A100.11: As part of FINRA’s regular cycle examinations of members, the monthly Trading Activity Fee reports will be audited against the books and records of the member to ensure the accuracy of the reports. Q200.16: As a clearing firm, I receive transactions from my correspondents bundled together for clearing purposes, often referred to as “compressed” trades. The TAF generally applies to transactions in securities that, under the TRACE Rules, are defined as "TRACE-Eligible Securities" (as defined in Rule 6710(a)) and that fall within the definition of a "Reportable TRACE Transaction" (as defined in Rule 6710(c)) and all municipal securities subject to MSRB reporting requirements under MSRB Rule G-14. 1 See TRACE User Guide specifying how agency transactions are to be reported to TRACE and MSRB’s RTRS Specifications specifying how agency transactions are to be reported to RTRS. A500.3: The fee will be assessed on a per contract basis. Based on the member’s determination, the TAF will apply if the transaction is required to be trade reported to either TRACE or the MSRB. Q400.3: Will the Trading Activity Fee be assessed on the exercise of an option? How is the TAF assessed on transactions effected via such relationships?A200.9: For purposes of the TAF, the sponsoring member is viewed as acting as agent on behalf of the sponsored participants. However, options that are cash-settled, which do not result in the delivery of the underlying security or securities, do not result in a Trading Activity Fee assessment. rule flows One exception to this rule is when the principal amount of one bond in is something other than $1,000 (such as so-called "baby bonds"), the maximum fee should be calculated using the actual number of bonds. See the FINRA By-Laws, Schedule A, Section 1 for the Trading Activity Fee rates and the minimum and maximum fee rates. BrokerCheck is a trusted tool that shows you employment history, certifications, licenses, and any violations for brokers and investment advisors. Explanation: The Securities and Exchange Commission has approved FINRA Rule 3110(e), which requires member firms to conduct independent background checks on candidates applying for registration with … Q200.4: If I am a registered market maker on a national securities exchange and receive an order from a customer that I send to a national securities exchange for execution, is that transaction exempt from the TAF?A200.4: Transactions executed on behalf of a registered market maker’s own customer, including agency and riskless principal transactions, will be assessed the TAF. The current rate is about $0.000119 per share for stocks with a … Specifically: Q200.8: How is the TAF assessed on equity trades executed in a riskless principal capacity? Need Help? Does the fee have minimum and maximum rates?A100.9: The rate for the Trading Activity Fee is based on aggregate volumes. FINRA’s fee proposal to the SEC would boost member firm fees from gross income, trading activity, number of reps, registrations and qualification exams, according to the SEC filing. A100.14: Section 1 of Schedule A to FINRA By-Laws provides that members shall be assessed a TAF for the sale of covered securities. Members executing sell orders for equity securities in an agency capacity on behalf of a non-FINRA member broker-dealer will be assessed a TAF regardless of whether the trade is executed on a national securities exchange or over-the-counter. Discrepancies may result in disciplinary action, depending on the facts and circumstances. This includes costs associated with performing examinations, financial monitoring, and FINRA’s policy, rulemaking, interpretive and enforcement activities. If, however, the original sell order was received from another broker-dealer rather than a customer, the firm acting as the intermediary will only be assessed the TAF once, when the intermediary sells the security as a principal to a customer or another dealer. ?A200.15: The scope of the Trading Activity Fee was designed to include only the initial execution of a transaction. Complete FINRA Trading Activity Fee Self-Reporting Form - Finra online with US Legal Forms. As a general matter, corporate debt that, at issuance, has a maturity of one year or less is not TRACE eligible and, therefore, is not subject to the TAF. We offer tips to help you manage your personal finances and set sound financial goals—and we explain in plain language key investing concepts, different types of investments and investment professionals, and questions to ask. In addition, transactions that are primary market transactions, but do not meet either definition (e.g. are intended to aid firms as they develop and review their procedures to ensure they are accurately calculating the TAF. Q400.4: If a member effects a sale of an exchange listed option contract and the subsequent exercise of the option contract results in physical delivery of securities, does the member pay the TAF on both the sale of the option and the delivery of the securities upon exercise? Clearing firms must have a mechanism in place that will allow them to identify the individual components of compressed clearing entries so that the TAF may be properly calculated based on the individual executions. A200.2: Only those proprietary transactions executed on a national securities exchange in a member's capacity as an exchange specialist or market maker are excluded from the TAF. Q100.17: How is the TAF assessed when a member, including an ATS or ECN, matches a customer order with a Broker-Dealer order? It is not permissible to apply the maximum transaction limit based on a compressed clearing entry. 100,000+ Traders. However, the requirements to report the size (volume) of an ABS differ if the security amortizes over time. In mid-2012, FINRA proposed increases to several fees. File a complaint about fraud or unfair practices. 