Specifically: Q200.8: How is the TAF assessed on equity trades executed in a riskless principal capacity? Members executing sell orders for equity securities in an agency capacity on behalf of a non-FINRA member broker-dealer will be assessed a TAF regardless of whether the trade is executed on a national securities exchange or over-the-counter. Q400.5: Are options involving narrow and broad based indexes exempt from the Trading Activity Fee?A400.5: Yes, the initial sale of an options contract involving a narrow or broad based index is excluded from the Trading Activity Fee. This should include aggregate number of shares for stocks, aggregate number of contracts for options and aggregate number of round turn transactions for security future products. FINRA’s fee proposal to the SEC would boost member firm fees from gross income, trading activity, number of reps, registrations and qualification exams, according to the SEC filing. Furthermore, following the TAF rule flows does not guarantee compliance with TAF requirements or provide a safe harbor from regulatory responsibility. A customer places an order to sell one million shares of a covered security and the member executes ten 100,000 share trades that are then allocated to the customer on an average price basis. Rather, the TAF is assessed on the FINRA member who is the ultimate seller of the security, not the firm acting as agent. The Factor is either reported by the member, or, in most cases, is incorporated in the TRACE system by FINRA and not reported by the member as provided in Rule 6730(d)(2). However, the FINRA member, the seller of the security, will be assessed the Trading Activity Fee on the transaction. Q200.16: As a clearing firm, I receive transactions from my correspondents bundled together for clearing purposes, often referred to as “compressed” trades. The flows identify decision points firms should evaluate when determining whether a particular type of transaction is subject to the fee. The chart above illustrates the effect of different ongoing fees on a over 20 years. It does not apply to primary market transactions. The FINRA claims attorneys of Epperson & Greenidge discuss some of the day trading rules and regulations that stockbrokers, investment advisors, and investors must comply with, such as minimum equity requirements. Q300.11: On February 6, 2012, the TRACE reporting requirements for trades in TRACE-Eligible Securities (other than Asset-Backed Securities) in Rule 6730 changed so that the size (volume) of a trade is reported based on the total par value or principal value traded rather than on the number of bonds. FINRA IS A REGISTERED TRADEMARK OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. FINRA operates the largest securities dispute resolution forum in the United States, Report a concern about FINRA at 888-700-0028. To report on abuse or fraud in the industry, FinPro (The Financial Professional Gateway), Securities Industry Essentials Exam (SIE), Financial Industry Networking Directory (FIND), Section 1 of Schedule A to FINRA’s By-Laws, Trading Activity Fee (TAF) Self-Reporting Form. Review Section 1 of Schedule A to the FINRA By-Laws for the specific types of securities and transactions subject to, or exempt from, the TAF. Q300.4: Does the TAF apply to all TRACE-reportable transactions and municipal transactions reported to the MSRB?A300.4: The TAF only applies to TRACE-reportable and municipal transactions effected in the secondary market. Q200.5: Are transactions executed by floor based brokers who are dually registered with FINRA and a national securities exchange exempt from the Trading Activity Fee? Members executing sell orders for equity securities in a riskless principal capacity on behalf of a non-FINRA member broker-dealer will be assessed a TAF regardless of whether the trade is executed on a national securities exchange or over-the-counter. ?A200.15: The scope of the Trading Activity Fee was designed to include only the initial execution of a transaction. Therefore, in an agency transaction executed on behalf of another FINRA member broker-dealer on a national securities exchange by a registered market maker, the TAF would be assessed on the FINRA member who is the ultimate seller of the security, not the FINRA member market maker acting as agent in the transaction. Is my firm subject to the TAF for transactions executed by clearing clients in dark pools operated by another FINRA member? A100.12: For a trade that is cancelled and later corrected, the TAF would apply to the corrected trade. When a member reports a transaction in an ABS where the par value (or original principal value or original face value) does not decrease (or in some circumstances, increase) over time due to the amortization of assets underlying the security, the total par value is reported to TRACE (and not the number of bonds, even if ascertainable) as required under FINRA Rule 6730(d)(2), and the TAF is assessed based upon the total par value reported. Example 1. Members executing sell orders for equity securities in an agency capacity on behalf of a non-broker-dealer customer will be assessed the TAF. Acting as the customer’s agent, Broker #1 buys the bonds from Broker #2. Q200.2: Are all proprietary transactions in exchange-listed securities for which a member is registered as a market maker exempt from the Trading Activity Fee? Is it permissible to apply the TAF to the single compressed entry rather than the individual transactions that make up the compressed clearing entry? Q400.3: Will the Trading Activity Fee be assessed on the exercise of an option? Q300.9: How is the TAF applied to covered debt securities transactions with investment advisors that ultimately allocate the order among multiple customers? Q200.3: If I am a registered market maker on a national securities exchange and receive an agency order from a FINRA member broker-dealer that I then send to a national securities exchange for execution, is that transaction exempt from the TAF?A200.3: When a member acts as agent on behalf of another FINRA member in the sale of a covered security, the TAF is assessed to the member who is the ultimate seller of the security, not the member acting as agent. A200.5: If the floor based broker qualifies for exemption from FINRA registration under SEC Rule 15b9-1, then any transactions effected by that broker will be exempt from the Trading Activity Fee. As the investment portfolio How should firms calculate the TAF on these transactions? Q200.12: Are convertible bonds included in the scope of the Trading Activity Fee?A200.12: Convertible debt is included in the scope of the Trading Activity Fee, and the fee rate shall be determined by the facility to which the trade report is submitted (i.e., if reported to an equity reporting system, the fee should be assessed per the equity securities rate; if reported to TRACE, it should be assessed per the bond fee rate). fee. Q500.2: How does FINRA interpret the term “round turn” as it relates to assessing the Trading Activity Fee on security futures products?A500.2: For purposes of applying the Trading Activity Fee to security futures products, a round turn transaction is defined as a purchase and subsequent liquidating sale, or a sale followed by a subsequent covering purchase, of a contract for future delivery by a single market participant. However, the requirements to report the size (volume) of an ABS differ if the security amortizes over time. One exception to this rule is when the principal amount of one bond in is something other than $1,000 (such as so-called "baby bonds"), the maximum fee should be calculated using the actual number of bonds. A200.16: The TAF is applied to the initial execution of a transaction and not to any related clearing entries. Q200.10: My firm clears for non-member broker/dealers that engage primarily in options transactions as exchange specialists. I do not receive the individual components of these compressed clearing entries. A300.10: A member must determine whether a transaction in a short-term money market instrument is required to be reported under either TRACE or MSRB Rules. The body is a gateway all securities firms must pass to conduct business in the US. Report #2: Broker #1 (as agent) SELL 100 bonds to customer (or Broker #2). Clearing firms must have a mechanism in place that will allow them to identify the individual components of compressed clearing entries so that the TAF may be properly calculated based on the individual executions. There is a separate rate for share volume for stocks, contract volume for options, round turn transaction volume for futures, and bond volume for debt. The member may not calculate the fee based on the million share order from the investment advisor (one sale at $5) because it is comprised of multiple customer accounts. Based on the member’s determination, the TAF will apply if the transaction is required to be trade reported to either TRACE or the MSRB. If the FINRA member only clears the transaction but does not act as executing party, no fee is assessed on the clearing member. For example, if a trade of an ETF is reported to a FINRA equity transaction reporting system, the fee should be assessed per the equity security rate, and if the trade is reported to TRACE, it should be assessed per the bond fee rate.