Finra could adjust caps in Trace reports, share Rule 144A trades

By Susanna Moon

Chicago, Aug. 31 - The Financial Industry Regulatory Authority said it will gather feedback in the next month about sharing more information on Trace-eligible securities trading.

The comment period ends Oct. 10, according to a Finra notice.

One issue is whether Finra should maintain or modify current Trace dissemination caps, under which the actual size, or volume, of a transaction over a certain par value is not displayed in disseminated real-time Trace transaction data.

Also, Finra questions whether it should start disseminating trades in Trace-eligible Rule 144A securities and the scope and manner of that.

Distributing data on Rule 144A securities might improve the quality of executions and valuations, Finra said.

Questions about the notice should be directed to Elliot R. Levine, associate vice president and counsel, transparency services, at 202 728-8405, or Sharon Zackula, associate vice president and associate general counsel, office of general counsel, at 202 728-8985.

Background

Finra noted that, as part of the initial Trace implementation in July 2002, it established dissemination protocols that included certain caps. Disseminated Trace transaction data includes price, time of execution, size and other information. The size disseminated is the total par value of the trade, subject to the limits of the applicable dissemination cap.

For investment-grade securities and agency debt securities, the current dissemination cap is $5 million, and a transaction in excess of $5 million is disseminated as "$5MM+."

For non-investment grade securities, the current dissemination cap is $1 million, and a transaction in excess of $1 million is disseminated as "$1MM+."

Finra recently announced additional caps as part of the dissemination of transaction information on agency pass-through mortgage-backed securities traded to be announced. Finra will begin disseminating TBA transactions on Nov. 5.

For TBA transactions eligible "for good delivery," the dissemination cap is $25 million, and a transaction in excess of $25 million will be disseminated as "$25MM+."

For TBA transactions "not for good delivery," the dissemination cap is $10 million, and a transaction in excess of $10 million will be disseminated as "$10MM+."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.