Trade Reporting Facilities: TRF, ADF, ORF, and TRACE
Quick Answer
FINRA operates four trade-reporting facilities, each scoped to a different product. The TRF (Trade Reporting Facility) accepts reports for NMS stocks executed off-exchange. The ADF (Alternative Display Facility) accepts both quotes and trade reports for ADF participants in NMS stocks. The ORF (OTC Reporting Facility) accepts reports for non-NMS OTC equities and restricted equity securities. TRACE (Trade Reporting and Compliance Engine) accepts reports for eligible debt including corporates, agencies, MBS/ABS, and Treasuries. A firm must report each transaction to the correct facility based on the product and venue of execution.
A broker-dealer that executes a trade away from a registered exchange has to report that trade to FINRA somewhere. FINRA does not have one universal trade tape; instead, it operates four distinct facilities, each scoped to a specific product type. The principal's first job in trade reporting is to make sure the firm's desks know which facility applies to which trade and that the firm holds a participation agreement with each facility it uses.
The Four FINRA Reporting Venues
Each facility has its own input mechanics and product scope:
| Facility | Product Reported |
|---|---|
| FINRA/Nasdaq TRF (Carteret and Chicago) | NMS stocks executed OTC (off-exchange) when at least one party is a Nasdaq-affiliated TRF participant |
| FINRA/NYSE TRF | NMS stocks executed OTC when at least one party is an NYSE-affiliated TRF participant |
| Alternative Display Facility (ADF) | NMS stocks quoted and traded OTC by ADF participants (separate quote display and trade-report combo) |
| OTC Reporting Facility (ORF) | OTC equity securities (non-NMS) and restricted equity securities |
| TRACE | Eligible debt: corporate bonds, agency debt, MBS/ABS, Treasuries, certain securitized products |
The TRF and ADF both serve NMS stocks, but the routing is different. A TRF accepts reports from members executing trades off-exchange; the ADF is a hybrid quote-and-trade facility for participants that want a non-exchange quote display and trade-report combo. The ORF is the OTC-equity facility (think Pink Sheets and OTCBB-style securities, plus restricted shares). TRACE is exclusively for debt.
Think of it this way: The product determines the facility. NMS stock off-exchange goes to a TRF or ADF. Non-NMS OTC equity goes to the ORF. Debt goes to TRACE. Misrouting a trade is a reportable violation independent of any timing problem.
Exam Tip: Gotchas
- Off-exchange NMS-stock executions go to a TRF or the ADF, NEVER to the ORF. The ORF is only for OTC equities (Pink/OTCBB-style securities) and restricted securities. Misrouting an NMS-stock report to the ORF is a discrete trade-reporting violation.
- The ADF does both quotes and trade reports. The TRF and ORF only do trade reports; quotes for those venues are distributed through other channels (the SIPs and inter-dealer quotation services).
- TRACE is only for debt. A common trap is to ask whether a corporate-bond trade should be reported to the ORF; the answer is no, it goes to TRACE.
ATS Trade Reporting Exemption
A subscriber that routes an order to a registered Alternative Trading System (ATS) does not always have to report the resulting execution. The ATS reporting exemption excuses the non-FINRA-member subscriber from the trade-reporting obligation; the ATS itself reports the executed trade.
The exemption only applies if the subscriber is not a FINRA member. When two FINRA members execute against each other on an ATS, the executing party identified in the ATS rulebook is responsible for reporting (typically the ATS or the seller, depending on the ATS's rules).
Think of it this way: The point of the ATS exemption is to avoid double-reporting. If a buy-side firm (a non-member, like an institutional asset manager) routes to an ATS, the ATS handles the report. Without the exemption, both the ATS and the non-member would be on the hook, which would create duplicate records on the FINRA tape.
Exam Tip: Gotchas
- The ATS reporting exemption only applies to non-FINRA-member subscribers. Member-to-member ATS executions do not get the blanket exemption; the executing party identified in the ATS rulebook reports.
- The exemption is from the trade-reporting obligation, not from anything else. The non-member subscriber is still subject to short-sale marking (Reg SHO), customer-disclosure rules, and any obligations imposed by the ATS itself.
Participation Agreements and Desk Mapping
A member that wants to report through any of these facilities must have a participation agreement with that facility on file. The principal must verify that:
- Each desk that executes off-exchange knows which facility applies to its product
- The firm has a current participation agreement with every facility it uses
- The firm's MPIDs (Market Participant Identifiers, covered in the next section) are mapped to the right desks and the right facilities
A failure to map a desk to its correct facility is the precursor to misrouted reports, which is the precursor to trade-reporting violations across any of the four facilities.
Exam Tip: Gotchas
- A participation agreement is facility-specific, not universal. A firm with a Nasdaq TRF agreement is not automatically authorized to report through the ORF or TRACE; each facility requires its own agreement.
- The principal's role here is mapping verification. The exam tests whether the supervisor confirms each desk knows its facility. A trader who does not know whether a security is NMS, OTC equity, or restricted will misroute the report; that is a supervision failure even if the misrouting is a one-off mistake.