5034 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 43873 

(January 23, 2001), 66 FR 8131 (January 29, 2001) 

(Order Approving File No. SR–NASD–99–65). 

4 ‘‘TRACE-Eligible Security’’ means a debt 

security that is United States (U.S.) dollardenominated and is: (1) 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; (2) issued or 

guaranteed by an Agency as defined in paragraph 

(k) or a Government-Sponsored Enterprise as 

defined in paragraph (n); (3) a U.S. Treasury 

Security as defined in paragraph (p); or (4) a 

Foreign Sovereign Debt Security as defined in 

paragraph (kk). ‘‘TRACE-Eligible Security’’ does not 

include a debt security that is a Money Market 

Instrument as defined in paragraph (o). See Rule 

6710(a). 

5A ‘‘List or Fixed Offering Price Transaction,’’ as 

defined in Rule 6710(q), and a ‘‘Takedown 

Transaction,’’ as defined in Rule 6710(r) are 

required to be reported to TRACE by the next 

business day (T+1). See Rule 6730(a)(2). 

6 ‘‘Agency Debt Security’’ means a debt security 

(i) issued or guaranteed by an Agency as defined in 

paragraph (k); (ii) issued or guaranteed by a 

Government-Sponsored Enterprise as defined in 

paragraph (n); or (iii) issued by a trust or other 

entity that was established or sponsored by a 

Government-Sponsored Enterprise for the purpose 

of issuing debt securities, where such enterprise 

provides collateral to the trust or other entity or 

retains a material net economic interest in the 

reference tranches associated with the securities 

issued by the trust or other entity. The term 

excludes a U.S. Treasury Security as defined in 

paragraph (p) and a Securitized Product as defined 

in paragraph (m), where an Agency or a 

Government-Sponsored Enterprise is the Securitizer 

as defined in paragraph (s) (or similar person), or 

the guarantor of the Securitized Product. See Rule 

6710(l). 

7 ‘‘Asset-Backed Security’’ means a type of 

Securitized Product where the Asset-Backed 

Security is collateralized by any type of financial 

asset, such as a consumer or student loan, a lease, 

or a secured or unsecured receivable, and excludes: 

(i) a Securitized Product that is backed by 

residential or commercial mortgage loans, mortgagebacked securities, or other financial assets 

derivative of mortgage-backed securities; (ii) an 

SBA-Backed ABS as defined in paragraph (bb) 

traded To Be Announced as defined in paragraph 

(u) or in a Specified Pool Transaction as defined in 

paragraph (x); and (iii) a collateralized debt 

obligation. See Rule 6710(cc). 

8 ‘‘Agency Pass-Through Mortgage-Backed 

Security’’ means a type of Securitized Product 

issued in conformity with a program of an Agency 

as defined in paragraph (k) or a GovernmentSponsored Enterprise (GSE) as defined in paragraph 

(n), for which the timely payment of principal and 

interest is guaranteed by the Agency or GSE, 

representing ownership interest in a pool (or pools) 

of mortgage loans structured to ‘‘pass through’’ the 

principal and interest payments to the holders of 

the security on a pro rata basis. See Rule 6710(v). 

‘‘To Be Announced’’ (TBA) means a transaction in 

7. This estimate assumes that two-thirds (1,934) of the internal hours are spent by in-house attorneys to prepare the plan (1,934 hours × $484 estimated hourly 

rate = $936,056 per year) and that one-third (967) are spent by the fund’s board of directors to approve the plan (967 hours × $4,770 per hour = $4,612,590). 

8. $936,056 + $4,612,590 = $5,548,646. 

The information provided under rule 

18f–3 will not be kept confidential. An 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 

displays a currently valid OMB control 

number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice by February 26, 2024 to (i) 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, c/ 

o John Pezzullo, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: January 22, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01437 Filed 1–24–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99404; File No. SR–FINRA– 

2024–004] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of a 

Proposed Rule Change To Amend 

FINRA Rule 6730 (Transaction 

Reporting) To Reduce the 15-Minute 

TRACE Reporting Timeframe to One 

Minute 

January 19, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 

11, 2024, the 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 amend FINRA 

Rule 6730 to reduce the 15-minute 

TRACE reporting timeframe to one 

minute, with exceptions for member 

firms with de minimis reporting activity 

and for manual trades. 

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 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

(i) Background 

FINRA has collected and 

disseminated transaction information in 

fixed income securities through TRACE 

since 2002.3 Since the implementation 

of TRACE, the fixed income markets 

have changed dramatically, including a 

significant increase in the use of 

electronic trading platforms or other 

electronic communication protocols to 

facilitate the execution of transactions. 

With these changes, FINRA has been 

considering ways to modernize the 

reporting rules and provide for more 

timely, granular and informative data to 

enhance the value of disseminated 

transaction data. 

FINRA rules specify the applicable 

outer-limit reporting timeframe for 

different types of TRACE-Eligible 

Securities,4 and these timeframes have 

been adjusted over time in line with 

changes in the markets. A 15-minute 

outer-limit reporting timeframe 

currently applies to most transactions 5

in corporate bonds, agency debt 

securities,6 asset-backed securities 

(ABS) 7 and agency pass-through 

mortgage-backed securities (MBS) 

traded to-be-announced (TBA) for good 

delivery (GD).8 The 15-minute reporting 


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Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 5035 

an Agency Pass-Through Mortgage-Backed Security 

as defined in paragraph (v) or an SBA-Backed ABS 

as defined in paragraph (bb) where the parties agree 

that the seller will deliver to the buyer a pool or 

pool(s) of a specified face amount and meeting 

certain other criteria but the specific pool or pool(s) 

to be delivered at settlement is not specified at the 

Time of Execution, and includes TBA transactions 

‘‘for good delivery’’ (GD) and TBA transactions ‘‘not 

for good delivery’’ (NGD). See Rule 6710(u). 

9 In 2004, FINRA (then NASD) reduced the 

timeframe for reporting corporate bonds to within 

15 minutes of the time of execution. See Securities 

Exchange Act Release No. 49845 (June 14, 2004), 69 

FR 35088 (June 23, 2004) (Order Approving File No. 

SR–NASD–2004–057); see also Notice to Members 

04–51 (July 2004). Agency debt has been subject to 

the 15-minute reporting timeframe since it became 

TRACE-Eligible in 2010. See Securities Exchange 

Act Release No. 60726 (September 28, 2009), 74 FR 

50991 (October 2, 2009) (Order Approving File No. 

SR–FINRA–2009–010); see also Regulatory Notice 

09–57 (September 2009). MBS TBA GD became 

subject to the 15-minute reporting timeframe in 

2013, and the reporting timeframe for ABS was 

reduced to 15 minutes in 2015. See Securities 

Exchange Act Release No. 66829 (April 18, 2012), 

77 FR 24748 (April 25, 2012) (Order Approving File 

No. SR–FINRA–2012–020); Securities Exchange Act 

Release No. 71607 (February 24, 2014), 79 FR 11481 

(February 28, 2014) (Order Approving File No. SR– 

FINRA–2013–046); see also Regulatory Notices 12– 

26 (May 2012) and 14–34 (August 2014). 

10 In 2015, the SEC approved amendments to 

FINRA rules to require firms to report transactions 

in TRACE-Eligible Securities as soon as practicable. 

See Securities Exchange Act Release No. 75782 

(August 28, 2015), 80 FR 53375 (September 3, 2015) 

(Order Approving File No. SR–FINRA 2015–025). 

11FINRA Rule 6730(a)(1) sets forth the 

requirements for when trades executed during 

different time periods throughout the day must be 

reported to TRACE. Currently, corporate, agency, 

ABS, and MBS TBA GD transactions executed on 

a business day at or after 12:00:00 a.m. Eastern 

Time (ET) through 7:59:59 a.m. ET must be reported 

the same day, no later than 15 minutes after the 

TRACE system opens. Transactions executed on a 

business day at or after 8:00:00 a.m. ET through 

6:29:59 p.m. ET must be reported as soon as 

practicable, but no later than 15 minutes of the 

Time of Execution, except for transactions executed 

on a business day less than 15 minutes before 6:30 

p.m. ET, which must be reported no later than 15 

minutes after the TRACE system opens the next day 

(and, if reported on T+1, designated ‘‘as/of’’ with 

the date of execution). Finally, transactions 

executed on a business day at or after 6:30:00 p.m. 

ET through 11:59:59 p.m. ET, or trades executed on 

a Saturday, a Sunday, a federal or religious holiday, 

or other day on which the TRACE system is not 

open at any time during that day, must be reported 

on the next business day, no later than 15 minutes 

after the TRACE system opens (and must be 

designated ‘‘as/of’’ and include the date of 

execution). 

12Under Rule 6710(d), the ‘‘Time of Execution’’ 

generally means the time when the parties to a 

transaction agree to all of the terms of the 

transaction that are sufficient to calculate the dollar 

price of the trade. For transactions involving 

TRACE-Eligible Securities that are trading ‘‘when 

issued’’ on a yield basis, the ‘‘Time of Execution’’ 

is when the yield for the transaction has been 

agreed to by the parties to the transaction. 

13FINRA is also proposing a conforming 

amendment to Supplementary Material .03 to refer 

to the Rule generally rather than ‘‘paragraph (a)’’ to 

reflect that members reporting pursuant to one of 

the exceptions in new Supplementary Material .08 

and .09 are still required to report their trades ‘‘as 

soon as practicable.’’ 

timeframe has been in place for 

corporate bonds since 2005, and later 

was implemented for agency debt, ABS, 

and MBS TBA GD.9

Thus, today, transactions in these 

securities are generally required to be 

reported as soon as practicable 10 but no 

later than 15 minutes from the time of 

execution, and FINRA publicly 

disseminates information on the 

transaction immediately upon receipt.11

As discussed in more detail below, 

FINRA has found that 82.9 percent of 

trades in the TRACE-Eligible Securities 

that are currently subject to the 15- 

minute outer-limit reporting timeframe 

were reported within one minute of 

execution. In light of the technological 

advances in the intervening 18 years 

since FINRA first adopted the 15-minute 

reporting requirement, including the 

increase in electronic trading, and 

consistent with FINRA’s longstanding 

goals of increasing transparency and 

improving access to timely transaction 

data, FINRA is proposing updates to 

modernize the reporting timeframes and 

provide timelier transparency. FINRA 

will continue to assess its TRACE 

reporting requirements and member 

reporting and consider whether any 

adjustments to the one-minute 

requirement are warranted. 

