Harmonizing requirements across rulebooks and easing implementation for securities industry
WASHINGTON, November 28, 2016 /BUSINESS WIRE/ — The Securities and Exchange Commission has approved FINRA’s proposal requiring its member firms to disclose on retail customer confirmations the “mark-up” or “mark-down” for most transactions in corporate and agency debt securities.
The SEC at the same time has approved a similar proposal from the Municipal Securities Rulemaking Board, which harmonizes the requirements across the FINRA and MSRB rulebooks and eases implementation for the securities industry.
The new rule will require that if a firm sells or buys a corporate or agency fixed-income security to or from a retail customer and on the same day buys or sells the same security as principal from another party in an equal or greater amount, the firm would have to disclose on the customer confirmation the firm’s mark-up or mark-down from the prevailing market price for the security. The confirmation would also have to include the execution time and a reference (and hyperlink if the confirmation is electronic) to trade-price data in the security from TRACE, FINRA’s Trade Reporting and Compliance Engine.
The disclosure requirement will not apply to securities acquired in a fixed-price offering and sold the same day to the retail customer at the fixed price offering price, or in situations where the firm does not have an offsetting principal trade in the bonds sold to the retail customer on the same day. An implementation date for the new rule will be announced in an upcoming regulatory notice.
FINRA, the Financial Industry Regulatory Authority, regulates broker-dealers doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating brokerage industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, and informing and educating the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers the largest dispute resolution forum for investors and firms. For more information, please visit here.