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MSRB Notice

Real-Time Transaction Reporting: Revised Schedule and Operational Plan

In June 2003, the MSRB published a notice (the “June Notice”) requesting comment on the general policies that should govern real-time price reporting and dissemination of municipal securities.  The June Notice reviewed the reasons for moving to real-time transaction reporting and the MSRB’s operational plan for completing the transition to this new environment. 

This notice describes a revised schedule for implementation of real-time transaction reporting.  The schedule now calls for real-time transaction reporting to begin in January 2005.  Based upon its consideration of the comments received in response to the June Notice, the MSRB has made other minor modifications in the operational plan, as described in this notice.  Future notices will provide technical documentation of these changes.

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This notice describes changes to the implementation schedule for real-time transaction reporting of municipal securities to the MSRB.  The new schedule will bring real-time reporting, which is defined as the requirement to report transactions within 15 minutes of the time of trade, into operation in January 2005.  The notice also describes four minor modifications made by the MSRB to the operational plan for its Real-time Transaction Reporting System (RTRS), which, in summary, are:

  • Syndicate managers and syndicate members that effect trades in new issues at the list offering price may report such trades by the end of the first day of trading in the issue.
  • On a temporary basis, a dealer may report trades within three hours of the time of trade – rather than within 15 minutes – if the CUSIP number and indicative data of the issue traded are not in the dealer’s securities master file, the dealer has not traded the issue in the previous year, and the dealer is not a syndicate manager or syndicate member for the issue.  This provision will sunset automatically one year after RTRS implementation.
  • Dealers may report trades in variable rate instruments (including auction rate products) and commercial paper by the end of the day in which the trades are effected.
  • Dealers will not be required to indicate trades done using Alternative Trading Systems (ATS), but the ATS indicator field will be retained in the reporting format for potential use later.

At this time the MSRB is concentrating on the operational plan to provide dealers with lead times for programming changes into their securities processing systems.  The MSRB is continuing to consider issues related to transparency and dissemination of transaction information, and intends to address that topic early in 2004, well in advance of the implementation date.

Following are descriptions of the revised schedule, the responses MSRB has received to its June 2003 request for comment on real-time reporting (the “June Notice”),[1] and the resulting operational modifications made by the MSRB.


As described in the June Notice, the MSRB is in the process of developing RTRS and is preparing dealers to make the transition to a real-time reporting environment.[2]  To provide dealers with a single telecommunications “pipeline” for reporting, clearance and settlement of trades, MSRB decided in 2001 to design RTRS to interface with the Real-Time Trade Matching (RTTM) system, which will be operated by National Securities Clearing Corporation (NSCC)[3] and will be the central real-time system for trade comparison.  Additional reasons for connecting RTRS with RTTM include the momentum of RTTM (which is already processing trades in real-time in government and mortgage-backed securities), the synergies available to dealers for reporting and comparing transactions in real time with a single technology and a single pipeline, and the financial industry’s initiative for straight-through processing.  The MSRB and NSCC have worked closely together to ensure that the requirements for both transaction reporting and for clearance and settlement will be satisfied with this technology.

Under this approach, RTRS will receive most municipal securities trade data through NSCC.  This requires the MSRB and NSCC to coordinate system scheduling.  NSCC’s May 2003 implementation timeline called for RTTM implementation in the fourth quarter of 2003,[4] and MSRB in turn planned to provide dealers with six months to test RTRS in conjunction with the operational RTTM, bringing RTRS into operation in mid-2004.[5]  Current plans, however, call for the RTTM messaging interface with RTRS to go into operation in June 2004.[6]  The MSRB is now announcing a revision to the RTRS schedule, bringing RTRS into operation in January 2005.  Also in January 2005, planned revisions to MSRB Rules G-12(f) and G-14 will require dealers to submit inter-dealer trades for comparison and to report inter-dealer and customer trades within 15 minutes of the time of trade.  A testing and implementation schedule is at the end of this notice.  Documentation describing the test plan and test scenarios will be provided in the future.


