MSRB Seeks Comment on Enhancing Price Transparency for Large Trades

Date: June 1, 2012

Contact: Jennifer A. Galloway, Chief Communications Officer
             (703) 797-6600


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today published a request for comment on a proposal to provide for more rapid public dissemination of trade size information for large municipal securities transactions through the MSRB Real-Time Transaction Reporting System (RTRS), the centralized system for collection and market-wide dissemination of all transactions in municipal securities by dealers. Transaction data is published on the MSRB’s Electronic Municipal Market Access (EMMA®) website on a real-time basis for free public access and is also offered on a subscription basis to, among others, market data vendors. 

Currently, transaction information disseminated from RTRS and published on the EMMA website on a real-time basis includes the par value on all transactions with a value of $1 million or less but uses an indicator of “1MM+” in place of the par value on transactions where the value is greater than $1 million. Five business days after the trade, RTRS disseminates and the EMMA website reveals the exact par value of the trade. 

The five-day delay was intended to address concerns raised by some industry participants during the implementation of RTRS that revealing the exact value of large trades on a real-time basis would allow dealers to identify the dealer and institutional investors involved in the trade, information that could be used to trade against the dealer’s position and reduce the incentive for a dealer to take large positions in these circumstances. The MSRB planned to review the five-day delay to determine if this effort to preserve the anonymity of dealers and institutional investors substantially detracted from the benefits of price transparency. 

Recently, the MSRB has grown concerned that some market participants may be disadvantaged by the delay in access to the exact size of large trades because some institutional investors may have earlier access to this information through their relationships with dealers, as outlined in a recent report published by the Government Accountability Office in January 2012. A foundational principal of RTRS is that all market participants would have equal access to transaction information. 

“The MSRB believes disseminating the exact trade size of all transactions will help achieve our goal of ensuring the fairest and most accurate pricing of municipal securities transactions by providing all market participants with equal access to transaction information,” said MSRB Executive Director Lynnette Kelly. 

Comments should be submitted no later than July 2, 2012. 

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.