06-71: Clarification of Exemption for Market Makers Acting in the Capacity of Exchange Market Maker and Interpretive Guidance Relating to Riskless Principal Transactions06-44: Exemption for Registered NASDAQ Market Makers Acting in the Capacity of Exchange Market Maker06-37: Exemption for Registered NASDAQ Market Makers Acting in the Capacity of Exchange Market Maker05-61: NASD Solicits Member Comment on Possible Realignment of the Trading Activity Fee; Comment Period Expires October 31, 200505-23: NASD Issues Further Guidance on the Trading Activity Fee05-03: NASD Provides Updated Options Exemption Listing for the Trading Activity Fee04-84: SEC Approves Adjustments to the Trading Activity Fee03-43: SEC Approves Increase to the Trading Activity Fee03-30: SEC Approves Revisions to NASD By-Laws Regarding Trading Activity Fee02-75: NASD Provides Additional Information on the Trading Activity Fee02-63: NASD Provides Additional Information on Amendments to Section 8 of Schedule A to NASD's By-Laws to Eliminate the Regulatory Fee and to Implement a New Transaction-Based Trading Activity Fee as Announced in Notice to Members 02-41; Implementation Date: October 1, 200202-41: NASD Informs Members of Proposed Changes to NASD's Gross Income Assessment, Personnel Assessment, and Regulatory Fee. The guidance in this FAQ addresses general questions about the TAF, as well as specific questions about reporting the TAF for equity, debt, options and futures transactions. Richard John Denecker Jr. (also known as Dick Denecker) of Richmond Virginia a stockbroker currently registered with UBS Financial Services has been fined $5,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based on findings that Denecker engaged in unauthorized trading in customer accounts at UBS. Starting February 1, 2015, FINRA will implement a new Trading Activity Fee (TAF) automated filing process that will allow firms to report their TAF volumes to FINRA electronically. Report #2: Broker #1 (as agent) SELL 100 bonds to customer (or Broker #2). Q100.10: Do rounding rules apply for the Trading Activity Fee?A100.10: Rounding rules do not apply because the Trading Activity Fee is calculated and reported in aggregate. Firms will still submit manual paper forms for filings or amendments for filing periods December 2014 and earlier. The flows identify decision points firms should evaluate when determining whether a particular type of transaction is subject to the fee. A100.12: For a trade that is cancelled and later corrected, the TAF would apply to the corrected trade. One exception to this rule is when the principal amount of one bond is something other than $1,000 (such as so-called "baby bonds"), the maximum fee should be calculated using the actual number of bonds. The Factor is either reported by the member, or, in most cases, is incorporated in the TRACE system by FINRA and not reported by the member as provided in Rule 6730(d)(2). Review Section 1 of Schedule A to the FINRA By-Laws for the specific types of securities and transactions subject to, or exempt from, the TAF. The member then executes ten 100,000 share trades to fill the investment advisor’s order. Effective July 2, 2012, FINRA increased the filing fees for filing offering documents pursuant to the Corporate Financing Rule from .01 percent to 0.015 percent of the proposed maximum aggregate offering price, plus $500, and increased the maximum filing fee cap from $75,500 to $225,500. A400.3: The exercise of an option is subject to the TAF if the exercises results in the physical delivery of the underlying security or securities. Finally, the TAF does not apply to TRACE-reportable transactions in U.S. Treasury Securities. Certain countries charge additional pass-through fees (see below). Example: A member opens a position (long or short) of 100 contracts. Q100.16: How is the TAF assessed when a member, including an ATS or ECN, matches customer orders? Finra is seeking to increase the fees it charges for trading activity in equity securities. “at the market offerings”), would not be subject to TAF. The TAF rate also remains the same: $0.00075 per bond for each sale of a covered TRACE-Eligible Security (other than an Asset-Backed Security), with a maximum charge of $0.75 per trade. Members executing sell orders for equity securities in a riskless principal capacity on behalf of a non-broker-dealer customer will be assessed the TAF. The U.S. Financial Industry Regulatory Authority Inc. (FINRA) is seeking to boost the fees it collects from the industry by US$225 million annually by 2024. Q200.6: If a non-FINRA member floor broker executes a trade on a FINRA member’s behalf on the floor of a national securities exchange, will the TAF be assessed on the floor broker?A200.6: Non-FINRA member floor brokers acting as agent on a FINRA member’s behalf will not be assessed the Trading Activity Fee. While a round turn transaction in a futures product is assessed a TAF based on the futures fee structure, any settlement of a futures product is assessed a TAF based on the equity fee structure. Clearing firms must have a mechanism in place that will allow them to identify the individual components of compressed clearing entries so that the TAF may be properly calculated based on the individual executions. Q100.12: Does the TAF apply to trades that are cancelled and subsequently corrected? Does FINRA view the clearing firm as the executing broker for purposes of the TAF for executions occurring via these electronic order delivery systems? Members executing sell orders for equity securities in a riskless principal capacity on behalf of a non-FINRA member broker-dealer will be assessed a TAF regardless of whether the trade is executed on a national securities exchange or over-the-counter. Q100.6: Should the data be submitted to FINRA by the clearing firm for the Trading Activity