Regulatory Notice 10-14

SEC Approves Access to Historic TRACE Data and Related Fees Effective Date: March 31, 2010

Published Date:

March 05, 2010

Trade Reporting and Compliance Engine (TRACE)

Regulatory Notice
Notice Type Rule Amendment	Referenced Rules & Notices FINRA Rule 6750(b) FINRA Rule 7730 Securities Act Rule 144A
Suggested Routing Compliance Fixed Income Legal Operations Research Systems Trading	Key Topic(s) Fees Historic TRACE Data

Executive Summary

Effective March 31, 2010, the public will have access to Historic TRACE Data, and fees for professional users of Historic TRACE Data will go into effect.¹

The text of the amendments is available in Attachment B at www.finra.org/notices/10-14.

Questions regarding this Notice should be directed to:

• Ola Persson, Director, Transparency Services, at (212) 858-4796; or

• Elliot R. Levine, Associate Vice President and Counsel, Transparency Services, at (202) 728-8405.

For inquiries regarding how to access Historic TRACE Data, please contact TRACE Data Services at (888) 507-3665.

Background & Discussion

Transaction-level information on publicly traded TRACE-Eligible Securities is available in real-time as the transactions are reported to TRACE (TRACE Market Data). However, transaction-level information is not available in TRACE Market Data, or otherwise publicly available, if such information is not disseminated as provided in Rule 6750(b).²

Currently, for each transaction the data released as TRACE Market Data includes, among other fields:

• bond identifiers (FINRA symbol and CUSIP number);

• date/time—execution time for current day's transactions, execution date and time for as/of trades and reversals;

• price;

• yield;

• quantity, subject to certain volume limits or caps³;

• contra-party type (customer or dealer) & buy or sell side indicator (in TRACE Market Data, only the sell side of an inter-dealer report is subject to dissemination);

• various modifiers, indicators (e.g., the trade was executed at a special price; the settlement does not follow market convention) and administrative messages.

The fees FINRA charges for TRACE data are set forth in Rule 7730. FINRA makes the real-time TRACE Market Data available to professional users for a fee, while Non-Professionals have access to transaction-level data at no charge at www.finra.org/marketdata and other publicly accessible Web sites.⁴

Historic TRACE Data

FINRA believes that it is important to provide access to historical transaction-level data, particularly for research purposes. Effective March 31, 2010, transaction-level data for transactions in all TRACE-Eligible Securities reported to TRACE since July 1, 2002, except Rule 144A transactions, will be made available as Historic TRACE Data. Historic TRACE Data will include transactions that, at the time of reporting, were not subject to dissemination, such as Non-Investment Grade corporate bond transactions. (As a group, such transactions were reported to TRACE as of July 1, 2002, but were only later subject to dissemination.) Also, Historic TRACE Data will include certain transaction-level information—such as actual trade volume (or size)—that currently is not publicly available for larger transactions.

The release of Historic TRACE Data is subject to the following protocols:

• transaction data must have aged at least 18 months before FINRA will include it in Historic TRACE Data. For example, when historic data becomes available on March 31, 2010, TRACE corporate bond transaction data from 2009 will not be available at that time, because the data was captured and created less than 18 months ago.

• Historic TRACE Data will not include the identity of any broker-dealer that is a party to a transaction.

The data elements and fields that FINRA will include in Historic TRACE Data for each transaction are set forth in Attachment A. Additional information regarding the fields is available in "Historic TRACE Data: Enhanced Historical Time and Sales—Trade Record File Layout" in the technical specifications at www.finra.org/trace/historicaldata.

FINRA may change the fields and data elements of Historic TRACE Data to respond to user needs, improve the usefulness of the data or foster the extensive use of such data in research on the bond markets. FINRA will notify firms and other data users of any changes to Historic TRACE Data in a Regulatory Notice (or an equivalent publication).

Fees

In Rule 7730(d)(1), FINRA incorporates fees for Historic TRACE Data that apply to financial services professionals, such as broker-dealers and data vendors, and to Non-Professionals. Corporate bond TRACE-Eligible Security transactions will be organized and sold as the Historic Corporate Bond Data Set. After transactions in Agency Debt Securities have been reported to TRACE for more than 18 months, FINRA will organize and sell the aged transactions in Agency Debt Securities as the Historic Agency Data Set.⁵ Fees are payable per data set. Under Rule 7730(d)(1)(B), fees for Historic TRACE Data are reduced for qualifying tax-exempt organizations.

