Quick Answer
After execution, a broker-dealer reports each off-exchange trade to the correct FINRA facility on time with the right modifiers. NMS stocks go to a Trade Reporting Facility (TRF) or Alternative Display Facility (ADF); OTC equities go to the OTC Reporting Facility (ORF); debt goes to the Trade Reporting and Compliance Engine (TRACE). The Consolidated Audit Trail (CAT) captures the full order lifecycle on top.
The whole unit on one sheet: the four facilities, the timing windows, the modifiers, CAT, penny-stock supervision, and the recordkeeping the exam loves.
The Four FINRA Reporting Facilities
- Trade Reporting Facility (TRF): NMS stocks executed off-exchange (FINRA/Nasdaq and FINRA/NYSE variants).
- Alternative Display Facility (ADF): NMS stocks quoted AND traded off-exchange by ADF participants (quote display plus trade report).
- OTC Reporting Facility (ORF): non-NMS OTC equity securities and restricted equity securities.
- Trade Reporting and Compliance Engine (TRACE): eligible debt (corporates, agencies, mortgage/asset-backed, Treasuries).
- Product determines the facility. A participation agreement is facility-specific, not universal.
The One-Liners That Win Points
- Off-exchange NMS-stock reports go to a TRF or the ADF, NEVER to the ORF. Misrouting is a discrete violation independent of any timing problem.
- Only the ADF handles both quotes and trade reports; the TRF and ORF do trade reports only.
- TRACE is only for debt. A corporate-bond trade goes to TRACE, not the ORF.
- Alternative Trading System (ATS) exemption: a non-FINRA-member subscriber is excused; the ATS reports the trade. Member-to-member ATS executions do not get the blanket exemption.
- Short-sale marking ("short" or "short exempt") is required on every equity report under Regulation SHO. "Short exempt" is NOT "exempt from Reg SHO"; it is still a short.
- Market participant identifier (MPID): a four-character code; a firm may use multiple MPIDs to attribute reporting by desk, but must keep a roster mapping each to its supervisor.
Numbers to Lock In
| Item | Value |
|---|---|
| Equity report window (TRF/ADF/ORF), normal hours | within 10 seconds of execution |
| TRACE (debt) report window | as soon as practicable, no later than 15 minutes |
| Normal market hours | 9:30 a.m. to 4:00 p.m. ET |
| CAT initial submission | by 8:00 a.m. ET on T+1 |
| CAT error correction | by 8:00 a.m. ET on T+5 |
| Computer clock sync to NIST | within 50 milliseconds |
| Manual clock sync to NIST | within 1 second |
| CAT data retention | 5 years (first 2 easily accessible) |
| Trade-report blotter retention | 3 years (first 2 easily accessible) |
| Penny-stock price test | under $5 (and not NMS/listed) |
| Penny-stock issuer net tangible assets | over $5 million (3+ years) or over $2 million (newer) |
| Penny-stock issuer average revenue | at least $6 million over last 3 years |
Top Gotchas
- Time of execution is recorded to the second, not the minute (TRACE and CAT alike); a coarse timestamp fails even if the report is on time.
- A late report is accepted with a "late" modifier, not rejected; the mark travels through public dissemination.
- A clock drifting to 200 milliseconds violates the CAT sync rule even if no late trade reports occur. The violation is the clock, not the report.
- CAT supplements trade reporting; it does not replace it. One trade produces both a facility tape print and CAT lifecycle reports, and the two must reconcile.
- Account name/designation changes need WRITTEN principal approval and a documented reason, and the rule covers error and firm proprietary accounts, not just customer accounts.
- An error correction (cancel, correct, or as-of) creates a SECOND record, never an overwrite; retain the original AND the corrected report.
- Penny-stock account approval is in writing by a principal, never self-approved by the rep; the signed customer agreement is per-trade, and Schedule 15G is delivered BEFORE the transaction.
- Established-customer exemption is per-customer and defined by specific tests (account over 1 year with prior penny-stock activity, OR three penny-stock buys on three days from three issuers), not relationship length.
One-Breath Recap
After any off-exchange execution the firm reports the trade to the right FINRA facility on time: NMS stock goes to a TRF or the ADF, OTC equity to the ORF, and debt to TRACE, with equity reports due within 10 seconds and TRACE within 15 minutes, every equity report carrying its short-sale mark. On top of the tape print, CAT captures the full order lifecycle, due by 8:00 a.m. ET on T+1 with clocks synced within 50 milliseconds of NIST. Recordkeeping runs underneath it all: written principal approval for account-name changes, error corrections that add a second record rather than overwrite, blotters kept 3 years and CAT data 5, plus the penny-stock friction layer (Schedule 15G before the trade, per-trade signed agreement, principal account approval) for every non-exempt customer.
Need more than the recap? This is a condensed summary. If it is not enough, read the full Trade Reporting unit for the complete lesson.