[Federal Register Volume 90, Number 117 (Friday, June 20, 2025)]
[Notices]
[Pages 26382-26387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-11298]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103270; File No. SR-FINRA-2025-008]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend
FINRA Rule 6730 (Transaction Reporting)
June 16, 2025.
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 June 10, 2025, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 6730 (Transaction Reporting)
to maintain the currently effective 15-minute outer limit timeframe for
reporting TRACE-eligible securities covered by File No. SR-FINRA-2024-
004 and to provide a streamlined alternative for reporting and
dissemination in connection with specified allocations of an aggregate
order in a TRACE-eligible security to multiple managed customer
accounts.
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.
[[Page 26383]]
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
Background
On September 20, 2024, the Commission issued an order approving
proposed rule change SR-FINRA-2024-004, as modified by Partial
Amendment No. 1, to amend FINRA Rule 6730 to reduce the 15-minute TRACE
reporting outer limit timeframe for fully electronic trades to one
minute, with a later deadline for manual trades and firms with limited
trading activity.\3\ As approved by the Commission, where a trade
qualified for the manual trades exception, a 15-minute outer limit
would apply for the first year following implementation; a 10-minute
outer limit would have applied for the second and third years; and a
five-minute outer limit would have applied thereafter.\4\ Under File
No. SR-FINRA-2024-004, FINRA also adopted a requirement that members
append a new manual trade indicator to identify all manual trades. The
amendments were intended to modernize the TRACE reporting rules, while
providing additional time for reporting trades that were not fully
electronic from end to end and for firms with limited trading activity.
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\3\ See Securities Exchange Act Release No. 101121 (September
20, 2024), 89 FR 78930 (September 26, 2024) (Order Approving File
No. SR-FINRA-2024-004) (``Approval Order''). The reporting timeframe
reductions of File No. SR-FINRA-2024-004 would only have applied to
TRACE-eligible securities that are currently subject to the 15-
minute outer limit reporting threshold under Rule 6730(a)(1).
\4\ See Rule 6730.09(b); see also, Approval Order, 89 FR 78930,
78931.
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Following the approval of File No. SR-FINRA-2024-004, FINRA
continued its engagement with members regarding TRACE reporting
timeframes, and members raised several additional concerns and
questions in connection with aspects of the approved reporting regime.
Specifically, members provided additional insights into the workflows
that impact the current feasibility of one-minute reporting for certain
fully electronic trades and five-minute reporting for manual trades. In
this regard, members discussed, among other things, challenges to
reporting within one-minute fully electronic transactions with more
complex workflows (such as allocations to managed customer accounts or
portfolio trades).
Members also discussed challenges to faster reporting for trades
executed by telephone, email, or through a chat/messaging function
where some or all of the trade details must be manually entered to book
the trade or report it to TRACE. Firms' challenges varied depending on
firm characteristics, such as firm size and business model. Members
further noted that the amendments compounded compliance concerns given
the rigors of the condensed reporting timeframes. In this context,
members also noted FINRA's current approach to late report marking,
which marks as late any corrections made to a disseminated field if
such corrections were entered outside of the reporting timeframe (even
where the initial trade was reported within the reporting
timeframe).\5\
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\5\ In response to these comments, FINRA is updating TRACE
system logic with respect to trade corrections so that trade report
timeliness is determined based only on the time of submission of the
original trade report. Therefore, a member's trade report will no
longer be marked late if the member makes a correction to a
disseminated field outside of the reporting timeframe applicable to
the original transaction (so long as the transaction was reported
originally on a timely basis).
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As a result, FINRA has determined that it is appropriate at this
time to maintain the currently effective TRACE reporting standard
requiring members to report transactions as soon as practicable, but no
later than within 15 minutes of the Time of Execution \6\ of the
transaction for all types of trades (i.e., manual, hybrid, and fully
electronic trades) that are currently subject to Rule 6730(a)(1). In
addition, FINRA is proposing to implement additional responsive
measures to address concerns raised to FINRA during its engagement
process. Therefore, FINRA is filing this proposed rule change to: (1)
amend Rule 6730 to maintain the currently effective 15-minute outer
limit timeframe for reporting transactions in the securities impacted
by File No. SR-FINRA-2024-004; and (2) adopt new Rule 6730.08 to
provide a streamlined alternative for reporting and dissemination in
connection with specified allocations of an aggregate order in a TRACE-
Eligible Security to multiple managed customer accounts.