The MSRB’s June Notice requested comment on the general policies that should govern real-time price reporting and dissemination of municipal securities.  The June Notice reviewed the reasons for moving to real-time transaction reporting and described the MSRB’s operational plan for completing the transition to this new environment.  The MSRB received 20 comment letters.  After reviewing these comments, the MSRB made the following modifications to its operational plan.  Revised specifications for programmers, embodying these changes, will be published in the near future. 

15-Minute Reporting Requirement

Four commentators express their concern about the resources necessary to achieve real-time reporting.  One commentator “wholeheartedly supports the approach MSRB has taken in using RTTM for submission of transaction data to RTRS” and “commend[s] the MSRB for coordinating the move to RTRS to coincide with NSCC’s transition to RTTM.”  However, this commentator and three others state concerns about the cost of redesign to the industry that will be necessary for compliance with the 15-minute reporting requirement and the possibility that the operating costs for small firms may make them less competitive with large firms.

The MSRB has designed RTRS to minimize the redesign and operational costs to report trades in real-time.  The implementation date of real-time transaction reporting, originally scheduled for 1997, has been delayed by the MSRB several times to give dealers additional time to make changes in bond processing systems necessary to capture trade data and process it on a real-time basis.[7]  The current focus on straight-through processing of securities transactions provides the best possible environment to make the conversion to real-time transaction reporting.[8]  In particular, the contemporaneous development of RTTM, the real-time comparison system[9] to be implemented by NSCC in 2004, will allow dealers to leverage their systems development work to satisfy two goals at once – that of real-time transaction reporting and real-time comparison of inter-dealer transactions.  For trades that are not eligible for comparison, NSCC will not process the transaction data submitted, but will immediately forward the data to the MSRB.  This will allow dealers to avoid setting up separate telecommunications links and facilities specifically for trade reporting these trades to the MSRB.

Schedule for Phase-In of Real-Time Reporting

Five commentators state their belief that there should be a phased-in approach to dealer testing and implementation of RTRS.  One commentator states that dealers require a minimum of six months of testing of RTRS after RTTM is fully operational, and proposes that after six months of RTTM operation, dealers would begin submitting most inter-dealer trades through RTTM under the 15-minute reporting requirement. This and one other commentator would initiate reporting of customer trades using messages sent through RTTM at the same time as inter-dealer trades, but would delay subjecting customer trades to the 15-minute requirement until dealers have six months of experience with real-time inter-dealer trade reporting.

One commentator suggests that during the testing and phase-in period the MSRB provide “progress reports” that would help dealers measure their success and become aware of areas that need improvement.  This commentator believes that regulators, in assessing individual firms’ performance, should not use the progress reports.  Another commentator states that dealers “will need the co-operation of the enforcement agencies in recognizing the difference between non-compliance and growing pains.”

The MSRB notes that the revised schedule extends the RTRS operational start date from mid-2004 to January 2005 and thereby provides six more calendar months for dealer system preparation.  This will do much to allay the concerns expressed above relating to dealer readiness for real-time transaction reporting.  Under the revised schedule (shown as a table below), RTRS will be available for beta testing with dealers in April 2004.  In July 2004, RTRS will go into parallel operation with RTTM.  Dealers will continue to be able to test with RTRS from this point onward, and, in addition, may at any time before January 2005 opt voluntarily to submit trades in the message format and to discontinue using the current batch format.  Dealers voluntarily using the message format before 2005 will be encouraged to submit trade reports in real time, but the current end-of-day requirement will remain in effect until 2005. 

The MSRB is not aware of an operational reason to phase in the customer trade reporting requirement six months after the inter-dealer reporting requirement.  Both customer and inter-dealer trades will come under the 15-minute requirement in January 2005. 

