The Financial Industry Regulatory Authority proposed a rule change to amend FINRA Rule 6700 Series to require member firms to identify transactions with non-member affiliates in Trade Reporting and Compliance Engine reports using a new contra-party identifier. The proposed rule change also will require member firms to flag transactions with non-member affiliates (i) when both parties are trading for their own accounts and (ii) when such transactions occur within the same day, price and security as a transaction with another counterparty. Such transactions are generally back-to-back trades between (a) the FINRA member firm and a counterparty and (b) the FINRA member firm and its non-member affiliate. FINRA seeks to suppress the dissemination of such non-member affiliate transactions, as they are not arms-length transactions, are not economically distinct and fail to provide useful pricing information. FINRA believes the proposed rule change will increase the transparency of disseminated trade information.
The proposed rule change will be effective within 45 days of its publication in the Federal Register on December 11.
Click here to read the proposed rule change.