TRACE FAQ - Reporting
In a transaction involving both an executing broker and an introducing broker, which member reports?
Both parties are required to report to TRACE. For example, introducing broker A (IBA) receives an order to buy bonds from its customer and then sends that order to executing broker B (EBB) for execution. Assuming EBB sells bonds to IBA from its inventory account, the following reports would be required:
EBB reports a principal sell to IBA
IBA reports an agency buy from EBB
IBA reports an agency sell to its customer
How do I sign up for TRACE reporting?
An authorized party at your firm must sign all the appropriate agreements and return two copies to:
FINRA Market Operations
9509 Key West Avenue, 5th floor
Rockville, MD 20850
Market Operations will keep one copy and return a signed copy to the designated authorized party at your firm.
FINRA Market Operations: 866-776-0800 (toll free) e-mail address: FINRA Market Operations
What is the URL for the TRACE site used for trade reporting?
https://www.finratrace.org
If my firm is a clearing firm, but we did not execute the trade, we do not offer reporting services, and all we do is clear, do we have a TRACE reporting obligation?
No. A clearing firm that handles post-transaction trade processing has no obligation under the TRACE Rules.
Are matured, called, or otherwise retired bonds still available on the system?
Yes. To accommodate "as/of" trades these issues may be reported for a period of up to 365 days after the issue has matured, is called, or is otherwise retired.
Are bonds listed on an exchange or NASDAQ TRACE reportable?
If the transaction is executed over-the-counter (OTC), the transaction must be reported to TRACE. However, if the bond is both listed and executed on a national exchange, there is no report to TRACE.
In moving a TRACE-eligible bond from one firm principal trading account to another, is a member firm required to submit a TRACE report, or is this simply an inter-company transfer?
If there is no change in ownership, it is merely a journal entry between accounts and is not reportable to TRACE.
At what time will the list of reportable bonds be available each day?
The file containing the complete list of TRACE-reportable bonds will initially be available each evening at approximately 8:00 p.m., Eastern Time, the night before the list becomes effective. It will then be updated the morning it becomes effective after 6:30 a.m., Eastern Time. However, the morning update will only reflect name changes and enhanced information provided by our primary vendor. FINRA makes every effort to have the files available by the specified times. However, should a delay be encountered outside of our control, firms are encouraged to download the 6:30 a.m.list.
What is the purpose of the dissemination flag and the Rule 144A flag referred to in the specifications for obtaining the downloadable list?
These two fields are for informational purposes only. The dissemination flag indicates the bonds that are marked for dissemination (through the TRACE BTDS). The Rule 144A flag denotes bonds that are purchased and sold pursuant to Rule 144A of the Securities Act, are book-entry securities that may be cleared and settled at DTCC.
How much time do members have to submit their trade reports to TRACE?
Please refer to NTM 05-28 .
How do I execute a trade outside normal TRACE operating hours or on a non-business day?
Trades executed up until 11:59:59 p.m., Eastern Time, should be reported "as/of" on the next business day, within the current TRACE reporting window of system open, which will occur at 8:00 a.m., Eastern Time. Trades executed from midnight to 7:59:59 a.m., Eastern Time, should be reported within the current TRACE reporting window of system open.
What happens if I neglect to report a trade and TRACE shuts down?
These trades should be entered on the next TRACE business day as "as-of" with the execution time. The TRACE system will determine whether the trade is late based on the execution time. Exception: If the TRACE system was open on the date of the trade, but there was inadequate time to report (i.e., there was less than the current TRACE reporting window), a trade will not be considered late if it is reported within the current TRACE reporting window from system open.
How do I report my TRACE-eligible trades if I do business on a federal holiday or on a weekend and the system is shut down?
Transactions in TRACE-eligible securities executed on a non-business day on which the TRACE system is closed, at any time during that day, must be reported the next TRACE business day within the current TRACE reporting window, after the TRACE system opens. The trade date used is the reporting day, with the execution time entered as "00:01:00" Eastern Time, with the special price modifier selected. The report is not designated "as/of". However, if the selected reporting method provides a "special price memo" field, the actual execution date and time must be entered in that field.
Firms that report trades using the TRACE/RTTM interface must follow the same procedure, using the special price reason code "/SPXRR004" in the Trade Instruction Processing Narrative (:70E::TPRO) field. Actual execution date and time are not required in RTTM submitted trades since a special price memo field is not available.
How many sides of a transaction do I have to report? It is my understanding that all member firms will have to report both buys and sells, regardless of the counterparty.
Yes. TRACE Rules require that both the buy and the sell side of eligible transactions be reported to the system in order to create a complete audit trail.