(ii) Proposed Rule Change To 

Implement One-Minute Reporting 

FINRA is proposing amendments to 

Rule 6730 (Transaction Reporting) to 

reduce the trade reporting timeframe for 

securities currently subject to the 15- 

minute reporting outer limit to one 

minute, with exceptions for member 

firms with de minimis reporting activity 

and for manual trades, discussed further 

below. As is the case today, FINRA 

would make information on the 

transactions publicly available 

immediately upon receipt of the trade 

reports. 

Under existing Rule 6730(a)(1), 

transactions in corporate bonds, agency 

debt, ABS, and MBS TBA GD generally 

must be reported as soon as practicable, 

but no later than within 15 minutes of 

execution. Specifically, transactions 

executed on a business day at or after 

12:00:00 a.m. ET through 7:59:59 a.m. 

ET must be reported the same day no 

later than 15 minutes after the TRACE 

system opens. Transactions executed on 

a business day at or after 8:00:00 a.m. 

ET through 6:29:59 p.m. ET must be 

reported no later than within 15 

minutes of the Time of Execution, 

except for transactions executed on a 

business day less than 15 minutes 

before 6:30 p.m. ET, which must be 

reported no later than 15 minutes after 

the TRACE system opens the next day 

(and, if reported on T+1, designated ‘‘as/ 

of’’ with the date of execution). Finally, 

transactions executed on a business day 

at or after 6:30:00 p.m. ET through 

11:59:59 p.m. ET, or trades executed on 

a Saturday, a Sunday, a federal or 

religious holiday, or other day on which 

the TRACE system is not open at any 

time during that day, must be reported 

on the next business day no later than 

15 minutes after the TRACE system 

opens (and must be designated ‘‘as/of’’ 

and include the date of execution). 

To provide more timely information 

about transactions in corporate bonds, 

agency debt, ABS, and MBS TBA GD, 

subject to the exceptions discussed 

below and as provided in Rule 

6730(a)(2), FINRA is proposing to 

amend Rule 6730(a)(1) to reduce the 

trade reporting timeframe as follows. 

Amended Rule 6730(a)(1) would 

provide that transactions must be 

reported as soon as practicable, but no 

later than within one minute of the 

Time of Execution.12 Amended Rule 

6730(a)(1)(B) would require that a 

transaction executed on a business day 

at or after 8:00:00 a.m. ET through 

6:29:59 p.m. ET must be reported as 

soon as practicable, but no later than 

one minute from the Time of Execution, 

except that, a transaction executed on a 

business day less than one minute 

before 6:30:00 p.m. ET, must be reported 

no later than 15 minutes after the 

TRACE system opens the next business 

day (T+1) (and, if reported on T+1, 

designated ‘‘as/of’’ with the date of 

execution). Any trades executed on a 

business day prior to the open of the 

TRACE system, on a business day at or 

after 6:30:00 p.m. ET through 11:59:59 

p.m. ET, or on a Saturday, a Sunday, a 

federal or religious holiday or other day 

on which the TRACE system is not open 

at any time during that day would 

continue to be reportable as soon as 

practicable on the next business day 

(T+1), but no later than within 15 

minutes after the TRACE system opens 

(and must be designated ‘‘as/of,’’ as 

appropriate, and include the date of 

execution). 

(iii) Exceptions From One-Minute 

Reporting 

FINRA is proposing two exceptions 

from the one-minute reporting 

timeframe for: (1) member firms with 

‘‘limited trading activity’’ in the TRACEEligible Securities that are subject to 

one-minute reporting; and (2) manual 

trades.13


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14Evidence of this confirmation should be 

retained as part of the member’s books and records; 

however, members eligible for the exception will 

not need to take affirmative steps to have their trade 

reports processed pursuant to the exception’s 15- 

minute reporting timeframe (e.g., members eligible 

for the exception will not need to submit a 

certification of eligibility to FINRA or add a 

modifier or indicator to their trade reports). 

15As noted above, for purposes of Rule 6730, the 

reporting timeframe is measured from the Time of 

Execution as defined by Rule 6710(d), which 

generally refers to the time that the parties have 

agreed to all of the terms of the transaction 

sufficient to calculate the dollar price of the trade 

(or yield, in the case of when-issued securities 

priced to a spread). 

16FINRA reminds members of their obligation to 

retain these electronic communications as part of 

their books and records, consistent with FINRA and 

SEC recordkeeping requirements. See, e.g., Notice 

to Members 03–33 (July 2003). 

Exception for Members With ‘‘Limited 

Trading Activity’’ 

New Supplementary Material .08 

would provide an exception to the oneminute reporting timeframe for 

members with ‘‘limited trading 

activity.’’ A member with ‘‘limited 

trading activity’’ would be defined as a 

member that, during one of the prior 

two calendar years, reported to TRACE 

fewer than 4,000 transactions in the 

TRACE-Eligible Securities that are 

subject to paragraphs (a)(1)(A) through 

(a)(1)(D) of Rule 6730 (i.e., corporate 

bonds, agency debt, ABS and MBS TBA 

GD), including any manual trades. 

Supplementary Material .08(b) would 

require members relying on the 

exception to confirm annually their 

qualification for the exception.14 As 

outlined in Supplementary Material 

.08(c), members qualifying for the 

exception would be required to report 

these trades as soon as practicable, but 

no later than within 15 minutes of the 

Time of Execution (or in the case of a 

trade executed outside of TRACE system 

hours, less than 15 minutes before 6:30 

p.m. ET, or on a Saturday, a Sunday, a 

federal or religious holiday, or other day 

on which the TRACE system is not open 

at any time during that day, as soon as 

practicable, but no later than within 15 

minutes after the TRACE system opens 

the next business day (T+1)). 

Members that exceeded the 4,000- 

trade threshold two calendar years in a 

row would be required to comply with 

the one-minute reporting requirements 

of paragraphs (a)(1)(A) through (a)(1)(D) 

of the Rule beginning 90 days after the 

firm no longer meets the criteria for the 

exception (i.e., beginning 90 days after 

January 1 of the next calendar year). If 

a member’s reporting activity 

subsequently dropped below the 4,000- 

trade threshold, the member would once 

again be eligible for the exception. For 

example, a member that reported 3,000 

trades in the relevant TRACE-Eligible 

Securities to TRACE in 2022 and then 

4,150 trades in 2023 would continue to 

be eligible for the exception in 2024; 

however, if the member then reported 

4,100 trades in 2024, the member would 

be required to comply with the oneminute reporting requirements starting 

90 days after January 1, 2025 (with 

January 1 being day one of 90). If the 

member proceeded to report 3,500 

trades in 2025, the member would once 

again be eligible for the exception from 

one-minute reporting for 2026 under the 

two-year lookback. FINRA believes that 

the two-year lookback period for 

eligibility for the exception will 

accommodate fluctuations in trading 

activity that may be due to unusual 

market-wide events or unique client 

demands. 

Manual Trades Exception 

New Supplementary Material .09 

would provide an exception for manual 

trades that would afford firms 

additional time to report transactions 

that are not electronic from end to end, 

as described further below. Where a 

trade qualifies for the manual trades 

exception, a 15-minute outer limit 

would apply for the first year following 

implementation; a 10-minute outer limit 

would apply for the second year; and a 

five-minute outer limit would apply 

thereafter. 

The manual trades exception would 

apply narrowly only to ‘‘transactions 

that are manually executed’’ or where a 

‘‘member must manually enter any of 

the trade details or information 

necessary for reporting the trade 

through the TRAQS website or into a 

system that facilitates trade reporting to 

TRACE.’’ Thus, a trade that requires 

manual intervention at any point to 

complete the trade execution or 

reporting process would qualify for the 

manual trades exception. In that regard, 

while an exhaustive list cannot be 

provided here, FINRA contemplates that 

the exception would be available for a 

variety of situations that meet the 

specified criteria, including, for 

example: 

• where a member executes a trade 15

by manual or hybrid means, such as by 

telephone, email, or through a chat/ 

messaging function,16 and subsequently 

must manually enter into a system that 

facilitates trade reporting all or some of 

the information required to book the 

trade and report it to TRACE; 

• where allocations to individual 

accounts must be manually input in 

connection with a trade by a duallyregistered broker-dealer/investment 

adviser; 

• where an electronic trade is subject 

to manual review for risk management 

or regulatory compliance purposes and, 

as part of or following the review, the 

trade must be manually approved, 

amended, or released before the trade is 

reported to TRACE (e.g., a firm’s risk 

management procedures require a 

secondary approver for trades over a 

certain threshold; a firm’s best 

execution procedures require manually 

checking another market to confirm that 

a better price is not available to the 

customer); 

• where a member trades a bond for 

the first time and additional manual 

steps are necessary to set the bond up 

in the firm’s systems to book and report 

the trade (e.g., entering the CUSIP 

number and associated bond data into 

the firm’s system); and 

• where a member agrees to trade a 

basket of securities at a single price and 

manual action is required to calculate 

the price of component securities in the 

basket or to book and report the trade 

in component securities to TRACE. 

The above examples are illustrative of 

the types of circumstances in which, 

due to the manual nature of components 

of the trade execution or reporting 

process, reporting a transaction within 

one minute of the Time of Execution 

may be unfeasible, even where a 

member makes reasonable efforts to 

report the trade as soon as practicable 

(as required). FINRA also will assess 

members’ trade reporting in connection 

with manual trades to determine 

whether the five-minute trade reporting 

timeframe (to become applicable after 

two years) is appropriate, and will be 

prepared to make adjustments, as 

necessary. 

FINRA has extensive experience and 

data regarding members’ historic 

behaviors reporting transactions to 

TRACE under a myriad of scenarios. 

FINRA will be reviewing the use of the 

manual trades exception—members may 

not, in any case, purposely delay the 

execution or reporting of a transaction 

by handling any aspect of a trade 

manually or introducing manual steps 

following the Time of Execution. 

