FINRA’s Proposed Enhancements to TRACE Reporting for U.S. Treasury Securities
Summary
SIFMA provided comments to FINRA regarding Regulatory Notice 20-43, FINRA’s proposed enhancements to TRACE reporting for US Treasury securities. SIFMA recognizes the importance of regulators having access to the information they need to conduct systemic risk and market conduct oversight and understand FINRA’s goals in exploring how the TRACE platform can be used to support the delivery of additional information on market activity and the behavior of market participants to FINRA and its regulatory partners. As the regulatory community reviews activity in the Treasury securities markets, we understand the importance of finding new ways for regulators to obtain information relating to the activity in these securities.
Excerpt
February 22, 2021
Via Electronic Submission
Jennifer Piorko Mitchell
Office of the Corporate Secretary
FINRA
1735 K Street, NW
Washington, DC 20006-1506
Re: Regulatory Notice 20-43; FINRA Requests Comment on Enhancements to TRACE Reporting for U.S. Treasury Securities
Dear Ms. Mitchell,
SIFMA1 and its members appreciate the opportunity to respond to Regulatory Notice 20-43 and share our recommendations and concerns on FINRA’s proposed enhancements to TRACE reporting for US Treasury securities. We recognize the importance of regulators having access to the information they need to conduct systemic risk and market conduct oversight and understand FINRA’s goals in exploring how the TRACE platform can be used to support the delivery of additional information on market activity and the behavior of market participants to FINRA and its regulatory partners. As the regulatory community reviews activity in the Treasury securities markets, we understand the importance of finding new ways for regulators to obtain information relating to the activity in these securities.
At the outset, we would like to share our views on high level considerations which we suggest FINRA bear in mind when designing any planned enhancements to TRACE reporting and the schedule and implementation process to support them, before moving into more detailed comments on specific elements of the proposal. There are a number of common considerations which we feel should shape the design and implementation of any potential enhancements to TRACE in the Treasury market space.
First, when considering the technical and operational challenges of making any enhancements for reporting firms, there are substantial differences among TRACE reporters. Different firms may be starting from different levels, depending on existing systems and infrastructure, and we recommend FINRA bear these differences in mind when developing implementation timelines. Similarly, we would like to stress the importance of staggered build times for any enhancements which FINRA moves forward with, discussed further below.