U.S. regulators are seeking to further boost transparency in the fixed-income market for retail investors.
The U.S. Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB) both released proposals that would require disclosure of pricing reference information on fixed-income trade confirmations. Under the proposals, bond dealers in retail-sized fixed income transactions would be required to disclose the price of certain trades in the same security on the same day, as well as the difference between this reference price and the customer’s price on the client’s trade confirmation.
In its proposal, FINRA says that it believes that additional pricing information ‘will better enable customers to evaluate the cost and quality of the services firms provide by assisting customers in monitoring current same-day prices a firm and a customer pays or receives in connection with a transaction.”
The proposal will provide customers with pricing information that they cannot currently obtain, FINRA notes. It also says that providing this type of information “will promote transparency into firms’ pricing practices and encourage communications between firms and their customers about pricing of their fixed income transactions.”
“This proposal also may provide customers with additional information that may assist them in detecting practices that are possibly improper, which would supplement FINRA’s own surveillance and enforcement program,” it says.
FINRA and the MSRB are seeking input on the likely economic implications of the proposals as well as on alternative approaches, including a potential markup disclosure requirement.
Comments on the proposals are due by Jan. 20, 2015.