.

In addition, as discussed above, FINRA considered an alternative, phased reporting 

approach, with certain core information required prior to the first trade and an extended 60-

minute window for remaining information. FINRA is not proposing this alternative approach for 

the reasons discussed above, but FINRA invites interested parties to submit comments on this or 

any other element of the proposal.
22

C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule 

Change Received from Members, Participants, or Others

Written comments were neither solicited nor received. As noted above, the proposed rule

change is based on the FIMSAC Recommendation, which was published on the SEC website but 

did not generate any written comments.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Within 45 days of the date of publication of this notice in the Federal Register or within 

such longer period up to 90 days (i) as the Commission may designate if it finds such longer period 

to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory 

organization consents, the Commission will:

A. by order approve or disapprove such proposed rule change, or

B. institute proceedings to determine whether the proposed rule change should be 

disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments concerning 

the foregoing, including whether the proposed rule change is consistent with the Act. Comments 

may be submitted by any of the following methods: 

Electronic Comments:

 Use the Commission’s Internet comment form (http://www.sec.gov/rules/sro.shtml); or 

 Send an e-mail to rule-comments@sec.gov. Please include File Number SR-FINRA2019-008 on the subject line.

Paper Comments:

 Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 

100 F Street, NE, Washington, DC 20549-1090.
23

All submissions should refer to File Number SR-FINRA-2019-008. This file number should be 

included on the subject line if e-mail is used. To help the Commission process and review your 

comments more efficiently, please use only one method. The Commission will post all 

comments on the Commission’s Internet website (http://www.sec.gov/rules/sro.shtml). Copies 

of the submission, all subsequent amendments, all written statements with respect to the 

proposed rule change that are filed with the Commission, and all written communications 

relating to the proposed rule change between the Commission and any person, other than those 

that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be 

available for website viewing and printing in the Commission’s Public Reference Room, 100 F 

Street, NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. 

and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the

principal office of FINRA. All comments received will be posted without change. Persons 

submitting comments are cautioned that we do not redact or edit personal identifying
24

information from comment submissions. You should submit only information that you wish to 

make available publicly. All submissions should refer to File Number SR-FINRA-2019-008, 

and should be submitted on or before [insert date 21 days from publication in the Federal 

Register].

For the Commission, by the Division of Trading and Markets, pursuant to delegated 

authority.23

Eduardo A. Aleman

Deputy Secretary

 

23 17 CFR 200.30-3(a)(12).
Page 52 of 61

EXHIBIT 3

Detailed List of Corporate Bond New Issue Reference Data Fields

As discussed in the attached filing, the proposed corporate bond new issue reference data 

service would include the fields listed below. 

Fields Specified in FIMSAC Recommendation (Schedule A)

Proposed Data Field

*currently disseminated 

on the Corporate Security 

Daily List

Description Currently 

Mandatory,

Voluntary or New 

Field

Issuer* Name of the issuing entity of the security. Mandatory

Coupon* Current interest rate of the security. Mandatory

ISIN Number The International Securities Identification 

Number (ISIN).

New Field

CUSIP Number* The Committee on Uniform Security 

Identification Procedures (CUSIP) number.

Mandatory

Currency Currency in which the security was issued. New Field

Issue Date / First 

Settlement Date

Date the security is issued. Displays the First 

Settle Date, the date payment is due.

Voluntary

Interest Accrual Date Date from which interest begins to accrue. New Field

Day Count Description The description of the day-count convention 

for calculating yields and/or accrued interest 

(e.g., 30/365, actual/365, etc.).

New Field

Coupon Frequency Number of times per year interest is paid. Voluntary

First Coupon Payment 

Date

The first coupon payment date following the 

initial settlement date.

Voluntary

Maturity* Date the principal of a security is due and 

payable.

