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 Notices
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18-35 SEC Approves Rule Change to Modify the Dissemination Protocols for Agency Debt Securities; Effective Date: November 19, 2018

15-14 SEC Approves Amendments to Require Firms to Identify Transactions with Non-Member Affiliates in TRACE Trade Reports; Effective Date: November 2, 2015

14-34 SEC Approves Amendments to Disseminate Additional Asset-Backed Securities Transactions and to Reduce the Reporting Time for Such Transactions; Effective Date: April 27, 2015*

12-56 SEC Approves Amendments to TRACE Rules and Dissemination Protocols to Disseminate Specified Pool Transactions and SBA-Backed ABS Transactions and to Reduce the Time to Report Such Transactions; Effective Date: July 22, 2013

12-48 FINRA Changes the Effective Date for Amendments to TRACE Rules Relating to the Reporting and Dissemination of Agency Pass-Through Mortgage-Backed Securities Traded To Be Announced and Related TRACE Fees in FINRA Rule 7730 from November 5, 2012, to November 12, 2012

12-26 SEC Approves Amendments to TRACE Reporting Requirements and Dissemination of Agency Pass-Through Mortgage-Backed Securities Traded To Be Announced and Related Fees; Effective Date: November 5, 2012

11-20 SEC Approves Amendments to Transaction Reporting and Trading Activity Fee Rules Related to the Reporting of Asset-Backed Securities Transactions; Effective Date: May 16, 2011

10-55 FINRA Establishes a New Effective Date for Reporting Asset-Backed Securities to TRACE and Related Rule Changes; Effective Date: May 16, 2011

10-23 SEC Approves Reporting Asset-Backed Securities Transactions to TRACE and Related Fees; Effective Date: February 14, 2011

09-57 SEC Approves Amendments Expanding TRACE to Include Agency Debt Securities and Primary Market Transactions; Effective Date: March 1, 2010

09-24 SEC Approves Amendments Expanding the Definition of "TRACE-Eligible Security"; Effective Date: June 15, 2009

08-57 FINRA Announces SEC Approval and Effective Date for New Consolidated FINRA Rules Effective Date: December 15, 2008

07-61 SEC Approves Exemption from TRACE Reporting Requirements for Certain "Derivative-Related Transactions"; Effective Date: December 13, 2007

07-18 SEC Approves Amendments to TRACE Reporting Exempting Trades in TRACE-Eligible Securities Conducted on a Facility of, and Reported to, the New York Stock Exchange; Effective Date: January 9, 2007

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

04-39 SEC Approves Amendments to Clarify the Term "TRACE-Eligible Security" and to Expand the Scope of an Exemption from TRACE Reporting Requirements

02-76 NASD Issues Interpretive Guidance to the Trade Reporting and Compliance Engine Rules (TRACE Rules)

6710. Definitions

Past version: effective from Jun 15 2009 - Feb 28 2010.
To view other versions open the versions tab on the right.

