According to FINRA, Dealerweb Inc. was censured and fined for inaccurately reporting transactions in TRACE-eligible securities without the required 'No Remuneration' (NR) indicator.

Dealerweb operated an alternative trading system (ATS) and voice interdealer trading desk that customers accessed via non-transaction-based subscription fees. This meant transaction prices did not include commissions, mark-ups, or mark-downs - triggering the requirement to append the NR indicator to transaction reports. Because most of Dealerweb's subscribers were broker-dealers, most transactions qualified for the inter-dealer exception to the NR indicator requirement. However, in transactions with non-broker-dealer customers such as banks, the firm was required but failed to report using the NR indicator.

The TRACE system (Trade Reporting and Compliance Engine) provides transparency in the fixed income markets by disseminating transaction data to market participants. Accurate reporting, including proper use of modifiers and indicators, is essential for market participants to understand the true nature of reported transactions. The NR indicator specifically signals that reported prices represent actual transaction prices without embedded compensation, which is important information for price discovery.

Dealerweb's supervisory system failures allowed these reporting errors to continue undetected. While the firm performed reviews to identify late reported transactions, it had no process to check the accuracy of transaction information reported, including the NR indicator and other required modifiers. The firm was unaware of the issue until FINRA notified it.

Following the findings, Dealerweb implemented a daily review process for accurate reporting of transaction information and updated its written supervisory procedures accordingly. For market participants, this case highlights the technical complexity of regulatory reporting obligations and the critical importance of comprehensive supervisory systems that verify not just timeliness but also accuracy of regulatory reports.