Industry regulator the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB) are offering companion proposals that would require disclosure of pricing reference information on customer confirmations for transactions in fixed income securities, officials say.
The similar proposals are seeking input on factors unique to the corporate and municipal bond markets.
Under the two proposals, bond dealers in retail-sized fixed income transactions would be required to disclose on the customer’s confirmation the price of certain same-day principal trades in the same security, as well as the difference between this reference price and the customer’s price, officials say.
“Requiring additional pricing-related disclosure to investors as part of the customer confirmation promotes price transparency and will benefit customers in retail-sized trades,” said Robert Colby, FINRA’s chief legal officer, in a prepared statement.
The MSRB approach takes “information already available to the public online but provides it directly to retail investors at the time of the transaction, enabling them to more easily evaluate their transaction costs,” said MSRB Executive Director Lynnette Kelly in a statement.
The SEC recommended that the MSRB consider requiring disclosure of pricing reference information to retail investors as part of a series of recommendations related to price transparency in the SEC’s 2012 Report on the Municipal Securities Market, officials say.
FINRA and the MSRB officials are seeking input on the likely economic implications of the proposals, and on alternative regulatory approaches, officials say. For instance, some have suggested that regulators consider a potential markup disclosure requirement targeting trades that could be considered riskless principal transactions.
Officials ask that comments be submitted to FINRA and the MSRB no later than January 20, 2015.
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