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.
FINRA's Fixed Income Regulation (FIR) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with guidance relating to FINRA’s enforcement of MSRB rules.
- FINRA Issues Guidance on the Enhanced Confirmation Disclosure Requirements in Rule 2232 for Corporate and Agency Debt Securities07/12/2017
- SEC Approves Amendments to Require Mark-Up/Mark-Down Disclosure on Confirmations for Trades With Retail Investors in Corporate and Agency Bonds02/15/2017
- Guidance on Best Execution Obligations in Equity, Options and Fixed Income Markets11/20/2015
- FINRA Requests Comment on a Revised Proposal Requiring Confirmation Disclosure of Pricing Information in Corporate and Agency Debt Securities Transactions10/12/2015
- SEC Approves Rule to Address Conflicts of Interest Relating to the Publication and Distribution of Debt Research Reports08/26/2015
- Guidance Relating to Firm Short Positions and Fails-to-Receive in Municipal Securities07/30/2015
- FINRA Requests Comment on Proposal to Require Alternative Trading Systems to Submit Quotation Information Relating to Fixed Income Securities to FINRA for Regulatory Purposes02/06/2015
- FINRA Reminds Firms of Their Sales Practice and Due Diligence Obligations When Selling Municipal Securities in the Secondary Market09/20/2010
- FINRA Recommends Review of Municipal Securities Activities06/30/2009
- NASD and NYSE Joint Interpretive Guidance on Fixed Income Research07/31/2006
- GuidanceIn 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
- GuidanceOn this free, on-demand recording of a WebEx presentation, FINRA staff members discuss new and updated fixed income-related Report Cards.November 25, 2015
- Targeted Examination LetterFINRA is reviewing transactions with retail customers of certain fixed income products known as “Gas Bonds.”June 01, 2009
- FAQPreliminary Note: FINRA recently adopted enhanced confirmation disclosure requirements for corporate and agency bonds.
- FINRA Posts Guidance on Enhanced Price Disclosure to Retail Investors for Corporate and Agency BondsJuly 12, 2017
- FINRA Receives SEC Approval for Enhanced Price Disclosure to Retail Investors for Fixed-Income SecuritiesNovember 18, 2016
- October 19, 2016
- 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 SecuritiesDecember 16, 2014
- FINRA and MSRB Release Proposals to Provide Pricing Reference Information for Investors in Fixed Income MarketsNovember 17, 2014
- 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 ViolationsDecember 09, 2013
- FINRA Fines Morgan Stanley $1 Million and Orders Restitution of $188,000 for Best Execution and Fair Pricing Violations in Customer Bond TransactionsAugust 22, 2013
- FINRA Fines StateTrust Investments $1 Million and Orders $353,000 in Restitution for Charging Unfair Prices in Bond TransactionsJune 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 CMOsOctober 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 NotesApril 11, 2011
- Investor EducationWhen securities are listed on a centralized exchange, such as the New York Stock Exchange or Nasdaq, transaction information such as price and trade history is readily available to investors through the exchange. But how can you get information about bonds and other fixed income securities that are not listed on a national securities exchange? Information about these securities, known as over-the-counter (OTC) debt securities, is provided by TRACE®—the Trade Reporting and Compliance Engine®.