Electronic Blue Sheet (EBS)

An electronic blue sheet is an electronic request for detailed information about trades sent to clearing firms, broker dealers and market makers by the Securities and Exchange Commission (SEC). Electronic blue sheets include the name of the security, its price, the date of the transaction, the size of the transaction and the parties involved.

This information request was historically mailed to clearing firms on blue forms. As the daily volume of securities increased, this process has moved to an electronic system in order to facilitate collection.

Collection of this information is undertaken in order to give the SEC a better understanding of developing trading strategies by institutions and professional traders. The SEC also uses the information to determine if securities laws are being broken especially those related to insider trading. The information is also used to examine the causes of extreme security volatility with the SEC reconstructing the transactions over a period time.

The information gathered from all types of blue sheets is used by FINRA’s Office of Fraud Detection and Market Intelligence to find and identify irregularities in trading activity. The irregularities could be instances of insider trading or other illegal actions.

The base form of the blue sheet gives the SEC detailed information about trades performed by a firm and its clients. The information includes the security's name, the date traded, price, transaction size and a list of the parties involved. The information from a blue sheet may be used to assess why a security experienced elevated degrees of volatility.

Blue sheets are expected to include information about the account holder and trades. Whether in digital form or on paper the intent of the document is to give the SEC and other regulators a way to process and understand the flow of trading activity. Incomplete or inaccurate information may impede regulators who are searching for cases of fraud or insider trading.

Firms can face fines if it is discovered that they supplied regulators with insufficient or erroneous blue sheet information. For example, Citigroup agreed to pay a $7-million fine in 2016 after the SEC found the firm had provided incomplete blue sheet data for 15 Years. Citigroup agreed to pay the penalty and admit wrongdoing to settle the charges. The SEC said that a computer coding error caused the firm to provide regulators with incomplete blue sheet information regarding the trades it executed.

The error occurred with software Citigroup used when it processed requests for its blue sheet data. This led to the omission of 26,810 transactions when Citigroup responded to blue sheet requests between 1999 and 2014.