Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Amend the FINRA Rule 6700 Series (Trade Reporting and Compliance Engine) (TRACE) To Expand the Scope of the Non-Member Affiliate-Principal Transaction Indicator to Also Include Member Affiliates
Published Date: 7/29/2026
Notice
Summary
No summary available.
Analyzed Economic Effects
4 provisions identified: 2 benefits, 2 costs, 0 mixed.
Broader Definition of 'Affiliate' (25% Rule)
FINRA changed the definition of "Non-member Affiliate" to "Affiliate," defined as an entity that controls, is controlled by, or is under common control with a member, where "control" means legal, beneficial, or equitable ownership of 25 percent or more of voting capital stock (or comparable ownership interest). Members must identify entities that meet this Affiliate definition at least annually and update their identifications promptly after organizational or operational restructuring.
Reporting & Correction Rules for Affiliate Trades
When a member and an Affiliate transact as principal, the member must select the Affiliate--Principal Transaction indicator if it reasonably believes there is (or will be) a same-day, same-price, same-security transaction with another contra-party. For transactions between member affiliates, both members must share that reasonable belief and each must append the indicator. TRACE will suppress dissemination of identified trades and, if only one member appends the indicator, TRACE will still suppress the sell-side report but generate mismatch reports for the firms. Members are not required to correct a prior report solely to append the indicator if they lacked the reasonable belief at the time, but must correct reports that appended the indicator if the qualifying same-day, same-price transaction does not occur.
12-Month Implementation Window With Early Adoption
FINRA intends to publish a Regulatory Notice setting an implementation date of no less than 12 months from approval to give firms time for systems and process changes, and FINRA will allow firms to voluntarily use the Affiliate--Principal Transaction indicator before the formal compliance date. This timeline was stated in FINRA’s response to comments and is tied to any approval of the rule change.
Affiliate Trades Can Be Hidden From TRACE
If a broker-dealer (a FINRA member) and an affiliate trade the same TRACE-Eligible Security on the same trading day at the same price, FINRA’s expanded Affiliate--Principal Transaction indicator allows those inter-affiliate trades to be identified and suppressed from public dissemination. The rule applies when the trade is in the same TRACE-Eligible Security, on the same day, and at the same price and is intended to reduce investor confusion about trading volume.
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