FINRA Regulatory Notice 25-17: Streamlined TRACE Allocation Reporting for BD/IAs

The Financial Industry Regulatory Authority (FINRA) has adopted amendments to Rule 6730 (Transaction Reporting) through the new Regulatory Notice 25-17, introducing a streamlined TRACE reporting option for firms that operate as both a broker-dealer and an investment adviser (BD/IA).

Published on December 4, 2025, and effective June 8, 2026, the amendments are designed to reduce operational burden while maintaining transparency and market integrity. Importantly, FINRA is not otherwise changing its TRACE reporting requirements.

Overview of the Rule 6730 Amendments

Under the amendments to Rule 6730, FINRA permits BD/IAs to report certain allocations of TRACE-eligible securities in an aggregated manner, rather than submitting separate TRACE reports for each managed customer account.

This alternative reporting-framework applies when:

• A BD/IA executes an aggregate order
• Portions of that order are allocated to multiple managed customer accounts
• All allocations occur at the same price and time of execution
• No mark-ups or commissions are applied to the allocations

The change is intended to streamline reporting for firms that manage allocations internally, while preserving regulatory oversight.

Firms reviewing these changes may want to assess them alongside broader broker-dealer compliance services.

What Were TRACE Allocation Reporting Requirements?

Prior to these amendments, when a BD/IA executed an aggregate order and subsequently allocated portions of that order to multiple managed customer accounts, the firm was required to:

• Report each individual allocation separately to TRACE
• Submit each report within the applicable TRACE timeframes
• Maintain full supervisory and recordkeeping controls for each allocation

This process often created operational inefficiencies for firms managing large volumes of allocations.

The New Aggregated Reporting Alternative (Supplementary Material .08)

New Supplementary Material .08 to Rule 6730 provides BD/IAs with the option to report qualifying allocation transactions in a single aggregated TRACE trade report.

Under this framework, a BD/IA may:

• Report the aggregate sale of TRACE-eligible securities to managed accounts in one TRACE report
• Include the number of managed customer accounts receiving allocations
• Reflect allocations executed at the same price and time
• Submit the report within the standard TRACE reporting deadlines outlined in Rule 6730(a)

This option is completely voluntary. Firms may continue reporting individual allocations if they prefer.

Like always, supervisory systems should be reviewed to ensure proper oversight, particularly within FINRA compliance programs.

Illustrative Example of Aggregated TRACE Reporting

To demonstrate how the new reporting alternative works in practice:

• A BD/IA executes a $5 million par value bond purchase
• The bonds are allocated to 20 managed customer accounts
• Each account receives $250,000
• All allocations occur at the same price with no mark-up or commission

Under the amended rule:

• The BD/IA reports the original $5 million purchase as it does today
• The BD/IA may then report the sale to the 20 managed accounts as one aggregated TRACE report
• The report must include the number of managed accounts (20) receiving allocations

FINRA will disseminate:

• The aggregate transaction size
• The number of managed accounts
• Subject to existing TRACE transaction size caps

Key Requirements Firms Must Continue to Meet

While the amendments introduce flexibility, firms must still ensure that:

• Aggregated reports are submitted within TRACE reporting timeframes
• Allocations reflect the same execution price and time
• Supervisory procedures address the use of aggregated reporting
• Records clearly support allocation methodologies and account counts

These elements should be incorporated into a firm’s compliance expertise and supervisory framework. 

What Is Not Changing Under Regulatory Notice 25-17

FINRA emphasized that the amendments are limited in scope. Notably:

• TRACE reporting requirements for non-allocation trades remain unchanged
• FINRA is not reducing the TRACE reporting outer limit
• Firms must continue reporting TRACE-eligible securities as soon as practicable, but no later than 15 minutes after execution during TRACE system hours

FINRA noted that, following engagement with firms, additional concerns were raised regarding shorter reporting timelines. As a result, the current reporting standard remains in place.

Effective Date and Planning Considerations

The amendments to Rule 6730 become effective on June 8, 2026. Firms that qualify as BD/IAs should consider:

• Whether aggregated TRACE reporting aligns with their allocation practices
• Updates to written supervisory procedures
• Training for trading, operations, and compliance staff
• Coordination between broker-dealer and advisory functions

Proactive planning can help firms implement changes smoothly and avoid reporting issues during regulatory reviews. Many firms address these updates as part of broader regulatory exam preparation.

Aligning With FINRA Forward Modernization Efforts

At Quadrant Regulatory Group, we help BD/IAs interpret regulatory changes and assess how new rules impact reporting obligations, supervisory systems, and compliance programs.

Have more questions about how Regulatory Notice 25-17 may affect your TRACE reporting practices? Contact Quadrant Regulatory Group to discuss implementation considerations and compliance readiness.