The American Securities Association Friday sent a letter to the Securities and Exchange Commission outlining its opposition to changes to the post-trade reporting window for the municipal securities market.
ASA's
The move would be an unnecessary mandate for a “well-functioning and transparent market that has weathered multiple crises over the last three decades remarkably well,” said the ASA, a trade association that represents the capital markets interests of small and regional financial services firms.
SEC Chair Gary Gensler in April
“The academic research overwhelmingly finds that post-trade transparency improves efficiency and competition in the markets they serve," Gensler said. "Currently, a trade has to be reported as soon as practicable but no later than within 15 minutes of the time of execution. Why couldn’t the outer bound be shortened to no later than, for example, one minute?”
At its most recent quarterly meeting, in April, the MSRB
The majority of muni bond trades are reported within the first 10 minutes, the ASA said, citing MSRB data. Most trades are reported more quickly than that, even within the proposed one-minute window, but said a mandate is unnecessary because “it is unclear how such a short timeframe would benefit investors or increase transparency, especially given the episodic nature of trading in this market.”
In the primary market, the complex nature of new-issue deals should make them exempt from any reporting timeframe, the ASA argued, as it’s difficult to quickly report what happens when a deal gets “dropped” into the syndicate, which then distributes them to other buyers and/or dealers.
“Given how rapidly the capital markets evolve, it is reasonable to update regulations as necessary,” the group concluded. “However, broad new mandates that disrupt an otherwise well-functioning market can inflict great harm on investors and raise costs for municipalities looking to issue debt. We urge the SEC to only address true market failures through any proposed regulation.”