With regard to the request for “progress reports,” the MSRB, as stated in the June Notice, plans during the testing period to make reports available to each dealer showing the dealer’s performance on the various compliance parameters, along with industry averages for each parameter.  To the extent that these reports will relate to dealer performance during the test period on 15-minute reporting (rather than the existing requirement to report by midnight of trade date), the performance data would not be relevant to enforcement actions.

Exemption from the 15-Minute Requirement for Syndicate and Other New Issue Trades

Several commentators touch on the reporting of trades by an underwriting syndicate and other trades in new municipal securities issues.  One commentator states that there are so many transactions associated with a new issue that it may be physically impossible to enter them all within 15 minutes.  Two commentators note that CUSIP numbers and “indicative data” (securities descriptive data needed to make price/yield calculations and to confirm a transaction, such as dated date, coupon and maturity) are often not available to market participants, especially dealers that are not in an underwriting syndicate, on the first day of trading of new issues.  Regarding syndicates, one commentator states that “the Syndicate Manager always has the complete details before the Selling Members, putting the Selling Members at a disadvantage.”

In addition, six commentators question the value of reporting syndicate trades because, as one commentator states, “on sale date, the new issue transactions are done at a price that is already publicly known by way of the public offering itself,” and therefore there is little need for real-time disclosure of these new issue prices.  One commentator notes that the price reported on the first official day of trading in an issue may reflect an agreement based on market conditions on a day that precedes the initial trade date for the issue.  This commentator further states that trade reports on the initial trade date for a new issue may consist of both primary market trades (possibly based on prices agreed to days before) and secondary market trades reflecting that day’s market environment, which, it says, might mislead some investors as to prevailing market prices on the initial trade date.

Five commentators propose that reports of new issues should be required by the end of the first trading day or, if the CUSIP number is still not available, the next day.   One commentator states that “this should be considered a temporary reprieve and the industry should begin to search for a more permanent solution.”  One commentator proposes a flag for trades in the primary or secondary market to indicate that a submission has exceeded the 15-minute window because the CUSIP had to be added to the firm’s or to its vendor’s security master file. 

The MSRB agrees, in light of the large number of pre-sale commitments that a syndicate manager or syndicate member may have to report when a bond purchase agreement is signed or an award is announced, that it may be burdensome and even impossible in some cases for a syndicate manager or member to report all of these transactions within 15 minutes.  Moreover, the MSRB agrees that real-time dissemination of “list price” transactions would not offer a great benefit to transparency objectives.  For these specific reasons, the planned changes to Rules G-12(f) and G-14 will allow syndicate managers and syndicate members to report their trades done at the list offering price as late as the end of the first day of trading in the issue.  They would be required to include in the trade report an indicator to show that the trade is a “syndicate price trade,” i.e., a trade done by a syndicate manager or member at the list offering price.  Once a new issue has been released for trading, normal transaction reporting rules will apply to the syndicate manager and members and they will be required to enter trades within 15 minutes of the time of trade, as they also will be required to do for trades done at other than the publicly stated list price.

The MSRB plans to disseminate the “syndicate price” indicator with the trade as part of the transparency reports.  This will address the concern that syndicate prices are mixed in with secondary market prices on the initial trade date for an issue and will prevent confusing some investors as to prevailing market prices on the initial trade date.

The comments on adding new CUSIP numbers and indicative data for new issues are addressed in the next paragraph, since a similar topic arises in connection with some secondary market transactions.

Exemption for Trades in Issues Not Traded in the Prior Year

Eight commentators discuss secondary market trades of securities that have not been traded for a long time.[10]  They state that it is not practical for a dealer to keep all 1.5 millionCUSIP numbers in its securities master file in preparation for a possible trade, and that it is not possible to obtain and enter a CUSIP number and indicative data for such a security within 15 minutes of the trade.[11]  Commentators cite times ranging up to several hours as being necessary, depending on circumstances.[12] The same considerations would apply to a dealer that is not a member of a syndicate and that is trading a new issue for the first time.

