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Glossary > Finance > Regulatory And Compliance > Financial Industry Regulatory Authority (FINRA)
Legal Disclaimers

Trade Reporting And Compliance Engine (TRACE)

The Trade Reporting and Compliance Engine (TRACE) is a tool created by the Financial Industry Regulatory Authority (FINRA) to improve market transparency by requiring broker-dealers to report transactions in eligible fixed-income securities within specified time frames.

Example #1

When an investor buys or sells corporate bonds or other eligible securities, the broker-dealer is required to report the details of the transaction to TRACE for public disclosure.

Example #2

TRACE allows investors to access information on bond transactions, including prices and volumes, which can help them make more informed investment decisions.

Misuse

One misuse of TRACE could be a broker-dealer failing to report bond transactions accurately or in a timely manner. This could mislead investors about the true market conditions and potentially expose them to greater risks. It is essential to monitor and enforce accurate reporting to maintain market integrity and protect investors.

Benefits

An important benefit of TRACE is that it promotes market transparency by providing investors with access to real-time pricing information for fixed-income securities. This transparency can lead to fairer pricing for investors and greater market efficiency.

Conclusion

TRACE plays a crucial role in promoting transparency and integrity in the fixed-income securities market by requiring timely reporting of transactions. By ensuring that investors have access to relevant information, TRACE empowers them to make informed investment choices.

Last Modified: 4/30/2024
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