FINRA Brings 144A Corporate Debt Transactions Into the Light

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today began publicly disseminating Rule 144A transaction data in corporate debt securities, bringing transparency to a market that had previously operated in the dark. 144A transactions—resales of restricted corporate debt securities to large institutions called qualified institutional buyers (QIBs)—account for a significant portion of the volume in corporate debt securities. In the first quarter of 2014, 144A transactions comprised nearly 13 percent of the average daily volume in investment-grade corporate debt, and nearly 30 percent of the average daily volume in high-yield corporate debt. 144A transactions comprised nearly 20 percent of the average daily volume in the corporate debt market as a whole.

"We're excited to increase transparency in this opaque market. The information will help professional investors and contribute to more efficient pricing of these securities, as well as inform valuation for mark-to-market purposes," said Steven Joachim, FINRA Executive Vice President, Transparency Services.

Last year, pursuant to the JOBS Act, the SEC lifted the prohibition against general solicitation and general advertising in offerings of 144A securities, and FINRA believes that bringing post-trade price transparency to 144A transactions in corporate debt is in harmony with the changes approved by the SEC.

Through the Trade Reporting and Compliance Engine (TRACE) (, FINRA will disseminate 144A transactions subject to the same dissemination caps that are currently in effect for non-144A transactions. The same dissemination cap for investment-grade corporate bonds ($5 million) applies to both 144A and non-144A corporate bond transactions, and the $1 million dissemination cap for high-yield corporate bonds similarly applies to both 144A and non-144A transactions. 144A transactions are also subject to the same 15-minute reporting requirement as non-144A corporate debt transactions.

Market professionals are able to access the information via major market data vendors. Retail investors who may be interested in this information as a reference point also for non-144A transactions will have free access to this data through FINRA's Market Data Center starting Tuesday, July 1.

TRACE was established in July 2002 to create a regulatory database and bring transparency to the corporate bond market. Transparency in non-144A transactions was fully phased in by January 2006, offering real-time, public dissemination of transaction and price data for all publicly traded corporate bonds—including intra-day transaction data and aggregate end-of-day statistics (most active bonds, total volume, advances and declines, and new highs and lows). Agency debentures were added in March of 2010 and are subject to real-time dissemination. On November 12, 2012, FINRA began disseminating transaction information for agency pass-through mortgage-backed securities traded "to-be-announced" (TBA). FINRA began disseminating information for so-called specified pool transactions in agency pass-through mortgage-backed securities and SBA-backed securities in July 2013.

FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business—from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.