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FINRA Manual
Corporate Organization Notices
2004
04-95 NASD Issues Reminder to Members Regarding the Municipal Securities Rulemaking Board's Implementation of Real-Time Reporting and Dissemination of Transactions in Municipal Securities
04-92 Amendments to Section 13 of Schedule A to the NASD By-Laws Governing the Review Charge for Advertisement, Sales Literature, and Other Such Material Filed with or Submitted to NASD
04-91 NASD Has Filed for Immediate Effectiveness Amendments to Section 7 of Schedule A to the NASD By-Laws Governing Fees for Filing Documents Pursuant to the Corporate Financing Rule
04-90 NASD Issues Interpretive Guidance Regarding Various Trade Reporting and Compliance Engine (TRACE) Rules
04-89 NASD Alerts Members to Concerns When Recommending or Facilitating Investments of Liquefied Home Equity
04-86 SEC Approves NASD Interpretive Material to Rule 2210 Regarding Member Firms' Use of Investment Analysis Tools
04-85 SEC Approves Amendments to Rule 6954(c) Requiring ECNs to Capture and Report Routed Order Identifier Information to OATS
04-83 NASD Requests Comment on Whether to Propose New Rule That Would Address Conflicts of Interest When Members Provide Fairness Opinions in Corporate Control Transactions (Comment Period Expired January 10, 2005)
04-80 NASD Seeks Comment on Proposed Changes to the OATS Rules (Comment Period Expired January 20, 2005)
04-79 SEC Approves New Chief Executive Officer Compliance Certification and Chief Compliance Officer Designation Requirements
04-78 SEC Approves Amendments to Rule 1120 to Eliminate Exemptions from the Continuing Education Regulatory Element Requirements
04-77 SEC Announces Approval of Amendment to NASD's Minor Rule Violation Plan (MRVP) to Include Failure to Timely Submit Amendments to Form U5
04-74 Broker-Dealer, Investment Adviser Firm, Agent and Investment Adviser Representative Renewals for 2005
04-73 Amendments to Section 4 of Schedule A to the NASD By-Laws Governing Qualification Examination Fees
04-72 Impermissible Use of Negative Response Letters for the Transfer of Mutual Funds and Variable Annuities (Changes in Broker-Dealer of Record)
04-69 Mandatory Use of Combined New Order/Route and Combined New Order/Execution Reports Delayed until April 4, 2005; Clarification of Combined Reporting Format Requirements for Related Order Information Submitted by Multiple Order Sending Organizations
04-68 SEC Approves Rule Amendment Requiring That ADF Market Participant Provide Advance Written Notice When Denying Access
04-66 NASD Reminds Member Firms of Their Obligations to Ensure the Accuracy and Integrity of Information Entered into Order-Routing and Execution Systems
04-65 SEC Approves Amendments to TRACE Rules to Disseminate Transaction Information on All TRACE-Eligible Securities, Modify and Supplement Defined Terms, and Enhance Notification Requirements
04-64 SEC Announces Immediate Effectiveness of the Deletion of IM-2210-4(b) and Rule Series 3400 as Obsolete
04-59 SEC Announces Immediate Effectiveness of Amendments to the Rule 9600 Series Establishing Waiver Subcommittee of the National Adjudicatory Council
04-58 SEC Grants Accelerated Approval of Rule Change Relating to Transfers of Specifically Designated Customer Account Assets through the Automated Customer Account Transfer Service (ACATS) (This version was updated on 8/19/04)
04-57 NASD Extends Jurisdiction to Suspend Formerly Associated Persons Who Fail to Pay Arbitration Awards
04-54 Operative Date of Short Sale ACT Reporting Requirements for OTCBB and Other Non-NASDAQ OTC Equity Securities Extended to September 24, 2004
04-53 SEC Approves Amendments to IM-10104 and Rules 10306 and 10319 Regarding "Last Minute" Adjournments of Arbitration Hearings
04-51 SEC Approves Amendments to TRACE Rule 6230 to Reduce the Reporting Period to 30 Minutes on October 1, 2004, and to 15 Minutes on July 1, 2005
04-50 Treatment of Commodity Pool Trail Commissions under Rule 2810 (Direct Participation Programs Rule) (The effective date has been delayed until 10/12/04)