Additionally, in light of the overarching 

obligation to report trades as soon as 

practicable, members should consider 

the types of transactions in which they 

regularly engage and whether they can 

reasonably reduce the time between a 

trade’s Time of Execution and its 

reporting, and more generally must 

make a good faith effort to report their 

trades as soon as practicable. 

In addition, FINRA proposes to 

amend Rule 6730(d)(4) to require that 

any member that executes or reports a 

trade manually append a manual trade 


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Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 5037 

17See, e.g., Rule 6623 describing ‘‘exceptional 

circumstances’’ as instances of system failure by a 

member or service bureau, or unusual market 

conditions, such as extreme volatility in a security, 

or in the market as a whole. 

18This proposed rule change would also make 

Rule 6730(f) consistent with other FINRA trade 

reporting rules that impose shorter reporting 

timeframes. See, e.g., Rule 6622(a)(4). 

19As is the case today, late trade statistics 

regarding trades reported outside of the applicable 

timeframe would be reflected in the Report Cards 

available to members. FINRA would update its 

Report Cards to take into consideration the 

proposed exception for firms with de minimis 

reporting activity and for manual trades. In 

addition, FINRA plans to enhance its TRACE 

Report Cards to include metrics that will facilitate 

members’ ability to track their eligibility for the de 

minimis exception. While these trade statistics will 

continue to be available to members on their 

TRACE Report Cards, these statistics are not 

publicly available. 

20See, e.g., FINRA Trade Reporting Frequently 

Asked Questions, Q206.21 available at https://

www.finra.org/filing-reporting/markettransparency-reporting/trade-reporting-faq. 

21 15 U.S.C. 78o–3(b)(6). 

indicator to the trade report so that 

FINRA can identify manual trades. The 

new manual trade indicator would be 

required regardless of whether the 

member reported the manual trade 

outside of the one-minute timeframe in 

reliance on the manual trades exception, 

which would provide FINRA with 

important insights into manual trading 

and the use of the exception. The 

manual trade indicator would be used 

for regulatory purposes and would not 

be included in the TRACE data publicly 

disseminated. 

Finally, FINRA is proposing to amend 

Rule 6730(f) to provide that a pattern or 

practice of late reporting may be 

considered conduct inconsistent with 

high standards of commercial honor and 

just and equitable principles of trade, in 

violation of Rule 2010, absent 

‘‘reasonable justification’’ (in addition to 

the rule’s existing reference to 

‘‘exceptional circumstances’’).17 FINRA 

believes that the addition of ‘‘reasonable 

justification’’ as a relevant factor in 

FINRA’s evaluation of a firm 

experiencing a pattern or practice of late 

reporting is appropriate given the 

proposed reduction in the trade 

reporting timeframe; 18 for example, to 

enable FINRA to determine that 

reasonable justification exists due to 

circumstances that could not reasonably 

be anticipated or prevented and that 

could not be resolved by the firm within 

the one minute reporting timeframe.19

However, members must have 

sufficiently robust systems with 

adequate capability and capacity to 

enable them to report in accordance 

with FINRA rules; thus, recurring 

systems issues in a member firm’s or a 

vendor’s systems would not be 

considered reasonable justification or 

exceptional circumstances under Rule 

6730(f) to excuse a pattern or practice of 

late trade reporting.20

If the Commission approves the 

proposed rule change, FINRA will 

announce the effective date of the 

proposed rule change in a Regulatory 

Notice. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,21 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 remove 

impediments to and perfect the 

mechanism of a free and open market, 

and, in general, to protect investors and 

the public interest. 

FINRA believes that reducing the 

reporting timeframe to as soon as 

practicable, but no later than within one 

minute from the time of execution for 

corporate, agency, ABS and MBS TBA 

GD transactions helps achieve the 

purposes of the Act. As discussed 

above, the 15-minute reporting 

timeframe has been in place for 

corporate bonds and agency debt 

securities since 2005. Since that time, 

the fixed income markets have changed 

dramatically, including a significant 

increase in the use of electronic trading 

platforms or other electronic 

communication protocols to facilitate 

the execution of transactions. With 

these changes, FINRA has been 

considering ways to modernize the rule 

and provide for more timely, granular 

and informative data to enhance the 

value of disseminated transaction data. 

FINRA believes that the proposed rule 

change helps achieve the purposes of 

the Act in that it will improve the 

timeliness of information reported to 

TRACE, thereby benefiting transparency 

and allowing investors and other market 

participants to obtain and evaluate more 

timely pricing information for these 

securities. FINRA also believes that the 

proposed exceptions from the oneminute reporting requirement for 

members with de minimis reporting 

activity and manual trades are 

appropriate in that they are tailored to 

balance the burdens on members with 

the benefits to transparency. 

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 

FINRA has undertaken an economic 

impact assessment, as set forth below, to 

further analyze the regulatory need for 

the proposed rule change, its potential 

economic impacts, including 

anticipated costs, benefits, and 

distributional and competitive effects, 

relative to the current baseline, and the 

alternatives considered in assessing how 

best to meet its regulatory objective. 


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22See Discussion: Economic Impacts, Anticipated 

Benefits. 

23FINRA aggregated reports across MPIDs 

(market participant identifier) belonging to the same 

CRD (central registration depository) number and 

excluded covered depository institutions. 

24All analysis used this sample period unless 

otherwise specified. 

25See supra note 11. 

26Covered depository institutions started to 

report to TRACE on September 1, 2022. In the first 

three quarters of 2023, reports by covered 

depository institutions represented 6.6 percent, 0.8 

percent and 0.7 percent of the total MBS TBA GD, 

agency debt and ABS trade reports, respectively. 

27Corporate bond trades represented 88.9 percent 

of the 37,252,591 total reports in the sample while 

MBS TBA GD, agency debt, ELN and ABS 

accounted for 7.4 percent, 2.8 percent, 0.5 percent, 

and 0.3 percent, respectively. 

As described below in more detail, 

approximately 83 percent of 

transactions in TRACE-Eligible 

Securities currently subject to the 15- 

minute reporting timeframe are reported 

within one minute of execution. 

However, there is significant variation 

in reporting timeframes within and 

across member firms of different sizes 

and across different products. The 

proposed de minimis and manual trades 

exceptions balance the benefits of 

timelier reporting with the potential 

costs of disrupting markets and 

disproportionally impacting less active 

and smaller participants. FINRA 

estimates that, as a result of this 

proposed rule change, after adjusting for 

the proposed de minimis exception, up 

to 16.4 percent of current annual trading 

volume, or 6.1 million trades and 20 

trillion dollars in par value, might 

potentially be reported faster (this 

represents an upper end estimate— 

impacted by the extent to which firms 

do or do not rely on the proposed 

manual trades exception with respect to 

such trades (manual trades are not 

currently identifiable as such in TRACE 

data)).22

Regulatory Need 

As discussed previously, over the last 

18 years there have been significant 

advancements in the fixed income 

markets, and in recognition of those 

advancements, FINRA is proposing to 

reduce the TRACE trade reporting 

timeframe for transactions in all 

TRACE-Eligible Securities that currently 

are subject to a 15-minute reporting 

timeframe. Timelier reporting provides 

more timely transaction information to 

the market, supporting more effective 

price formation and potentially 

decreasing trading costs and increasing 

liquidity. 

Economic Baseline 

The economic baseline stems from 

current Rule 6730, establishing a 

reporting requirement of as soon as 

practicable but no later than within 15 

minutes of the Time of Execution. 

Factors that may affect the speed with 

which firms can report executions 

include, but are not limited to, security 

characteristics, recency of trading in a 

particular security, trading platform, 

execution method, reporting process 

and level of automation. 

Overall, in 2022 838 member firms 

reported trades in TRACE-Eligible 

Securities currently subject to the 15- 

minute reporting timeframe, with 803, 

443, 79, 216 and 173 member firms 

reporting trades in corporate bonds, 

agency debt, MBS TBA GD, equitylinked notes (ELNs) and ABS 

respectively.23 FINRA found that 83 

percent of trades across TRACE-Eligible 

Securities currently subject to the 15- 

minute reporting timeframe were 

reported within one minute of 

execution. Examining reporting times 

for these securities by individual 

reporters, FINRA found that within one 

minute: 43 percent of reporters 

submitted 75 percent of their trades; 34 

percent of reporters submitted 85 

percent of their trades; and 18 percent 

of reporters submitted 95 percent of 

their trades. 

Specifically, FINRA analyzed trade 

reporting times by dealers and 

alternative trading systems (ATSs) 

under the current 15-minute reporting 

timeframe using TRACE data from 

January 2022 through December 2022.24

The analysis measured the time between 

the trade Time of Execution and report 

time (and in cases where reports were 

later corrected or canceled, to the time 

of the initial report). The analysis 

focused on transactions executed at or 

after 8:00 a.m. ET and before 6:15 p.m. 

ET on business days, the time window 

during which trades must be reported 

on that day as soon as practicable, but 

no later than within 15 minutes of the 

Time of Execution.25 The sample 

excluded covered depository 

institutions’ trade reports in MBS TBA 

GD and agency-issued fixed income 

securities, as they are subject to the 

Federal Reserve’s rule rather than 

FINRA’s rule.26

Reporting Times Across Products 

FINRA examined the distribution of 

trade reports from one to 15 minutes 

from the Time of Execution for 

corporate bonds, agency debt, MBS TBA 

GD, ELNs and ABS.27 Table 1 shows 

that corporate bonds and MBS TBA GD 

were, on average, reported the fastest 

among the products, with around 83 

and 84 percent of the trades reported 

within one minute, respectively. Agency 

debt followed closely behind at 81 

percent. ELNs were at 67 percent and 

ABS were at 52 percent of trades 

reported within one minute. 

Commenters, discussion with FINRA 

advisory committees, and outreach to 

members indicated that ELNs and ABS 

trading and reporting frequently involve 

manual handling of some aspect of the 

trade execution or reporting process. 

