The Municipal Securities Rulemaking Board (MSRB) today requested public comment on a proposal to establish for the first time explicit requirements for municipal securities dealers to seek the most favorable price possible when executing transactions for retail investors. If ultimately approved, the proposed "best-execution" standard would provide benefits for investors, promote competition among dealers and enhance market efficiency.
"The MSRB's best-ex proposal is a significant step for protecting investors and improving the structure and efficiency of the municipal market," said MSRB Chair
Modeled on the
The MSRB's proposal takes into consideration certain characteristics of the municipal securities market. For example, it provides guidance to dealers for situations when there are fewer price quotations and less relevant pricing information available. In defining possible trading venues that dealers should consider, the proposed rule includes alternative trading systems or platforms, broker's brokers and other counterparties, such as the dealer acting as principal. This definition of trading venues reflects current characteristics of the municipal market, but also allows dealer practices to change as the municipal market continues to evolve and new technologies are introduced.
In conjunction with the proposal, the MSRB is seeking comment on an exception from the new rule for transactions with sophisticated municipal market professionals. This proposed exception follows a similar approach to fair-pricing obligations under existing MSRB rules, on the grounds that imposing additional execution requirements on dealers in transactions with such well-informed and sophisticated investors may not be necessary.
The MSRB's best-execution proposal aligns with long-range market transparency initiatives begun by the MSRB in early 2012, and the recommendations of the
Comments on the best-execution rule proposal should be submitted to the MSRB no later than
TNS 30FurigayJof 140220-4643136 30FurigayJof
Most Popular Stories
- 5 Notable Hispanic Technology Executives
- Top Hispanic Tech Companies Push for the Top
- Rand Paul Tops Presidential Straw Poll at Conservative PAC Conference
- Tesla's Alt-Energy Future Aims for Massive Lithium-Ion Battery Production
- New Chat App, Yik Yak, Causes Problems for Students
- China Urges Malaysia Flight Emergency Response
- Russia, Crimea Discuss Referendum
- Visa, MasterCard Team Up to Focus on Payment Security
- Gas Prices May Jump from Calif. Emissions Law
- Obama Meets with Ukraine Prime Minister Wednesday