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[Release No. 34-105991; File No. SR-FINRA-2026-009]

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

July 24, 2026.

Introduction

On April 22, 2026, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed

with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of

the Securities Exchange Act of 1934 (“Exchange Act”),1 and Rule 19b-4 thereunder,2 a proposed

rule change to amend the FINRA Rule 6700 Series to expand the scope of the non-member

affiliate—principal transaction indicator to also include member affiliates. The proposed rule

change was published for comment in the Federal Register on May 6, 2026.3 On June 10, 2026,

pursuant to Section 19(b)(2) of the Exchange Act,4 the Commission designated a longer period

within which to approve the proposed rule change, disapprove the proposed rule change, or

institute proceedings to determine whether to approve or disapprove the proposed rule change. 5

This order approves the proposed rule change.

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

See Securities Exchange Act Release No. 105352 (May 1, 2026), 91 FR 24625 (“Notice”). Comments

received on the proposed rule change are available at: https://www.sec.gov/rules-regulations/publiccomments/sr-finra-2026-009.

15 U.S.C. 78s(b)(2).

See Securities Exchange Act Release No. 105648, 91 FR 36019 (June 15, 2026).

II.

Summary of the Proposed Rule Change

As FINRA states in the Notice, in 2015 FINRA adopted rules related to the reporting of

TRACE-Eligible Securities,6 which established the non-member affiliate—principal transaction

indicator and required members to identify in TRACE reports transactions between the member

and its non-member affiliate, where the member also engaged in a same-day, same-price

transaction in the same security with another contra-party.7 As explained by FINRA, this nonmember affiliate—principal transaction indicator allows FINRA to suppress from dissemination

inter-affiliate transactions that do not provide pricing information different from the

disseminated transaction between the member and the other contra-party, thereby improving

transparency and addressing concerns regarding potential investor confusion as to the level of

trading activity in TRACE-Eligible Securities. 8

As described in more detail in the Notice, FINRA proposes to expand the use of the nonmember affiliate—principal transaction indicator to also include transactions between member

affiliates trading as principal where the transaction with the member affiliate occurs within the

same trading day, at the same price, and in the same TRACE-Eligible Security as a transaction

“TRACE-Eligible Security” means a debt security that is United States (U.S.) dollar-denominated and is:

(1) issued by a U.S. or foreign private issuer, and, if a “restricted security” as defined in Securities Act Rule

144(a)(3), sold pursuant to Securities Act Rule 144A; (2) issued or guaranteed by an Agency as defined in

paragraph (k) or a Government-Sponsored Enterprise as defined in paragraph (n); (3) a U.S. Treasury

Security as defined in paragraph (p); or (4) a Foreign Sovereign Debt Security as defined in paragraph (kk).

“TRACE-Eligible Security” does not include a debt security that is a Money Market Instrument as defined

in paragraph (o). See Notice, supra note 3, at 24625 n.3.

See Securities Exchange Act Release No. 74482 (Mar. 11, 2015), 80 FR 13940 (Mar. 17, 2015).

See Notice, supra note 3, at 24625.

executed by one of the members with another contra-party.9 To reflect this expanded use, the

indicator would also be re-designated as the Affiliate—Principal Transaction indicator. 10

To effectuate this change, FINRA proposes to modify several existing rules in its

rulebook, including FINRA Rule 6710 (Definitions), FINRA Rule 6730 (Transaction Reporting),

and FINRA Rule 6750 (Dissemination of Transaction Information).

FINRA proposes to modify the definition of “Non-member Affiliate” in FINRA Rule

6710(ee) by re-titling it “Affiliate” and removing language limiting the definition to a “nonmember” entity. As proposed, FINRA Rule 6710(ee) will define “Affiliate” to mean an entity

that controls, is controlled by or is under common control with a member. The rule would

continue to state that for the purposes of this definition, “control,” along with any derivative

thereof, means legal, beneficial, or equitable ownership, directly or indirectly, of 25 percent or

more of the capital stock (or other ownership interest, if not a corporation) of any entity

ordinarily having voting rights, and that the term “common control” means the same natural

person or entity controls two or more entities.

