The Securities and Exchange Commission is soliciting comments on a rule change proposed by the Municipal Securities Rulemaking Board that would rescind a one-minute trade reporting standard previously approved by the SEC.
On June 9, the MSRB
The MSRB's decision to rescind the one-minute trade reporting deadline and revert to the existing 15-minute standard came after "months of dialogue and engagement with market participants," MSRB President and CEO Mark Kim said in a June 9 press release.
The provisions that would be rescinded by the proposed rule change were approved by the SEC on Sept. 20, 2024 as part of a wider set of amendments that have yet to go into effect, the MSRB noted in its June 10 filing.
Currently, dealers are required to report their trades to the MSRB's Real-time Transaction Reporting System within 15 minutes of the time of trade, though certain exceptions exist.
The amendments the SEC approved in September 2024, modified, among other things, the baseline 15-minute reporting requirement for reporting trades to RTRS in two ways: Reducing the timeframe for reporting such trades to no later than one minute after the time of trade and mandating that trades be reported as soon as practicable, irrespective of the amended deadline, according to the filing.
The 2024 amendments also added two new exceptions to the one-minute reporting requirement for trades that have a manual component and for trades by dealers with limited trading activity. Included as well was a requirement that dealers append a new manual trade indicator to flag all manual trades.
The MSRB continued to engage with market participants following the approval of the 2024 amendments and received additional feedback expressing a variety of concerns relating to the one-minute reporting requirement.
Those concerns surfaced as dealers began to weigh the steps they would need to take to comply with the 2024 amendments "that related both to additional scenarios involving potential trades with a manual component beyond those discussed in the 2024 amendments, and to issues that could arise in the case of certain fully automated trades," the filing said.
"Some of these scenarios raised the prospect that a potentially broader array of circumstances than previously anticipated during the course of the rulemaking for the 2024 amendments may exist where, at this time, the adjustment of dealer systems and workflows, including those dependent on third party vendors or market utilities, associated with achieving and complying with the shortened reporting timeframes under the 2024 amendments might not be feasible in the near-term," the filing said.
In looking at trade reporting data, the MSRB observed that trades that were likely reported electronically were being reported more quickly in 2024 compared with 2022, according to the filing.
"The MSRB previously noted that, to the extent dealers are not already reporting trades as soon as practicable, the inclusion of the requirement for reporting as soon as practicable would have the effect of increasing the proportion of trades being reported within shorter timeframes than they currently are, without regard to a one-minute, five-minute or 15-minute deadline...," the filing said.
The MSRB believes that the inclusion of the as soon as practicable requirement could by itself result in improved trade reporting times, with the biggest improvements likely to occur for trades currently being reported closer to the 15-minute deadline, the filing said.
"The MSRB believes that the 2024 amendments, as modified by the proposed rule change, would serve to continue to enhance market transparency without the potential compliance burdens and costs associated with the one-minute reporting requirement and the use of a special condition indicator for trades with a manual component," the filing said.
Consequently, "the MSRB has determined that it is appropriate at this time to rescind the one- minute reporting requirement and related provisions of the 2024 amendments and revert the rule language to maintain the currently-effective 15-minute RTRS reporting standard," the filing said.
"The MSRB has also determined to retain the as soon as practicable requirement and related provisions, as well as certain other clarifying amendments, of the 2024 amendments," the filing said.
