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FINRA proposes expanding TRACE into a central corporate bond resource

The Financial Industry Regulatory Authority has asked the Securities and Exchange Commission to allow the expansion of its collection and dissemination of new-issue reference data for corporate bonds.

In a proposal Thursday, FINRA called for using its Trade Reporting and Compliance Engine, or TRACE, as a centralized source for market participants to receive more comprehensive and timely security description information about new issues.

FINRA currently 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, according to a news release. 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, the release said.

"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," said Thomas Gira, FINRA's executive vice president of market regulation and transparency services, in the release.

The SEC's Fixed Income Market Structure Advisory Committee made a similar recommendation in October.

"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," Mr. Gira said.