FINRA Simplifies TRACE Reporting for Certain Firms: What You Need to Know

Overview of FINRA Regulatory Notice 25-17

The Financial Industry Regulatory Authority (FINRA) has adopted amendments to Rule 6730 (Transaction Reporting) that introduce a more efficient way for certain firms to report trade allocations.

Specifically, firms that operate as both a broker-dealer and investment adviser (BD/IA) will now have the option to report certain trades using a single aggregated TRACE report, rather than reporting each allocation separately.

The rule becomes effective June 8, 2026, and is designed to reduce operational burden without changing overall TRACE reporting requirements.

What Is Changing Under Rule 6730?

Under current rules, if a BD/IA executes a trade and allocates portions of that trade across multiple managed accounts, it must:

• Report each allocation individually to TRACE

The new amendment introduces an alternative:

• Firms may report those allocations in one aggregated TRACE report, provided certain conditions are met

This change is intended to simplify reporting workflows for firms that routinely execute aggregated orders.

How Aggregated TRACE Reporting Works

Under new Supplementary Material .08, firms can:

• Submit a single TRACE report for an aggregated allocation
• Include the total trade size
• Report the number of managed customer accounts receiving allocations
• Ensure all allocations share the same execution time and price

Importantly, reporting must still occur within standard TRACE timeframes under Rule 6730(a).

Example in Practice

To illustrate:

• A BD/IA executes a $5 million bond purchase
• The trade is allocated across 20 managed accounts
• Each account receives $250,000
• All allocations occur at the same price with no markup

Under the new rule:

• The purchase is reported as usual
• The allocation can be reported as one aggregated transaction, including the number of accounts (20)

This significantly reduces reporting duplication while maintaining transparency.

Key Requirements Firms Must Follow

While the process is simplified, firms must still ensure:

• Allocations have the same execution time and price
• Reports are submitted within TRACE deadlines
• The number of allocated accounts is clearly disclosed
• All standard TRACE data fields remain complete

Firms should review these requirements as part of their broader FINRA compliance programs.

Important: This Change Is Optional

The new reporting method is not mandatory.

Firms can choose to:

• Continue reporting allocations individually, or
• Transition to the aggregated reporting model

This flexibility allows firms to adopt the approach that best fits their operational structure.

What Is Not Changing

FINRA emphasized that:

• TRACE reporting rules remain largely unchanged
• The existing requirement to report trades within 15 minutes remains in place
• FINRA is not moving forward with reducing reporting time to one minute

This provides firms with continuity in reporting expectations while introducing targeted efficiency improvements.

What This Means for BD/IAs

For firms that qualify, this update presents an opportunity to:

• Reduce operational reporting burden
• Improve efficiency in allocation workflows
• Simplify TRACE submission processes

However, firms must ensure their systems, controls, and supervisory procedures can support aggregated reporting accurately.

Many firms will want to evaluate these updates within their broader broker-dealer compliance services framework.

Preparing for the June 2026 Effective Date

Firms should begin preparing now by:

• Reviewing current TRACE reporting workflows
• Identifying eligible allocation scenarios
• Updating supervisory procedures and documentation
• Testing systems for aggregated reporting capability

These updates should also be incorporated into  regulatory exam preparation to ensure readiness during future reviews.

Key Takeaways

• FINRA is introducing optional aggregated TRACE reporting for BD/IAs
• The goal is to streamline allocation reporting, not change core requirements
• Reporting must still meet timing, accuracy, and disclosure standards
• Firms should prepare ahead of the June 8, 2026 effective date

FAQ

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