Welcome to Reporting Trades to the Designated Reporting Facility: the unit that decides where an off-exchange trade report goes, who has to send it, what it must say, and how fast it must get there.
Exam Weight: about 4 of the 50 scored items (CertFuel planning estimate; FINRA publishes weights only by function, and Function 2, Maintaining Books and Records, Trade Reporting and Clearance and Settlement, is 9 items / 18%)
What You'll Learn
In this unit, you'll cover:
- The Reporting Obligation and Which Facility Takes the Trade: which securities are reported off-exchange, which facility accepts each one, and what FINRA publishes about a member's own volume
- Distinctions Among the Reporting Facilities: where participation is mandatory, where it is not, the five participation conditions, and the ways the FINRA/NYSE facility differs from the other three
- Multiple MPIDs for Reporting Facility Participants: the approval a second market participant identifier needs, the separate identifier a participant operating an alternative trading system must obtain, and the dark pool volume opt-in
- Which Party Reports, and What the Report Contains: the executing party test, the sell-side tiebreak, give-up agreements, and the six data items a last sale report carries, or five at the OTC Reporting Facility
- Timing of Trade Reports: the 10-second clock, the four outside-hours windows at each facility, the cancellation deadlines, and when a report goes on a paper form instead
- Trade Report Modifiers: the eleven lettered modifier subparagraphs at the three national market system facilities, the eight at the OTC Reporting Facility, one reserved on each list, and the two that need a second time field
- Tape, Non-Tape and Clearing-Only Reports, and Trades That Are Not Reported: the riskless principal exception, the step-out reports, the seven excluded transaction types, or five at the OTC Reporting Facility, and the three reported for fees only
- Trade Report Input, Acceptance and Processing: the data elements, the twenty-minute accept-or-decline window and the three lock-in methods that three of the four facilities carry, and the automatic lock-in cut-off
- Obligation to Honor Trades and Audit Trail Requirements: why the system's record binds a participant, and why every data element is an audit trail obligation
- Trade Reporting Exemptions for Alternative Trading Systems: the five criteria staff must find satisfied, what the exempt system still has to publish, and who reports the trade instead
- Violation of the Reporting Rules: what a single late report costs, what a pattern or practice costs, and the sentence that reaches beyond a pattern
Why This Matters
Function 2 is 9 of the 50 scored items, and trade reporting is the largest piece of it. A securities trader touches these rules on every off-exchange print, so the material is both heavily tested and used daily.
The unit builds from destination to content to timing to consequence:
- Which facility the security and the execution venue send you to
- Which of the two members has to file the report
- What the report must contain, and which modifiers ride on it
- What happens when the report is late, wrong, cancelled, or never sent at all
Let's start with the obligation itself, and with the question of which facility takes the trade.