FINRA also will respond to ad-hoc requests for Historic TRACE Data from Non-Professionals—that is, individuals who are not affiliated with or engaged in financial services as defined in Rule 7730(f)(1)(A) through (C) who intend to receive and use the information solely for their personal, non-commercial use. Under Rule 7730(d)(2), if FINRA charges Non-Professionals a fee, it will be limited to cover the administrative and operational costs of responding to such requests.

Historic TRACE Data will be available, and the amendments to Rule 7730 will become effective, on March 31, 2010.

¹See Securities Exchange Act Release No. 61012 (November 16, 2009), 74 FR 61189 (November 23, 2009) (Order Approving File No. SR-FINRA-2007-006).

² Currently, under Rule 6750(b), transaction-level information is not disseminated for a transaction in a TRACE-Eligible Security that is: (1) effected pursuant to Securities Act Rule 144A (a Rule 144A transaction); and (2) a transfer of proprietary securities positions between a member and another member or non-member broker-dealer where the transfer (a) is effected in connection with a merger of one broker-dealer with the other broker-dealer or a direct or indirect acquisition of one broker-dealer by the other broker-dealer or the other broker-dealer's parent company, and (b) is not in furtherance of a trading or investment strategy.

³ Currently, under TRACE dissemination protocols, FINRA does not make publicly available in TRACE Market Data or otherwise the actual number of bonds traded in Investment Grade debt if the par value of a transaction exceeds $5 million and in Non-Investment Grade debt if the par value of a transaction exceeds $1 million. "Investment Grade"and "Non-Investment Grade"are defined for purposes of the Rule 6700 Series in Rule 6710(h) and Rule 6710(i), respectively.

⁴ The term "Non-Professional" is defined in Rule 7730(f)(1) as a natural person who uses TRACE transaction data solely for his personal, non-commercial use (and will not re-distribute such data), and is not engaged as a professional in the financial services industry (i.e., is not licensed in any of the specific capacities in the financial services industry and is not otherwise engaged in financial services as specified in Rule 7730(f)(1)(A) through (C)).

The site www.finra.org/marketdata includes real-time TRACE data provided free of charge to Non-Professionals for personal, noncommercial use. The descriptive information includes, among other things, the bond symbol and issuer name; coupon, maturity and redemption features such as call or put options; and Moody's, S&P and/or Fitch credit ratings, if the security is rated.

Currently, FINRA also releases aggregated data regarding both disseminated and non-disseminated transactions, but in a manner that protects transaction-level non-disseminated data from being ascertained. See, e.g., FINRA's TRACE Fact Book (www.finra.org/TRACE/FactBook) and market aggregate statistics (published daily at www.finra.org/marketdata).

⁵ "Agency Debt Security"is defined in Rule 6710(l).

ATTACHMENT A

HISTORIC TRACE DATA

Historic TRACE Data will include the following transaction-level information:

• bond identifier (FINRA symbol and CUSIP number);

• date/time: execution time for current day's transactions, and execution date and time for reports for as/of trades and reversals;

• price;

• yield;

• quantity (as reported and not subject to caps);

• indicators: when issued; commission; as/of; buy or sell; contra-party (dealer or customer); automatic give up (AGU); special price;

• buyer commission and seller commission;

• buyer capacity (principal or agency) and seller capacity (principal or agency);

• security type;

• dissemination flag; and

• other fields for trade status, days to settlement, additional modifiers or indicators regarding other conditions of sale or relating to reporting, and administrative messages, such as Message Sequence Number.

Additional information about the fields and data elements is available in "Historic TRACE Data: Enhanced Historical Time and Sales—Trade Record File Layout"in the Technical Specifications at www.finra.org/trace/historicaldata.

ATTACHMENT B to Regulatory Notice 10-14

New text is underlined; deletions are in brackets.

* * * * *

7730. Trade Reporting and Compliance Engine (TRACE)

The following charges shall be paid by participants for the use of the Trade Reporting and Compliance Engine ("TRACE"):