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\6\ See Rule 6710(d). Under 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, as defined by Rule
6710(a), 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.
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Proposed Changes
Reporting Timeframes
As discussed above, FINRA is proposing amendments to Rule 6730 to
maintain the currently effective TRACE reporting outer limit timeframe
for the securities transactions subject to Rule 6730(a)(1)--i.e.,
continuing to require that members report impacted transactions to
TRACE as soon as practicable, but no later than within 15 minutes from
the Time of Execution. Therefore, FINRA is amending Rule 6730(a) and
subparagraphs (a)(1)(B) and (C) to delete references to ``one minute''
and replace them with ``15 minutes.'' FINRA also is amending Rule 6730
to: (i) delete paragraph (d)(4)(I) (Manual Trade Indicator) to remove
the requirement that members append a manual trade indicator; (ii)
delete Supplementary Material .08 (Exception for Members with Limited
Trading Activity), which would have retained a 15-minute outer limit
reporting timeframe for firms with de minimis trading activity; and
(iii) delete Supplementary Material .09 (Exception for Manual Trades),
which would have provided additional reporting time for trades other
than fully electronic trades.
To continue to work with members to support timely and efficient
trade reporting, FINRA has an established dedicated email inbox--
``[email protected]''--where members and their service bureaus
can self-identify reporting issues. This proactive engagement can help
to avoid late trade reporting inquiries from FINRA, reducing the time
firms spend responding to inquiries. Self-reporting in this manner is
voluntary but continues to be encouraged. FINRA is exploring ways to
enhance its processes to improve the ability of members and their
service bureaus to identify different types of challenges or issues,
including those that may not be systematic or widespread (e.g., manual
errors).
FINRA remains committed to encouraging timely reporting--i.e., as
soon as practicable following the execution of a transaction--to
facilitate the benefits to transparency that result. As discussed
above, FINRA believes that the proposed rule change is
[[Page 26384]]
appropriate at this time in light of the additional information
obtained since File No. SR-FINRA-2024-004 was approved, to be
responsive to members' concerns, and to ensure that FINRA takes a
measured and informed approach to significant modifications to TRACE
reporting requirements. FINRA also anticipates that members who elect
to avail themselves of the proposed reporting alternative for
allocation trades will benefit from a more streamlined approach that
should improve their trade reporting processes and efficiency. In
addition, the modifications to TRACE system marking logic should
provide for a focused view on the timeliness of the initial report.
FINRA will continue its engagement with members and monitor and study
developments in the market for TRACE-Eligible Securities, including
changes in reporting timeframes.
Aggregate Reporting for Allocation Trades
FINRA is proposing to amend Rule 6730 to add new Supplementary
Material .08 (Reporting Allocation Trades) to permit a member that is
both a broker-dealer and an investment adviser (``BD/IA'') to report
allocations of specified orders to managed customer accounts in a
streamlined manner. Specifically, proposed Supplementary Material .08
would provide that a member BD/IA may report allocations of an
aggregate order in a TRACE-Eligible Security to multiple managed
customer accounts in a single, aggregate TRACE trade report (in lieu of
separately reporting allocations to each managed customer account).
Under the proposal, an aggregate TRACE trade report must reflect
allocations with the same price and Time of Execution and be submitted
to TRACE within the timeframes specified in Rule 6730(a).\7\ In
addition, Rule 6730(c) would be updated to require that the aggregate
trade report include the number of managed customer accounts to which
the TRACE-Eligible Security is being allocated.
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\7\ See, e.g., FAQ 3.1.47, Scenario 1, FINRA Frequently Asked
Questions (FAQ) about the Trade Reporting and Compliance Engine
(TRACE), available at https://www.finra.org/filing-reporting/trace/faq, (``When reporting the sales of securities to the various
managed customer accounts, the time of execution is the time the
material terms of the transaction are determined. If BD/IA A
finalizes the allocation with respect to each managed customer
account (thereby establishing the material terms of the transaction
as to each customer) before or at the same time it submits the
aggregate order to its trading desk (to purchase from the Street),
the time of execution of the sales to individual managed customer
accounts is the same time of execution reported for the aggregate
purchase. If such allocations (as to the material terms with respect
to each managed customer account) are not finalized before or at the
same time as the aggregate order (to purchase from the Street), the
time of execution of the sales to individual managed customer
accounts is the time such allocations are finalized.'').
