Public Reporting of Transaction In Municipal Securities: Rule G-14
On August 17, 2001, the Board filed with the Securities and Exchange Commission a proposed change to rule G-14 that would provide a Daily Comprehensive Report of municipal securities transactions.[1] The transaction information on the Daily Comprehensive Report would come from reports made to the Board by brokers, dealers and municipal securities dealers (“dealers”) under its rule G-14, which governs reports of sales or purchases. This rule currently requires dealers to report essentially all inter-dealer and customer transactions in municipal securities to the Board by midnight of trade date.
The proposed Daily Comprehensive Report would provide the details of municipal securities transactions effected during a single day. Each day’s report would include the transactions effected two weeks previously. The proposed Report would be available by a subscription service. Each business day the Report would be made available electronically to subscribers by File Transfer Protocol (FTP) via the Internet. The subscription fee would be $2,000 per year.
Purpose of the Report
The Board has a long-standing policy to increase price transparency in the municipal securities market, with the ultimate goal of disseminating comprehensive and contemporaneous pricing data. Since 1995, the Board has expanded the scope of the public transparency reports in several steps. Each step has provided industry participants and the public successively more information about the market.[2]
In May, 2001, the Board announced its plan to begin reporting trades in “real time” by mid-2003.[3] The implementation of real-time trade reporting is being coordinated with the industry’s schedule for migration to an environment of same-day settlement of securities transactions. To attain real-time reporting the Board intends in the future to file an amendment to rule G-14 to require dealers to report their trades within 15 minutes of the time they are effected.
As an interim step to increase transparency, the Board is proposing to disseminate a Daily Comprehensive Report. The proposed Report, to be made available each day, would contain details of all municipal securities transactions that were effected during the trading day two weeks earlier. Data about each trade on the proposed Report would be similar to that on the current monthly Comprehensive Transaction Report, but would be produced daily and would be available at least two weeks earlier than the monthly report. For each trade, the proposed Report would show the trade date, the CUSIP number of the issue traded, a short issue description, the par value traded, the time of trade reported by the dealer, the price of the transaction, and the dealer-reported yield of the transaction, if any. Each transaction would be categorized as a sale by a dealer to a customer, a purchase from a customer, or an inter-dealer trade.
Description of Proposed Service
The proposed Service would make the Daily Comprehensive Report available each day to subscribers. Subscribers would access the Report via the Internet and would download copies from the Board’s computer using a password-protected FTP account. The Board plans to make a single day’s data available to prospective users without charge, so that they make determine whether they wish to subscribe.
The Board is establishing a fee for an annual subscription to the Service of $2,000. The proposed annual fee is structured approximately to defray the Board’s costs for production of daily data sets, operation of telecommunications lines, and subscription maintenance.[4] The Service would become available after SEC approval.
August 17, 2001
[1] File No. SR-MSRB-2001-06. Comments on the proposed amendment may be made to the Commission and should refer to this file number.
[2] The MSRB’s report summarizing prices for issues that are frequently traded on the inter-dealer market began operation in 1995; in 1998, dealer-customer prices were added in a second summary report; in January 2000, a report with details of trades in frequently traded issues was added; and in October 2000, a comprehensive report, covering all transactions effected during the previous month, began operation. (“Comprehensive Transaction Report”) See Securities Exchange Act Release No. 43426 (October 10, 2000), 65 FR 61367 (October 27, 2000).
[3] See “Real-Time Reporting of Municipal Securities Transactions,” MSRB Reports, Vol. 21, No. 2 (July 2001) at 31-36.
[4] The subscription fee for the current monthly report is also $2,000 annually. Subscribers to the monthly report who prefer the fresher data of the proposed Daily Comprehensive Report will have the option to switch subscriptions to the latter.
