On August 10, the Financial Industry Regulatory Authority issued Regulatory Notice 16-30, which reminds member firms of their obligations to accurately enter a transaction’s “time of execution” on Trade Reporting and Compliance Engine (TRACE) reports. FINRA Rule 6730(c) (Transaction Information to Be Reported) requires “parties to a transaction” involving TRACE-eligible securities to report the transaction’s “time of execution”. The “time of execution” is generally deemed to occur when the parties to the transaction agree to all of the material terms needed to calculate the dollar price and quantity of the transaction.
The notice clarified that the “time of execution” is not necessarily the time when an electronic notification of the transaction is sent to a counterparty. Rather, it is the time when there has been a sufficient “meeting of the minds” regarding the material terms of the transaction, such as price and quantity. The notice also outlined the proper way to determine the “time of execution” for transactions occurring after TRACE system hours or on a non-business day and for transactions involving new issues and TRACE-eligible securities that are trading “when issued” on a yield basis.
Regulatory Notice 16-30 is available here.