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The below examples illustrate the operation of the proposed
reporting alternative.
Scenario 1: BD/IA A is both a BD and an IA and operates as
one legal entity. BD/IA A directs its trading desk to purchase an
aggregate amount of $5 million (par value) in bonds from the Street (or
otherwise obtain the bonds). BD/IA A then sells portions of the
aggregate amount to 20 managed customer accounts at BD/IA A ($250,000
to each account, in accordance with the allocation instructions). The
sales to the managed customer accounts are all executed at the same
price and do not reflect a mark-up or commission.
[cir] TRACE reporting under the proposal: BD/IA A reports the
purchase (from the Street or another source) of the $5 million in bonds
to TRACE, as it would today. In the above scenario, if BD/IA A chooses
to report the sale to the 20 managed customer accounts pursuant to
proposed Rule 6730.08 in lieu of reporting to TRACE 20 separate sales
to its customers' managed accounts, BD/IA would report a sale of $5
million in bonds to a customer in a single aggregate trade report and
include the number of managed accounts to which the aggregated order is
being allocated pursuant to proposed Rule 6730(c)(14) (i.e., 20). The
BD/IA also would include the ``no renumeration'' indicator pursuant to
Rule 6730(d)(4)(F) and all other information required to be reported
pursuant to Rule 6730(c) and the TRACE User Guide and Technical
Specifications.
Scenario 2: BD/IA A is both a BD and an IA and operates as
one legal entity. BD/IA A directs its trading desk to purchase an
aggregate amount of $6 million (par value) in bonds from the Street (or
otherwise obtain the bonds).
[cir] BD/IA A purchases $3 million in bonds from BD B at 11:57:03
a.m.
[cir] BD/IA A purchases $2 million in bonds from BD C at 11:57:07
a.m.
[cir] BD/IA A purchases $1 million in bonds from BD D at 11:57:14
a.m.
At 11:57:15 a.m., BD/IA A then sells portions of the aggregate
amount to 20 managed customer accounts at BD/IA A ($300,000 to each
account, in accordance with the allocation instructions). The sales to
the managed customer accounts are all executed at the same price and do
not reflect a mark-up or commission.
[cir] TRACE reporting under the proposal: BD/IA A reports the
purchases from BD B of the $3 million in bonds, BD C of the $2 million
in bonds, and BD D of the $1 million in bonds to TRACE, as it would
today. In the above scenario, if BD/IA A chooses to report the sale to
the 20 managed customer accounts pursuant to proposed Rule 6730.08 in
lieu of reporting to TRACE 20 separate sales to its customers' managed
accounts, BD/IA would report a sale of $6 million in bonds to a
customer in a single aggregate trade report,\8\ include the number of
managed accounts to which the aggregated order is being allocated
pursuant to proposed Rule 6730(c)(14) (i.e., 20), include the ``no
renumeration'' indicator pursuant to Rule 6730(d)(4)(F), and include
all other information required to be reported pursuant to Rule 6730(c)
and the TRACE User Guide and Technical Specifications.\9\
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\8\ Dissemination is subject to transaction size caps over which
the actual size of a transaction will not be included in the real-
time TRACE transaction data (i.e., $5 million (par value) for
investment grade corporate bonds and $1 million (par value) for non-
investment grade corporate bonds). For trades above the
dissemination caps, FINRA disseminates the size of the trade as
``5MM+'' (for investment grade) and ``1MM+'' (for non-investment
grade). The uncapped transaction sizes become available as part of
the Historic Corporate Bond Data Set six months after the calendar
quarter in which the transactions are reported. See Rule 7730(d).
\9\ FINRA's TRACE FAQs currently address a variety of allocation
scenarios. FINRA will update its FAQs to illustrate the operation of
new Supplementary Material, if the proposed rule change is approved
by the Commission. See FINRA Frequently Asked Questions (FAQ) about
the Trade Reporting and Compliance Engine (TRACE), available at
https://www.finra.org/filing-reporting/trace/faq.
