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Fixed Income

FINRA.org | Fixed Income

FINRA plays an important role in regulating and providing transparency to the fixed income securities markets. For example, we operate and enforce FINRA rules regarding the Trade Reporting and Compliance Engine (TRACE®), and enforce, for our member firms, federal securities regulations governing fixed income, including those promulgated by the Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB).

Most recently, the SEC designated FINRA as the examination and enforcement authority for municipal advisors that are FINRA members. Firms selling municipal securities or performing municipal advisory services must register with the MSRB.

FINRA Member Regulation is responsible for examining all FINRA members involved in the fixed income markets for compliance with applicable rules and regulations. Among other things, Member Regulation reviews firms' fixed-income sales practices to determine whether they have dealt fairly with customers and that their registered representatives are properly qualified and supervised, and ensures they are in compliance with net capital requirements.

Market Regulation, meanwhile, monitors trading activity in more than 2.5 million individual debt securities, including corporate bonds, municipal securities, government agency securities, U.S. Treasury Securities and mortgage- and asset-backed securities, for potential manipulative activity and to ensure customers receive fair prices.

Trade Reporting and Compliance Engine (TRACE)

TRACE, introduced in 2002, captures real-time consolidated transaction data for all eligible public and private (144A) corporate bonds—including investment grade, high yield and convertible debt—agency debt and U.S. Treasury Securities. Securitized products, such as mortgage-backed securities (MBS), traded in specified pool or To Be Announced (TBA) transactions also are part of the TRACE system.

As a result, TRACE brings transparency to the bond market. Individual investors and market professionals can access information on all over-the-counter (OTC) public and private activity representing more than 99 percent of total U.S. corporate bond debt, more than 16,000 agency debt securities, and more than one million asset and mortgage-backed securities.

FINRA licenses TRACE data to TRACE vendors and subscribers. The TRACE Content Licensing section provides information about data licensing options, agreements, technical specifications, and market data policies.

Learn more about TRACE

CONTACT OGC

FINRA's Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see FINRA OGC Interpretative Guidance for more information.

OGC staff contacts:
Racquel Russell and Alex Ellenberg
FINRA, OGC
1735 K Street, NW
Washington, DC 20006
(202) 728-8000

