With a growing consensus that investors would benefit from improvements in the availability of pre-trade pricing information and other changes to secondary market trading practices, the MSRB is exploring opportunities to enhance price transparency. The MSRB recognizes that significant changes in market structure must be done carefully and with full input of market participants to ensure any changes achieve the goal of a more fair and efficient market.
The MSRB is currently focused on several near- and longer-term initiatives to promote fair pricing for retail investors and to advance its central transparency platform, as described below:
- Disclosure of Mark-Ups: In a next step toward greater price transparency, the MSRB is implementing a mark-up disclosure rule for municipal securities transactions on May 14, 2018. The amendments to Rule G-15 require dealers to disclose on retail customer confirmations the amount of the mark-up on certain principal transactions. The amendments 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 MSRB will also implement amendments to Rule G-30 establishing prevailing market price guidance on how municipal securities dealers price bonds and calculate their compensation.
- Best Execution: In March 2016, the MSRB implemented a best-execution rule for transactions in the municipal market. The new requirement aims to improve pricing for retail investors by ensuring dealers have appropriate procedures in place to achieve a price that is as favorable as possible under prevailing market conditions.
- Central Transparency Platform: The MSRB continues to focus on enhancing price transparency for municipal securities investors as it develops elements of a central transparency platform (CTP). The CTP, envisioned in the MSRB’s Long-Range Plan for Market Transparency Products, would provide a comprehensive, interactive and real-time display of a suite of pricing-related market data. The MSRB began collecting additional post-trade data elements as part of the long-term effort to develop the next generation of its Real-time Transaction Reporting System (RTRS) in support of the central transparency platform. The MSRB also continues to consider adding certain pre-trade data to EMMA for the benefit of retail investors.