The MSRB understands that a dealer that does not currently have a CUSIP number in its security master file might, under existing conditions, reasonably take as much as three hours to enter the issue into its securities master, even when best efforts are applied.  Therefore, the planned rule changes will provide, when a dealer has not traded an issue within the past year, that a three-hour trade reporting requirement will apply rather than a 15 minute reporting requirement.  The dealer will be required to code the trade report with an indicator to show that the report was delayed because of the need to add the CUSIP number to the dealer’s master file.  Because the MSRB believes it is practical for a dealer’s securities master file to hold all the CUSIP numbers it has traded in the previous year, a dealer will not be allowed to use this exemption for a particular CUSIP more than once a year.  Trades that the dealer indicates are delayed because of the need to add the CUSIP number will be checked against the dealer’s previous transaction reports to ensure that the issue had not been traded by that dealer during the past year.  The three-hour requirement also would apply to new issue securities that a dealer trades for the first time, as long as the dealer in question is not the syndicate manager or a syndicate member.  This should address concerns dealers have about obtaining new issue information on issues that they are not underwriting.  The MSRB believes that syndicate managers and syndicate members do have, or should have, timely access to information on a new issue that they are underwriting.[13]

The three-hour provision will expire or “sunset” automatically after one year from the date of RTRS implementation.  During this year, MSRB plans to work with dealers, trade associations and information vendors to ensure that industry efforts are being made to speed up the process of updating securities master files and that indicative data provided by the various commercial services meets dealer needs with respect to 15-minute transaction reporting with respect to quality and consistency as well as speed.

Exemption for Variable and Short-Term Instruments

Two commentators note that short-term instruments such as variable rate demand obligations (VRDOs), commercial paper and auction rate instruments typically are traded at par or at the clearing bid rate, and that there is limited benefit to disseminating such prices in real time.  The commentators cite the difficulty of real-time reporting of transactions in these instruments, since they are sold at auction with unpredictable results and are large issues involving numerous investors.  They believe that trades in short-term instruments should be reported at the end of the day rather than within 15 minutes.  However, one commentator states that VRDO reporting should be reported in real time because “it is preferable to have a consistent procedure for submitting these trades.” 

The MSRB understands that trades in variable rate products (including auction rate products) and commercial paper frequently are processed in a different manner than other fixed rate municipal securities.  Because it may present significant operational challenges for dealers to incorporate these instruments in the 15-minute reporting stream, the MSRB plans to require that trades in variable rate instruments and commercial paper be reported by the end of the day rather than within 15 minutes.  The dealer will include an indicator in the trade report to show that the security is being reported outside the 15-minute window for this reason.  The MSRB plans to require that trades in notes (i.e., securities with a fixed or zero interest rate and over nine months in maturity) be subject to normal reporting rules.

The MSRB does not currently plan to require reports of yields or reset rates on variable rate and auction rate products, but continues to be interested in price transparency in this area.  Accordingly, the MSRB will explore other ways to provide transparency for the short-term rates that are being set in reofferings and in variable rate and auction products. 

D iscrepancies in Timestamps on Inter-Dealer Trades

One commentator states that dealers “question the basis upon which the valid timestamp [on a trade report] will be determined in the case of an inter-dealer discrepancy,” and it asks the MSRB to clarify this point.  RTRS processing will assume that if there are different times on sides of an inter-dealer trade, the earlier time is correct.  If the times differ by more than 15 minutes, RTRS will send messages to parties on both sides informing them of the difference, but RTRS will not mark either time as invalid.  The MSRB plans to review this assumption as experience is gained with real-time reporting.