In conjunction with this change, FINRA proposes to update references to “non-member

affiliate” to “Affiliate” in existing FINRA Rule 6370, Supplementary Material .02, and FINRA

Rule 6750(d)(1). The updates to FINRA Rule 6370, Supplementary Material .02 would require

members, for the purposes of compliance with paragraphs (c)(6) and (d)(4)(E) of FINRA Rule

6370, to identify those entities that would meet the definition of “Affiliate” at least annually. In

addition, where the member has undergone an organizational or operational restructuring that

may impact its Affiliate relationships, it must promptly review and update, as necessary, its

See Notice, supra note 3, at 24626.

See id. See also proposed FINRA Rule 24628. FINRA provides examples in the Notice to illustrate the

expanded scope of the Affiliate—Principal Transaction indicator. See Notice, supra note 3, at 24626-28.

identification of Affiliates for purposes of the rule. Proposed FINRA Rule 6750(d)(1) would

state that FINRA will not disseminate information on a transaction in a TRACE-Eligible

Security that is identified with the Affiliate—Principal Transaction indicator pursuant to Rule

6730(d)(4)(E).

FINRA also proposes to update FINRA Rule 6730(d)(4)(E), replacing existing language

limited to the non-member Affiliate—Principal Transaction indicator with language stating how

to report the proposed Affiliate—Principal Transaction Indicator. As proposed, FINRA Rule

6730(d)(4)(E) would state that:

(i) If a member and an Affiliate transact in a principal capacity in a TRACE-Eligible

Security, and the member reasonably believes that the member (or its member Affiliate, in the

case of member Affiliates, as further described in subparagraph (ii)) will engage (or has already

engaged) in a transaction in the same security within the same day, at the same price, with

another contra-party, select the Affiliate—Principal Transaction indicator. 11

(ii) In a transaction between member Affiliates, to select the Affiliate—Principal

Transaction indicator, both members must share a reasonable belief that the member or its

member Affiliate will engage (or has already engaged) in a transaction in the same security

within the same day, at the same price, with another contra-party, and each member must append

the Affiliate—Principal Transaction indicator. 12

FINRA states that it understands that members may have multiple member affiliates (and in some cases,

multiple desks at each entity, including those separated by information barriers) that transact in the same

securities with each other as with other contra-parties. See Notice, supra note 3, at 24626 n.10. FINRA

states that with the inclusion of the “reasonable belief” language, the proposed rule does not require

members to seek to identify incidental or unforeseeable trades between it and its affiliates occurring on the

same day and at the same price as a transaction with another counterparty unless those trades are

systemically identifiable by each TRACE-reporting affiliate contra-party in the normal course of business.

See id.

FINRA states that because the Affiliate—Principal Transaction indicator would be a matching field in

TRACE, either both member affiliates must append, or they both must not append, the indicator when

reporting (as contra-parties to each other) their respective qualifying transaction(s) to TRACE. See Notice,

(iii) If a member has engaged in a same day, same price transaction in the same security

with both a member Affiliate and a non-member Affiliate and neither member Affiliate engages

in a same-security, same-day, same-price transaction with an unaffiliated contra-party, the

member must only append the Affiliate—Principal Transaction indicator to either the trade

report with its member Affiliate (consistent with paragraph (d)(4)(E)(ii) of this Rule), or to the

trade report for its transaction with its non-member Affiliate. If the member appends the

Affiliate—Principal Transaction indicator to the trade report for the transaction with its nonmember Affiliate, neither the member nor its member Affiliate may append the Affiliate—

Principal Transaction indicator to the trade report for the member-to-member transaction.13

(iv) A member is not required to correct a prior trade report with its Affiliate solely for

the purpose of appending the Affiliate—Principal Transaction indicator if the member did not

reasonably believe that it (or its member Affiliate, in the case of member Affiliates) would

engage (or had already engaged) in a same-day, same-price transaction in the same security with

another contra-party at the time of the prior trade report. If, however, a member appends the

Affiliate—Principal Transaction indicator to a trade report reflecting a transaction with an

Affiliate and, ultimately, the member or its member Affiliate does not engage in a same day,

same price transaction in the same security with another contra-party, the member must correct

the prior trade report to exclude the Affiliate—Principal Transaction indicator. 14

supra note 3, at 24626. FINRA states that in the event only one member affiliate appends the Affiliate—

Principal Transaction indicator to its TRACE report, TRACE would still suppress from dissemination the

sell-side trade report, but both members would receive a report of a mismatch for that trade on their

TRACE Match Status Reports. See Notice, supra note 3, at 24626 n.9.

