FINRA Rule 7130

That original rule was written specifically around the Trade Reporting and Comparison Service, or TRACS, directing members to utilize TRACS to report transactions required under the Rule 4630A Series, and describing TRACS's own internal processing logic, including its treatment of automatically locked-in trades destined for the National Securities Clearing Corporation and its distinction between regular-way settlement trades eligible for comparison and non-regular-way trades, such as cash, next-day, or seller's option settlement, which TRACS would not compare or forward to DTCC at all.

FINRA substantially rewrote this TRACS-specific language through SR-FINRA-2013-053, the same filing discussed in the Rule 7110 and Rule 7120 entries elsewhere in this dictionary, effective February 3, 2014. The amended rule replaced the instruction to "utilize TRACS to report transactions" with the more general requirement that members "comply with the Rule 7100 Series when reporting transactions to the System," a change that eliminated the rule's dependence on TRACS-specific terminology and processing descriptions in favor of language equally applicable regardless of the specific underlying technology platform. This 2014 rewrite also removed detailed references to the settlement-type distinctions that had determined whether TRACS would compare a given trade, streamlining the rule's structure considerably.

When and How Transactions Must Be Reported

Participants must transmit trade reports to the System for Reportable System Transactions as soon as practicable, but no later than 10 seconds after execution, or such other time period FINRA rules prescribe, or must accept or decline a previously submitted trade report within 20 minutes after execution, depending on which side of the transaction the Participant occupies. This dual timing structure reflects the ADF's trade acceptance and comparison functionality: a Reporting Party enters its version of the trade into the System, and the contra party then has a window to review and either accept or decline that submitted trade information. Where no give-up agreement exists between the parties, this trade acceptance and comparison functionality is mandatory rather than optional. The ADF also separately offers matching functionality, in which each party independently enters its own version of the trade information and the System itself matches the two submissions, governed under Rule 7140 rather than Rule 7130 itself.

FINRA's own guidance confirms that firms are not required to capture execution time in milliseconds if their underlying systems do not already do so, and may continue reporting in whole seconds instead; where a firm's system does capture milliseconds, however, that finer granularity must be reported. This millisecond flexibility mirrors the analogous accommodation found in the OTC Reporting Facility and Trade Reporting Facility rules, and FINRA has stated it expects the percentage of firms reporting in milliseconds to increase over time as trading technology continues to advance industry-wide.

Content Requirements for Each Trade Report

Rule 7130 requires each trade report to include specific data elements: the security identification symbol for the ADF-eligible security, the number of shares, the unit price, the time of execution, an indicator identifying which party is submitting the report, an indicator specifying whether the transaction is a buy, sell, or cross, and detailed information identifying the broker or brokers involved in the transaction, information that together allows the Central Repository and FINRA's own surveillance systems to correctly reconstruct the transaction's essential terms and participants. Beyond these baseline content elements, Rule 7130 addresses several more specialized reporting scenarios directly. Where the System is used to transfer a transaction fee between two FINRA members, the trade report must comply with the specific requirements of Rule 7130(h): a member selling 100 shares at $10 per share plus a $0.01 transaction fee reports 100 shares at $10, the price exclusive of the transaction fee, to the System for publication, while separately reporting pricing information reflecting a $10.01 per share price inclusive of the transaction fee for clearance and settlement purposes. Before submitting any such report, both members and their respective clearing firms must have executed an agreement permitting this fee transfer, along with any other applicable agreement such as a give-up agreement under Rule 6282(h), and must have submitted the executed agreements to FINRA Market Operations; these agreements are themselves treated as member records under Rule 4511, subject to FINRA's ordinary recordkeeping obligations, and executing this fee-transfer mechanism does not relieve a member of its separate obligations under Rule 2232 and SEA Rule 10b-10 governing customer confirmations.

For any transaction where the System is used to clear a trade, the report must indicate whether the trade is to be compared within the System itself or is instead locked in pursuant to an Automatic Give-Up Agreement or a Qualified Special Representative Agreement, and, where applicable, a report may carry a unique indicator FINRA specifies to denote a clearing-only, non-regulatory report.

Reporting for Regulatory Transaction Fee Purposes Only

Rule 7130(f) addresses a category of transaction that is not reported to the ADF for public dissemination at all, but must nonetheless be reported for purposes of assessing the regulatory transaction fee under Section 3 of Schedule A to the FINRA By-Laws. 

These include transactions where the buyer and seller have agreed to trade at a price substantially unrelated to the current market for the security, such as a transfer structured to enable the seller to make a gift; purchases or sales effected upon the exercise of an option according to its terms, or the exercise of any other right to acquire securities at a pre-established price unrelated to the current market; and transfers of proprietary securities positions effected in connection with a merger or a direct or indirect acquisition, provided that transfer is not undertaken in furtherance of a trading or investment strategy. 

For this merger-related category specifically, members must provide FINRA at least three business days advance written notice of their intent to rely on this exception, including the basis for their determination that the transfer genuinely meets its terms, mirroring the identical advance-notice requirement discussed in the FINRA Rule 6750 entry elsewhere in this dictionary in the TRACE dissemination context.

These regulatory-fee-only transactions must be submitted to the System by 6:30 p.m. Eastern Time, or the end of the System's reporting session then in effect if different, and may be entered as either clearing or non-clearing reports.

Cancellations, Reversals, and End-of-Day Processing

With the exception of trades FINRA staff cancels under the Rule 11890 Series, members must report to the System the cancellation or reversal of any trade previously submitted, with the member responsible under FINRA rules for the original report also bearing responsibility for submitting any subsequent cancellation or reversal report. 