TABLE 1—REPORTING TIMES ACROSS PRODUCT TYPES

Minutes from execution All products 

(%) 

Corporate 

(%) 

Agency 

(%) 

MBS TBA GD 

(%) 

ELN 

(%) 

ABS 

(%) 

1 ............................................................... 82.9 83.1 80.7 84.1 66.5 51.5 

2 ............................................................... 91.7 91.7 92.4 93.8 70.9 66.9 

3 ............................................................... 96.1 96.3 94.9 95.8 74.8 75.2 

4 ............................................................... 97.0 97.3 96.0 96.7 76.3 80.5 

5 ............................................................... 97.6 97.8 96.6 97.3 77.3 85.1 

10 ............................................................. 99.0 99.2 98.8 98.6 80.7 93.2 

15 ............................................................. 99.4 99.5 99.2 99.5 81.8 97.6 

Share of Reports ...................................... 100.0 88.9 2.8 7.4 0.5 0.3 

Reporting Time by Trade Size 

FINRA examined whether reporting 

timeframes differ across trade sizes. For 

certain products, large trades are more 

likely to be more complex or a voice 

trade, or otherwise require manual 

handling. FINRA examined the 

distribution of trade reports from one to 

15 minutes from the Time of Execution 


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28MBS TBA GD trades represented 96 percent of 

the trades larger than $25M and 82 percent of them 

were reported within one minute. 

29FINRA looked at finer distinctions of reporter 

activity level, but it did not yield additional insight. 

for trades with a par value of less than 

$1 million, greater than or equal to $1 

million but less than $5 million, greater 

than or equal to $5 million but less than 

$10 million, greater than or equal to $10 

million but less than $25 million, and 

greater than or equal to $25 million. 

Panel A of Table 2 shows that 

approximately 93 percent of reported 

trades were for less than $5 million, 

with 74 to 84 percent reported within 

one minute and 95 to 98 percent 

reported within five minutes. Similarly, 

for trades greater than or equal to $5 

million, 77 to 81 percent were reported 

within one minute and 95 to 96 percent 

were reported within five minutes. 

Panel B of Table 2 shows that, for 

corporate bonds and agency debt, 

smaller trades were reported faster 

while larger trades took longer to report. 

FINRA found that 84 percent of 

corporate bond trades smaller than $1 

million were reported within one 

minute whereas 62 percent of trades 

greater than or equal to $25 million 

were reported within one minute. For 

agency debt, 84 percent of trades 

smaller than $1 million were reported 

within one minute whereas 44 percent 

of trades greater than or equal to $25 

million were reported within one 

minute. Trade size did not appear to be 

strongly associated with reporting time 

for other products.28

TABLE 2—REPORTING TIME ACROSS TRADE SIZE

Minutes from execution <$1M 

(%) 

$1–<$5M 

(%) 

$5–<$10M 

(%) 

$10–<$25M 

(%) 

>=$25M 

(%) 

Panel A: Reporting Time by Trade Size (Par Value Traded) 

1 ........................................................................................... 84.1 74.3 81.0 77.3 81.0 

2 ........................................................................................... 92.7 83.8 89.0 87.3 91.9 

3 ........................................................................................... 96.8 91.0 93.7 92.6 94.6 

4 ........................................................................................... 97.6 93.3 95.2 94.3 95.7 

5 ........................................................................................... 98.0 94.8 96.2 95.4 96.4 

10 ......................................................................................... 99.2 97.9 98.4 97.9 98.3 

15 ......................................................................................... 99.4 98.9 99.2 99.1 99.2 

Share of reports ................................................................... 84.1 9.3 3.2 1.5 1.9 

Panel B: Percentages of Trades Reported Within One Minute by Trade Size (Par Value Traded) 

Product: 

Corporate ...................................................................... 84.3 73.1 65.8 64.8 61.7 

Agency .......................................................................... 83.6 62.6 56.0 50.8 44.2 

MBS TBA GD ............................................................... 80.4 80.9 90.1 84.1 82.0 

ELN ............................................................................... 66.6 62.8 61.0 57.9 61.5 

ABS ............................................................................... 53.5 48.2 47.8 48.7 49.6 

Reporting Time by Reporter Activity 

Level 

FINRA compared trade reporting 

times across firms with different levels 

of activity to assess how the potential 

burdens stemming from the proposed 

rule change would be distributed across 

firms. The analysis measured reporters’ 

activity by number of trades in 2022 and 

assigned them to three activity groups: 

where a reporter’s trades accounted for 

less than 0.01 percent, 0.01 through 0.1 

percent, or greater than 0.1 percent of 

total reported trades.29 Table 3 shows 

that the distribution of par value traded 

was concentrated in more active 

reporters. Eighty-four different reporters 

were in the most active group 

(accounting for over 0.1 percent of 

reported trades each), and together their 

activity represented 95.5 percent of the 

total par value traded. There were 149 

different reporters with 0.01 to 0.1 

percent of reported trades each and their 

reports accounted for 4.2 percent of the 

total par value traded. The last activity 

group had 605 different reporters with 

less than 0.01 percent of reported trades 

each and together their activity 

represented 0.3 percent of the par value 

traded. 

TABLE 3—REPORTING TIMES BY REPORTER ACTIVITY LEVEL

Reporter activity level Number of 

reporters 

Market 

share 

(trade 

counts) 

(%) 

Market 

share 

(par value) 

(%) 

Trades 

reported 

within one 

minute 

(%) 

Reporters 

reporting 

at least 

95% of 

trades 

within 

one minute 

(%) 

Trades 

reported 

within 

five 

minutes 

(%) 

Reporters 

reporting 

at least 

95% of 

trades 

within 

five 

minutes 

(%) 

Activity Group 1—Reporters with >0.1% of Trade Counts ....... 84 94.1 95.5 84.0 34.5 98.0 86.9 

Activity Group 2—Reporters with 0.01 to 0.1 of Trade Counts 149 4.9 4.2 67.7 14.8 91.7 55.7 

Activity Group 3—Reporters with <0.01 of Trade Counts ........ 605 0.9 0.3 50.8 17.0 86.2 48.6 

All Reporters ............................................................................. 838 100.0 100.0 82.9 18.4 97.6 53.7 

On average, the most active trade 

reporters reported their trades to TRACE 

more quickly. Specifically, 84 percent of 

trades executed by the most active 

reporters (with more than 0.1 percent of 

reported trades) were reported within 


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30Under the current rule, these trades can be 

reported either on the same day before TRACE 

closes or the next business day no later than 15 

minutes after the TRACE system opens. Under the 

proposed rule change, such trades must be reported 

as soon as practicable on the same day, but no later 

than within one minute of the time of execution. 

31Under the current and proposed rules, these 

trades must be reported as soon as practicable, but 

no later than 15 minutes after the TRACE system 

opens. 

one minute, and 98 percent of their 

trades were reported within five 

minutes. In comparison, approximately 

51 percent of trades executed by 

reporters with less than 0.01 percent of 

reported trades were reported within 

one minute, and 86 percent were 

reported within five minutes. FINRA 

notes that even less-active reporters 

reported at least some material portion 

of their trades within one minute. 

In addition, FINRA examined the 

reporting times by individual reporters 

by measuring the percentage of firms 

that reported at least 95 percent of their 

trades within one minute. Overall, 

approximately 18 percent of reporters 

submitted 95 percent of their trades 

within one minute. When examined by 

reporter activity level, 35 percent of 

reporters with greater than 0.1 percent 

of trade reports submitted 95 percent of 

their trades within one minute, 

compared to 17 percent of reporters 

with less than 0.01 percent of trade 

reports. FINRA notes that most firms 

reported some material portion of their 

trades after one minute, regardless of 

their level of trading activity. 

Reporting Time for After Hours Trades 

FINRA examined trades that were 

executed during TRACE system hours 

and compared the findings to trades that 

were executed outside of these hours, 

which are subject to different reporting 

timeframe requirements. Table 4 shows 

that trades executed and reported after 

hours represented only 1.18 percent of 

total par value. In all cases, these trades 

took longer to report. For instance, less 

than 21 percent of trades executed 

between 6:15 and 6:29 p.m. ET were 

reported within one minute,30 while just 

over 49 percent of trades executed 

between 6:29 p.m. and 8:00 a.m. ET the 

next day or on non-business days were 

reported within one minute after the 

TRACE system opened.31

TABLE 4—REPORTING TIMES BY TIME OF DAY

Minutes from execution 

Time group 1: 

8:00 a.m. to 

6:15 p.m. ET 

(%) 

Time group 2: 

6:15 p.m. to 

6:29 p.m. ET 

(%) 

Time group 3: 

before 

8:00 a.m. or 

after 

6:29 p.m. ET 

or nonbusiness 

day * 

(%) 

1 ................................................................................................................................................... 82.9 20.9 49.2 

2 ................................................................................................................................................... 91.7 26.3 81.4 

3 ................................................................................................................................................... 96.1 36.7 90.4 

4 ................................................................................................................................................... 97.0 57.1 92.9 

5 ................................................................................................................................................... 97.6 71.9 93.9 

10 ................................................................................................................................................. 99.0 96.2 96.6 

15 ................................................................................................................................................. 99.4 96.2 96.8 

Share of Reports ......................................................................................................................... 98.8 0.0 1.2 

* For time group three, for trades before 8:00 a.m. ET, FINRA measured the reporting time from TRACE opening on the same business day; 

for trades after 6:29 p.m. ET or on non-business day, FINRA measured the reporting time from TRACE opening on the next business day. 

Execution and Trade Reporting 

Scenarios 

FINRA examined several trading 

scenarios, described further below, 

where trading or reporting could 

involve manual processes. 

When a bond starts to trade, the 

security may not be on the member 

firm’s security master (or on FINRA’s 

security master), which requires firms to 

engage in a set-up process to facilitate 

execution or trade reporting. FINRA 

examined the reporting time for bonds 

when they first start to trade in the 

secondary market. Table 5 shows that in 

the three-day period after secondary 

market trading commenced in a newly 

issued bond, 63 percent of trades were 

reported within one minute, as 

compared to 83 percent for trades 

executed more than three days after the 

first trade. Longer reporting times were 

associated with the commencement of 

secondary market trading in newly 

issued bonds, but not in cases where a 

firm first started to trade a bond that 

was not new to market (but where the 

firm had not previously traded the 

security). 