System Fees	Transaction Reporting Fees	[Market]Data Fees
Level I Trade Report Only Web Browser Access—$20/month per user ID Level II Full Service Web Browser Access—Subscription for a single user ID or the first user ID—$50/month (includes one Data Set); $80/month (includes two Data Sets) Subscription for additional user IDs—$80/month per user ID (includes one Data Set); $140/month per user ID (includes two Data Sets)	Trades up to and including $200,000 par value—$0.475/trade; Trades between $200,001 and $999,999 par value—$0.000002375 times the par value of the transaction (i.e., $0.002375/$1000); Trades of $1,000,000 par value or more—$2.375/trade	Market Data: BTDS Professional Real-Time Data Display—$60/month per terminal per Data Set of Real-Time TRACE transaction data, or a flat fee of $7,500/month per Data Set of Real-Time TRACE transaction data, entitling Professionals to make unlimited internal use of such Data Set(s) on any number of interrogation or display devices.
CTCI/Third Party—$25/month/per firm	Cancel/Correct—$1.50/trade	Market Data: Vendor Real-Time Data Feed—$1,500/month per Data Set of Real-Time TRACE transaction data for receipt of continuous Real-Time TRACE transaction data in such Data Sets, except for qualifying Tax-Exempt Organizations, or $250/month per Data Set of Snapshot Real-Time TRACE transaction data for daily receipt of such Data Set(s).
	"As/of" Trade Late—$3/trade	Market Data: Vendor Real-Time Data Feed—$400/month per Data Set of Real-Time TRACE transaction data for such Data Set(s) for qualifying Tax-Exempt Organizations.
		Market Data: BTDS Non-Professional Real-Time Data Display—No charge.
		Historic TRACE Data: Set-Up Fee—a single fee of $2,000 for development and set-up to receive Historic TRACE Data, except for qualifying Tax-Exempt Organizations.
		Historic TRACE Data: Set-Up Fee—a single fee of $1,000 for development and set-up to receive Historic TRACE Data for qualifying Tax-Exempt Organizations.
		Historic TRACE Data: Fee—$2,000/calendar year per Data Set for receipt of Historic TRACE Data, except for qualifying Tax-Exempt Organizations. The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. The data is enabled for internal use and internal and/or external desktop display distribution. Bulk redistribution of data is not permitted.
		Historic TRACE Data: Bulk Re-Distribution Fee—except for qualifying Tax-Exempt Organizations, $1/CUSIP per calendar year (or part thereof) within a single Data Set of Historic TRACE Data per each recipient of redistributed data; maximum fee per Data Set of $1,000/calendar year (or part thereof) per each recipient of redistributed data.
		Historic TRACE Data: Bulk Re-Distribution Fee—for qualifying Tax-Exempt Organizations, $500/calendar year per Data Set for receipt of Historic TRACE Data. The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. The data is enabled for internal use and internal and/or external desktop display. Bulk redistribution of data is permitted with certain restrictions.

(a) through (b) No Change.

(c) Market Data Fees

Real-Time TRACE transaction data disseminated by FINRA comprises the following databases ("Data Set(s)"): corporate bonds ("Corporate Bonds Data Set") and Agency Debt Securities ("Agency Data Set"). Market data fees are charged for each Data Set. Professionals and Non-Professionals may subscribe to receive one or both Data Sets of Real-Time TRACE transaction data disseminated by FINRA in one or more of the following ways for the charges specified, as applicable. Members, vendors and other redistributors shall be required to execute appropriate agreements with FINRA.

(1) Professional Fees

Professionals may subscribe for the following:

(A) through (B) No Change.

(C) Vendor Real-Time Data Feed Fee of $400 per month per Data Set for Real-Time TRACE transaction data received by a Tax-Exempt Organization as defined in Rule 7730[(c)].[for the] A Tax-Exempt Organization qualifies to receive Real-Time TRACE transaction data under this paragraph if it does not redistribute such data in bulk, or it redistributes such data in bulk or otherwise at no charge solely to Non-Professionals or other Tax-Exempt Organizations that agree to be subject to the same restrictions.[to use solely to provide Non-Professionals access to such Data Set(s) of Real-Time TRACE transaction data at no charge.]

(D) A natural person otherwise subject to market data fees under Rule 7730[(c)] is not subject to such fees when he or she accesses and uses TRACE transaction data solely for his or her personal, non-commercial use.

(2) No Change.

[(3) Definitions]

[(A) "Non-Professional"—As used in Rule 7730(c) 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. As used in Rule 7730(c) a "Non-Professional" is not:]

[(i) registered nor qualified in any capacity with the SEC, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association, nor an employee of the above and, with respect to any person identified in this subparagraph i., uses TRACE transaction data for other than personal, non-commercial use;]

[(ii) 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), nor an employee of the above and, with respect to any person identified in this subparagraph ii., uses TRACE transaction data for other than personal, non-commercial use;]

[(iii) 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, nor any other employee of a bank, insurance company or such other organization referenced above and, with respect to any person identified in this subparagraph iii., uses TRACE transaction data for other than personal, noncommercial use; nor]

[(iv) engaged in, nor has the intention to engage in, any redistribution of all or any portion of the TRACE transaction data.]

[(B) "Tax-Exempt Organization" as used in Rule 7730(c) means an organization that is described in Section 501(c) of the Internal Revenue Code (26 U.S.C.§501(c)); has received recognition of the exemption from federal income taxes from the Internal Revenue Service; and obtains and uses Real-Time TRACE transaction data solely for redistribution to Non-Professionals, as defined for purposes of Rule 7730(c), at no charge.]

