MSRB files one minute reporting window amendments with SEC

The Municipal Securities Rulemaking Board has filed its amendments to Rule G-14 on customer transaction reporting with the Securities and Exchange Commission, moving to bring the current 15-minute window for reporting trades to the MSRB down to one minute with exceptions for manual trades and smaller firms with limited municipal trading activity.

The proposal now awaits approval by the Commission but it has had a bumpy road. From the start it has faced significant backlash as many have argued that the proposal would have a largely negative impact on smaller firms, that the MSRB has not provided strong enough rationale for this change, and that the efficacy of such a change is unclear, among others.

"With this rule filing, the MSRB achieved a milestone on the way to improving the transparency of the municipal securities market," said MSRB chief executive officer Mark Kim. "We look forward to working with the SEC to finalize this rulemaking. I also want to acknowledge FINRA, with whom we worked closely to harmonize our respective rule proposals to provide clarity and consistency in trade reporting across fixed income markets."

After the board requested comment in August 2022, the MSRB "engaged in additional analysis and extensive engagement with market stakeholders to understand why certain types of voice brokered, block and other trade types might not currently be readily reportable within one minute, as well as to understand potential resource or other barriers to meeting a new one-minute timeframe that might exist for some firms, including smaller, less active firms," the MSRB said.

"We have considered this feedback and recognize the critical roles that all types of firms and differing manners of trading play in the municipal securities market," said Ernesto Lanza, chief regulatory and policy officer at the MSRB. "The proposal filed today represents a carefully crafted modernization of the trade reporting paradigm that we believe will result in substantial improvements in making more contemporaneous prices available to investors and other market participants. It also will ensure firms with limited trading volumes can continue to participate in this market and many legitimate uses of manual trades are not unnecessarily impeded."

Those exemptions for de minimis market activity and for manually executed trades were noted by Kim at the end of last year.

The MSRB will also move to a T+1 settlement cycle this year, as the compliance date for those rule amendments to Rules G-12 on uniform practice and G-15 on confirmation, clearance and settlement practices is May 28.

The board is also expected to launch a new proposal on pre-trade reporting, the third and final pillar of its multi-year look at time of trade, post-trade and pre-trade reporting.