Mandatory

144A Eligible Indicator* Field will return true when the issuer’s 

offering documentation (e.g., prospectus or 

offering memorandum) includes a statement 

to the effect that the security will be offered 

and sold in reliance upon Rule 144A of the 

U.S. Securities Act of 1933 or when other 

information from the issuer or another 

involved party indicates that the security will 

be offered and sold in such manner.

Mandatory

Regulation S Indicator Field will return true when the issuer’s New Field
Page 53 of 61

Fields Specified in FIMSAC Recommendation (Schedule A)

Proposed Data Field

*currently disseminated 

on the Corporate Security 

Daily List

Description Currently 

Mandatory,

Voluntary or New 

Field

offering documentation (e.g., prospectus or 

offering memorandum) includes a statement 

to the effect that the security will be offered 

and sold outside the United States in reliance 

upon Regulation S of the U.S. Securities Act 

of 1933 or when other information from the 

issuer or another involved party indicates that 

the security will be offered and sold in such 

manner.

Security Type Brief description of the specific instrument 

type. For example, Corporate Note, Bond or 

Debenture or Other.

Mandatory

Bond Type Brief description of bond type. For example, 

Junior Unsecured or Junior Subordinated 

Unsecured; Senior Secured; Secured; 

Unsecured; Senior Unsecured; Subordinated 

Unsecured; Senior Subordinated Unsecured; 

Other.

Mandatory

First Coupon Period 

Type

Describes the first coupon period of the bond 

with respect to the payment frequency.

New Field

Convertible Indicator* Indicates if the security is convertible to 

equity. 

Mandatory

Call Indicator Indicates whether the security has a call 

provision.

Mandatory

First Call Date The first date on which bonds may be called 

for redemption.

Mandatory

Put Indicator Indicates the existence of a feature that 

provides the bond holder the contractual 

option to redeem the bond prior to the 

scheduled maturity date.

New Field

Put Date Date on which securities are subject to 

redemption by the bond holder.

New Field

Minimum Increment The minimum increment of the face value of 

the bond as originally specified in the issuer’s 

offering documentation of the security.

New Field

Minimum 

Piece/Denomination

The minimum tradable denomination,

amount, or investment, as originally specified 

New Field
Page 54 of 61

Fields Specified in FIMSAC Recommendation (Schedule A)

Proposed Data Field

*currently disseminated 

on the Corporate Security 

Daily List

Description Currently 

Mandatory,

Voluntary or New 

Field

in the issuer’s offering documentation of the 

security.

Fields Added Based On Additional Industry Outreach

Proposed Field Description Rationale Currently 

Mandatory, 

Voluntary or New 

Field

Issuance Amount The total issue 

amount of the 

security.

This field addresses the size of 

the deal, which is a data attribute 

for index inclusion criteria 

across most every fixed income 

index. This would have 

influence on ETF, liquidity, etc.

New Field

First Call Price The first price on 

which bonds may 

be called for 

redemption based 

on the call 

schedule. 

This field is critical for option 

adjusted spread (OAS) and 

average life calculations.

Represents an important field for 

most clients especially retail 

investors when they gauge reinvestment risk.

Mandatory

First Put Price The price at which 

the bond holder 

can sell the 

security if 

exercising the put 

option on the 

security.

This field is critical for OAS and 

average life calculations. 

Represents an important field for 

most clients especially retail 

investors when they gauge reinvestment risk.

New Field

Coupon Type Fixed, floating, 

step up/down, etc.

This field denotes potential 

complexity and predictable cash 

flow data.

Mandatory

Rating If the security has 

been rated, and if 

so if the rating is 

Investment Grade 

This field is important to assess

risk. In addition, FINRA utilizes 

ratings to determine TRACE 

grade (Investment Grade or 

Voluntary
Page 55 of 61

Fields Added Based On Additional Industry Outreach

Proposed Field Description Rationale Currently 

Mandatory, 

Voluntary or New 

Field

or Non-Investment 

Grade.