[(C) "Real-Time" as used in Rule 7730(c) shall mean that period of time starting from the time of dissemination by FINRA of transaction data on a TRACE-eligible security, and ending no more than four hours thereafter.]

(d) Historic TRACE Data

Historic TRACE Data comprises the following Data Set(s): corporate bonds ("Historic Corporate Bonds Data Set") and Agency Debt Securities ("Historic Agency Data Set"). Historic TRACE Data fees, except the Set-Up Fee, are charged for each Data Set. Professionals and Non-Professionals may receive Historic TRACE Data provided by FINRA in one or more of the following ways for the charges specified, as applicable. Recipients of Historic TRACE Data shall be required to execute appropriate agreements with FINRA.

(1) Professional Fees

Professionals may subscribe for the following:

(A) Persons or Organizations Other Than Qualifying Tax-Exempt Organizations

(i) Set-Up Fee—a single fee of $2,000 for development and set-up to begin receiving Historic TRACE Data.

(ii) Data Fee—$2,000 per calendar year per Data Set for receipt of Historic TRACE Data. The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. Historic TRACE Data is enabled for internal use and internal and/or external desktop display distribution. Bulk redistribution of such data is not permitted.

(iii) Bulk Re-Distribution Fee—$1 per CUSIP per calendar year (or part thereof) within a single Data Set of Historic TRACE Data per each recipient of re-distributed data, with a maximum fee per Data Set of $1,000 per calendar year (or part thereof) per each recipient of re-distributed data.

(B) Qualifying Tax-Exempt Organizations

A Tax-Exempt Organization qualifies for development and set-up and to receive Historic TRACE Data under this paragraph (d)(1)(B) if it does not re-distribute such data in bulk, or it re-distributes such data in bulk or otherwise at no charge solely to Non-Professionals or other Tax-Exempt Organizations that agree to be subject to the same restrictions.

(i) Set-Up Fee—$1,000 for development and set-up to begin receiving Historic TRACE Data.

(ii) Data and Bulk Re-Distribution Fee—$500 per calendar year per Data Set for receipt of Historic TRACE Data. The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. Historic TRACE Data is enabled for internal use and internal and/or external desktop display, and bulk redistribution, and may be re-distributed subject to the restrictions in paragraph (d)(1)(B).

(2) Non-Professional Fees

If FINRA provides all or any portion of one or both Data Sets of Historic TRACE Data to a Non-Professional, FINRA will charge a cost-neutral fee under Rule 7730(e) comprised solely of the cost of the media and the cost of delivery (e.g., U.S. Postal Service or other requested delivery service).

(e[4]) Other Requests for Data

FINRA may impose and collect charges for data FINRA supplied upon request, where there is no provision elsewhere in this Rule 7730[(c)] for charges for such service or sale.

(f) Definitions

(1) "Non-Professional"—As used in Rule 7730, 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. As used in Rule 7730, a "Non-Professional" is not:

(A) registered nor qualified in any capacity with the SEC, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association, nor an employee of the above and, with respect to any person identified in this subparagraph (A), uses TRACE transaction data for other than personal, non-commercial use;

(B) engaged as an "investment adviser" as that term is defined in Section 202(a)(11) of the Investment Advisers Act (whether or not registered or qualified under that Act), nor 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) 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, nor any other employee of a bank, insurance company or such other organization referenced above and, with respect to any person identified in this subparagraph (C), uses TRACE transaction data for other than personal, non-commercial use; nor

(D) engaged in, nor has the intention to engage in, any redistribution of all or any portion of the TRACE transaction data.

(2) "Tax-Exempt Organization" as used in Rule 7730 means an organization that is described in Section 501(c) of the Internal Revenue Code (26 U.S.C.§501(c)) and has received recognition of the exemption from federal income taxes from the Internal Revenue Service.

(3) "Real-Time" as used in Rule 7730 means that period of time starting from the time of dissemination by FINRA of transaction data on a TRACE-Eligible Security, and ending no more than four hours thereafter.

(4) "Historic TRACE Data" as used in Rule 7730 means historic transaction-level data with elements to be determined from time to time by FINRA in its discretion and as stated in a Regulatory Notice or other equivalent publication. Historic TRACE Data will be delayed a minimum of 18 months and will not include MPID information.

¹ Charges that may be imposed by third parties, such as CTCI line providers, are not included in these fees.

² Under the Vendor Real-Time Data Feed Fee and service, Real-Time TRACE transaction data (or Data Set(s) of such data) may not be used in any interrogation display devices or any systems that permit end users to determine individual transaction pricing.