MSRB seeks public input on proposal to require disclosure of mark-ups

By Wendy Van Sickle

Columbus, Ohio, Sept. 24 – The Municipal Securities Rulemaking Board is seeking public comment on a proposal to require municipal securities dealers to disclose on retail customer confirmations the amount of the mark-up in a class of principal transactions, according to a Thursday press release.

The proposal seeks to increase transparency of investor transaction costs and dealer compensation in the municipal securities market and is the first proposal of its kind in more than 20 years, according to the MSRB.

“Investors need a way to understand the true costs of their municipal securities transactions,” MSRB executive director Lynnette Kelly said in the news release. “Our new proposed approach would offer greater clarity for investors as to dealer compensation while leveraging the existing processes and systems dealers use to comply with their fair-pricing obligations.”

The amendments to MSRB Rule G-15 would require dealers acting as principal to disclose to retail customers their mark-up from the prevailing market price of a municipal security if the dealer makes a corresponding trade within two hours of the customer trade, MSRB said.

Also, all retail customer confirmations would be required to include a link to the main page for the security on the MSRB’s Electronic Municipal Market Access (EMMA) website in order to help investors learn more about the market for their traded security.

The MSRB’s request for comment seeks input on possible alternatives to its preferred approach, including a modified version of its earlier proposal to require dealers to provide on retail customer confirmations a reference price for a comparable transaction by the dealer and the difference between those prices.

The mark-up disclosure proposal to increase the transparency of dealer compensation and transaction costs is based on a recommendation in the Security and Exchange Commission’s 2012 Report on the municipal securities market, according to the release.

The deadline to submit comments is Nov. 20.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.