Regulatory Notice 08-42

Guidance on Transactions in TRACE-Eligible Securities Under SEC Rule 144

Executive Summary

The SEC recently adopted changes to SEC Rule 144 that shorten the holding period requirements for privately placed securities before they can be sold into the secondary market, subject to the conditions of the rule, and that may change industry conventions in the resale of privately placed debt securities.

FINRA reminds firms that, unless exempt under NASD Rule 6230(e), once a security is eligible under NASD Rule 6210 as a TRACE-eligible security, all secondary market transactions in the security are "reportable TRACE transactions," as defined in NASD Rule 6210(c). This includes securities that are eligible because they were initially issued pursuant to Section 4(2) of the Securities Act of 1933 and subsequently purchased or sold pursuant to SEC Rule 144A.

Questions regarding this Notice may be directed to Elliot R. Levine, Associate Vice President and Counsel, Transparency Services, at (202) 278-8405; or Sharon Zackula, Associate Vice President and Associate General Counsel, Office of General Counsel, at (202) 728-8985.