FINRA states that this provision addresses the concern that all legs of an inter-affiliate transaction may be

suppressed from dissemination. See Notice, supra note 3, at 24626.

FINRA states that proposed Rule 6730(d)(4)(E)(iv) seeks to adopt with respect to member affiliates the

same obligations for correcting trade reports as are currently in place regarding a member’s trade with a

non-member affiliate. See Notice, supra note 3, at 24628 n.16.

FINRA states that it undertook an “economic impact assessment” to analyze the potential

economic impacts of the proposed rule change, including anticipated costs, benefits, and

distributional and competitive effects relative to the current baseline, and the alternatives

considered in assessing how best to meet its regulatory objective.15 In this analysis, FINRA

conducted an analysis using TRACE data from January 2025 through December 2025 to

estimate the percentage of trades that could be subject to the proposed rule change across

TRACE-Eligible Securities.16 In addition, FINRA received feedback in response to Regulatory

Notice 25-04 (March 2025, including commenters raising concerns regarding the dissemination

of certain transactions between affiliated members that are similar to the concerns raised in 2014

regarding transactions between members and non-member affiliates.17 FINRA provided these

comments, as well as a summary of these comments and its responses in its filing with the

Commission.18

III.

Discussion and Commission Findings

After carefully reviewing the proposed rule change and the comment letters received, the

Commission finds that the proposed rule change is consistent with the requirements of the

Exchange Act and the rules and regulations thereunder applicable to a national securities

association.19 In particular, the Commission finds that the proposed rule change is consistent

with Section 15A(b)(6) of the Exchange Act, 20 which requires, among other things, that the

See Notice, supra note 3, at 24629-30.

See id.

Comments received by FINRA are available on FINRA’s website in the public comment file for

Regulatory Notice 25-04, available at: https://www.finra.org/rules-guidance/notices/25-04#comments.

See Notice, supra note 3, at 24630.

In approving this proposed rule change, the Commission has considered the proposed rule’s impact on

efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).

15 U.S.C. 78o-3(b)(6).

association’s rules be designed to prevent fraudulent and manipulative acts and practices, to

promote just and equitable principles of trade, and, in general, to protect investors and the public

interest.

The Commission received four comment letters that were broadly supportive of the

proposed rule change.21 One of these commenters states, among other things, that the

transactions covered by the proposed rule change between FINRA member affiliates are not

economically distinct and do not provide meaningful pricing and volume information, and so the

proposed rule change would enhance the efficiency of the fixed income markets by increasing

the accuracy of the volume information disseminated under the TRACE rules. 22 Another

commenter states that the proposed rule change would improve the accuracy and usefulness of

TRACE data by suppressing dissemination of transactions that are economically duplicative and

do not contribute meaningful information to the market. 23

One commenter states that FINRA should not penalize good faith errors with respect to

the Affiliate—Principal Transaction indicator in a situation where a FINRA member trades at the

same price and on the same day with both a member affiliate and a non-member affiliate.24

Instead, the commenter states that FINRA should instead should focus on pattern-and-practice

issues and instances of intentionally misleading actions.25 In a response letter, FINRA states that,

consistent with FINRA’s historical approach to trade reporting oversight, in evaluating

See Letters to Vanessa Countryman, Secretary, Commission, from Scott Pintoff, General Counsel,

MarketAxess Holdings Inc., dated May 27, 2026 (“MarketAxess Letter”); from Howard Meyerson,

Managing Director, Financial Information Forum, dated May 27, 2026 (“FIF Letter”), at 2; from Joanna

Mallers, Secretary, PTG, dated May 27, 2026 (“PTG Letter”), at 1; Christopher B. Killian, Managing

Director, Securitization and Credit, SIFMA, dated May 27, 2026 (“SIFMA Letter”), at 1-2.

See MarketAxess Letter, at 2.

See PTG Letter, at 2.

See SIFMA Letter, at 2.