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FINRA believes that the proposed alternative approach will
streamline reporting, thereby improving efficiency and removing
unnecessary burdens. The proposed rule change also may improve
transparency by removing reports with low utility from dissemination
(to the extent that firms avail themselves of this alternative), while
continuing to ensure that the allocation associated with the aggregate
order is reported and disseminated to the market, without the loss of
price information. FINRA also notes that reporting pursuant to this
alternative approach is voluntary; therefore, depending on a member BD/
IA's business and determinations regarding burdens and benefits, a
member may choose to continue to report individual allocations as it
does today or to modify its practices to begin reporting on an
aggregate basis pursuant to this proposed rule change. Member BD/IAs
also will have the flexibility on a case-by-case basis to choose
whether to report a particular transaction on an aggregate basis
pursuant to proposed Rule 6730.08 or whether to report the allocations
to managed customer accounts individually.
[[Page 26385]]
If the Commission approves the proposed rule change, FINRA will
announce the effective date of the proposed rule change in a Regulatory
Notice. The effective date of the proposed rule change also will apply
to the provisions amended in File No. SR-FINRA-2024-004, as further
amended by the instant filing.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating transactions in securities, and, in
general, to protect investors and the public interest, and Section
15A(b)(9) of the Act,\11\ which requires that FINRA rules not impose
any burden on competition that is not necessary or appropriate.
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\10\ 15 U.S.C. 78o-3(b)(6).
\11\ 15 U.S.C. 78o-3(b)(9).
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FINRA believes the proposed rule change related to reporting
timeframes is in the public interest and consistent with Section
15A(b)(6) of the Act because it addresses the additional concerns and
questions raised by members in connection with aspects of the approved
reporting regime, including related to the workflows that impact the
current feasibility of one-minute reporting for certain fully
electronic trades and five-minute reporting for manual trades. FINRA
understands that MSRB similarly is proposing a rule change that would
provide for a 15-minute outer limit for the reporting of municipal
securities. Therefore, the proposed rule change maintains consistency
between the regimes applicable to covered TRACE-Eligible Securities and
municipal securities, thereby fostering cooperation and coordination
with persons engaged in regulating transactions in securities,
consistent with Section 15A(b)(6) of the Act. In addition, FINRA
believes that the proposed rule change is consistent with Section
15A(b)(9) of the Act and does not impose any burden on competition that
is not necessary or appropriate in that it is intended to alleviate
compliance challenges and avoid potential unintended consequences--
particularly given the prevalence of manual and hybrid trading
workflows for the impacted securities. Therefore, FINRA believes that
the proposed rule change related to reporting timeframes helps achieve
the purposes of the Act and is appropriate at this time given the
additional information obtained since the approval of File No. SR-
FINRA-2024-004 and to be responsive to members' feasibility and
compliance concerns.
FINRA also believes that the proposed alternative reporting regime
to permit members to report allocations of an aggregate order to
multiple managed customer accounts with the same Time of Execution and
price as a single, aggregate TRACE trade report is consistent with the
Act. Specifically, FINRA believes the alternative reporting regime is
in the public interest and consistent with Section 15A(b)(6) of the Act
because it should improve transparency (to the extent that firms avail
themselves of this alternative) by removing reports with low utility
from dissemination while continuing to ensure that the allocation
associated with the aggregate order is reported and disseminated to the
market, without the loss of pricing information. FINRA also believes
that the proposed rule change is consistent with Section 15A(b)(9) of
the Act and does not impose any burden on competition that is not
necessary or appropriate in that the proposed reporting alternative is
intended to streamline reporting, improve reporting efficiency, and
remove unnecessary burdens. Therefore, FINRA believes that the proposed
rule change is consistent with the Act as it maintains valuable
transparency while reducing burdens on members.
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 analyze the regulatory need for the proposed rule change, its
potential economic impacts, and the alternatives considered in
assessing how to best meet FINRA's regulatory objectives.
