Yes, and this is your only "switched ignition" wire. So it must also branch off to the gauges power, the regulator "I" terminal (blue), and one of the field connections on the regulator, and anything else that you want on only with ignition. On mine, I used that wire to fire a relay, and then the loads run off the relay. Not necessary unless you have quite a bit of load. The MSD small red is a very small load, IE it switches the MSD box and uses either a mechanical relay or solid state switch.
It is EXTREMELY important that the regulator ground and the regulator "IGN" (blue) see exact battery voltage, or the charge voltage will be added to the voltage offset.
That is, if say, the ground at the regulator is .2V above battery, and the regulator IGN terminal sees a .2V drop from the battery positive, that total of .4V will be added to whatever the regulator setpoint is.