Companies regulated by the Financial Industry Regulatory Authority (FINRA) will soon be required to report fractional shares in whole numbers. These new changes, which are expected to come into effect in the first quarter of 2025, aim to streamline reporting standards for fractional shares.
Currently, FINRA's existing trade reporting rules require disclosure of reports of recent sales to various trade reporting facilities. This framework does not support reporting quantities of fractional shares, which requires updating.
In the upcoming guidance, FINRA-registered entities are required to disclose latest equity transaction sales reports to designated trade reporting centers, Alternative Reporting Center, or OTC Reporting Center.
Additionally, FINRA will enhance transaction reporting facilities to enable reporting of fractional share quantities. As per the updated guidelines, a new 'Split Quantity' field will be introduced alongside the existing 'Quantity' field.
Transactions involving fractional shares will require a declaration in the “Quantity” and “Quantity of fractional shares” fields. The “Quantity” field will continue to accommodate whole numbers, with fractional amounts rounded or truncated.
According to the press release, the regulator said: “When a trade is executed for less than one share, for example 1/3 of a share, the quantity traded must be reported in two fields. Companies should round up and report a stock quantity of 1. in the Quantity field.”
“Additionally, companies must report the actual fractional quantity in the Fractional Quantity of Shares field, in decimal format only, up to six decimal places and truncated beyond six decimal places. So, for example, for a 1/3 share transaction, the reported split quantity of shares would be reported in decimal format as 0.333333.”
FINRA Prepares for Changes in Trading Reports
Meanwhile, the “Fractional Quantity” field will capture the total quantity of the transaction, including the fractional component up to six digits after the decimal point. Existing FAQs on business reporting will be revised to reflect these changes and ensure clarity for market participants. Companies will need to adhere to specific reporting guidelines for transactions involving fractional shares.
FINRA urged market participants to stay informed through FINRA communications channels for updates. Although the effective date for the updated guidance is set for next year, FINRA is committed to providing timely announcements regarding the specific implementation date. The regulator urged firms to stay informed via FINRA notices and email communications to ensure a smooth transition.
Companies regulated by the Financial Industry Regulatory Authority (FINRA) will soon be required to report fractional shares in whole numbers. These new changes, which are expected to come into effect in the first quarter of 2025, aim to streamline reporting standards for fractional shares.
Currently, FINRA's existing trade reporting rules require disclosure of reports of recent sales to various trade reporting facilities. This framework does not support reporting quantities of fractional shares, which requires updating.
In the upcoming guidance, FINRA-registered entities are required to disclose latest equity transaction sales reports to designated trade reporting centers, Alternative Reporting Center, or OTC Reporting Center.
Additionally, FINRA will enhance transaction reporting facilities to enable reporting of fractional share quantities. As per the updated guidelines, a new 'Split Quantity' field will be introduced alongside the existing 'Quantity' field.
Transactions involving fractional shares will require a declaration in the “Quantity” and “Quantity of fractional shares” fields. The “Quantity” field will continue to accommodate whole numbers, with fractional amounts rounded or truncated.
According to the press release, the regulator said: “When a trade is executed for less than one share, for example 1/3 of a share, the quantity traded must be reported in two fields. Companies should round up and report a stock quantity of 1. in the Quantity field.”
“Additionally, companies must report the actual fractional quantity in the Fractional Quantity of Shares field, in decimal format only, up to six decimal places and truncated beyond six decimal places. So, for example, for a 1/3 share transaction, the reported split quantity of shares would be reported in decimal format as 0.333333.”
FINRA Prepares for Changes in Trading Reports
Meanwhile, the “Fractional Quantity” field will capture the total quantity of the transaction, including the fractional component up to six digits after the decimal point. Existing FAQs on business reporting will be revised to reflect these changes and ensure clarity for market participants. Companies will need to adhere to specific reporting guidelines for transactions involving fractional shares.
FINRA urged market participants to stay informed through FINRA communications channels for updates. Although the effective date for the updated guidance is set for next year, FINRA is committed to providing timely announcements regarding the specific implementation date. The regulator urged firms to stay informed via FINRA notices and email communications to ensure a smooth transition.