Pre-trade transparency is on the SEC advisory panel's plate

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WASHINGTON - Pre-trade transparency in the municipal market is slated to be discussed by dealers, financial advisors and a data provider at the Securities and Exchange Commission's Fixed Income Market Structure Advisory Committee meeting here on July 16, the SEC announced Wednesday.

This will be the third meeting of the FIMSAC, which was formally established in November 2017 to provide the commission with what SEC Chairman Jay Clayton said he hoped would be an increased understanding of the “efficiency, transparency, and effectiveness” of the fixed income markets.

Munis received minimal attention at the first two meetings, but the 23-member committee features a number of prominent muni market figures such as former acting SEC Chairman Elisse Walter, who was also a commissioner, and the Municipal Securities Rulemaking Board's Chief Market Structure Officer John Bagley.

Clayton has said he is concerned about the fixed income markets because of the prevalence of corporate and municipal bonds in the investment portfolios of older Americans who he fears may not be knowledgeable about the differences between the bond and equity markets.

According to the agenda released Wednesday, the panel will have a discussion on the current state of pre-trade transparency in the municipal market from 1:30 p.m. until 2:45 p.m. ET. Panelists taking part in the discussion will be industry participants: Bernard Costello, head of muni trading at Morgan Stanley; Ric Edelman, financial planner and author; Chris Ferreri, chief operating officer at Hartfield, Titus and Donnelly; Ben Smelser, a senior vice president at Breckenridge Capital Advisors; David Umeda, a financial advisor at Charles Schwab; and Ron Valinoti, founder of Triangle Park Capital Markets Data.

The SEC has been interested in improving pre-trade transparency in the muni market for several years. The commission’s 2012 Report on the Municipal Securities Market suggested that the SEC could require alternative trading systems on which munis are traded to publicly disseminate their best bid and offer prices, and that the MSRB could require the same of brokers’ brokers.

The MSRB has also for several years said it intends to work towards improving pre-trade transparency, at least in part by continuing to enhance its existing EMMA platform.

The rest of the FIMSAC’s agenda does not appear to be muni-specific, although the final discussion of the day will center on a draft recommendation on electronic trading venue regulation.

The meeting will be held at the SEC’s headquarters in Washington. Members of the public can submit comments for the committee to consider either electronically or on paper. The meeting will be available via live webcast and begins at 9:30 a.m. ET.

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