MSRB Rules G-15 and G-30: Mark-up Disclosure and Prevailing Market Price

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Target Audience:                                                                                            

  • Broker-dealers

Learning Objectives:

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

  • Identify the mark-up and mark-down disclosure requirements;
  • Engage in decision-making scenarios related to disclosure requirements; and
  • Understand the pricing factors used in determining the prevailing market price of a municipal bond under the new requirements.

Course Outline:

1. Introduction
a. Review of the MSRB Rules
i. MSRB Rule G-8: Books and Records 
ii. MSRB Rule G-14: Reports of Sales or Purchases 
iii. MSRB Rule G-15: Confirmation
iv. MSRB Rule G-30: Prices and Commissions 
b. Overview of the Waterfall
i. Dealer's Contemporaneous Cost or Proceeds
ii. Hierarchy of Pricing Factors
iii. Similar Securities
iv. Economic Models

2. Trading Scenario 1 - Contemporaneous Costs
a. Dealer's contemporaneous costs or proceeds
b. Calculating disclosure mark-up
c. Disclosure requirements

3. Trading Scenario 2: Overcoming the Presumption of Contemporaneous Costs
a. Dealer's Contemporaneous Costs or Proceeds
b. Disclosure Requirements
c. Hierarchy of Pricing Factors
d. Overcoming presumption of contemporaneous cost

4. Trading Scenario 3:  Waterfall Process
a. Calculating Disclosure Mark-up
b. Determining PMP 
c. Economic Models
d. Hierarchy of Pricing Factors
e. Similar Securities

5. Trading Scenario 4: Mark-up Calculation Made at the End of the Day
a. Calculating Disclosure Mark-up
b. Determining PMP 
c. Disclosure Requirements

6. Trading Scenario 5: Mark-up Calculations Input at the Time of Trade
a. Calculating Disclosure Mark-up
b. Determining PMP 
c. Disclosure Requirements
d. Hierarchy of Pricing Factors

7. More about the Rules
a. Determining PMP 
b. Disclosure Requirements
c. Disclosure Exceptions
d. Similar Securities

8. Assessment