WASHINGTON – The Municipal Securities Rulemaking Board is providing some new information about municipal securities trades on its Electronic Municipal Market Access (EMMA) system.
The board has begun using the indicator "A" to show on EMMA when an interdealer trade was executed either with an alternative trading system or using an ATS.
"This will allow investors and others to better assess the extent to which ATS' are used in the municipal market," the MSRB said in a release on Monday.
An alternative trading system provides a platform that brings together buyers and sellers of munis and other securities. It may otherwise engage in functions commonly performed by an exchange, according to the MSRB. Participants typically are broker-dealers or institutional investors that buy or offer securities for sale through offering or bid-wanted procedures. The system must register under the Securities and Exchange Commission Rule ATS as a broker-dealer or securities exchange.
There are at least four ATS' that include munis, including TMC Bonds, Tradeweb, KCG BondPoint, and Bloomberg BOLT, according the electronic bond trading report for U.S. corporate and muni securities released by the Securities Industry and Financial Markets Association in February.
In addition, the MSRB has begun using the indicator "N" on EMMA to show when customer trades do not include markups, markdowns or commissions in their reported trade prices.
"This indicator differentiates customer transactions that do not include a dealer compensation component, providing a more meaningful comparison of trade prices," the MSRB said in its release.
This new indicator comes as the MSRB has been having trouble moving forward with proposed amendments to its Rule G-15 that would require dealers acting as principals to disclose to retail customers the markups and markdowns on muni trades. But the proposed amendments have proved to be controversial, with dealers complaining they would be too burdensome and costly. Rule G-15 covers confirmation, clearance, settlement and other uniform practice requirements with respect to transactions with customers.
