Newest TRACE amendment extends definition of “TRACE-Eligible Securities”

By Ken Somma

In 2001, the Securities and Exchange Commission approved the Trade Reporting and Compliance Engine (TRACE). This rule requires all member firms to report secondary market transactions in eligible over-the-counter fixed income securities to FINRA. Unlike equities, over-the-counter securities trades are private transactions between counterparties and were not previously publicly reported. This lack of reporting provided very little to no price execution transparency to the marketplace.

Over the years, there have been many reporting requirement changes and amendments to the original 2001 rule. The latest change, effective July 10, 2017, will require FINRA member firms to report transactions executed in Treasury securities to TRACE as defined in Regulatory Notice 16-39.

The amendment proposal extends the definition of “TRACE-Eligible Securities” to include products that meet the definition of a “US Treasury Security.”  This definition will only include securities that are marketable (e.g. treasury bills, notes, bonds, separated tradable principal and interest components [STRIPS], and treasury inflation protected securities [TIPS]). The rule excludes all savings bonds, which have been removed from the definition of “US Treasury Securities”.

It can be a challenge to navigate all these changes and ensure your reporting is thorough and compliant. Lightning by SS&C takes the complexity and manual intervention out of all regulatory reporting requirements. Its comprehensive paperless trading module automates all front-, middle- and back-office elements of fixed income securities processing. It is fully TRACE compliant and is flexible enough to be deployed as a standalone solution for TRACE or an end-to-end solution to manage an entire trade lifecycle. It easily connects to trade execution platforms (e.g. Bloomberg) and is clever enough to understand the report timing requirement for each CUSIP traded.

SS&C has been successfully delivering financial software & technology for more than 30 years. We are a trusted, experienced partner with a strong commitment to ensuring our clients fully understand and are completely compliant with the latest regulatory changes.

To learn how we can help you stay on top of the latest changes or for more information on Lightning, download our brochure or contact us for a demo at solution@sscinc.com or 800-234-0556.

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