ATS Indicator

The June notice requested comments about designating certain trades that are done through alternative trading systems (ATSs).  One commentator states that the expectation that ATS trades will be reported is “both problematic and unnecessary” and asks for additional information from the MSRB about the utility of reporting and disseminating the ATS designation.  This commentator states that trading information through ATSs is already reported to the SEC and that the SEC might make such information available to the MSRB.[14]  Another commentator states that, while it is registered as an ATS, it does not execute trades with broker-dealers through electronic means, but instead functions as a voice-broker.  In light of this, the commentator believes “the identification of our trades as ATS trades will be confusing, and provide inaccurate data.”

The commentators have raised issues that would be problematic for real-time reporting in the case of an ATS dealer in municipal securities that also does non-ATS trades.  The MSRB plans to review the issue to determine whether there is another way to enhance existing audit trail capabilities with respect to electronically executed trades without identifying traditional voice brokered trades as “ATS” transactions.  At this time, the MSRB is dropping the requirement for dealers to identify ATS trades, but is retaining the field in the reporting format for potential use later.  When RTRS is initially implemented, dealers may simply omit the ATS indicator. 

RTRS Business Day 

The June notice requested comment on the proposed requirement to report trades within 15 minutes if the trades are done during the RTRS “business day,” defined as the period between 7:30 a.m. and 6:30 p.m. Eastern time.  The time of receipt of an electronic trade report would be the time of its arrival at NSCC.  Trades reported during the business day would be disseminated in real-time.  Transactions effected outside of the RTRS Business Day would have to be reported by dealers no later than 15 minutes after the start of the next RTRS Business Day.  One commentator states that it “prefer[s] to follow the same procedures used in GSCC reporting” but does not specify the GSCC procedures or their advantages.  Another commentator agrees with the MSRB’s proposal that the RTRS business day would be defined to extend from 7:30 am to 6:30 pm.  The MSRB at this time is retaining the proposed definition of the RTRS business day.


At this time the MSRB is concentrating on the operational plan, since dealers need long lead times to program changes into their securities processing systems before real-time reporting becomes operational.  The MSRB is continuing to consider transparency and dissemination issues.  In these areas, commentators discuss topics  including costs and benefits of increased transparency, investor proposals for increased transparency, phasing in dissemination of trades in infrequently traded issues to ensure there is no adverse effect on liquidity, dissemination of agency and broker’s brokers’ transactions, dissemination of RTRS control numbers on trades, and the utility of a national matrix of yields.  The MSRB will consider these comments and will determine policies for real-time dissemination of transaction information early in 2004, well in advance of the implementation date.


By January 2005, all dealers that effect transactions in municipal securities must successfully demonstrate their operational readiness for real-time reporting.  Dealers with high trade volumes (dealers that reported an average of more than five trades per week between July 2003 and June 2004) must test message-based reporting.  Dealers with low trade volumes (dealers averaging five or fewer trades per week) are not required to test message-based reporting, but must successfully test some method of real-time reporting.   They must test the reporting of inter-dealer trades via a clearing broker, and the reporting of  customer trades either via the RTRS Web method or via a clearing broker or service bureau.[16]  High-volume dealers may use the RTRS Web method in addition to messaging.  The RTRS Web method will be available for testing on the same schedule as the message-based method.

First quarter 2004

MSRB publishes details of message-based and Web testing, including testing procedures, test scripts and other information necessary for setting up a testing account. 

April 2004

Dealers begin to schedule testing with the MSRB.

Dealers may begin beta testing of RTRS inter-dealer and customer trade reporting.

June 2004

NSCC implements production version of messaging for inter-dealer trades and accepts customer trade messages.

July 2004

RTRS goes into parallel operation with RTTM. MSRB begins to certify successful testing.

Between July and December, dealers may opt to switch to messaging and Web reporting of inter-dealer or customer trades.  (End of day requirement and batch transaction reporting continue.)

October 2004

By Oct. 1, all high-volume dealers must have tested messaging or have arranged with the MSRB a date for testing.

December 2004

All dealers must have successfully tested the reporting of inter- dealer and customer trades, via messaging or Web.

January 2005

RTRS is operational.

