Best Execution of Transactions in Municipal Securities

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Target Audience     

  • Brokers-dealers

Learning Objectives

At the end of this course, learners will be able to:

  • Describe fundamental best-execution obligations under MSRB Rule G-18;
  • Identify considerations for determining best-execution;
  • Navigate scenarios that challenge the learner to apply a process to achieve best-execution; and
  • Understand transaction obligations to Sophisticated Municipal Market Professionals (SMMPs).

Course Outline

1. Introduction
a. Review Rules 
i. MSRB Rule G-18: Best Execution
ii. MSRB Rule G-30: Pricing Obligations
iii. MSRB Rule D-15: Definition of SMMPs
iv. MSRB Rule G-48: Modified Regulatory Obligations Owed to SMMPs

2. Scenario 1 - Small Firm
a. Accessibility of Quotations
b. ATS as a Market
c. Best Market
d. Character of Market
e. Number of Markets
f. Reasonable Diligence
g. Firm’s Inventory as a Market
h. Individual Broker as a Market
i. Interpositioning

3. Scenario 2 – Mid-Size Firm
a. ATS as a Market
b. The Best Execution Committee
c. Clearing /Executing Broker
d. Establishing Policies and Procedures
e. Exception Reports
f. Introducing Broker
g. Maintaining Adequate Resources
h. Price of the Bond
i. Reviewing and Revise Policies and Procedures
j. Systemic Execution Problem

4. Scenario 3 – Best Execution for Certain Situations
a. Accessibility of Quotations
b. ATS as a Market
c. Broker’s Broker as a Market
d. Character of the Market
e. Extreme Market Conditions
f. Liquidity as a Service 
g. Price of the Bond
h. Qualification as an SMMP
i. Review and Modify Policies and Procedures
j. SMMP Exemption
k. Systemic Execution Problem

5. Assessment