Non-Investment Grade) which 

determines dissemination 

volume caps.

Perpetual 

Maturity 

Indicator

Indicates if the 

security does not 

have a maturity 

date.

This field is used in pre-trade 

compliance. Yield calculations 

generally use first call on 

perpetual securities.

Mandatory

Payment-In-Kind 

(PIK) Indicator 

Indicates if the 

security has a PayIn-Kind interest.

This field used in pre-trade

compliance as it indicates cash 

flow implications and risk for 

many investors.

New Field
Page 56 of 61

EXHIBIT 5

Below is the text of the proposed rule change. Proposed new language is underlined; 

proposed deletions are in brackets.

* * * * *

2200. COMMUNICATIONS AND DISCLOSURES

* * * * *

2230. Customer Account Statements and Confirmations

2232. Customer Confirmations

(a) through (e) No Change.

(f) Definitions

For purposes of this Rule, the term:

(1) No Change.

(2) “corporate debt security” shall have the same meaning as in Rule 

6710(jj) [mean a debt security that is that is United States ("U.S.") dollardenominated and issued by a U.S. or foreign private issuer and, if a "restricted 

security" as defined in Securities Act Rule 144(a)(3), sold pursuant to Securities 

Act Rule 144A, but does not include a Money Market Instrument as defined in 

Rule 6710(o) or an Asset-Backed Security as defined in Rule 6710(cc)];

(3) through (4) No Change.

* * * * *

6700. TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)

* * * * *

6710. Definitions
Page 57 of 61

The terms used in this Rule 6700 Series shall have the same meaning as those 

defined in the FINRA By-Laws and rules unless otherwise specified. For the purposes of 

this Rule 6700 Series, the following terms have the following meaning:

(a) through (ii) No Change.

(jj) “Corporate Debt Security” is a type of TRACE-Eligible Security that is 

United States ("U.S.") dollar-denominated and issued by a U.S. or foreign private issuer 

and, if a "restricted security" as defined in Securities Act Rule 144(a)(3), sold pursuant to 

Securities Act Rule 144A, but does not include a Money Market Instrument as defined in 

Rule 6710(o) or a Securitized Product as defined in Rule 6710(m).

* * * * *

6760. Obligation To Provide Notice and Dissemination of Corporate Debt Security

New Issue Reference Data

(a) Members Required to Provide Notice 

(1) To facilitate trade reporting and dissemination of transactions in 

TRACE-Eligible Securities and to provide market participants in the Corporate 

Debt Security markets with reliable and timely new issue reference data to 

facilitate the trading and settlement of these instruments, a member that is a 

managing underwriter of a distribution or offering ("offering"), other than a 

secondary offering, of a TRACE-Eligible Security must obtain information and 

provide notice to FINRA Operations as set forth in this Rule. If a managing 

underwriter is not designated, an underwriter must provide such notice. In 

offerings where managing underwriters and/or underwriters are not designated, 

the lead initial purchaser must provide such notice, and if there is no lead initial 
Page 58 of 61

purchaser, an initial purchaser must provide such notice. If more than one person 

is obligated to provide notice (e.g., multiple underwriters), such persons may 

submit jointly a single notice containing the required information to FINRA 

Operations. A member that is an underwriter or a Securitizer of a Securitized 

Product is a managing underwriter for purposes of this Rule. A member that is 

required to provide notice must make a good faith determination that the security 

is a TRACE-Eligible Security before providing such notice. 

(2) No Change.