Regulatory Need
Reporting Timeframes
As discussed previously, in recognition of the concerns raised
through continued engagement with member firms and other market
participants regarding the feasibility of shorter TRACE reporting
timeframes, FINRA is proposing to maintain the currently effective
reporting requirement of as soon as practicable, but no later than
within 15 minutes from the Time of Execution for all trades in TRACE-
Eligible Securities that are currently subject to Rule 6730(a)(1). The
proposed rule change also would prevent potential loss associated with
unsuccessful expenditures undertaken to meet the shorter reporting
timeframe obligations. The proposed rule change would address these
potential impacts, to the extent embedded in the approved but not yet
effective reporting rules and is thus consistent with FINRA's measured
approach to enhancing TRACE reporting requirements, carefully balancing
transparency benefits against potential operational impacts in the
fixed income market.
Aggregate Reporting for Allocation Trades
As discussed above, currently, if a BD/IA executes a trade for
multiple customer accounts as part of an aggregate order and then
allocates portions of the aggregate amount to various managed customer
accounts at the BD/IA, it is required to separately report the
individual allocations to TRACE. Depending on the number of managed
accounts to which the bonds are being allocated, the BD/IA may be
required to report a large number of separate transactions within the
applicable trade reporting timeframe. This can pose operational
challenges for firms, particularly those managing numerous accounts.
Moreover, when individual allocations reflect the same price and Time
of Execution in connection with the same order, separate reporting does
not provide additional insight into the price of the traded security.
Permitting firms to submit an aggregate allocation report as an
alternative to submitting a separate report for each individual
allocation trade, as discussed herein, would reduce the number of
reports required to be submitted to TRACE and could therefore increase
reporting efficiency for members without compromising the availability
of important transparency or regulatory information.
Economic Baseline
Reporting Timeframes
As discussed above, the Commission approved File No. SR-FINRA-2024-
004 to amend FINRA Rule 6730 to reduce the 15-minute TRACE reporting
outer limit timeframe for fully electronic trades to one minute, with a
later deadline for manual trades and firms with limited trading
activity; this rule change was never implemented by
[[Page 26386]]
FINRA.\12\ Therefore, members have continued to be required to report
transactions in TRACE-Eligible Securities that are subject to Rule
6730(a)(1) within the 15-minute outer limit reporting timeframe. As
such, the proposed rule change would maintain the status quo for
impacted member firms.
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\12\ See supra notes 3-4 and accompanying text.
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Aggregate Reporting for Allocation Trades
FINRA estimated the number and dollar par value of allocation
trades in TRACE-Eligible Securities between July 2023 and June 2024, as
well as the number of market participant identifiers engaging in
allocation trades covered by the proposed rule change.\13\
Approximately 117 market participant identifiers reported 7,570,097
allocation trades that represented $205.4 billion in total par value
traded. Among these reports, 39.53 percent were corporate and agency
trades,\14\ 6.77 percent were securitized product trades,\15\ and 53.70
percent were transactions in U.S. Treasury Securities.\16\ The 10 most
active TRACE reporters among the 117 market participant identifiers
accounted for 97.88 percent of the allocation trades and 79.48 percent
of the allocation trade dollar volume.\17\
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\13\ An allocation flag does not exist in TRACE; therefore,
FINRA used heuristics to approximate allocation trades.
Specifically, FINRA identified as allocation trades agency trades
where a dually registered single market participant identifier
reported two or more customer-facing trades in a unique security
with the same execution price, time of execution, and report side
(excluding trades with renumeration and reported by an electronic
platform). FINRA believes this approach is more likely to represent
a high estimate of impacted trades.
\14\ See Rule 6710(l).
\15\ See Rule 6710(m).
\16\ See Rule 6710(p).
\17\ To determine the most active participants, the participants
were sorted based on the number of unique allocations they reported.