See id. at 3.

compliance with the expansion of the Affiliate—Principal Transaction indicator, FINRA will

work with its members to swiftly identify and rectify potential issues. 26

Three commenters request both adequate time for FINRA members to complete any

necessary systems or reporting modifications necessary if the proposed rule change were

adopted, and the ability for firms to elect to use the expanded Affiliate—Principal Transaction

indicator in advance of any formal compliance deadline. 27 In the FINRA Response Letter,

FINRA states that it intends to publish a Regulatory Notice establishing an implementation date

of no less than 12 months from any approval of the proposed rule change, to provide firms with

sufficient time for systems and process changes, but that FINRA also intends to make the

Affiliate—Principal Transaction indicator available for voluntary use prior to the implementation

date for firms that opt to report the indicator earlier. 28

One commenter requests FINRA incorporate the scenarios provided in the Notice

through updates to current TRACE FAQs.29 The commenter also requests FINRA update certain

FAQs related to fact patterns under the non-member affiliate framework, in particular how the

indicator applies when affiliate and non-affiliate quantities do not match cleanly or involve

multiple trades.30 FINRA states that it agrees and intends to incorporate the scenarios provided in

the proposed rule change into the TRACE FAQs to provide its members with illustrative

See Letter to Vanessa Countryman, Secretary, Commission, from Racquel L. Russell, Senior Vice

President, Director of Capital Markets Policy, FINRA, dated June 18, 2026 (“FINRA Response Letter), at

See PTG Letter, at 2; FIF Letter at 3; SIFMA Letter, at 3 (stating that FINRA should provide at least 12

months for member firms to implement this rule change but should also allow for early adoption).

See FINRA Response Letter at 3.

See FIF Letter, at 2.

See id. at 2. The commenter also requests that FINRA update the FAQs to also address the scenario where

there are multiple transactions between affiliates, applying the same principles (for example a scenario

where multiple transactions with an affiliate should be suppressed because of a single disseminated

transaction with a non-affiliate). Id. at 2-3.

examples regarding the circumstances under which members append the indicator and where

member affiliate transactions would be suppressed from dissemination.31 FINRA also states that

it will continue to engage with its members to consider whether additional interpretive guidance

would be appropriate.32

One commenter requests guidance related to TRACE reporting more broadly, specifically

scenarios that involve trading by non-FINRA member covered depository institutions.33 While

FINRA states that this request is outside for the scope of the proposed rule change, FINRA states

that it “is happy to engage with members on the need for clarifications in this and other areas and

will consider further updates to the FAQs, as appropriate.”34

As discussed above, the proposed rule change expands the use of the current non-member

affiliate—principal transaction indicator to also include transactions between FINRA member

affiliates trading as principal where the transaction with the FINRA member affiliate occurs

within the same trading day, at the same price, and in the same TRACE-Eligible Security as a

transaction executed by one of the members with another contra-party. The expanded Affiliate—

Principal Transaction indicator would improve post-trade transparency by enabling FINRA to

identify and suppress from public dissemination transaction data that offers no new pricing

information, thus reducing potential investor confusion as to the level of trading activity in

TRACE-Eligible Securities. The proposed changes to FINRA rules appear reasonably designed

See FINRA Response Letter, at 4.

See id.

See FIF Letter, at 3.

See FINRA Response Letter, at 2 n.3.

to effectuate this goal and are therefore consistent with Section 15A(b)(6)35 of the Exchange Act

and the rules and regulations thereunder applicable to a national securities association.

IV.

Consultation with the Treasury Department

Pursuant to Section 19(b)(6) of the Act, 36 the Commission has considered the

sufficiency and appropriateness of existing laws and rules applicable to government securities

brokers, government securities dealers, and their associated persons in approving the proposed

rule change. Pursuant to Section 19(b)(5) of the Act, 37 the Commission consulted with and

considered the views of the Treasury Department in determining whether to approve the

proposed rule change. The Treasury Department did not object to the proposed rule change.

Conclusion

IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Exchange Act,38 that

15 U.S.C. 78o-3(b)(6).

15 U.S.C. 78s(b)(6).

15 U.S.C. 78s(b)(5) (providing that the Commission “shall consult with and consider the views of the

Secretary of the Treasury prior to approving a proposed rule filed by a registered securities association that

primarily concerns conduct related to transactions in government securities, except where the Commission

determines that an emergency exists requiring expeditious or summary action and publishes its reasons

therefor”).

15 U.S.C. 78s(b)(2).

the proposed rule change (SR-FINRA-2026-009) be, and hereby is, approved.

For the Commission, by the Division of Trading and Markets, pursuant to delegated

authority.39

Sherry R. Haywood,

Assistant Secretary.

17 CFR 200.30-3(a)(12).

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.