Introduction

Welcome to Trade Reporting: the rules that govern how a broker-dealer (BD) reports each executed transaction to the correct FINRA facility, on time, with the correct modifiers, and how the firm preserves the resulting records. This unit is the post-execution reporting core of Function 4 on the Series 24 exam.

Exam Weight: Part of 21% (~32 questions across Function 4)

What You'll Learn

In this unit, you'll cover:

• Trade Reporting Facilities (TRF, ADF, ORF, TRACE): Which facility receives reports for NMS stocks executed off-exchange, OTC equities, restricted securities, and TRACE-eligible debt, plus the ATS reporting exemption for non-member subscribers
• Reporting Timeliness: The 10-second window for equity venues, the 15-minute window for TRACE, what makes a report "late," and how multiple MPIDs are used to map reporting activity to desks
• Modifiers and Special Conditions: Short-sale marking (short, short exempt) on every report under Reg SHO, the manipulative reporting prohibitions, and the obligation to provide trade information to FINRA on request
• Recordkeeping: Written principal approval for any account name/designation change, 3-year retention of trade-report blotters, modifier records, corrections, and the rule that an error correction creates a second record (not an overwrite)
• Definitions: Statutory definitions of clearing agency, market maker, listed, and qualified market maker / block positioner, plus how Reg ATS defines an Alternative Trading System
• Consolidated Audit Trail (CAT): The lifecycle reporting standard for orders, modifications, cancels, routes, and executions, the 8:00 a.m. ET T+1 report deadline, and the 50-millisecond clock-sync requirement against NIST
• Penny Stocks: The $5 / NMS / net-tangible-asset / revenue definition tests, the Schedule 15G disclosure document, the suitability and signed-agreement sales-practice requirement, and the established customer and excepted security exemptions
• Reporting-Rule Violations and Trade-Report Processing: The input, processing, comparison, and dispute mechanics on the TRF/ORF, what happens when a contra-party rejects a report, and how termination of access to a facility works

Why This Matters

The Series 24 exam tests three principal-level questions on this material:

• Whether the firm reports each trade to the correct facility within the correct time window with the correct modifiers (TRF vs ADF vs ORF vs TRACE; 10-second vs 15-minute; short, short exempt, late)
• Whether the firm's CAT reporting and clock-synchronization controls satisfy the CAT requirements (computer clocks within 50 milliseconds of NIST, T+1 reporting deadline, 5-year retention)
• Whether the firm's penny-stock supervision complies with the penny-stock regime (Schedule 15G delivery, signed agreement, account approval) for every non-exempt customer transaction

A firm that misroutes an off-exchange NMS trade to the ORF violates the trade-reporting facility rules; a firm whose order-management system clock drifts to 200 milliseconds violates the CAT clock-synchronization requirement even if no late trade reports occur; a firm that lets a registered rep self-approve a penny-stock customer purchase violates the penny-stock sales-practice rule. The exam pairs these because the rulebook does.

Let's start with the four FINRA reporting facilities and which products go to each.