04-49 SEC Approves Amendments to Rules 10308 and 10312 Regarding Arbitrator Classification, Disclosures, and Challenges
04-48 SEC Approves Amendments to Rule 6954 Requiring Members to Record and Report Execution Price and Firm Capacity in OATS Execution Reports
04-46 Mandatory Changes to OATS New Order, Combined New Order/Route, and Combined New Order/Execution Reports
04-45 NASD Seeks Comment on Proposed Rule to Impose Specific Sales Practice Standards and Supervisory Requirements on Members for Transactions in Deferred Variable Annuities
04-44 Impermissible Confidentiality Provisions and Complaint Withdrawal Provisions in Settlement Agreements
04-43 Members' Use of Affidavits in Connection with Stipulated Awards and Settlements to Obtain Expungement of Customer Dispute Information under Rule 2130
04-42 NASD Informs Members of Upcoming District Committee and District Nominating Committee Elections
04-41 NASD Announces Nominees for Regional Industry Member Vacancies on the National Adjudicatory Council
04-39 SEC Approves Amendments to Clarify the Term "TRACE-Eligible Security" and to Expand the Scope of an Exemption from TRACE Reporting Requirements
04-38 NASD Reminds Member Firms of Their Obligations to Adhere to Credit Extension Requirements and Day Trading Margin Rules
04-37 SEC Approves Rules Requiring Members to Create Business Continuity Plans and Provide Emergency Contact Information
04-33 Limited Net Capital Relief from the Reclassification of Certain Equity as Liabilities in Accordance with Statement of Financial Accounting Standards No. 150 (Action required by 05/10/04)
04-32 SEC Approves Amendments to Require Quarterly Review and Update of Executive Representative Contact Information
04-31 NASD Announces Nomination Procedures for Regional Industry Member Vacancies on the National Adjudicatory Council
04-29 NASD Informs Members of Upcoming District Committee and District Nominating Committee Elections (This version corrects certain administrative and other non-substantive text)
04-28 SEC Approves Amendments to Repeal Rule 4613A(e)(1) Requiring Same-Priced Quotations on Multiple Markets
04-26 NASD Reminds Members of Their Duty to Ensure Proper Application of Discounts in Sales Charges to Sales of Unit Investment Trusts (UITs)
04-25 SEC Approves New NASD Research Analyst Qualification and Examination Requirements (Series 86/87)
04-24 SEC Announces Immediate Effectiveness of IM-3150 Governing Exemptions from the Reporting Requirements of NASD Rule 3150
04-23 NASD Seeks Comment On (1) Amending its Minor Rule Violation Plan to Include Failure Timely to Submit Amendments to the Uniform Termination Notice for Securities Industry Registration (Form U5); and (2) Adopting a Rule to Create an Inactive Disclosure
04-22 SEC Approves Amendments to Rule 1120 (Continuing Education Requirements) Regarding Regulatory Element Contact Person
04-21 NASD Provides Further Guidance on Amendments to NASD Rule 3370 — Affirmative Determination Requirements
04-20 IPO Distribution Manager to Replace Compliance Desk; Filings Required for All New Issues as Defined in Rule 2790
04-18 NASD and NYSE Provide Further Guidance on Rules Governing Research Analysts' Conflicts of Interest
04-16 NASD Adopts Rule 2130 Regarding Expungement of Customer Dispute Information From The Central Registration Depository
04-15 SEC Approves Amendments to NASD Rules Concerning Member Participation in the National Do-Not-Call Registry
04-13 SEC Approves Amendments to Rule 2710 (Corporate Financing Rule) and Rule 2720 (Distribution of Securities of Members and Affiliates-Conflicts of Interest)
04-12 Change in Policy of Granting Foreign Deferrals to Registered Supervisors and Principals from the Continuing Education Regulatory Element
04-11 NASD Reminds Members and Associated Persons of Their Duty to File Uniform Submission Agreements
04-10 SEC Approves Amendments to Membership Application and Continuation Rules (Rules 1011, 1014, and 1017)
04-09 SEC Announces Immediate Effectiveness of Amendments to Section 4 of Schedule A to the NASD By-Laws
