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Blue Sheets

Blue Sheets
InvestingLaws and RegulationsSECSec and Regulatory Bodies

What Are Blue Sheets?

Blue sheets are formal requests for data conveyed by the Securities and Exchange Commission (SEC) to market makers, broker-dealers, and additionally clearinghouses. Blue sheets ask for data connected with specific securities or transactions — especially those that might have impacted the price of the security. Blue sheets are in many cases requested to decide whether there has been any criminal behavior or to decide why a certain security encounters a large level of volatility. In the same way as other things in the trading world, blue sheets have now become electronic.

Figuring out Blue Sheets

The polls or requests for data sent by the SEC came to be known as blue sheets since they were imprinted on blue paper. Blue sheets give the SEC various data. They should incorporate data about the account holder and the trades executed by a firm and its clients, specifically:

  • The name of the security
  • The date and price of the trade
  • The size of the transaction
  • A rundown of the counterparties in question

The objective is to grant regulators the means to dissect a firm's trading activity. Assuming that the data is deficient, obsolete, or generally inaccurate, it can slow down the ability of regulators to spot examples of fraud and insider trading. Blue sheet data is utilized by the Financial Industry Regulatory Authority (FINRA) Office of Fraud Detection and Market Intelligence to find and recognize peculiarities in trading activity that could insider trade.

Banks and different institutions that act as brokers and clearinghouses commit resources to overseeing and filing data suitably. This can mean binds up employees to gather data. Systems must be laid out to better capture the data. Similarly as with different activities tied to compliance, the additional expense should be visible as a burden.

Each layer of refinement that is added to blue sheet data gathering assists with working on the transparency of banking and trading activities. Blue sheets can speed up investigations into fraud as long as the data is accurate and convenient. At the point when regulators discover peculiarities in trading activities from blue sheet data, it can trigger a more exhaustive investigation that might require further reporting and records by banks and other financial institutions.

Peculiarities in trading activities from blue sheets can trigger a careful investigation that might require banks and other financial institutions to give records and top to bottom reporting.

Special Considerations

Blue sheets were originally sent out on paper in a printed copy system. Yet, that changed during the 1980s. Blue sheet data is presently given electronically through electronic blue sheet systems, or EBS. The change is a consequence of the high volumes of trades that started occurring as trading systems started moving to electronic exchanges. Likewise, more experts and institutions trade securities through various broker-dealer accounts.

Sending and getting blue sheet requests electronically permits data to be communicated on time so that documents can be explored and closed straightaway.

FINRA emails blue sheet requests to beneficiaries and relegates a due date for each request. FINRA additionally posts the requests on its system in case the company doesn't receive the original request. Companies that have no data to report must send a confirmation email subsequent to doing an exhaustive survey. FINRA doesn't acknowledge clear or void blue sheets as a response.

Inability to Comply

There are ramifications companies face in the event that they either don't answer requests for data or on the other hand assuming the data they submit is subsequently found to be fragmented or lacking. All responsible gatherings might be fined by the SEC. The size and scope of the punishments can change contingent upon the violation.

There have been several cases where major banks have needed to pay big fines for not giving sufficient data on the blue sheets requested by the SEC. Citigroup paid $7 million out of 2016 and Credit Suisse Securities paid $4.25 million out of 2015 for fines coming from inadequate blue sheet data on trades made by their customers.

Highlights

  • This data is meant to work on the transparency of banking and trading activities and to investigate inconsistencies.
  • Blue sheets are presently requested and recorded just carefully.
  • Blue sheets are requests for transaction data by the SEC from financial institutions or trading firms.
  • Companies or people might be fined on the off chance that they don't give accurate data.