Fee?A100.6: Data should be submitted as monthly aggregates at the clearing firm level. File a complaint about fraud or unfair practices. Q100.9: How do you calculate the rate for the Trading Activity Fee? FINRA regulates trading in equities, corporate bonds, securities futures, and options. For dually registered BD/RIAs or BDs with affiliated investment advisors, both the block transaction and the transactions representing allocations to customer accounts are reportable events and may be TAF-assessable. Such a trade is not executed in, or does not pass through, the broker-dealer’s proprietary account, and is appropriately identified on firm transaction records as an agency transaction. A200.8: The TAF is assessed on equity trades executed in a riskless principal capacity in the same manner as equity trades executed in an agency capacity. Q100.4: How often is the Trading Activity Fee assessed? If the member can link the ten street side trades to the four account level average price confirmations, the member may calculate the fee based on either the ten street side trades (ten sales at $5) or on the account level average price confirmations (four sales at $5). Q200.12: Are convertible bonds included in the scope of the Trading Activity Fee?A200.12: Convertible debt is included in the scope of the Trading Activity Fee, and the fee rate shall be determined by the facility to which the trade report is submitted (i.e., if reported to an equity reporting system, the fee should be assessed per the equity securities rate; if reported to TRACE, it should be assessed per the bond fee rate). The Trading Activity Fee will be assessed on the firm delivering the underlying security or securities. The TAF rule flowsare intended to aid firms as they develop and review their procedures to ensure they are accurately calculating the TAF. For TAF purposes, FINRA views these trade reports as one transaction, and Broker #1 would be assessed one fee for the transaction. The chart below illustrates the impact of a 1% ongoing . Easily fill out PDF blank, edit, and sign them. A200.18: A member may choose to calculate the TAF based on either the one 400,000 share sale from the firm’s proprietary account or at the individual customer account level. In addition to the above rebate incentives, QMMs that execute shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent 1.00% or more of Consolidated Volume during the month will be assessed a discounted remove fee of $0.00295 in Tapes A and B for shares executed (in securities priced at or greater than $1). FINRA IS A REGISTERED TRADEMARK OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. FINRA operates the largest securities dispute resolution forum in the United States, Report a concern about FINRA at 888-700-0028. FINRA proposed updating the method for calculating trade reporting fees under FINRA Rule 7620B for broker-dealers using the FINRA/NYSE Trade Reporting Facility (the "FINRA/NYSE TRF"). A100.18: When a member matches as agent a buy order from a Broker-Dealer with a sell order from a Broker-Dealer, the TAF is assessed as follows: Q200.1: Does the Trading Activity Fee apply to transactions effected on a national securities exchange by a dually registered specialist or floor based market maker in a covered equity security? A300.1: Convertible debt is included in the scope of the Trading Activity Fee, and the fee rate shall be determined by the facility to which the trade report is submitted (i.e., if reported to an equity reporting system, it should be assessed per the equity securities rate; if reported to TRACE, it should be assessed per the bond fee rate). Important Note: The TAF rule flows do not include all possible scenarios your firm may encounter, and should be reviewed in conjunction with Section 1 of Schedule A to FINRA’s By-Laws and the TAF Frequently Asked Questions (see below). A100.17: When a member matches as agent an order from a customer with an order from a Broker-Dealer, the TAF is assessed as follows: Q100.18: How is the TAF assessed when a member, including an ATS or ECN, matches Broker-Dealer orders? Under FINRA Rule 5320, trading ahead of customer orders is strictly prohibited. Q300.9: How is the TAF applied to covered debt securities transactions with investment advisors that ultimately allocate the order among multiple customers? A300.11: No. However, the methodology chosen by the member to calculate the TAF assessment must be consistently applied to all average price transactions and must be documented by the member. I do not receive the individual components of these compressed clearing entries. 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To report on abuse or fraud in the industry, FinPro (The Financial Professional Gateway), Securities Industry Essentials Exam (SIE), Financial Industry Networking Directory (FIND), Section 1 of Schedule A to the FINRA By-Laws, Section 1 of Schedule A to FINRA’s By-Laws, See the FINRA By-Laws, Schedule A, Section 1, Customer Buy Order matched as agent with FINRA Member Broker-Dealer Sell Order, TAF is assessed on the selling FINRA Member Broker-Dealer, Customer Sell Order matched as agent with FINRA Member Broker-Dealer Buy Order, TAF is assessed on member executing the cross, Customer Buy Order matched as agent with non-FINRA Member Broker-Dealer Sell Order, Customer Sell Order matched as agent with non-FINRA Member Broker-Dealer Buy Order, FINRA Member Broker-Dealer Buy Order matched as agent with FINRA Member Broker-Dealer Sell Order, Non-FINRA Member Broker-Dealer Sell Order matched as agent with FINRA Member Broker-Dealer Buy Order, Non-FINRA Member Broker-Dealer Buy Order matched as agent with FINRA Member Broker-Dealer Sell Order, Non-FINRA Member Broker-Dealer Sell Order matched as agent with non-FINRA Member Broker-Dealer Buy Order. 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