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.
2022 Report on FINRA’s Examination and Risk Monitoring Program
The Firm Short Positions and Fails-to-Receive in Municipal Securities section of the 2022 Report on FINRA’s Risk Monitoring and Examination Activities (the Report) informs member firms’ compliance programs by providing annual insights from FINRA’s ongoing regulatory operations, including (1) relevant regulatory obligations and related considerations, (2) exam findings and effective practices, and (3) additional resources.
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 Securities
- SEC Approves Amendments to Require Mark-Up/Mark-Down Disclosure on Confirmations for Trades With Retail Investors in Corporate and Agency Bonds
- Guidance on Best Execution Obligations in Equity, Options and Fixed Income Markets
- FINRA Requests Comment on a Revised Proposal Requiring Confirmation Disclosure of Pricing Information in Corporate and Agency Debt Securities Transactions
- SEC Approves Rule to Address Conflicts of Interest Relating to the Publication and Distribution of Debt Research Reports
- Guidance Relating to Firm Short Positions and Fails-to-Receive in Municipal Securities
- FINRA Requests Comment on Proposal to Require Alternative Trading Systems to Submit Quotation Information Relating to Fixed Income Securities to FINRA for Regulatory Purposes
- FINRA Reminds Firms of Their Sales Practice and Due Diligence Obligations When Selling Municipal Securities in the Secondary Market
- FINRA Recommends Review of Municipal Securities Activities
- NASD and NYSE Joint Interpretive Guidance on Fixed Income Research
- 2022 Report on FINRAs Examination and Risk Monitoring ProgramThe Firm Short Positions and Fails-to-Receive in Municipal Securities section of the 2022 Report on FINRA’s Risk Monitoring and Examination Activities (the Report) informs member firms’ compliance programs by providing annual insights from FINRA’s ongoing regulatory operations, including (1) relevant regulatory obligations and related considerations, (2) exam findings and effective practices, and (3) additional resources.February 09, 2022
- 2019 Exam Findings ReportThe Fixed Income Mark-up Disclosure section of the 2019 Report on Exam Findings informs member firms’ compliance programs by describing recent findings and observations from FINRA’s examinations, and, in certain cases, also providing a summary of effective practices.October 16, 2019
- 2018 Exam Findings ReportThe Fixed Income Mark-Up Disclosure section of the 2018 Report on Exam Findings informs member firms’ compliance programs by describing recent findings and observations from FINRA’s examinations, and, in certain cases, also providing a summary of effective practices.December 07, 2018
- 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 AlertIf 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 EducationA 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 EducationWith 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 EducationThis 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.