Rule G-14 real-time reporting requirement becomes effective. 

Rule G-12(f) real-time automated comparison requirement becomes effective.

Batch transaction input ceases.

December 11, 2003

[1] “Request for Comments:  Plan for Real-Time Reporting,” Notice 2003-23 dated June 13, 2003, on

[2] In addition to the June Notice, information for dealers that are planning the transition to real-time reporting is on the MSRB’s Web site,, under “Transaction Reporting System.”

[3] NSCC is a clearing agency registered under the Securities Exchange Act.  The RTTM service will be provided on behalf of NSCC by the Fixed Income Clearing Corporation (FICC), an affiliate of NSCC, via a service agreement.  FICC already has implemented RTTM for Government Securities and Mortgage-Backed securities trade processing.

[4] NSCC, “NSCC Real-Time Trade Matching for Corporates, Municipals and UITs,” New Service Bulletin (May 30, 2003) at 3.

[5] See “Plans for MSRB’s Real-Time Transaction Reporting System,” MSRB Notice 2003-3, dated February 3, 2003, and the June Notice.

[6] See NSCC, “Implementation Timeline for RTTM for Corporate and Municipal Bonds and UITs,” NSCC Important Notice No. A5713/P&S5283 (November 11, 2003) (the “NSCC Timeline”) on

[7] See, e.g., “Real Time Reporting of Municipal Securities Transactions,” MSRB Reports Vol. 21, No. 2 dated July 2001, and  “Plans for MSRB’s Real-Time Transaction Reporting System,” MSRB Notice 2003-3 dated February 3, 2003, on

[8] See, e.g., “SIA Board Endorses Program to Modernize Clearing, Settlement Process for Securities,” SIA Press Release (July 18, 2002) on

[9] This notice speaks of trade “comparison,” although RTTM is a “matching” system.  A trade is considered “compared” when the trade details submitted by both contraparties are matched and a report evidencing the terms of the trades is issued by the clearing corporation, or, for certain one-sided submissions, when the trade is received by RTTM.  RTTM marks trades as “matched” as to details from both parties, or as automatically matched at a specified time.  See NSCC, Real-time Trade Matching (RTTM) for NSCC-Eligible Fixed Income Securities:  Business Requirements (July 2002), n 4.

[10] One commentator states the problem is exacerbated for West Coast firms that use East Coast clearing firms and that trade late in the afternoon Pacific Time.

[11] The MSRB’s current Transaction Reporting System, which verifies trades market-wide, maintains a comprehensive securities master file containing CUSIP numbers and data for 1.5 million non-matured securities.  Extensive staff and financial resources are devoted to obtaining, verifying and maintaining this file.  The MSRB believes that it is not reasonable to require a dealer to build such a file to support only its own trading activity.

[12] One commentator states that up to two hours are necessary and another states that setup can take more than three hours.  One commentator states that “this process is normally measured in hours, not minutes.”  One commentator depends upon a service bureau where setting up a CUSIP “can take quite a bit of time.”  One commentator, without citing details, states a concern about the time to set up non-investment grade paper.  One commentator states that even dealers that have integrated data services with their processing systems still take approximately 7-11 minutes to set up a security traded in the secondary market, if it was not already set up.

[13] MSRB Rule G-34 requires a managing underwriter (syndicate manager) to apply to the MSRB or its designee for assignment of a CUSIP number for the issue before initial trading in the issue begins, and in its application to provide indicative data for the issue.

[14] The MSRB understands that the SEC does not have trade-level data on ATS trades similar to the RTRS trade-level data.  ATSs send quarterly summaries of activity to the SEC but they do not report to the SEC each transaction price and size.

[15] The schedule here is consistent with the NSCC Timeline, cited above, n 6.

[16] See June Notice, sections on “Submission of Transaction Reports by Intermediaries,” “Message-Based vs. Web Submission of Trade Data,” and “Testing and Contact Requirements.”