FINRA offers advice to firms that must start reporting Asset-Backed Securities (ABS's) transactions to TRACE on Monday, 5/16/11.  Although firms have up to two business days (T + 1) to report such ABS transactions, FINRA asks that firms submit these reports as soon as practicable after the execution of a transaction and throughout the trading day.   Read further to understand FINRA's concerns.  

        Pilot Program Adopted to Ease in Transition.   Firms expressed concerns about having to report ABS transactions to TRACE starting Monday, 5/16.  They reacted to FINRA's general requirement that such ABS transactions must be reported no later than the close of the TRACE System on the date of trade (T), with certain exceptions - particularly as it related to certain more complex ABS transactions.

As a result, FINRA and SEC agreed to establish a Pilot Program that will allow more time for reporting such ABS transactions to TRACE during the first 6 months of reporting - which gives firms more flexibility (an additional day) for timely reporting.  During the Pilot Program, FINRA Rule 6730 permits transactions in ABS executed on a business day to be reported no later than the next business day (T+1) during TRACE System Hours.  Upon expiration of the Pilot Program, most transactions in ABS must be reported the day of
execution during TRACE System Hours to be timely reported.

        Queuing of ABS Transaction Reports.   The system is designed to accept transaction reports throughout the trading day.  However, FINRA understands that certain firms prefer to queue ABS transaction reports and report such transactions at or near the close of the  permissible reporting time period - i.e., on T + 1 during the Pilot Program and trade date after the expiration of the Pilot Program. 

If a large number of firms adopt such ABS trade reporting practices, FINRA anticipates possible processing delays - due to system capacity issues  - which, in turn, may result in firms being unable to report timely.  To prevent such system problems, FINRA requests that firms report trades in ABS's as soon as practicable and throughout the course of the trading day rather than queuing such reports until the end of the reporting time period. If firms do not voluntarily report in this manner, it may become necessary to amend FINRA Rule 6730(a)(3) specifically to require that firms report “as soon as practicable” in all cases.

For further details, go to:   [FINRA Trade Reporting Notice, 5/10/11]