TABLE 5—REPORTING OF TRADES IN NEWLY ISSUED BONDS

Minutes from execution 

First three 

days of S1 

trading 

(%) 

All other 

days 

(%) 

1 ............................................................................................................................................................................... 63.1 83.3 

2 ............................................................................................................................................................................... 77.3 91.9 

3 ............................................................................................................................................................................... 83.5 96.3 

4 ............................................................................................................................................................................... 86.3 97.2 

5 ............................................................................................................................................................................... 88.0 97.8 

10 ............................................................................................................................................................................. 92.0 99.1 

15 ............................................................................................................................................................................. 93.5 99.5 

Share of Reports ..................................................................................................................................................... 1.7 98.3 


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32An allocation flag does not exist in TRACE, so 

FINRA used heuristics to identify those trades. 

33Five out of 29 reporters that reported allocation 

trades were able to report 90 percent of their 

allocation trades within one minute. Seven more 

were able to report 90 percent of their allocation 

trades within five minutes. 

34FINRA used heuristics to identify portfolio 

trades since a portfolio trade identifier did not exist 

before May 15, 2023. 

35Over 99 percent of portfolio trades include a 

basket of less than 1,000 securities and the vast 

majority—nearly 85 percent—are baskets of less 

than 300 securities. Of the nearly 85 percent of 

portfolio trades for baskets of less than 300 

securities, over 97.9 percent of these are reported 

within five minutes; 96.9 percent of portfolio trades 

for baskets of between 300 and 1,000 securities are 

reported within five minutes; and 40.0 percent of 

the 0.69 percent of portfolio trades larger than 1,000 

securities are reported within five minutes. 

FINRA examined transaction 

reporting times for self-cleared trades as 

well as those cleared through thirdparty clearing firms and found that 

trades that are cleared through thirdparty clearing firms overall took longer 

to report. For trades cleared through a 

third party, 71 percent were reported 

within one minute, as compared to 85 

percent for self-cleared trades. FINRA 

found that trades through some thirdparty clearing firms were reported as 

fast as self-cleared trades. There were 

also significant variations in trade 

reporting time by correspondent firms 

through the same third-party clearing 

firm. 

TABLE 6—THIRD-PARTY CLEARING

Minutes from execution 

Third party 

clearing 

(%) 

Self-clearing 

(%) 

1 ............................................................................................................................................................................... 71.4 85.2 

2 ............................................................................................................................................................................... 91.9 91.6 

3 ............................................................................................................................................................................... 96.0 96.1 

4 ............................................................................................................................................................................... 97.1 97.0 

5 ............................................................................................................................................................................... 97.7 97.6 

10 ............................................................................................................................................................................. 99.1 99.0 

15 ............................................................................................................................................................................. 99.4 99.4 

Share of Reports ..................................................................................................................................................... 16.5 83.5 

FINRA examined transaction 

reporting times for trades that were 

subsequently suballocated across 

multiple accounts and found that, for 

allocated trades,32 68 percent were 

reported within one minute, as 

compared to 84 percent for other trades. 

FINRA found significant variation in 

reporting time for allocated trades by 

different reporters.33

TABLE 7—ALLOCATED TRADES

Minutes from execution Allocation 

(%) 

Nonallocation 

(%) 

1 ............................................................................................................................................................................... 68.2 83.7 

2 ............................................................................................................................................................................... 86.6 92.0 

3 ............................................................................................................................................................................... 90.6 96.4 

4 ............................................................................................................................................................................... 92.2 97.3 

5 ............................................................................................................................................................................... 93.0 97.8 

10 ............................................................................................................................................................................. 97.7 99.1 

15 ............................................................................................................................................................................. 99.0 99.4 

Share of Reports ..................................................................................................................................................... 5.2 94.8 

FINRA examined transaction 

reporting times for basket or portfolio 

trades and found that overall, these 

trades take longer to report. For 

portfolio trades,34 65 percent were 

reported within one minute, as 

compared to 85 percent for other trades. 

Within five minutes, 97.5 percent of 

portfolio trades were reported, as 

compared to 97.7 percent for other 

trades. FINRA also examined the 

reporting time by portfolio size. While 

larger baskets do tend to be reported 

more slowly, FINRA observed a range of 

reporting times for portfolio trades 

within the same basket size band—for 

example, 57.0 percent of portfolio trades 

in the 300–1,000 securities band are 

reported within one minute and 20.1 

percent of portfolio trades in the 1,000+ 

securities band are reported within one 

minute.35 There were also significant 

variations in the reporting time of 

portfolio trades by different reporters. 

This suggests that other factors (e.g., the 

technology employed) besides the size 

of the portfolio trade may be driving the 

reporting timeframe. 

TABLE 8—PORTFOLIO TRADES

Minutes from execution 

Portfolio 

trade 

(%) 

Non-portfolio 

trade 

(%) 

1 ............................................................................................................................................................................... 65.3 85.0 

2 ............................................................................................................................................................................... 83.1 92.8 

3 ............................................................................................................................................................................... 94.2 96.4 

4 ............................................................................................................................................................................... 96.5 97.2 


khammond on DSKJM1Z7X2PROD with NOTICES
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36FINRA also examined the reporting time for 

trades that were manually entered into the TRACE 

system through the TRAQS web interface rather 

than through the automated messaging protocol. 

The median time for web entry is four to five 

minutes. 

37 In the municipal bond market, research has 

shown that customer trade costs measured as 

effective spread decreased after the 2005 change in 

the trade reporting time requirement, which was 

from the end of a trading day to 15 minutes after 

execution. To the extent that more timely reporting 

may have a similar impact on other fixed income 

markets, FINRA expects that shortening the 

reporting timeframe would reduce customer trading 

costs. Timely reporting has also been shown to 

increase dealer market-making activities in the 

municipal markets, indicated by an increase in the 

overnight and over-the-week dealer capital 

committed to inventory, an increase in the number 

of dealers involved in completing a round-trip 

transaction, and more round-trip transactions that 

involve inventory taking. No similar studies were 

done in the corporate bond market, possibly due to 

the fact that the previous reporting timeframe 

reduction for corporate bonds coincided with other 

TRACE rule changes, so the effect was difficult to 

isolate. See Erik R. Sirri, Report on Secondary 

Market Trading in the Municipal Securities Market, 

July 2014 (Research Paper, Municipal Securities 

Rulemaking Board), https://www.msrb.org/sites/ 

default/files/2022-09/MSRB-Report-on-SecondaryMarket-Trading-in-the-Municipal-SecuritiesMarket.pdf; John Chalmers, Yu (Steve) Liu & Z. Jay 

Wang, The Differences a Day Makes: Timely 

Disclosure and Trading Efficiency in the Muni 

Market, 139(1) Journal of Financial Economics 313– 

335 (2021). 

TABLE 8—PORTFOLIO TRADES—Continued 

Minutes from execution 

Portfolio 

trade 

(%) 

Non-portfolio 

trade 

(%) 

5 ............................................................................................................................................................................... 97.5 97.7 

10 ............................................................................................................................................................................. 99.1 99.1 

15 ............................................................................................................................................................................. 99.5 99.4 

Share of Reports ..................................................................................................................................................... 9.5 90.5 

FINRA analyzed the number of 

transactions executed on or through an 

ATS, which approximates a subset of 

electronically executed and reported 

transactions. ATS trades represented 

28.1 percent of total trade reports during 

the sample period. Of those, 81.0 

percent were reported within one 

minute and 93.9 percent were reported 

within two minutes. For non-ATS 

trades, which represented 71.9 percent 

of total reports (some of which may 

qualify for the phased-in five-minute 

reporting timeframe available for 

manual trades), 83.7 percent were 

reported within one minute and 96.9 

percent were reported within five 

minutes. 

TABLE 9—ATS TRADES

Minutes from execution ATS trade 

(%) 

Non-ATS 

trade 

(%) 

1 ............................................................................................................................................................................... 81.0 83.7 

2 ............................................................................................................................................................................... 93.9 90.8 

3 ............................................................................................................................................................................... 98.7 95.1 

4 ............................................................................................................................................................................... 99.1 96.2 

5 ............................................................................................................................................................................... 99.3 96.9 

10 ............................................................................................................................................................................. 99.7 98.7 

15 ............................................................................................................................................................................. 99.8 99.2 

Share of Reports ..................................................................................................................................................... 28.1 71.9 

Economic Impacts 

Anticipated Benefits 

The proposed reporting timeframe 

reduction would require members to 

adopt enhancements to their current 

trade reporting processes to facilitate 

timelier reporting for transactions that 

currently are not reported within one 

minute (in 2022, 82.9 percent of the 

trades executed after 8:00 a.m. and 

before 6:15 p.m. E.T. were reported 

within one minute of execution). The 

proposed rule change therefore likely 

would result in quicker reporting and 

thus dissemination of transaction 

information for at least a portion of the 

approximately 17 percent of 

transactions that are not currently 

reported within one minute of 

execution. FINRA estimates that, after 

adjusting for the proposed de minimis 

exception, up to 16.4 percent, or 6.1 

million trades and 20 trillion dollars in 

par value annually, might potentially be 

reported faster than today (these 

estimates would be adjusted further to 

account for manual trades—to the extent 

firms rely on the proposed exception 

with respect to such trades—which 

FINRA is currently unable to identify in 

the TRACE data). 

FINRA analyzed the number of 

transactions executed on or through an 

ATS, which approximates a subset of 

electronically executed and reported 

transactions for which the manual 

trades exception will not be applicable. 

ATS trades represented 28.1 percent of 

total reports during the sample period. 

Of those, 81.0 percent were reported 

within one minute and 93.9 percent 

were reported within two minutes. This 

indicates that the proposed rule change 

will likely result in at least an 

additional 5.3 percent (28.1 percent × 

(1¥.81)) of total trades being reported 

within one minute (not accounting for 

the impact of the proposed de minimis 

exception). For the 71.9 percent nonATS trades (some of which may qualify 

for the manual trades exception), 96.9 

percent were reported within five 

minutes. This indicates that the 

proposed rule change will likely result 

in at least another 2.2 percent (71.9 

percent × (1¥.969)) of total trades being 

reported within five minutes in three 

years (not accounting for the impact of 

the proposed de minimis exception).36

A reduction in the time between trade 

execution and price dissemination 

would enhance transparency in the 

fixed income market and is consistent 

with the purposes of TRACE. Timelier 

reporting would allow FINRA to 

provide more timely pricing and other 

transaction information to the market, 

which supports more efficient price 

formation. Timely reporting has also 

been shown to increase dealer marketmaking activities in the municipal 

markets.37 While members may benefit 


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38The analysis excluded trades by a reporter that 

was also a party to the prior trade. 