When I report a trade with a customer, should the Buy/Sell code be from the member firm's perspective or from the customer's perspective?
The trade report is always entered from the perspective of the member firm that is reporting.
If I am a FINRA member and typically place orders with other firms, must the execution time that I report be the same as the execution time reported by the contra side executing broker?
Yes. Your counter party supplies the exact execution time when you are notified that your order has been filled. This is the execution time you should input on your TRACE report.
How do I report the volume of a transaction?
If you are reporting via CTCI or the FINRA Web browser, report the number of bonds, not the par value. TRACE will convert this amount to face (par) value.
The TRACE system assumes a $1,000 par value, so quantity for bonds that involve a factor must be translated into a percentage of $1,000. Reporting of quantity for bonds involving a factor is the same as reporting quantity for a baby bond.
Example: A broker-dealer buys or sells 25 bonds with a pro-rata sinking fund for which the current factor is .300. To determine what quantity to enter in the TRACE report, multiply 25 by .300 for a quantity of 7.5 bonds. This results in a remaining principal amount held of $7,500 at this point in the sinking fund schedule instead of the original $25,000.
How do I report a baby bond (less than $1,000 face value per bond)?
Enter the amount in decimal form. Examples: 1/2 a bond = ".50"; a $512.37 piece of a bond = ".51237".)
How do I report quantity for a bond with a pro-rata sinking fund that has a factor?
The TRACE system assumes a $1,000 par value, so quantity for bonds that involve a factor must be translated into a percentage of $1,000. Reporting of quantity for bonds involving a factor is the same as reporting quantity for a baby bond.
Example: A broker-dealer buys or sells 25 bonds with a pro-rata sinking fund for which the current factor is .300. To determine what quantity to enter in the TRACE report, multiply 25 by .300 for a quantity of 7.5 bonds. This results in a remaining principal amount held of $7,500 at this point in the sinking fund schedule instead of the original $25,000.
How do I report quantity on bonds with par values greater than $1,000? Exceptions: GMAC 0 12/1/12, GMAC 0 6/15/15 (see related FAQ below)
The TRACE system assumes a standard $1,000 par value, so quantity for a bond with a par value of greater than $1,000 must be translated into a $1,000 equivalent.
Examples:
A bond has a par value of $2,500. If 20 bonds are bought or sold, the total par value is $50,000. Divide $50,000 by $1,000. Reported Quantity = 50.
A bond has a par value of $500,000. If 10 bonds are bought or sold, the total par value is $5,000,000. Divide by $1,000. Reported Quantity = 5,000.
How do I report quantity and price for GMAC 0 12/1/12 and GMAC 0 6/15/15? These issues trade on the NYSE in units and in prices expressed in hundreds rather than in bond dollars (representing a percentage of par). If I execute OTC, however, how do I report quantity, price, and yield into TRACE?
How to report commission for these issues:
What price do I report to TRACE?
If you have charged either a markup or markdown, report the price inclusive of the mark. A commission is reported in a separate field.
If you are reporting via the NSCC interface, report settlement amount and accrued interest on Interdealer trades. TRACE will calculate the price based on this information. Customer trades reported via the NSCC interface must report price inclusive of the mark under the deal price field.
Is rounding permitted in the reporting of price or yield to TRACE?
TRACE rules do not provide for rounding before reporting. The system can accommodate reporting out to six decimal places for both price and yield. Price and yield should be submitted to TRACE exactly as calculated.
How do I report the price on a spread trade, since I won't know where the Treasury will be until later in the day?
When the underlying benchmark has been established by the parties of the trade thereby converting the spread to a corresponding yield and price, these can both be reported to TRACE.
What is weighted average pricing? How do I report a weighted average price trade?
Weighted average pricing is a means of establishing the price per bond when a large (block) order is filled by executing smaller transactions in the desired security during a given period by a broker-dealer in order to accumulate the total volume of bonds required to fill the order. In such cases, the price per bond is established by weighting the average of the various prices at which the partial transactions were executed. When this weighted average is reported, it may no longer be reflective of the current market price at the time of the final sale to the customer, and so the ".w" modifier must be added to the trade report so TRACE will properly report to the tape.
Is yield optional? It appears to be an optional field in the TRACE specifications?
No, reporting of yield is not optional. A member must report yield as required in TRACE Rule 6230(c)(13). A member does not report yield when a security is in default (and is trading flat), has a floating interest rate (e.g., Floating Rate Notes (FRNs)), has a step-up or a step-down feature and the amount of the step-up or step-down is not known, or is a pay-in-kind security (PIK). The provision also includes a more generally worded exception. Thus, the yield field is not optional, but may appear to be optional in the specifications because yield is not required in certain cases. Please review Rule 6230(c)(13) carefully.
