FINRA Proposes TRACE Reporting And Portfolio Trade Rule Amendments – Finance and Banking

FINRA proposed  amendments to Rule 6730 (“Transaction
Reporting”) that would provide additional transparency into
delayed Treasury spot and portfolio trades through the use of
“specific modifiers.”

As previously covered, FINRA requested comment on
proposed amendments to FINRA Rule 6730 that would require firms
to identify corporate bond trades (i) where the trade price is
based on a delayed Treasury spot trade, which is one that “was
priced earlier in the day based on the spread to a U.S. Treasury
Security,” and (ii) that are within a larger portfolio
trade.

In response to comments, FINRA proposed amending Rule 6730 to:

• increase transparency into delayed Treasury spot trades by
  requiring members to (i) “append a new modifier when reporting
  a delayed Treasury spot trade” and (ii) report the time for
  the agreed-upon spread for a delayed Treasury spot trade; and




• increase transparency into portfolio trades by requiring
  members to append a new modifier if reporting a transaction in a
  corporate bond (i) is executed between only two parties, (ii)
  involves a basket of corporate bonds of at least 10 unique issues,
  and (iii) is for a single agreed price for the entire basket.

If the SEC approves the proposal, FINRA will notify market
participants in the Federal Register within 90 days.

Primary Sources

1. SR-FINRA-2021-030: Proposed Rule Change to Amend
   FINRA Rule 6730 (Transaction Reporting) to Require Members to
   Append Modifiers to Identify Delayed Treasury Spot and Portfolio
   Trades when Reporting to TRACE

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