04-08 Effective Date of Amendments to NASD Rule 3370 (Affirmative Determination Requirements) Extended to April 1, 2004
04-07 NASD Requests Comment on Proposed Amendments to Rules 2710 (Corporate Financing) and 2810 (Direct Participation Programs) (This version corrects certain administrative and other non-substantive text)
04-06 SEC Approves Permanent TRACE Fee Structure and Nine-Month Pilot Program for BTDS Professional Delayed-Time Data Display Fee
04-04 SEC Announces Immediate Effectiveness of Amendments to Section 5 of Schedule A to the NASD By-Laws
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04-06 SEC Approves Permanent TRACE Fee Structure and Nine-Month Pilot Program for BTDS Professional Delayed-Time Data Display Fee
INFORMATIONAL
Trade Reporting and Compliance Engine (TRACE)
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SUGGESTED ROUTING |
KEY TOPICS |
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Legal & Compliance |
Debt Securities |
Executive Summary
The TRACE system became effective on July 1, 2002. Since that time the TRACE fee structure has been operating under a pilot program approved by the SEC that was due to expire on January 31, 2004. On January 15, 2004, the SEC approved a rule change amending Rule 7010(k) to establish a permanent fee structure for TRACE and a nine-month pilot program for the BTDS Professional Delayed-Time Data Display Fee.1
Rule 7010(k), as amended, is set forth in Attachment A. The fee structure is effective as of February 1, 2004.
Questions/Further Information
Questions concerning this Notice may be directed to NASD Market Operations at 866-776-0800, or Kosha K. Dalal, Assistant General Counsel, Office of General Counsel, Regulatory Policy and Oversight, NASD, at (202) 728-6903.
Background and Discussion
Since the TRACE system became effective on July 1, 2002, the TRACE fee structure has been operating under a pilot program approved by the SEC. On October 14, 2003, NASD proposed a rule change to establish a permanent fee structure for TRACE. The fee structure was approved by the SEC on January 15, 2004, and the fee structure will become effective on February 1, 2004. The BTDS Professional Delayed-Time Data Display Fee was approved by the SEC as a nine-month pilot program due to expire on October 31, 2004. The TRACE fee structure is outlined below.
Below is a chart outlining the approved TRACE fee structure.
| System Fees | Transaction Reporting Fees | Market Data Fees |
| Level I Trade Report Web Browser Access - $20/month per user ID | Only Trades up to and including $200,000 par value - $0.475/trade; | BTDS Professional Real-Time Data Display - $60/month per terminal |
| Level II Full Service Web Browser Access - $80/month per user ID | Trades between $201,000 and $999,999 par value - $0.002375 times the number of bonds traded/trade; | BTDS Professional Delayed-Time Data Display - $15/month per terminal (for a nine-month pilot period beginning February 1, 2004 and ending October 31, 2004) |
| CTCI/Third Party - $25/month per firm | Trades of $1,000,000 par value or more - $2.375/trade | BTDS Internal Usage Authorization - $500/ month per application/ service for Real-Time and Delayed-Time Data |
| Cancel/Correct - $1.50/trade | BTDS External Usage Authorization - $1,000/ month per application/ service for Real-Time and Delayed-Time Data | |
| "As of" Trade Late - $3/trade | BTDS Non-Professional Real-Time Data Display - $1/month per terminal |
System Fees
Web Browser Access Fees
Level I Trade Report Only Web Browser access permits a member to report TRACE transaction data to NASD over the Internet, but does not allow access to real-time TRACE data. Level II Full Service Web Browser access permits reporting of TRACE transaction data to NASD over the Internet and allows access to real-time transaction data through a query function. The Level I charge has been reduced from $25 per month, per user ID, to $20 per month, per user ID; and the Level II charge has been reduced from $85 per month, per user ID, to $80 per month, per user ID.