What yield is reported on a callable bond?
Under Rule 6230(c)(13), a reporting party must enter the lower of yield to call or yield to maturity. YTC is based upon the assumption that the call notice will be issued the day after the trade is executed.
Examples:
Discrete call: Caterpillar Finance Service Corp. MTN 3.67 10/4/07
Continuously callable: Nextel 10.65 9/15/07
On "when-issued" (WI) bonds, do you require the submitter of the trade report to tell you it is a WI bond, or will FINRA determine this?
FINRA will assign a unique symbol to a "when-issued" bond. Since the CUSIP may not be unique, please use the FINRA-assigned symbol.
Note: For purposes of TRACE reporting, WIs are not primary market securities, but rather, securities that came about as the result of a corporate action, such as a reorganization.
How do I report a bond trading "when-issued" (WI)?
Reporting by FINRA reporting symbol, users should check to see if two symbols have been assigned to one CUSIP number and use the one designated for WI trading. When an issue is trading on a WI basis, the same CUSIP number will be set up with two different reporting symbols, one for the WI status bond, and the other for the regular way bond. For firms reporting by symbol, it is important to make sure that the correct symbol has been selected when submitting a TRACE report. After settlement date, the system will not accept a regular way transaction under the WI symbol, unless it is an as/of submission.
Do I report negative yield on a convertible bond?
Yes. When reporting to TRACE, the reported yield should be the lower of yield to call ("YTC") or yield to maturity ("YTM"), regardless of whether or not that yield is negative. (For interpretive guidance, please see Notice to Members 02-76 , Question 7.)
If I buy or sell a sinking fund bond that trades on yield to average life, don't I use this yield when reporting to TRACE?
No. Under TRACE Rule 6230 (c)(13), a member must report the lower of yield to call or yield to maturity, even if the transaction was effected using a different standard. For interpretive guidance, please see Notice to Members 02-76 , Question 7.
On agency transactions, how does the commission impact the price used to calculate the yield?
The yield you report must be inclusive of commissions charged. The yield is a corollary of price. This means that when you incorporate the commission charged into the price for yield calculation, you must SUBTRACT the commission on BUY trade reports, and ADD the commission on SELL trade reports.
Example: Firm XYZ receives an order from a customer to sell 100 bonds. Acting as the customer's agent, XYZ sells the bonds to ABC. Although, technically the customer sold the bonds to ABC with XYZ acting as their agent, the reports from XYZ would be made as follows:
Report #1: XYZ BUY 100 bonds from C as Agent @ 98 and charged .125 commission
Report #2: XYZ SELL 100 bonds to ABC as Agent @98.
In the example above, the price that would be used for yield calculation in Report #1 would be 98 MINUS .125 or 97.875.
In a transaction involving an executing broker and an introducing broker, how is commission reported?
Both the executing and the introducing broker must be represented in the trade report. If the executing broker were long bonds, it would report that it "sold" as principal, net to the introducing broker. If the introducing broker charged its customer a commission, the introducing broker must report the commission in the separate "commission" field.
How do I enter the commission, if I charge a flat fee?
You report that you sold as agent to the customer (C) 10 bonds (do not report par value) and you enter ".45" in the seller's commission field. Here's how this works: The amount of the commission is reported in points per bond, so if 1 point = $10, then $45.00 = $4.50 per bond, or .45 points. ($45.00/10 bonds = $4.50. $4.50/$10.00 = $0.45, or .45 points.) TRACE will then add .45 to the 98 dollar price of the sale (98.45) and calculate a corresponding yield to this all-in price.
Example: If I sell as agent a $10,000 par value ("10M") TRACE-eligible XYZ 6 3/4 due 2/1/10 at 98 to a customer and I charge a $45.00 commission for the trade, how do I enter the commission?
If trades are cancelled and re-billed in a security that was not TRACE reportable on original trade date and now the security is classified as "TRACE eligible," would these trades need to be reported?
No
Are service bureaus allowed to operate in a give-up arrangement?
No
Would you explain to me what the modifiers and the special columns on the Time and Sales Search Results screen mean?
Comm: A "Y" under the commission column indicates that this was a trade to which a commission has been added, and that the price you are seeing reflects not only the price of the security, but the actual dollar amount that the buyer paid out of his/her pocket for the bonds.
Modifiers: Modifiers are used to indicate special trade conditions some of which are indicated below.
