SEC Approves FINRA Rule Expanding TRACE Affiliate-Principal Indicator

The SEC approved a FINRA rule change expanding the TRACE non-member affiliate-principal transaction indicator to also cover transactions between FINRA member affiliates, letting FINRA suppress from public dissemination inter-affiliate trades that duplicate pricing already reported in a member's trade with an unaffiliated counterparty.

FINRA will redesignate the indicator as the Affiliate-Principal Transaction indicator and revise the "Affiliate" definition in FINRA Rule 6710 ("Definitions") to drop the "non-member" limitation, defining an affiliate as an entity controlling, controlled by, or under common control with a member based on 25 percent or more ownership. FINRA Rule 6750 ("Dissemination of Transaction Information") is updated so FINRA will not disseminate transactions carrying the indicator.

Amendments to FINRA Rule 6730 ("Transaction Reporting") set the reporting mechanics: (i) both affiliated members must reasonably believe a matching same-day, same-price trade occurred with an unaffiliated party; (ii) both must append the indicator or neither may; and (iii) where a member trades with both a member affiliate and a non-member affiliate on identical terms, only one of the two affiliate legs may carry the indicator.

Members must identify entities meeting the new "Affiliate" definition at least annually under FINRA Rule 6370, Supplementary Material .02, and promptly update that identification after any organizational or operational restructuring.

Commenters broadly supported the proposal but urged FINRA not to penalize good-faith reporting errors and to add illustrative scenarios to the TRACE FAQs. FINRA agreed to update the FAQs and said it will work with members to swiftly identify and fix potential compliance issues.

The SEC approved the rule on July 24, 2026. FINRA will announce an implementation date, no less than 12 months after approval, in a forthcoming Regulatory Notice, with voluntary early adoption permitted.