According to FINRA, Credit Suisse Securities (USA) LLC was censured and fined $900,000 for multiple failures related to reporting transactions in TRACE-eligible securities.
The firm failed to timely report thousands of transactions in securitized products, corporate debt, and agency debt securities to TRACE. Most late reports, ranging from a few minutes to several days late, resulted from manual errors or omissions that delayed reports, or amendments not submitted timely. This late reporting constituted a pattern or practice without exceptional circumstances.
The firm also submitted numerous TRACE reports with inaccurate indicators due to coding errors. These included inaccurate No Remuneration indicators for U.S. Treasury securities and securitized products, inaccurate Non-Member Affiliate Principal Transaction indicators, inaccurate contra-party identifiers for corporate bonds, and inaccurate execution times for U.S. Treasury securities and securitized products. While the firm identified and remediated each coding error, some violations continued for 18 to 32 months before being addressed.
Additionally, Credit Suisse failed to timely notify FINRA of new issue offerings in TRACE-eligible asset-backed securities at an error rate exceeding five percent. The firm's supervisory system was not reasonably designed to achieve compliance with TRACE reporting rules. Although supervisory reviews identified high numbers and percentages of late reports, the firm did not fully address underlying causes and instead established internal error rate targets that were too high to address the ongoing pattern of late reporting.
For market participants and investors, accurate and timely TRACE reporting is essential for price transparency in fixed-income markets. These reporting failures undermined market transparency for an extended period. The firm's self-reporting of various issues demonstrates some commitment to compliance, though the systemic nature of the failures raises questions about the adequacy of the firm's compliance infrastructure.