39Faster reporting of large trades may also level 

the information playing field in the market between 

dealers and other investors. Research shows that 

investors obtained economically large cost 

reductions on offsetting trades of a block position 

by dealers that occurred after, relative to before, the 

report of the block trade. See Stacey E. Jacobsen & 

Kumar Venkataraman, Asymmetric Information and 

Receiving Investor Outcomes in the Block Market 

for Corporate Bonds (March 23, 2023), available at 

SSRN: https://ssrn.com/abstract=4398494 or http:// 

dx.doi.org/10.2139/ssrn.4398494. 

directly from the expedited price 

discovery, investors are also likely to 

benefit from better execution prices 

from members. In particular, the 

proposed rule change would aid 

investors and other market participants 

in obtaining and evaluating pricing and 

other market information more quickly. 

For example, FINRA identified trades 

that fell into the one to 15-minute 

window after a prior trade of the same 

bond but executed before the prior trade 

was reported. These trades could have 

potentially benefited from the 

knowledge of the material terms of the 

prior (as yet unreported) trade had the 

prior trade been reported within one 

minute instead of 15 minutes.38 For 

corporate bonds, these trades 

represented 1.6 percent of the sample 

reports or 3.4 percent of par value (not 

accounting for the impact of the 

proposed de minimis or manual trades 

exceptions). 

Large trades took longer on average to 

report than smaller trades. Large trades 

may also have a greater impact on the 

direction of the market. To the extent 

the proposed rule change results in 

faster dissemination of pricing 

information for large trades, the market 

could benefit from earlier access to 

information that could be more 

indicative of market movement.39

Anticipated Costs 

FINRA believes that the proposed rule 

change would likely result in direct and 

indirect costs for members to implement 

changes to their processes and systems 

for reporting transactions to TRACE 

within the new timeframes. While 

members currently using a third-party 

reporting service may incur less costs, 

as these costs will likely be borne 

largely by the third-party reporting 

service which may spread the costs 

across all of the reporting firms using its 

services, those firms that do not 

currently use a third-party reporting 

service may opt to do so if the costs 

would be lower than building or 

augmenting their own system. However, 

as discussed above, FINRA proposes to 

provide relief for members with respect 

to manual trades and for members with 

de minimis reporting activity, which 

should mitigate these costs. All 

members that execute or report a trade 

manually would incur costs to append 

the manual trade indicator. 

Most firms reported some material 

portion of their trades after one minute. 

This is true even for very active firms 

that may have a more sophisticated 

trade reporting infrastructure in place. 

For these trades, members may incur 

costs to modify their reporting systems 

and procedures to report more quickly 

and to monitor that the trades are 

reported in the required timeframe. The 

costs may be mitigated by the proposed 

relief for members with respect to 

manual trades and for members with de 

minimis reporting activity. 

Given current differences in access to 

trading and reporting technologies 

across firms, some firms may be 

impacted by the proposed rule change 

more than others. FINRA understands 

that larger and more active firms already 

employ reporting services and 

technologies to automate trade reporting 

and would be better positioned to 

absorb the costs of the proposal. Any 

impact on competition is likely to be 

limited, given the proposed exceptions 

described above. In particular, the de 

minimis exception would provide relief 

for those members for which the 

technological changes required may be 

more significant relative to their level of 

activity in this space. Based on 2022 

data, the proposed de minimis threshold 

would provide relief to 640 (out of 838 

currently active) members that, in the 

aggregate, accounted for 1.41 percent of 

trades or 0.43 percent of the total par 

value traded. 

Additionally, given trading in the 

fixed income products covered by the 

proposed rule change in many instances 

continues to involve manual 

intervention at some point to complete 

the trade execution or reporting process 

(e.g., trades executed by telephone, 

email, or chat or trades subject to 

manual review), requiring these trades 

to be reported in one minute could 

negatively impact market efficiency and 

competition. For example, customers 

might participate less in fixed income 

markets without the availability of voice 

brokerage services, or if these trades 

were pushed to electronic platforms, 

trading may become concentrated 

among fewer member firms, potentially 

reducing trading opportunities and 

liquidity. FINRA believes that the fiveminute exception for manual trades, 

coupled with the phase-in period, will 

allow firms relying upon some manual 

components in their trading or reporting 

process to continue to trade in these 

markets while complying with the new 

requirements, and therefore limit the 

potential for a negative impact on these 

markets. 

Some firms close to exceeding the de 

minimis threshold may choose to reduce 

the number of trades to qualify for the 

exception. However, this may only 

happen infrequently given the twocalendar year lookback period. Coupled 

with the fact that members can again 

qualify for the exception and that 

members under the de minimis 

threshold accounted for only a very 

small portion of the market volume, 

FINRA expects that the impact on 

overall trading will be minimal. FINRA 

notes that as markets evolve or firms 

adjust to the new requirements, the 

number of dealers meeting the de 

minimis exception and the par value of 

their trades may change over time, even 

if the threshold for qualifying for the 

exception remains the same. 

Members qualifying for the de 

minimis exception will be exempted 

from the one-minute requirement for all 

of their trade reports, and therefore will 

not incur costs to modify their reporting 

procedures and systems to report more 

quickly. On the other hand, the 

proposed relief for manual trades will 

likely apply to only some reports of a 

firm. Thus, members that do not qualify 

for the de minimis exception— 

depending upon the circumstances— 

would be required to incur costs to 

comply with the five-minute reporting 

requirement for manual trades and oneminute reporting requirement for other 

trades. All members that execute or 

report a trade manually would be 

required to append the manual trade 

indicator, and members relying on the 

manual trades exception would be 

required to document their eligibility for 

the relief. 

Depending on the relative costs of 

investing in systems to report in a 

timelier manner, members may opt to 

change their practices around executing 

and reporting trades to comply in ways 

other than improving the reporting 

process, and such modifications might 

have implications for the way in which 

a member operates its business and 

manages competing tasks. Members may 

also be reluctant to conduct trades for 

which it will be difficult to comply with 

the shortened reporting timeframe 

instead of making system changes 

necessary to comply. However, any 

indirect costs incurred as a result are 

bounded by the costs of improving the 

reporting process. FINRA expects that 

members will choose to improve their 

reporting process if it is more cost 

effective than other compliance 

approaches. The cost effectiveness of 

improving the reporting process through 


khammond on DSKJM1Z7X2PROD with NOTICES
5044 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 

40See SR–FINRA–2024–004 (Form 19b–4, Exhibit 

2b) for a list of abbreviations assigned to 

commenters (available on FINRA’s website at 

http://www.finra.org). Commenters Anonymous, 

Barrientos, Coker, Dapena, Kienbaum, Moise, 

Purpura, Rogan, Seinfeld, Sosa, Steichen, and Tovar 

are collectively referred to as ‘‘Individual 

Commenters.’’ Commenter Crescent expressed its 

support of ASA’s letter, which is referenced 

specifically below. 

41See Dimensional; FIA PTG; HMA. 

42See ASA; BDA; Beech; Colliers; Falcon Square; 

HJS; ICE Bonds; InspereX; ISC; NatAlliance; RBI; 

SIFMA; UPitt Clinic; Wiley. 

43See Arkadios; ASA; BDA; Beech; Colliers; 

Falcon Square; IBI 1 and 2; Individual Commenters; 

InspereX; ISC; NatAlliance; RBI; SIFMA; UPitt 

Clinic; VFM; Wiley. 

44See Arkadios; BDA; Beech; Colliers; Falcon 

Square; IBI 1 and 2; InspereX; Individual 

Commenters; ISC; NatAlliance; RBI; SIFMA; UPitt 

Clinic; VFM; Wiley. 

45See Arkadios; BDA; IBI 1 and 2; Individual 

Commenters; ISC; SIFMA; UPitt Clinic; VFM. 

46See ASA; BDA; Beech; BMO CM; Cambridge; 

FIF; HJS; HTD; IBI 1 and 2; ICI; InspereX; ISC; 

Lynch; SAMCO; Seaport; SIFMA; Wells Fargo; 

Wiley; WMBAA. 

47See BDA; BetaNXT; SIFMA; Wells Fargo. 

48See SAMCO; SIFMA; Wells Fargo. 

49See IBI 1; ICI; SIFMA. 

50See HJS; IBI 2; ISC; SIFMA. 

direct investment is likely positively 

correlated with the percentage of a 

firm’s trades subject to the shortened 

reporting timeframes. Those firms that 

find it less cost effective—because a 

small number of trades will be 

impacted—are more likely to qualify for 

the de minimis exception. 

Alternatives Considered 

FINRA considered requiring members 

to report trades as soon as practicable 

but no later than five minutes from 

execution. In 2022, 82.9 percent of 

trades were reported within one minute 

after a trade execution. By comparison, 

in 2022 more than 97.6 percent of trades 

were reported in five minutes or less. 

Accordingly, reducing the required 

reporting time to as soon as practicable 

but no later than five minutes would 

enhance the timeliness of up to only 2.4 

percent of the trades as compared to 

17.1 percent by moving to no later than 

one minute. FINRA believes a fiveminute reporting requirement would not 

meaningfully advance the immediacy of 

information transparency for market 

participants. 

FINRA considered several alternatives 

to the threshold for the de minimis 

trading exception from the one-minute 

reporting requirement. First, FINRA 

considered basing the relief on the par 

value traded rather than the number of 

trade reports. A par value-based de 

minimis exception would require even 

less-active dealers to meet the oneminute reporting requirement if they 

engaged in significant aggregate dollar 

volume trading and thus this approach 

could result in more large trades being 

subject to the one-minute reporting 

requirement. However, FINRA believes 

that the number of trade reports 

submitted over the period is a more 

appropriate measurement. The number 

of trade reports tracks more closely the 

costs that firms incur when reporting 

and the necessary investments in 

speeding up their reporting. 