The System's end-of-day processing follows a specific cycle: T+N entries may be submitted until 6:30 p.m. each business day, and at the end of daily matching, all declined trade entries are purged from the System entirely. Open trades, meaning those that remain unmatched or unaccepted, are treated differently; rather than being purged, they carry over to the next business day for continued comparison and reconciliation, consistent with the T+21 calendar day automatic lock-in mechanism discussed in the Rule 7140 entry elsewhere in this dictionary.

A Worked Example of the Fee Transfer Mechanism

Consider two FINRA members that have agreed to use the ADF's transaction fee transfer mechanism for a block of trades between them, with one member charging the other a small per-share transaction fee as part of their ongoing business relationship. For a sale of 500 shares at $25.00 per share with a $0.02 per share transaction fee, the reporting member submits the trade to the ADF for publication at the exclusive price, $25.00 per share, ensuring that the publicly disseminated last sale report accurately reflects the actual market price of the transaction rather than a price inflated by the private fee arrangement between the two firms. Separately, for clearance and settlement purposes, the report reflects the inclusive price of $25.02 per share, the figure the two firms' clearing systems will actually use to settle the transaction between themselves.

This dual-price structure exists specifically to prevent private fee arrangements between two firms from distorting the publicly visible last sale price other market participants rely on when assessing where a security is actually trading. A market participant observing the ADF's disseminated data sees the $25.00 exclusive price, an accurate reflection of the underlying market transaction, while the firms themselves settle at the $25.02 inclusive price reflecting their actual private commercial arrangement. 

Firms relying on this mechanism should build clear internal documentation distinguishing these two price figures in their own trade records, since conflating them, whether in internal reporting, client confirmations, or regulatory recordkeeping, risks creating exactly the kind of market-distorting confusion this dual-price structure was specifically designed to prevent.

Relevance Across FINRA's Examination Programs

The SIE, Series 63, and Series 65 do not test Rule 7130's specific content and timing requirements, since these exams do not reach into facility-level trade reporting mechanics at this level of technical detail. Series 7 candidates should understand conceptually that ADF trade reports must contain specific, standardized information reported within defined timeframes, reinforcing broader awareness of how OTC trade reporting functions generally without requiring command of the rule's specific content fields.

Series 24 candidates supervising a firm's ADF trade reporting activity need genuine operational command of the 10-second reporting standard, the 20-minute accept-or-decline window, and the fee-transfer and regulatory-fee-only reporting mechanics, since a principal's written supervisory procedures should specifically address how the firm ensures compliance with each of these distinct requirements. 

A principal should also understand the three-business-day advance notice requirement for merger-related proprietary position transfers precisely, given how easily this notice obligation can be overlooked amid the broader operational demands of a corporate transaction. 

Series 57 candidates handling actual trade report submission need direct, practical fluency with the required content elements and the distinction between the trade acceptance and comparison functionality and the matching functionality, since correctly identifying which functionality applies to a given trading relationship determines how that trader's own firm must actually submit its trade reports.

Practical Guidance for Firms

Firms using the ADF's fee-transfer mechanism under Rule 7130(h) should treat the underlying agreement execution and submission requirement as a genuine prerequisite completed well in advance of actual reliance on the mechanism, rather than something addressed only once a specific transaction requiring fee transfer has already occurred. 

Given that both members and their respective clearing firms must have executed and submitted the required agreement before any such report can properly be submitted, a firm that discovers this requirement only at the point of attempting to report a fee-transfer transaction risks a reporting delay or failure that proper advance preparation would have avoided entirely.

Firms relying on the merger-related proprietary position transfer exception should build the three-business-day advance notice requirement directly into their deal-planning timeline, treating it as a discrete compliance workstream item with a specifically assigned owner rather than an afterthought addressed once the underlying corporate transaction has already closed. 

Given how frequently fast-moving transaction timelines can crowd out compliance steps without an obvious natural place on a typical deal checklist, firms with recurring M&A-related proprietary position transfer activity should build a standing template or checklist specifically incorporating this notice requirement into their broader transaction execution process.

Firms should also periodically confirm their internal systems correctly distinguish between trades destined for public dissemination and the narrower category of transactions reportable solely for regulatory transaction fee purposes under Rule 7130(f), since conflating these two categories risks either failing to report a fee-assessment-only transaction that genuinely requires reporting, or mistakenly disseminating a transaction that was never intended for public display in the first place. 

A firm's trade reporting quality assurance program should specifically test for correct handling of these regulatory-fee-only transaction types as a distinct category, given how easily this narrower reporting obligation can be overlooked amid the much higher volume of ordinary, publicly disseminated trade reports a firm handles on a daily basis.

Firms should also build clear internal documentation addressing the end-of-day processing distinction between purged and carried-over trades, since a firm's own operational and reconciliation processes need to correctly anticipate that declined trade entries disappear from the System entirely at the end of daily matching, while genuinely open, unmatched trades instead persist and carry forward for continued reconciliation the following business day. 

A firm's own trade reporting reconciliation team should understand this distinction precisely, since treating a carried-over open trade as though it had been purged, or vice versa, risks a firm either failing to follow up on a trade that genuinely requires further resolution, or unnecessarily re-investigating a trade that has already been definitively closed out through the purging process.

Compliance teams training new trade reporting staff should specifically address the historical TRACS terminology still occasionally found in older internal documentation or training materials predating the 2014 simplification, ensuring new staff understand that references to TRACS-specific processing logic, including the older regular-way versus non-regular-way settlement distinctions the original rule once addressed directly, reflect a superseded framework rather than the current, facility-neutral standard actually governing ADF trade reporting today. A brief historical orientation of this kind can help prevent confusion when staff encounter older reference materials or conversations with longer-tenured colleagues who may still use legacy terminology out of habit.