How do I know if my trade report was accepted by the Web browser interface?
When you receive a confirmation message with a TRACE Control #, a CUSIP, the FINRA Symbol, and the name of the security, then your trade report is accepted.
If my firm reports via the NSCC interface, how will I know if any trades are rejected?
Effective May 23, 2005 TRACE is supporting the NSCC’s RTTM interface. This interface supports real-time interactive messaging. NSCC participants will receive a MT509 accept or reject for each MT515 instruct sent to TRACE. NSCC firms are responsible to review their rejects using the TRACE Website or their NSCC MT509 messages.
Who is responsible for resubmitting rejected trades?
The firm that had the original reporting obligation is ultimately responsible for resubmitting corrected reports.
What is the difference between a cancel and a reversal? When can I cancel a trade and when do I have to do a reversal?
A cancellation is a same-day function and can be done on Trade Date only. A reversal must be submitted to "undo" the previously entered trade. The reversal trade report must include the control number of the original submission in the "Internal Memo" field.
What is the difference between a no/was and a reversal/resubmission? Can you tell me when each function is used?
A "no/was" is a same day function to correct a previously reported trade on trade date. It must be done within system hours on trade date only. To cancel/correct any trade submitted on a previous business day, enter a reversal to cancel the original trade and submit an as/of for the corrected report.
Note: TRACE does not support the correction of partial quantities.
What fields can I not change using the no/was function?
All fields are changeable with the exception of:
Can I make same day corrections (no/was) to a TRACE report?
Corrections can be made via CTCI or the TRACE web browser.
Note: NSCC does not support the no/was function.
What happens if I modified a trade reported in TRACE, but later need to cancel it?
A trade report that has been modified may be cancelled the same way as one that has not been changed.
If I have to reverse an "as/of" entry that was a replacement for an earlier reversal, which control number do I reference-the control number of the original report or the control number of the replacement "as/of" report?
Please reference the report control number of the "as/of" report.
For how long after Trade Date will TRACE accept an "as/of" or a reversal entry?
TRACE will accept such reports up to one year from the trade date.
Can I assume that if I report through someone else, they can take care of all my reporting responsibilities?
No. The reporting responsibility remains with the member firm.
Can anyone other than the member firm required to report a transaction cancel or correct input in TRACE?
The member firm or the third party appointed by the member firm may cancel or correct a previously submitted transaction report.
Will introducing brokers that report through their clearing broker be able to see their TRACE reports?
No, only the firm that submits the trade report will have the capability to view the trade report later unless the introducing broker is the give-up on the TRACE report.
If the TRACE system is unavailable due to system or transmission failure, how will FINRA notify the participants?
You will receive an error message when you try to report and the system is not available. Additionally, please check system status .
If a trade is done from a firm's inventory account and is sold to a customer, how is this reported?
This is a principal sale by your firm to a customer, versus contra party "C".
If we sell from inventory to the Street, how is this reported?
This is a principal sale by your firm to another member firm, versus contra party "MPID" of the other member firm.
When using NSCC to report, does the customer side have to be reported, even though, currently, we do not report customer trades to NSCC?
Yes. The trade report will allow a member to report a trade with a customer.
How do I report an in-house cross?
An "in-house cross" is considered two transactions. One report shows your firm buying from the customer as principal or agent, and the second report shows the sale to the customer as principal or agent.
Note: If the trade ever moves through a proprietary account, it is considered a principal trade by FINRA. Because TRACE does not currently support riskless principal, it must be reported as: "Capacity = Principal".
What happens to trades that are cash trades, next day settlement, or ex-clearing, that do not go to the NSCC file?
These trades must be reported. If you are using NSCC to report, they may be reported using NSCC. For such trades (trades that you do not want NSCC to process), mark them "DEST03" in the Trade Instruction Processing Narrative field for " FINRA Only" and “NSCCREGO” as the Receiver in the Message Header. NSCC will forward these to TRACE without looking at them.
My firm received an unsolicited order from a customer to purchase bonds at the market. Having no position, I had to go to the Street to buy bonds in pieces, which I ran through my omnibus account. When I finally filled the order, I charged my customer an agency commission. How do I report what I did?
You report an agency buy from each firm that sold you bonds.
You report an agency sell with "C" (for the end customer), and the amount of the commission you charged in the commission box.
If a clearing firm executes a trade on behalf of a correspondent, and there is no give-up agreement in place, how is reporting accomplished?
The clearing firm reports an agency buy from the Street and an agency sell to its correspondent. The correspondent reports an agency buy from its clearing firm and an agency sell to its customer (C).
