Series 7 practice questionmediumTrade Reporting — TRACE
Which of the following transactions must be reported through FINRA's TRACE system?
- AExchange-listed equity trades
- BMunicipal bond trades
- COver-the-counter corporate bond trades✓ Correct answer
- DExchange-traded options transactions
Explanation
Why C — Over-the-counter corporate bond trades
TRACE (Trade Reporting and Compliance Engine) is FINRA's system for reporting over-the-counter transactions in eligible fixed-income securities, including corporate bonds, agency debt, and asset-backed securities. TRACE was created to increase price transparency in the bond markets. Municipal bond trades are reported through the MSRB's EMMA system, not TRACE, while equity trades are reported through equity trade reporting facilities. Most TRACE-eligible transactions must be reported within 15 minutes of execution.
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