CTCI Fees and Third-Party Access Fees
The charge for CTCI service and for reporting data through third-party intermediaries will remain at $25 per month, per firm.
Transaction Reporting Fees
Trade Reporting Fees
Trade Reporting Fees will remain at their current levels. The range for trade reporting fees will be from $0.475 to $2.375 per transaction based on the size of the reported transaction. Trades up to and including $200,000 par value will be charged a $0.475 fee per trade; trades between $201,000 par value and $999,999 par value will be charged a fee of $0.002375 multiplied by the number of bonds traded, and trades of $1,000,000 par value or more will be charged a fee of $2.375 per trade.
Corrective Transaction Fees
The Cancel or Correct Fee will remain at $1.50 per corrected trade and the "As of" Trade Late reporting fee will remain at $3.00 per late trade for those transactions that are not reported "As of" as required under the Rule 6200 Series.
Market Data Fees
The market data services and fees are as follows: (1) BTDS Professional Real-Time Data Display Fee of $60 per month, per terminal; (2) BTDS Professional Delayed-Time Data Display Fee of $15 per month, per terminal; (3) BTDS Internal Usage Authorization Fee of $500 per month, per application/service; (4) BTDS External Usage Authorization Fee of $1,000 per month, per application/service; and (5) BTDS Non-Professional Real-Time Data Display Fee of $1 per month, per terminal.
The term "Real-Time" as used in Rule 7010(k)(3) will mean that period of time starting from the time of dissemination by NASD of transaction data on a TRACE-eligible security, and ending four hours thereafter. "Delayed-Time" as used in Rule 7010(k)(3) will mean that period of time starting four hours after the time of dissemination by NASD of transaction data on a TRACE-eligible security, and ending at 11:59:59 p.m., Eastern Time, that calendar day.
BTDS Professional Delayed-Time Data Display Fee
The SEC has approved the BTDS Professional Delayed-Time Data Display on a pilot basis for a period of nine months beginning February 1, 2004, and ending October 31, 2004. The fee for the BTDS Professional Delayed-Time Data Display is $15 per month, per terminal, for each device receiving Delayed-Time TRACE transaction data. Transaction data for TRACE-eligible securities disseminated by NASD after this time frame will be provided free of charge. Professionals subscribing for the BTDS Professional Real-Time Data Display Fee of $60 per month, per terminal, to receive Real-Time TRACE transaction data will not pay this charge for Delayed-Time data in addition to the $60 fee for Real-Time data. NASD has also clarified that charges for BTDS Internal Usage and BTDS External Usage apply to Real-Time and/or Delayed-Time TRACE transaction data.
In addition, NASD has clarified the definition of "non-professional." NASD has added language to the definition to state that a natural person can qualify as a "nonprofessional" only if he or she receives TRACE market data primarily for personal, noncommercial use.
Effective Date
The rule amendments become effective on February 1, 2004.
1 See Securities Exchange Act Release No. 34-49086 (January 15, 2004), 69 Fed. Reg. 3416 (January 23, 2004), File No. SR-NASD- 2003-157.
Attachment A
7010. System Services
(a) through (j) No Change.
