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Securities Law

More Par Transparency on EMMA

WASHINGTON — The Municipal Securities Rulemaking Board has taken another step toward boosting trade transparency, announcing Friday that the par amount of trades of less than $5 million will now be posted on the EMMA system in real time.

Before the change, the board had obscured all par values of more than $1 million for five business days after trade execution with the designation "1MM+."

The board will now post pars of between $1 million and $5 million immediately. Pars of more than $5 million will continue to be obscured for five business days, with the marker "MM+."

The Securities and Exchange Commission approved the changes to the MSRB Real-time Transaction Reporting System in late October.

The "1MM+" designation had been used because market participants said names of institutional investors and dealers who made large trades of infrequently-traded securities could be surmised by the market. Participants said revealing the exact pars would also reveal information about dealers' inventories. They said "1MM+" would help obscure identities.

But a January report from the Government Accountability Office found that institutional investors typically knew the trade amounts anyway, thanks to conversations with broker dealers.

An MSRB notice said the change would ensure all investors have access to the same information. The move is an "appropriate first step ... in the short term," according to the notice.

"The MSRB plans to continue to evaluate whether the $5 million threshold can be raised further or completely eliminated with a view towards bringing full transparency of exact par values to the municipal market in real-time," the board said.

There were nearly 343,000 trades with par values of more than $1 million in 2011 and nearly 100,000 trades with pars of more than $5 million.

 

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