Companies regulated by the Financial IndustryRegulatory Authority (FINRA) will soon be required to report fractional shares as a whole number. These new changes, which are set to take effectin the first quarter of 2025, aim to streamline the reporting standards offractional shares.
Currently, FINRA's existing trade reporting rulesrequire the disclosure of the last sale reports to various trade reportingfacilities. This framework does not support the reporting of fractional sharequantities, prompting the need for an update.
In the upcoming guidelines, entities registered byFINRA are required to disclose the last sale reports of equity transactions todesignated Trade Reporting Facilities, Alternative Display Facility, or the OTCReporting Facility.
Additionally, FINRA will enhance the Trade Reporting Facilities to enable the reporting of fractional share quantities. Under theupdated guidance, a new "Fractional Share Quantity" field will beintroduced alongside the existing "Quantity" field. Trades involving fractional shares will requirereporting in the "Quantity" and "Fractional Share Quantity" fields. The"Quantity" field will continue to accommodate whole numbers, with fractionalamounts either rounded up or truncated.
According to the press release, the regulatormentioned: "Where a trade is executed for less than one share, e.g., 1/3share, the trade quantity should be reported in two fields. Firms should roundup and report a share quantity of 1 in the Quantity field."
"Additionally, firms should report the actualfractional quantity in the Fractional Share Quantity field, in decimal formatonly, up to six digits after the decimal and truncated beyond six decimalplaces. Thus, for example, for a trade of 1/3 share, the reported FractionalShare Quantity would be reported in decimal format as 0.333333."
FINRA Gears Up for Trade Reporting Changes
Meanwhile, the "Fractional Share Quantity" field willcapture the entire quantity of the trade, including the fractional component upto six digits after the decimal. Existing trade reporting FAQs will be revised toaccommodate these changes and ensure clarity for market participants. Firms willneed to adhere to specific reporting guidelines for trades involving fractionalshare quantities.
FINRA has urged market participants to stay informedthrough FINRA's communication channels for updates. While the effective date of the updated guidance isset for next year, FINRA has pledged to providetimely announcements regarding the specific implementation date. The regulator has urged companies tostay informed through FINRA's notices and e-mail communication to ensure a smooth transition.
Companies regulated by the Financial IndustryRegulatory Authority (FINRA) will soon be required to report fractional shares as a whole number. These new changes, which are set to take effectin the first quarter of 2025, aim to streamline the reporting standards offractional shares.
Currently, FINRA's existing trade reporting rulesrequire the disclosure of the last sale reports to various trade reportingfacilities. This framework does not support the reporting of fractional sharequantities, prompting the need for an update.
In the upcoming guidelines, entities registered byFINRA are required to disclose the last sale reports of equity transactions todesignated Trade Reporting Facilities, Alternative Display Facility, or the OTCReporting Facility.
Additionally, FINRA will enhance the Trade Reporting Facilities to enable the reporting of fractional share quantities. Under theupdated guidance, a new "Fractional Share Quantity" field will beintroduced alongside the existing "Quantity" field. Trades involving fractional shares will requirereporting in the "Quantity" and "Fractional Share Quantity" fields. The"Quantity" field will continue to accommodate whole numbers, with fractionalamounts either rounded up or truncated.
According to the press release, the regulatormentioned: "Where a trade is executed for less than one share, e.g., 1/3share, the trade quantity should be reported in two fields. Firms should roundup and report a share quantity of 1 in the Quantity field."
"Additionally, firms should report the actualfractional quantity in the Fractional Share Quantity field, in decimal formatonly, up to six digits after the decimal and truncated beyond six decimalplaces. Thus, for example, for a trade of 1/3 share, the reported FractionalShare Quantity would be reported in decimal format as 0.333333."
FINRA Gears Up for Trade Reporting Changes
Meanwhile, the "Fractional Share Quantity" field willcapture the entire quantity of the trade, including the fractional component upto six digits after the decimal. Existing trade reporting FAQs will be revised toaccommodate these changes and ensure clarity for market participants. Firms willneed to adhere to specific reporting guidelines for trades involving fractionalshare quantities.
FINRA has urged market participants to stay informedthrough FINRA's communication channels for updates. While the effective date of the updated guidance isset for next year, FINRA has pledged to providetimely announcements regarding the specific implementation date. The regulator has urged companies tostay informed through FINRA's notices and e-mail communication to ensure a smooth transition.