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Economic Impacts
Reporting Timeframes
The proposed rule change maintains the currently effective TRACE
reporting outer limit timeframe for transactions in TRACE-Eligible
Securities that are subject to Rule 6730(a)(1), and therefore there is
no economic impact compared to the current economic baseline for
reporting to TRACE. As discussed above, the proposed rule change is
intended to be responsive to members' feasibility concerns, alleviate
compliance challenges, and avoid potential unintended consequences. It
balances transparency benefits with practical implementation
considerations identified through member feedback. It also reduces the
compliance costs that member firms otherwise would incur to implement
File No. SR-FINRA-2024-004. To the extent that any firms allocated
resources toward system and procedural enhancements to accommodate the
anticipated changes in TRACE reporting requirements under File No. SR-
FINRA-2024-004, these investments may impact the amount of any
potential cost savings from this proposal. However, FINRA notes that it
announced its intention to not set an implementation date and to make
substantive changes to the amendments a few months following the
approval of File No. SR-FINRA-2024-004.\18\
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\18\ See Robert Cook, Updating Trace Reporting Timeframes
(February 5, 2025), available at https://www.finra.org/media-center/blog/updating-trace-reporting-timeframes.
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Aggregate Reporting for Allocation Trades Potential Benefits
As noted above, a significant number of market participant
identifiers engage in allocation trades and therefore may benefit from
the proposed rule change to permit them to streamline their
reporting.\19\ The reduction in the number of reports that would
otherwise be reported would improve members' ability to timely report
these transactions within the applicable reporting timeframe while
continuing to ensure that the allocation associated with the aggregate
order is reported and disseminated to the market, without the loss of
price information.
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\19\ In particular, the average allocation contains 15.52
trades. If all of these trades were reported pursuant to the
proposed alternative reporting regime, the total number of trade
reports would have been reduced from 7,570,097 to 487,625.
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Potential Costs
Aggregating reports pursuant to the proposed rule change will be
optional for firms; therefore, the proposed rule change will not impose
costs on members that prefer not to avail themselves of this approach.
Member firms that choose to avail themselves of the aggregate reporting
alternative could incur costs associated with making any necessary
system or process changes and presumably would choose to incur any such
costs because the expected benefits exceed the expected costs of
implementation.
As discussed above, under the proposed alternative, FINRA would
disseminate the number of managed accounts to which the securities
would be allocated and the aggregate volume of securities allocated,
but the individual volume allocated to each managed customer account
would not be disseminated. On balance, FINRA believes that the proposed
reporting alternative is appropriate as it continues to ensure that the
allocation associated with the aggregate order is reported and
disseminated to the market, without the loss of price information.
FINRA also considered potential competitive effects the proposed
rule change might have within impacted member firms as well as between
impacted and unimpacted member firms. The proposed rule change would
provide BD/IAs with the option to significantly streamline allocation
reporting by permitting them to submit a single allocation trade report
(similar to the single report members trading with a separate
investment advisor are currently required to submit). Although the
proposed rule change would apply equally to all impacted members, the
potential effect could differ depending on the business of the member.
FINRA believes that any differential competitive effects the rule might
have on impacted members with different usage of allocations would be
mitigated by the voluntary nature of proposed reporting changes. Hence,
FINRA does not believe the proposed rule would create significant
competitive effects.
Alternatives Considered
Reporting Timeframes
In developing the proposed rule change, FINRA considered extending
the reporting timeframe for manual trades from the ultimate five-minute
outer limit under File No. SR-FINRA-2024-004 (e.g., to 10 or 15
minutes) and maintaining the one-minute outer limit requirement for
fully electronic transactions. This approach would address feasibility
concerns relevant to reducing the reporting timeframe for trades
involving manual intervention but would not address the feasibility
issues raised by members related to other types of transactions.
Considering these factors, FINRA decided to maintain the currently
effective 15-minute outer limit requirement for all trades in covered
TRACE-Eligible Securities.
Aggregate Reporting for Allocation Trades
In developing the proposed rule change, FINRA considered various
alternatives and the potential costs and benefits of those
alternatives. Among other things, FINRA considered permitting BD/IAs to
report an aggregate allocation report and identifying it as such,
without providing the number of accounts to which the securities will
be allocated; however, FINRA believes the number of accounts to which
the
[[Page 26387]]
securities were allocated provides useful insight that is more
comparable to the information reported and disseminated today, without
adding undue complexity to the aggregate reporting framework. As such,
FINRA believes the proposed aggregate allocation report indicating the
number of allocations is preferable.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-FINRA-2025-008 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2025-008. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such 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-2025-008 and should be submitted on or
before July 11, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-11298 Filed 6-18-25; 8:45 am]
BILLING CODE 8011-01-P