meta_id 3440370

On August 26, 2026, the Financial Industry Regulatory Authority (FINRA) published Regulatory Notice 26-16, which amends FINRA's Trade Reporting and Compliance Engine (TRACE) rules to expand the scope of the principal transaction indicator to include transactions between member affiliates, in addition to the existing non-member affiliate transactions. The amendment modifies Rule 6730 and the definition of "affiliate" in Rule 6710 to encompass both non-member and member affiliates. Under the expanded rules, when a member and an affiliate transact in a principal capacity in a TRACE-eligible security, and both parties reasonably believe that a member or its member affiliate will engage in a same-day, same-price transaction with another counterparty, both members must append the affiliate-principal transaction indicator to their respective trade reports. This change reduces the dissemination of trade reports for transactions that are not economically distinct from separately disseminated transactions with other counterparties, thereby improving transparency of TRACE data. The notice includes four detailed scenarios illustrating how the expanded indicator operates under different business models and transaction structures. A critical provision requires that when a member transacts with both a member affiliate and a non-member affiliate on the same day, at the same price, in the same security, the member must append the indicator to only one of the two inter-affiliate trade reports to ensure at least one leg of the overall transaction remains subject to dissemination. The mandatory compliance date is August 2, 2027. Members may voluntarily comply beginning August 31, 2026. FINRA will update its TRACE reporting frequently asked questions to reflect these amendments. Members with questions should contact Alié Diagne, Senior Director, Transparency Services, at (212) 858-4092, or Erica Proctor, Associate General Counsel, at (202) 728-8864.