Additionally, the proposed exception 

(using the proposed 4,000-trade report 

threshold) would only impact a de 

minimis percent of par value traded. 

FINRA also considered a combination of 

the par value and the number of trades 

as the threshold for the de minimis 

exception, but that would have 

unnecessarily increased the complexity 

of the exception. FINRA also considered 

basing the exception on different levels 

of trading activity, for example, up to 

10,000 trades. However, FINRA 

determined that a threshold above 4,000 

trades would result in the loss of more 

timely information from members that 

trade significant volumes (74 members 

reporting between 4,000 and 10,000 

trades traded more than $1 billion par 

value, with the highest par value traded 

being $452 billion). Accordingly, FINRA 

believes that the scope of the proposed 

one-minute requirement will apply to 

firms that are active participants in the 

relevant TRACE-Eligible Securities and 

should be required to implement the 

reporting changes. Therefore, the 

proposed threshold for the de minimis 

exception (less than 4,000 trades during 

one of the prior two calendar years) will 

ensure that markets receive more timely 

information from more active firms. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

FINRA solicited comment on a 

proposal to reduce the 15-minute 

reporting timeframe to one minute in 

Regulatory Notice 22–17 (August 2022). 

Forty-four comments were received in 

response to the Regulatory Notice. A 

copy of the Regulatory Notice is 

available on FINRA’s website at http:// 

www.finra.org. A list of the comment 

letters received in response to the 

Regulatory Notice is available on 

FINRA’s website.40 Copies of the 

comment letters received in response to 

the Regulatory Notice are also available 

on FINRA’s website. Three commenters 

expressed overall support for the 

proposal,41 while other commenters 

expressed concerns about the proposal. 

The comments are summarized below. 

Small Firm Impact 

Commenters expressed concerns that 

implementation of the proposal would 

be costly for all member firms,42 but 

many commenters expressed particular 

concern that small member firms, 

including many minority, women, and 

veteran-owned broker-dealers, would be 

the most burdened by the 

implementation costs.43 Commenters 

believed that these firms would be most 

affected by the change (and stated that 

a significant portion of their trades are 

not already reported within or near oneminute) and would have fewer 

resources to make changes needed to 

meet the new timeframe.44 Some of 

these commenters expressed concern 

that many small broker-dealers would 

exit the market for fixed income 

secondary market trading because of the 

high implementation and compliance 

costs, harming the smaller retail 

investors that depend on small member 

firms for access to the market.45

To address these concerns, as 

described above, FINRA is proposing to 

provide an exception for members with 

de minimis reporting activity. FINRA 

believes that this exception, which 

would except firms with fewer than 

4,000 transactions in the TRACEEligible Securities subject to paragraphs 

(a)(1)(A) through (a)(1)(D) of Rule 6730, 

is calibrated to provide relief to firms 

that engage in limited activity in the 

TRACE-Eligible Securities subject to the 

proposed one-minute reporting 

timeframe, and therefore may not have 

systems in place that would enable 

reporting within one minute. Member 

firms with ‘‘limited trading activity’’ as 

defined in proposed Supplementary 

Material .08(a) would continue to be 

subject to the 15-minute outer limit 

reporting timeframe. 

Reporting Feasibility 

Commenters identified several 

circumstances under which the nature 

of the execution or reporting process 

may make it unfeasible to report within 

one minute. In particular, commenters 

argued that manually executed or 

reported trades,46 including large trades 

that must then be manually allocated to 

multiple subaccounts 47 and some 

complex transactions that involve 

multiple securities,48 cannot feasibly be 

reported within one-minute. Some 

commenters argued that reducing the 

reporting timeframe to one minute in 

these instances would threaten the 

viability of these types of trades, 

negatively impacting liquidity 49 and 

harming the retail investors, who may 

not be accustomed to electronic trading, 

serviced by these firms.50 Commenters 

also raised other scenarios that they 

believe present operational obstacles to 


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51See Anonymous; ASA; BDA; BetaNXT; FIF; 

SAMCO; SIFMA; Wells Fargo. 

52See FIF; SIFMA. FINRA notes that these trades 

would not be subject to the one-minute reporting 

timeframe under the proposed rule change and 

would continue to be subject to the current 15- 

minute outer limit. 

53See SAMCO; SIFMA; Wells Fargo. 

54For example, 57.0 percent of portfolio trades in 

the 300–1,000 securities band were reported within 

one minute and 20.1 percent of portfolio trades in 

the 1,000+ securities band were reported within one 

minute. 

55Sixty-eight percent of allocated trades were 

reported within a minute, with five out of 29 

members that reported allocation trades able to 

report 90 percent of their allocation trades within 

one minute. 

56See Arkadios; ASA; BDA; Cambridge; Falcon 

Square; HJS; HTD; IBI 2; InspereX; ISC; RBI; 

SAMCO; SIFMA; TRADEliance; Wells Fargo. 

57See Dimensional; FIA PTG; HMA. 

58See Discussion: Economic Impacts, Anticipated 

Benefits. 

59As discussed above, the proposed rule change’s 

exception for members with ‘‘limited trading 

activity’’ should address commenters’ concern that 

the proposal’s implementation costs may cause 

many small firms to exit the fixed income market, 

negatively impacting liquidity. See Falcon Square; 

IBI 1 and 2; Individual Commenters; InspereX; ISC; 

SIFMA; VFM; Wiley. Likewise, FINRA believes that 

the manual trades exception should address 

commenters’ concerns regarding the continued 

viability of manual trades and the ability to hedge 

large trades and trades in thinly traded securities, 

which FINRA understands are often executed 

manually. See IBI 1; ICI; SIFMA. Similarly, the 

exception for manual trades would provide an 

extended reporting timeframe to accommodate 

manual intervention in the trade execution or 

reporting process to conduct best execution and fair 

pricing reviews. See ASA; SIFMA. 

60See ICI; SIFMA. 

61See BMO CM; SIFMA; VFM. 

62See InspereX; SIFMA. 

63Covered depository institutions started to 

report to TRACE on September 1, 2022. See 86 FR 

59716, 59717 (October 28, 2021). 

reporting trades within one minute, 

such as where the security is not already 

in the firm’s security master (or on 

FINRA’s master list) due to the set-up 

process (internally or with FINRA),51 as 

well as trades executed when the 

TRACE system is not open that must be 

reported within one minute after the 

TRACE system re-opens the next trading 

day.52

With respect to commenters’ concern 

that certain types of transactions cannot 

feasibly be reported within one minute, 

FINRA believes that the exception for 

manual trades included in the proposed 

rule change will adequately address 

these concerns. New Supplementary 

Material .09 would phase in a fiveminute reporting standard for trades 

that involve manual intervention in the 

execution or reporting process. This 

exception would address commenters’ 

concern that reducing the reporting 

timeframe to one minute would threaten 

the viability of manual trades. Similarly, 

based on feedback from commenters 

and outreach to members, FINRA 

understands that other types of trades 

raised by commenters, such as some 

allocation trades and portfolio or list 

trades, may involve manual intervention 

in either the execution or reporting 

process 53 and, if so, would therefore 

qualify for the manual trades 

exception’s extended reporting 

timeframe. In that regard, 96.9 percent 

of non-ATS trades are already reported 

within five minutes; 97.5 percent of 

portfolio trades are already reported 

within five minutes; and 93 percent of 

allocation trades are already reported 

within five minutes. The phase-in 

period from implementation is intended 

to provide members with time to 

implement a reasonable process to 

comply with the reduced reporting 

timeframe with respect to their manual 

trades. Trades that do not qualify for the 

manual trades exception must be 

reported as soon as practical but no later 

than within one minute of the time of 

execution. As discussed above, FINRA 

has observed a range of reporting times 

for portfolio trades within the same 

basket size band 54 and similar variation 

in reporting times for allocation trades 

depending on the reporter.55 This 

suggests that even large portfolio and 

allocation trades can be reported within 

one minute and other factors (e.g., the 

technology employed to execute or 

report the trade) contribute to the 

reporting timeframe. 

Commenters raised additional 

concerns that other operational 

obstacles might make reporting trades 

within one minute unfeasible. As 

mentioned above, FINRA believes many 

of the concerns raised should be 

addressed with the proposed 

exceptions; however, other instances 

described by commenters do not appear 

to warrant an exception. For example, 

with respect to comments that TRACE 

reporting through a third-party clearing 

firm presents an operational obstacle to 

one minute reporting, FINRA has 

observed that 71 percent of third-party 

cleared trades are reported within one 

minute (as compared to 85 percent for 

self-cleared trades), and there are 

significant variations in trade reporting 

time by correspondent firms through the 

same third-party clearing firm, which 

suggests that other factors contribute to 

the reporting timeframe. FINRA notes 

that many smaller members rely on their 

third-party clearing firms to report 

trades to TRACE. Under the proposed 

rule change, members with ‘‘limited 

trading activity’’ would continue to be 

subject to a 15-minute outer limit 

reporting standard. 

With respect to trades in securities 

that are not already in the member 

firm’s security master (or on FINRA’s 

master list), FINRA believes that the 

proposed rule change’s exception for 

manual trades should help alleviate 

commenters’ concerns. FINRA 

understands that setting up a security in 

a firm’s security master (or with FINRA) 

typically involves manual intervention. 

Thus, initial trades in such securities— 

where manual steps must be taken to set 

up the security at the firm or with 

FINRA before the trade(s) can be booked 

or reported—would be subject to the 

phased-in five-minute reporting 

standard for manual trades rather than 

the one-minute standard. In addition, in 

response to commenters’ concern 

regarding trades reportable to FINRA on 

the next business day, FINRA is 

proposing to retain a reporting 

timeframe of as soon as practicable but 

no later than within 15 minutes of when 

the TRACE system opens. 