(k) Trade Reporting and Compliance Engine (TRACE)
The following charges shall be paid by participants for the use of the Trade Reporting and Compliance Engine ("TRACE"):
| System Fees | Transaction Reporting Fees | Market Data Fees |
| Level I Trade Report Only Web Browser Access - $20/month per user ID | Trades up to and including $200,000 par value - $0.475/trade; | BTDS Professional Real-Time Data Display - $60/month per terminal |
| Level II Full Service Web Browser Access - $80/month per user ID | Trades between $201,000 and $999,999 par value - $0.002375 times the number of bonds traded/trade; | BTDS Professional Delayed-Time Data Display - $15/month per terminal (for a nine-month pilot period beginning February 1, 2004 and ending October 31, 2004) |
| CTCI/Third Party - $25/month per firm | Trades of $1,000,000 par value or more - $2.375/trade | BTDS Internal Usage Authorization - $500/month per application/service for Real-Time and Delayed-Time Data |
| Cancel/Correct - $1.50/trade | BTDS External Usage Authorization - $1,000/month per application/service for Real-Time and Delayed-Time Data | |
| "As of" Trade Late - $3/trade | BTDS Non-Professional Real-Time Data Display - $1/month per terminal |
There are three methods by which a member may report corporate bond transactions that are reportable to NASD pursuant to the Rule 6200 Series. A member may choose among the following methods to report data to NASD: (a) a TRACE web browser; (b) a Computer-to-Computer Interface ("CTCI") (either one dedicated solely to TRACE or a multi-purpose line); or (c) a third-party reporting intermediary. Fees will be charged based on the reporting methodology selected by the member.
The charge to be paid by a member that elects to report TRACE data to NASD via a TRACE web browser shall be as follows: $20 per month, per user ID for Level I Web Trade Report Only Browser Access and $80 per month, per user ID for Level II Full Service Web Browser Access.
The charge to be paid by a member that elects to report TRACE data to NASD via a CTCI line shall be $25 per month, per firm, regardless of whether the line is or is not dedicated exclusively for TRACE.1
A member may elect to report TRACE data indirectly to NASD via third-party reporting intermediaries, such as vendors, service bureaus, or the National Securities Clearing Corporation ("NSCC"). The charge to be paid by a member shall be $25 per month, per firm. Nothing in this Rule shall prevent such third-party intermediaries from charging additional fees for their services.
For each transaction in corporate bonds that is reportable to NASD pursuant to the Rule 6200 Series, the following charges shall be assessed against the member responsible for reporting the transaction:
A member shall be charged a Trade Reporting Fee based upon a sliding scale ranging from $0.475 to $2.375 per transaction based on the size of the reported transaction. Trades up to and including $200,000 par value will be charged a $0.475 fee per trade; trades between $201,000 par value and $999,999 par value will be charged a fee of $0.002375 multiplied by the number of bonds traded per trade; and trades of $1,000,000 par value or more will be charged a fee of $2.375 per trade.
A member shall be charged a Cancel or Correct Trade Fee of $1.50 per canceled or corrected transaction.
A member shall be charged an "As of" Trade Late Fee of $3.00 per transaction for those transactions that are not timely reported "As of" as required by these rules.
Professionals and non-professionals may subscribe to receive Real-Time and Delayed-Time TRACE data disseminated by NASD in one or more of the following ways for the charges specified. Members, vendors and other redistributors shall be required to execute appropriate agreements with NASD.
The charge to be paid by a non-professional for each terminal receiving all or any portion of Real-Time TRACE transaction data disseminated through TRACE shall be $1.00 per month, per terminal.
NASD may impose and collect charges for data NASD supplied upon request, where there is no provision elsewhere in this Rule 7010(k) for charges for such service or sale.
1 The charges that may be imposed by third parties, such as CTCI line providers, are not included in these fees.
2 Under this service, Real-Time and/or Delayed-Time TRACE transaction data may not be used in any interrogation display devices, any systems that permit end users to determine individual transaction pricing, or disseminated to any external source.
3 Under this service, Real-Time and/or Delayed-Time TRACE transaction data may not be used in any interrogation display devices or any systems that permit end users to determine individual transaction pricing.