For the bonds approved for dissemination, are all transactions disseminated? Doesn't this result in double counting?
No. Only one side of an interdealer transaction is disseminated.
Will dissemination of transaction information occur on a real-time basis through vendors and directly from any FINRA Web site?
Dissemination of transaction information through the Bond Trade Dissemination Service (BTDS) feed is available on a real-time basis for a fee. FINRA members using the full service Web browser have access to disseminated transaction data real-time as part of their browser package. FINRA recently clarified that certain professionals and other employees in the financial services industry may be considered Non-Professionals when they are accessing and using the TRACE transaction data solely for personal, noncommercial use. Under TRACE rules there is no charge for accessing TRACE data in a non-professional capacity. As used in Rule 7010(k)(3) a “Non- Professional” is a natural person who uses TRACE transaction data solely for his or her personal, non-commercial use. A Non-Professional subscriber must agree to certain terms of use of the TRACE data, including that he or she receive and use the TRACE transaction data solely for his or her personal, non commercial use. Persons who are excluded from the definition of “Non-Professional” include a person that:
(a) is not a natural person;
(b) is registered or qualified in any capacity with the Commission, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association, or an employee of the above and, with respect to any person identified in this subparagraph b., uses TRACE transaction data for other than personal, non-commercial use;
(c) is engaged as an “investment adviser” as that term is defined in Section 202(a)(11) of the Investment Advisers Act of 1940 (whether or not registered or qualified under that Act), or an employee of the above and, with respect to any person identified in this subparagraph (c) uses TRACE transaction data for other than personal, non-commercial use;
(d) is employed by a bank, insurance company or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt, or any other employee of a bank, insurance company or such other organization referenced above and, with respect to any person identified in this subparagraph d., uses TRACE transaction data for other than personal, non-commercialuse; or
(e) is engaged in, or has the intention to engage in, any redistribution of all or any portion of the TRACE transaction data.
How do I notify market operations to set up a new issue for secondary trading?
Lead underwriters must provide Market Operations with the CUSIP number and basic descriptive information that is required pursuant to Rule 6260 so that new issues will be set up prior to the commencement of secondary market trading.
If I am reporting through a third party or if I have a web browser but I do a low volume of business in corporate debt securities, do I still have to pay for a daily license with CUSIP?
Trade reports may be submitted either using the CUSIP number or the FINRA reporting symbol.
Do I have to report trades only in the bonds for which there will be dissemination, or do I have to report everything?
All bonds on the Issue Master, as defined in NASD Rule 6210(a), are subject to reporting.
Do time zone changes affect reporting time?
No. The TRACE system requires execution time to be reported as Eastern Time, and the TRACE Rules require clearly that the regulatory reports be made in Eastern Time, even if this means converting both the time of execution and the date of execution to Eastern Time. This does not mean, however, that firms are required to confirm to their customers a trade date or execution time that is in Eastern Time.
What is considered "substantially unrelated to the current market", since according to Rule 6230(e)(3), such transactions are not reportable?
For interpretive guidance on Rules, please refer to Questions 9, 10, and 13 of Notice to Members 02-76 .
What happens if my firm gets an order from a Customer, and my Customer wants to "Step- Out" to another firm?
A Step-Out allows an executing broker to "Step Out," or allocate all or part of a trade to another broker-dealer. The only reportable event is the transaction between the executing firm and its customer.
The Broker-Dealer that has stepped in performs nothing more than a clearing function and does not have a reporting obligation. This scenario assumes that the position is held in a non-proprietary account used for clearing purposes only.
If I execute a trade in a bond that is trading flat, do I use the Special Price Flag?
Yes. Members must use the Special Price Flag and indicate in the Special Memo Field that the trade was executed flat. Once the issuer announces that the bond will default, the Special Price Flag should not be used. If, however, after the official public notice of default, trades continue to occur with interest included, those TRACE reports should be flagged with the Special Price Flag and a special memo, since these are now the specified trades, executed contrary to the convention of trading the defaulted security flat.
For interpretive guidance, please see Notice to Members 02-76, Question 6, Security in Default section.
If my firm is not a direct selling agent for an issuer, but I can get medium term notes or continuously offered notes from another dealer that is a designated agent, and I sell the notes at issue price to my customer, is the sale to my customer considered primary or secondary; i.e., do I have a reporting obligation to TRACE?
Sales of debt that occur routinely during a primary offering period and at a fixed price in accordance with the Plan of Distribution are considered part of the primary distribution, and are not reportable to TRACE.
What goes into the Commission Field? What about miscellaneous fees or service charges?
For interpretive guidance, please refer to this page .