The terms used in this Rule 6700 Series shall have the same meaning as those defined in the FINRA By-Laws and rules unless otherwise specified.
(a) The term "TRACE-eligible security" shall mean all United States dollar denominated debt securities that are depository eligible securities under NASD Rule 11310(d); Investment Grade or Non-Investment Grade; issued by United States and/or foreign private issuers; and, if a "restricted security" as defined in Securities Act Rule 144(a)(3), sold pursuant to Securities Act Rule 144A. The term "TRACE-eligible security" excludes debt issued by government-sponsored entities, mortgage- or asset-backed securities, collateralized mortgage obligations, and money market instruments. For purposes of the Rule 6700 Series, the term "money market instrument" means a debt security that at issuance has a maturity of one year or less.
(b) The term "Trade Reporting and Compliance Engine" or "TRACE" shall mean the automated system developed by FINRA that, among other things, accommodates reporting and dissemination of transaction reports where applicable in TRACE-eligible securities.
(c) The term "reportable TRACE transaction" shall mean any secondary market transaction in a TRACE-eligible security except transactions exempt from reporting as specified in Rule 6730(e).
(d) The term "time of execution" for a transaction in a TRACE-eligible security shall be the time when the parties to the transaction agree to all of the terms of the transaction that are sufficient to calculate the dollar price of the trade. The time of execution for transactions involving TRACE-eligible securities that are trading "when issued" on a yield basis shall be when the yield for the transaction has been agreed to by the parties to the transaction. For a transaction in a TRACE-eligible security in which the actual yield for the transaction is established by determining the yield from one or more designated securities (e.g., a "benchmark security" such as a U.S. Treasury security maturing in 5 years, or a combination of such "benchmark securities") and adding the agreed upon "yield spread" (e.g., 150 basis points above the benchmark security), the "time of execution" occurs when the yield has been agreed to by the parties to the transaction.
(e) The term "party to the transaction" shall mean an introducing broker-dealer, if any, an executing broker-dealer, or a customer. For purposes of this Rule, customer includes a broker-dealer that is not a FINRA member.
(f) The term "TRACE Participant" shall mean any FINRA member that reports transactions to the TRACE system, directly or indirectly.
(g) The term "Introducing Broker" shall mean the FINRA member that has been identified in the TRACE system as a party to the transaction, but does not execute or clear the transaction.
(h) The term "Investment Grade" shall mean a TRACE-eligible security that, if rated by only one nationally recognized statistical rating organization ("NRSRO"), is rated in one of the four highest generic rating categories; or if rated by more than one NRSRO, is rated in one of the four highest generic rating categories by all or a majority of such NRSROs; provided that if the NRSROs assign ratings that are evenly divided between (i) the four highest generic ratings and (ii) ratings lower than the four highest generic ratings, FINRA will classify the TRACE-eligible security as Non-Investment Grade for purposes of TRACE. If a TRACE-eligible security is unrated, for purposes of TRACE, FINRA may otherwise classify the TRACE-eligible security as an Investment Grade security and further classify it as being in one of the four highest generic rating categories.
(i) The term "Non-Investment Grade" shall mean a TRACE-eligible security that, if rated by only one NRSRO, is rated lower than one of the four highest generic rating categories; or if rated by more than one NRSRO, is rated lower than one of the four highest generic rating categories by all or a majority of such NRSROs. If a TRACE-eligible security is unrated, for purposes of TRACE, FINRA may otherwise classify the TRACE-eligible security as a Non-Investment Grade security and further classify it as being in one of the generic rating categories below the four highest such categories. If FINRA does not have sufficient information to make a judgment regarding the classification of an unrated TRACE-eligible security, for purposes of TRACE, FINRA will classify the TRACE-eligible security as having been rated B (or the equivalent rating of one or more NRSROs).1
(j) The term, "split-rated," shall mean an Investment Grade or a Non-Investment Grade security that is assigned ratings by multiple NRSROs that, for an Investment Grade security, are not in the same generic Investment Grade rating category, or, for a Non-Investment Grade security, are not in the same generic Non-Investment Grade rating category. After determining if a security is Investment Grade or Non-Investment Grade, FINRA will disregard any rating, if the security is Investment Grade, that is Non-Investment Grade, or, if the security is Non-Investment Grade, that is Investment Grade. With respect to an Investment Grade security, if multiple NRSROs assign ratings that are not in the same generic Investment Grade rating category, or, with respect to a Non-Investment Grade security, if multiple NRSROs assign ratings that are not in the same generic Non-Investment Grade rating category, FINRA will classify the TRACE-eligible security for purposes of TRACE by the generic rating that a majority or, if no majority, a plurality of the NRSROs assigns the security, provided that (i) if the NRSROs assign ratings that are evenly divided between two generic rating categories, FINRA will classify the TRACE-eligible security for purposes of TRACE by the lower of the ratings; or (ii) if each NRSRO assigns a different generic rating, FINRA will classify the TRACE-eligible security for purposes of TRACE by the lower or lowest of the ratings.

1 "B" is a rating of Standard & Poor's, a division of the McGraw-Hill Companies, Inc. ("S&P"). S&P is a nationally recognized statistical rating organization. S&P's ratings are proprietary to S&P and are protected by copyright and other intellectual property laws. S&P's licenses ratings to FINRA. Ratings may not be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use for any such purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person without S&P's prior written consent.

Amended by SR-FINRA-2009-004 eff. June 15, 2009.
Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
Amended by SR-FINRA-2007-007 eff. Dec. 13, 2007.
Amended by SR-NASD-2006-110 eff. Jan. 9, 2007.
Amended by SR-NASD-2004-94 eff. Oct. 1, 2004.
Amended by SR-NASD-2003-182 eff. June 17, 2004.
Amended by SR-NASD-2002-174 eff. March 3, 2003.
Amended by SR-NASD-2002-46 eff. July 1, 2002.
Amended by SR-NASD-2001-91 eff. July 1, 2002.
Adopted by SR-NASD-99-65 eff. July 1, 2002.

Selected Notices: 02-76, 04-39, 04-65, 07-18, 07-61, 08-57, 09-24.

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