(b) Information Required

(1) The notice must contain the following information: ([1]A) the CUSIP 

number or if a CUSIP number is not available, a similar numeric identifier (e.g., a 

mortgage pool number); ([2]B) the issuer name, or, for a Securitized Product, the 

names of the Securitizers; ([3]C) the coupon rate; ([4]D) the maturity; ([5]E) 

whether Securities Act Rule 144A applies; ([6]F) the time that the new issue is 

priced, and, if different, the time that the first transaction in the offering is 

executed; ([7]G) a brief description of the issue (e.g., senior subordinated note, 

senior note); and, ([8]H) such other information FINRA deems necessary to 

properly implement the reporting and dissemination of a TRACE-Eligible

Security, or if any of items ([2]B) through ([8]H) has not been determined or a 

CUSIP number (or a similar numeric identifier as referenced above) is not 

assigned or is not available when notice must be given, such other information 

that FINRA deems necessary and is sufficient to identify the security accurately.
Page 59 of 61

(2) For a new issue in a Corporate Debt Security, excluding bonds issued 

by religious organizations or for religious purposes (e.g., “church bonds”), in 

addition to the information required in paragraph (b)(1) of this Rule, the following 

information must be reported, if applicable: (A) the International Securities 

Identification Number (ISIN); (B) the currency; (C) the issue date; (D) the first 

settle date; (E) the interest accrual date; (F) the day count description; (G) the 

coupon frequency; (H) the first coupon payment date; (I) a Regulation S indicator; 

(J) the security type; (K) the bond type; (L) the first coupon period type; (M) a 

convertible indicator; (N) a call indicator; (O) the first call date; (P) a put 

indicator; (Q) the first put date; (R) the minimum increment; (S) the minimum

piece/denomination; (T) the issuance amount; (U) the first call price; (V) the first 

put price; (W) the coupon type; (X) rating; (Y) a perpetual maturity indicator; and

(Z) a Payment-In-Kind indicator.

(c) When Required

A notice required under this Rule must be provided to FINRA Operations prior to 

the execution of the first transaction of the offering, except as provided below.

(1) If an offering of a security, other than a Corporate Debt Security, is 

priced and commences on the same business day between 9:30:00 a.m. Eastern 

Time and 4:00:00 p.m. Eastern Time, a person that is required to provide notice 

must provide to FINRA Operations as much of the information set forth in 

paragraph (b)(1) that is available prior to the execution of the first transaction of 

the offering, which must be sufficient to identify the security accurately, and such 

other information that FINRA deems necessary and provide all other information 
Page 60 of 61

required under paragraph (b)(1) within 15 minutes of the Time of Execution of 

the first transaction. 

(2) No Change.

(d) Dissemination of Corporate New Issue Reference Data

Information about new issues of Corporate Debt Securities collected under this 

Rule will be disseminated upon receipt in the form determined by FINRA. 

* * * * *

7700. CHARGES FOR OTC REPORTING FACILITY, OTC BULLETIN BOARD 

AND TRADE REPORTING AND COMPLIANCE ENGINE SERVICES

* * * * *

7730. Trade Reporting and Compliance Engine (TRACE)

The following charges shall be paid by participants for the use of the Trade 

Reporting and Compliance Engine (“TRACE”):

System Fees Transaction Reporting Fees Data Fees

* * * * * * * * * * * * * * *

Corporate New Issue 

Reference Data: Fee —

$250/month for receipt of 

Corporate New Issue 

Reference Data for any person 

or organization for use for 

internal purposes only.

Corporate New Issue 
Page 61 of 61

Reference Data: Fee —

$6,000/month for receipt of 

Corporate New Issue 

Reference Data for any person 

or organization who shall 

retransmit or repackage the 

Data for delivery and 

dissemination to any outside 

person or organization in any 

way.

(a) through (h) No Change.

(i) Corporate New Issue Reference Data

Any person or organization may subscribe for the Corporate New Issue Reference 

Data disseminated pursuant to Rule 6760(d) subject to the following fees:

(1) Data fee of $250 per month for receipt of Corporate New Issue 

Reference Data that is used for internal purposes only.

(2) Data fee of $6,000 per month for receipt of Corporate New Issue 

Reference Data that is retransmitted or repackaged for delivery or dissemination 

to any outside person or organization in any way.

* * * * *