Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, March 9, 2009

FINRA Proposes Expansion in TRACE Reporting

FINRA proposes a major expansion of its Trade Compliance and Reporting Engine (TRACE) to include debt issued by federal government agencies, government corporations and government sponsored enterprises (GSEs), as well as primary market transactions in new issues. Currently, TRACE reports real-time pricing and trade volume information only on corporate bonds trading in the secondary market.  Approval of the proposal by the SEC would nearly double the number of bonds included in TRACE reporting. Roughly 25,000 government agency, corporation and GSE bonds would become TRACE-eligible, in addition to the approximately 30,000 corporate bonds now on TRACE. Retail investor activity in the government agency and GSE bond markets is believed to be comparable to retail activity in the corporate bond market.

TRACE was established in July 2002 to bring transparency to the corporate bond market. It was fully phased in by February 2005, offering real-time, public dissemination of transaction and price data for all corporate bond trades — including intra-day transaction data and aggregate end-of-day statistics (most active bonds, total volume, advances and declines and new highs and lows).  Retail investors have free access to this data at the FINRA website.

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