Regulatory Notice 17-24
FINRA Issues Guidance on the Enhanced Confirmation Disclosure Requirements in Rule 2232 for Corporate and Agency Debt Securities
July 12, 2017
Regulatory Notice 15-46
Guidance on Best Execution Obligations in Equity, Options and Fixed Income Markets
November 20, 2015
Regulatory Notice 15-36
FINRA Requests Comment on a Revised Proposal Requiring Confirmation Disclosure of Pricing Information in Corporate and Agency Debt Securities Transactions
October 12, 2015
Regulatory Notice 15-31
SEC Approves Rule to Address Conflicts of Interest Relating to the Publication and Distribution of Debt Research Reports
August 26, 2015
Regulatory Notice 15-27
Guidance Relating to Firm Short Positions and Fails-to-Receive in Municipal Securities
July 30, 2015
Regulatory Notice 15-03
FINRA Requests Comment on Proposal to Require Alternative Trading Systems to Submit Quotation Information Relating to Fixed Income Securities to FINRA for Regulatory Purposes
February 6, 2015
Regulatory Notice 10-41
FINRA Reminds Firms of Their Sales Practice and Due Diligence Obligations When Selling Municipal Securities in the Secondary Market
September 20, 2010
Regulatory Notice 09-35
FINRA Recommends Review of Municipal Securities Activities
June 30, 2009
Notice to Members 06-36
NASD and NYSE Joint Interpretive Guidance on Fixed Income Research
July 31, 2006
Podcast
The Annual Priorities Letter: A Fresh Take
The Annual FINRA Priorities Letter is a great resource for firms looking to improve their compliance, supervisory and risk management programs. But the 2019 Letter is a little different. Tune into this episode of FINRA Unscripted to learn more about the changes to the letter and to drill into a few key topics.
January 22, 2019
Guidance
Phone-In Workshop and WebEx Presentation Recording: Markup/Markdown Analysis Report
In the near-future, FINRA is introducing a new TRACE Markup/Markdown Analysis Report on the Report Center. The report displays a firm's markup and markdown behavior compared to the industry and provides the underlying details used to calculate the markup or markdown.
May 23, 2018
Targeted Examination Letter
Targeted Examination Letter on the Retail Sale of “Gas Bonds”
FINRA is reviewing transactions with retail customers of certain fixed income products known as “Gas Bonds.”
June 1, 2009
Report from FINRA Board of Governors Meeting – July 2018
July 25, 2018
FINRA Posts Guidance on Enhanced Price Disclosure to Retail Investors for Corporate and Agency Bonds
July 12, 2017
FINRA Receives SEC Approval for Enhanced Price Disclosure to Retail Investors for Fixed-Income Securities
November 18, 2016
FINRA Receives SEC Approval to Require Member Firms to Report Treasury Transactions to TRACE
October 19, 2016
FINRA Issues Investor Alert, Bond Liquidity—Factors to Consider and Questions to Ask
July 10, 2015
FINRA Fines Merrill Lynch $1.9 Million and Orders Restitution of $540,000 for Fair Pricing and Supervisory Violations Related to Purchases of Distressed Securities
December 16, 2014
FINRA and MSRB Release Proposals to Provide Pricing Reference Information for Investors in Fixed Income Markets
November 17, 2014
FINRA Board Approves Series of Equity Trading and Fixed Income Rulemaking Items
September 19, 2014
FINRA Fines Oppenheimer $675,000 and Orders Restitution of More Than $246,000 for Charging Unfair Prices in Municipal Securities Transactions and for Supervisory Violations
December 9, 2013
FINRA Fines Morgan Stanley $1 Million and Orders Restitution of $188,000 for Best Execution and Fair Pricing Violations in Customer Bond Transactions
August 22, 2013
FINRA Fines StateTrust Investments $1 Million and Orders $353,000 in Restitution for Charging Unfair Prices in Bond Transactions
June 26, 2013
FINRA Sanctions David Lerner Associates $14 Million for Unfair Practices in Sale of Apple REIT Ten and for Charging Excessive Markups on Municipal Bonds and CMOs
October 22, 2012
FINRA Fines UBS Financial Services $2.5 Million; Orders UBS to Pay Restitution of $8.25 Million for Omissions That Effectively Misled Investors in Sales of Lehman-Issued 100% Principal-Protection Notes
April 11, 2011
Investor Alert
Bond Liquidity—Factors to Consider and Questions to Ask
If you're like many investors, your portfolio contains bonds. When you purchased those investments, you may not have given much thought to whether you'd be able to sell them when you want to. FINRA is issuing this alert to educate investors about bond liquidity, and the potential for decreased liquidity and investment losses for those who sell their bonds before maturity at a time of market stress.
Investor Education
Bonds
A bond is a loan an investor makes to a corporation, government, federal agency or other organization in exchange for interest payments over a specified term plus repayment of principal at the bond’s maturity date. There are a wide variety of bonds including Treasuries, agency bonds, corporate bonds, municipal bonds and more. Likewise there are many types of bond mutual funds.
Investor Education
Bonds in a Bull Market? 7 Tips Before You Invest
It’s often during long bull markets that an asset mix gets out of sync and calls for rebalancing. When investments in stocks have been rising, rebalancing generally means considering shifting assets to bonds. Here are 7 tips to consider before you invest in bonds or bond funds.
Investor Alert
Catastrophe Bonds and Other Event-Linked Securities
Where there is uncertainty, there are always bets-the question is who wins. From horse racing to the price of gold, people have always speculated on uncertainty. FINRA is issuing this alert to inform investors about event-linked securities-financial instruments that allow investors to speculate on a variety of events, including catastrophes such as hurricanes, earthquakes, and pandemics.
Investor Alert
Duration—What an Interest Rate Hike Could Do to Your Bond Portfolio
If you own bonds or have money in a bond fund, there is a number you should know. It is called duration. Although stated in years, duration is not simply a measure of time. Instead, duration signals how much the price of your bond investment is likely to fluctuate when there is an up or down movement in interest rates. The higher the duration number, the more sensitive your bond investment will be to changes in interest rates.
Investor Education
Fixed Annuities
With a fixed annuity, the insurance company guarantees both the rate of return (the interest rate) and the payout to the investor. Although the word “fixed” might suggest otherwise, the interest rate on a fixed annuity can change over time.
Investor Education
Market Data Center Bonds Guide
This short guide illustrates how to use the different features and functions of the Bonds page, which includes general bond market information such as news, benchmark yields, and corporate bond market activity and performance information, descriptive data on U.S. Treasury, Agency, Corporate and Municipal Bonds, Credit Rating Information from major rating agencies, and price information.
Investor Alert
Municipal Bonds—Important Considerations for Individual Investors
FINRA is re-issuing this Alert to remind investors that while municipal bonds have historically been considered relatively conservative investments, munis, like all bond investments, carry risk. The updated Alert links to a new Information At-a-Glance resource that provides investors who are thinking about investing in municipal bonds with key information to make better informed choices.
Investor Education
The One-Minute Guide to Zero Coupon Bonds
Most bonds make regular interest or "coupon" payments—but not zero-coupon bonds. Zeros, as they are sometimes called, are bonds that pay no coupon or interest payment. Instead of getting interest payments, you buy the bond at a discount from the face value of the bond, and are paid the face amount when the bond matures.

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Related Links

Trade Reporting and Compliance Engine (TRACE)
Market Data Center
Municipal Securities Rulemaking Board (MSRB)
MSRB Investor Education
MSRB Electronic Municipal Market Access (EMMA)
SEC Office of Municipal Securities