Market Impact 

While some commenters argued that 

the benefits associated with shortening 

the timeframe for trade reporting have 

not been sufficiently explained,56

FINRA agrees with other commenters 

that the proposed rule change will 

increase transparency,57 which has 

historically been shown to improve 

price discovery and reduce trading 

costs.58 FINRA believes that the 

proposed rule change’s exceptions for 

members with de minimis reporting 

activity and for manual trades will 

mitigate the potential for the proposed 

rule change to have a negative impact 

on liquidity or execution quality.59 With 

respect to commenters’ concerns that 

the more rapid dissemination of trades 

could negatively impact liquidity for 

block trades 60 and benefit algorithmic 

traders at the expense of retail and 

institutional investors,61 FINRA 

believes the current trade dissemination 

caps effectively mitigate these concerns, 

and note that members already have an 

obligation under the current Rule to 

report trades as soon as practicable and 

are not permitted to delay the reporting 

(and thus dissemination) of trades. 

FINRA recognizes that covered 

depository institutions will not be 

subject to the proposed rule change.62

However, FINRA continues to believe 

that the proposed rule change is 

appropriate at this time. First, until 

recently, covered depository institutions 

did not report transactions to TRACE at 

all,63 and they are not subject to the 

TRACE reporting requirement for all 

TRACE-Eligible Securities. In addition, 

covered depository institutions do not 


khammond on DSKJM1Z7X2PROD with NOTICES
5046 Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 

64Covered depository institutions’ transactions in 

ABS are limited to SBA-Backed ABS. 

65See Arkadios; BDA; Beech; BMO CM; 

Cambridge; HJS; HTD; IBI 2; ICI; Individual 

Commenters; InspereX; SAMCO; Seaport; SIFMA; 

VFM. 

66See Arkadios; ASA; BDA; Beech; BMO CM; 

Cambridge; HJS; HTD; ICI; InspereX; SAMCO; 

Seaport; SIFMA; VFM. 

67To the extent the trade was originally fully 

electronic, when the member amends the trade 

report, it should add the Manual Trade Indicator. 

68See Arkadios; ICE Bonds; ICI; InspereX; 

TRADEliance; UPitt Clinic; SIFMA; VFM. 69See SIFMA. For corporate bonds, FINRA has 

proposed establishing a reference data service for 

new issues. See Securities Exchange Act Release 

No. 85488 (April 2, 2019), 84 FR 13977 (April 8, 

2019) (Notice of Filing of File No. SR–FINRA– 

2019–008) (Proposed Rule Change to Establish a 

Corporate Bond New Issue Reference Data Service). 70See SIFMA. 71See FIF; SIFMA. 

report a significant number of trades in 

agency debt since they began reporting 

to TRACE.64 While covered depository 

institutions are more active in the MBS 

TBA GD market, this activity has 

historically been concentrated in a few 

large institutions. FINRA believes that 

any potential competitive disadvantage 

is speculative. On balance, FINRA 

thinks the proposed rule change is 

appropriate and should improve the 

timing of market information. 

Other Issues 

While the proposed rule change may 

lead to an increase in reporting errors, 

corrections, and late reporting rates, 

particularly at the outset as members 

adapt to the proposed rule change’s new 

standards,65 FINRA expects that the 

impact to members’ accuracy and late 

reporting rates will largely be 

temporary, as accuracy and timeliness 

will increase as members adapt to the 

proposed rule change’s new standards. 

FINRA also intends to provide members 

with a sufficient implementation 

timeframe to make the changes 

necessary to comply with the reduced 

reporting timeframe (for example, 

approximately within 18 months from 

any SEC approval). As stated above, 

FINRA will announce the effective date 

of the proposed rule change in a 

Regulatory Notice. 

FINRA also believes that the extended 

reporting timeframes available for 

members with de minimis reporting 

activity and for manual trades will help 

mitigate these issues. FINRA likewise 

believes that the exception for manual 

trades will help mitigate commenters’ 

concern that errors will be less likely to 

be corrected within the reporting 

timeframe as FINRA understands that 

trade report corrections often involve 

manual intervention (e.g., a customer 

calling or instant messaging/chatting to 

request a change to the trade, which 

change is then manually made to the 

trade ticket/booking entry).66 Under 

such circumstances, the trade would 

qualify for the extended reporting 

timeframe applicable to manual 

trades.67 Additionally, in the event a 

trade report correction cannot be 

completed within the applicable 

timeframe, FINRA has historically taken 

into account whether cancels and 

corrections are driving untimely 

reporting and the reason(s) for the 

cancels and corrections in monitoring 

members for compliance with the Rule 

and assessing whether a firm has a 

‘‘pattern or practice’’ of late reporting. 

Accordingly, FINRA believes that 

potential issues related to errors, 

corrections, and late reporting will not 

be significant and do not outweigh the 

proposed rule change’s potential 

benefits. 

Finally, commenters also suggested a 

number of alternatives to the proposal 

that they believed would improve the 

TRACE reporting regime, including 

implementing a phased-in approach to 

shortening the reporting timeframe,68

establishing a global securities master 

list,69 improving TRACE’s web-based 

reporting interfaces, reducing TRACE 

system latencies and providing more 

transparency regarding systems issues 

that may impact reporting,70 and 

providing additional guidance on 

members’ ‘‘as soon as practicable’’ 

reporting obligation and additional 

TRACE reporting metrics to members.71

FINRA determined to implement a 

phased-in approach to reducing the 

reporting timeframe to five minutes for 

manual trades in light of commenters’ 

concerns. However, FINRA does not 

believe that the alternatives proposed by 

commenters will provide improvements 

to the TRACE reporting regime similar 

to those of the proposed rule change. 

Accordingly, FINRA determined to 

move forward with the proposal while 

it also continues to consider other ways 

to provide more timely, granular and 

informative data to market participants 

and enhance the value of disseminated 

transaction data. 

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 (i) 

as the Commission may designate up to 

90 days of such date 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

FINRA–2024–004 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. 

All submissions should refer to file 

number SR–FINRA–2024–004. This file 

number should be included on the 

subject line if email 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of 

FINRA. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–FINRA–2024–004 and should be 

submitted on or before February 15, 

2024. 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 17 / Thursday, January 25, 2024 / Notices 5047 

72 17 CFR 200.30–3(a)(12). 

1 0.5 hours per fund + 1 hour per fund = 1.5 hours 

per fund. 2 1.5 hours per fund x 11,241 funds = 16,862 

hours. 3 $21,400 per fund x 11,241 funds = 

$240,557,400. 

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

2 17 CFR 240.19b–4. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.72

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01395 Filed 1–24–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–574, OMB Control No. 

3235–0648] 

Submission for OMB Review; 

Comment Request; Extension: Rule 

498 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) (‘‘Paperwork 

Reduction Act’’), the Securities and 

Exchange Commission (‘‘the 

Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for extension of the 

previously approved collection of 

information discussed below. 

Rule 498 (17 CFR 230.498) under the 

Securities Act of 1933 (15 U.S.C. 77a et 

seq.) (‘‘Securities Act’’) permits openend management investment companies 

(‘‘funds’’) to satisfy their prospectus 

delivery obligations under the Securities 

Act by sending or giving key 

information directly to investors in the 

form of a summary prospectus 

(‘‘Summary Prospectus’’) and providing 

the statutory prospectus on a website. 

Upon an investor’s request, funds are 

also required to send the statutory 

prospectus to the investor. In addition, 

under rule 498, a fund that relies on the 

rule to meet its statutory prospectus 

delivery obligations must make 

available, free of charge, the fund’s 

current Summary Prospectus, statutory 

prospectus, statement of additional 

information, and most recent annual 

and semi-annual reports to shareholders 

at the website address specified in the 

required Summary Prospectus legend 

(17 CFR 270.498(e)(1)). A Summary 

Prospectus that complies with rule 498 

is deemed to be a prospectus that is 

authorized under Section 10(b) of the 

Securities Act and Section 24(g) of the 

Investment Company Act of 1940 (15 

U.S.C. 80a–1 et seq.). 

The purpose of rule 498 is to enable 

a fund to provide investors with a 

Summary Prospectus containing key 

information necessary to evaluate an 

investment in the fund. Unlike many 

other federal information collections, 

which are primarily for the use and 

benefit of the collecting agency, this 

information collection is primarily for 

the use and benefit of investors. The 

information filed with the Commission 

also permits the verification of 

compliance with securities law 

requirements and assures the public 

availability and dissemination of the 

information. 

Based on an analysis of fund filings, 

the Commission estimates that 

approximately 11,241 funds are using a 

Summary Prospectus. The Commission 

estimates that the annual hourly burden 

per fund associated with the 

compilation of the information required 

on the cover page or the beginning of 

the Summary Prospectus is 0.5 hours, 

and estimates that the annual hourly 

burden per fund to comply with the 

website posting requirement is 

approximately 1 hour, requiring a total 

of 1.5 hours per fund per year.1 Thus the 

total annual hour burden associated 

with these requirements of the rule is 

approximately 16,862.2 The 

Commission estimates that the annual 

cost burden is approximately $21,400 

per fund, for a total annual cost burden 

of approximately $240,557,400.3

Estimates of the average burden hours 

are made solely for the purposes of the 

Paperwork Reduction Act and are not 

derived from a comprehensive or even 

a representative survey or study of the 

costs of Commission rules and forms. 

Under rule 498, use of the Summary 

Prospectus is voluntary, but the rule’s 

requirements regarding provision of the 

statutory prospectus upon investor 

request are mandatory for funds that 

elect to send or give a Summary 

Prospectus in reliance upon rule 498. 

The information provided under rule 

498 will not be kept confidential. An 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 

displays a currently valid OMB control 

number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice by February 26, 2024 to (i) 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, 

c/o John Pezzullo, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: January 22, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01436 Filed 1–24–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99396; File No. SR–ISE– 

2024–03] 

Self-Regulatory Organizations; Nasdaq 

ISE LLC; Notice of Filing of Proposed 

Rule Change, as Modified by 

Amendment No. 1, To List and Trade 

Options on iShares Bitcoin Trust 

January 19, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on January 9, 

2024, Nasdaq ISE, LLC (‘‘ISE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

below, which Items have been prepared 

by the Exchange. On January 11, 2024, 

the Exchange filed Amendment No. 1 to 

the proposal, which supersedes the 

original filing in its entirety. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as modified by Amendment No. 

1, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Options 4, Section 3, Criteria for 

Underlying Securities. This Amendment 

No. 1 supersedes the original filing in its 

entirety. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/ise/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 


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