Client Alert

The Board of Governors of the Financial Industry Regulatory Authority, Inc. recently authorized regulatory notices seeking comment on initiatives to enhance transparency and execution quality in fixed income markets. These initiatives include:

  • Required trade confirmation disclosure related to certain fixed income trade pricing, including confirmation disclosure of bond mark-ups and mark-downs on same-day retail-size principal trades;
  • Required reporting of certain fixed income quotation information by alternative trading systems to FINRA; and
  • Identification of certain transactions with affiliated entities in Trade Reporting and Compliance Engine trade reports.

The recent FINRA action was largely prompted by calls from Securities and Exchange Commission Chair Mary Jo White and other Commissioners to help investors better understand the cost of fixed income transactions. In particular, Chair White said in a June 2014 speech that the SEC would work with FINRA and the Municipal Securities Rulemaking Board to develop rules by the end of 2014 regarding disclosure of mark-ups and mark-downs in “riskless principal” transactions for both corporate and municipal bonds.

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