7120. Trade Reporting Participation Requirements
(a) Mandatory Participation for Clearing Agency Members
(1) Participation in the System is mandatory for any FINRA member that has an obligation to report an over the counter transaction to FINRA, unless the member has an alternative electronic mechanism pursuant to FINRA rules for reporting and clearing such transaction. Such participation in the System shall include the reconciliation of all over the counter clearing agency eligible transactions.
(2) Participation in the System shall be conditioned upon the Participant's initial and continuing compliance with the following requirements:
(A) execution of, and continuing compliance with, a Participant Application Agreement;
(B) membership in, or maintenance of an effective clearing arrangement with a member of, a clearing agency registered pursuant to the Exchange Act;
(C) compliance with all applicable rules and operating procedures of FINRA and the SEC;
(D) maintenance of the physical security of the equipment located on the premises of the Participant to prevent unauthorized entry of information into the System; and
(E) acceptance and settlement of each trade that the System identifies as having been effected by such Participant, or if settlement is to be made through a clearing member, guarantee of the acceptance and settlement of each System identified trade by the clearing member on the regularly scheduled settlement date.
(3) Participation in the System as a Clearing Broker shall be conditioned upon the Clearing Broker's initial and continuing compliance with the following requirements:
(A) execution of, and continuing compliance with, a Participant Application Agreement;
(B) membership in a clearing agency registered pursuant to the Exchange Act;
(C) compliance with all applicable rules and operating procedures of FINRA and the SEC;
(D) maintenance of the physical security of the equipment located on the premises of the System Clearing Broker to prevent the unauthorized entry of information into the System; and
(E) acceptance and settlement of each trade that the System identifies as having been effected by itself or any of its correspondents on the regularly scheduled settlement date.
(4) Each Participant shall be obligated to inform FINRA of non-compliance with any of the participation requirements set forth above.
(b) Participant Obligations
(1) Access
Upon execution and receipt by FINRA of the Participant Application Agreement, a Participant may commence input and validation of trade information in ADF-eligible securities. Participants may access the service through computer interface or such other service as may be designated by FINRA during the hours of operation specified by FINRA. Prior to such input, all Participants, including those that have trade report information submitted to FINRA by any third party, must obtain from FINRA a unique identifying Market Participant Symbol ("MPID"), and use that identifier for trade reporting and audit trail purposes.
(2) Participant Obligations
(A) Participants shall commence participation in the System by initially contacting FINRA Market Operations to verify authorization for submitting trade data to the System for ADF-eligible securities.
(B) A Participant that is a self-clearing firm shall be obligated to accept and clear each trade that the System identifies as having been effected by that Participant.
(C) A Participant that is an introducing broker or a correspondent executing broker shall identify its clearing broker when it becomes a System participant and notify FINRA Market Operations if its clearing broker is to be changed; this will necessitate execution of a revised Participant Application Agreement.
(D) If at any time a Participant (either the Reporting Party or contra party) fails to maintain a clearing arrangement, it shall be removed from the System, and be precluded from participation in ADF until such time as a clearing arrangement is reestablished and notice of such arrangement, with an amended Participant Application Agreement, is filed with FINRA.
(E) Testing
Except as set forth below, Participants that intend to use the ADF for trade reporting only and connect to the ADF via a Financial Information eXchange (FIX) line must participate in annual connectivity and capacity/stress testing. Members required to participate in annual testing pursuant to this Rule shall not be charged fees under Rule 7530(c) for the annual testing.
(i) Participants are not required to participate in connectivity testing if they report at least 100 trades per month to the ADF.
(ii) Participants are not required to participate in capacity/stress testing unless their ADF activity levels or their capacity projections based on their current usage of a Trade Reporting Facility have increased by more than 20% from the previous year.
(3) Clearing Broker Obligation
(A) System clearing brokers shall be obligated to accept and clear as a party to the transaction each trade that the System identifies as having been effected by itself or any of its correspondent executing brokers. Clearing brokers may cease to act as principal for a correspondent executing broker at any time provided that notification has been given to, received and acknowledged by FINRA Market Operations and affirmative action has been completed by FINRA Market Operations to remove the clearing broker from the System for that correspondent executing broker. The clearing broker's obligation to accept and clear trades for its correspondents shall not cease prior to the completion of all of the steps detailed in this subparagraph (3).
(B) If at any time a System clearing broker fails to maintain a clearing arrangement, it shall be removed from the System until such time as a clearing arrangement is reestablished, and notice of such arrangement, with an amended Participant Application Agreement, is filed with FINRA.
| Amended by SR-FINRA-2016-031 eff. Sep. 12, 2016. Amended by SR-FINRA-2014-045 eff. Dec. 1, 2014. Amended by SR-FINRA-2013-053 eff. Feb. 3, 2014. Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008. Amended by SR-NASD-2006-091 eff. March 5, 2007. Amended by SR-NASD-2005-087 eff. Aug. 1, 2006. Adopted by SR-NASD-2002-97 eff. July 29, 2002. Selected Notices: 08-57, 16-33. |
- Regulatory Notice 16-33August 24, 2016