FINRA Proposes Disseminating New-Issue Reference Data for Corporate Bonds

FINRA recently filed with the U.S. Securities and Exchange Commission a proposal to expand its collection and dissemination of new-issue reference data for corporate bonds. The proposal calls for FINRA’s TRACE (Trade Reporting and Compliance Engine) to serve as a centralized source for market participants to receive more comprehensive and timely security description information about new issues.

Currently, FINRA collects and disseminates a limited amount of new-issue reference data about corporate bonds, such as the name of the issuer and the coupon of the bonds, for the purpose of supporting trade reporting. Electronic trading platforms generally require more information to make new issues available for trading, and rely on providers that collect data from different sources and at speeds that vary from a few hours to several days.

FINRA’s proposal to expand the collection and dissemination of new-issue reference data for corporate bonds aligns with a recommendation by the SEC’s Fixed Income Market Structure Advisory Committee (FIMSAC), which said in part: “The FIMSAC believes that the implementation of its recommendation would make the valuation, trading, settlement and trade reporting of new issue corporate bonds more efficient by reducing trading errors and enhancing competition among data vendors, trading platforms and investors.”

“Making TRACE the common source for reference data about new-issue corporate bonds will provide market participants with more comprehensive, consistent and timely information they can rely on for the efficient trading and settlement of the bonds. As the FIMSAC noted, access to accurate and timely reference data is increasingly important as market participants rely more on electronic trading platforms,” said Thomas Gira, Executive Vice President of Market Regulation and Transparency Services at FINRA. “Using TRACE to collect and disseminate this data demonstrates once again TRACE’s value as a central utility that serves the interests of a well-informed, well-functioning marketplace.”