SEC approves MSRB one minute reporting proposal

The Securities and Exchange Commission has approved amendments to Municipal Securities Rulemaking Board Rule G-14 on customer transaction reporting, shortening the time of trade window to one minute from 15 minutes and kicking off the initial opt-in period, though a formal compliance date has yet to be set.

The board first requested comment on the proposal in August 2022 and has since been engaged in a back and forth with other regulators and dealer groups. The SEC approval came Friday.

“Today’s approval order represents the culmination of our rulemaking initiative to amend MSRB Rule G-14 to establish a new one minute standard of trade reporting,” said MSRB chair Meredith Hathorn. “I want to acknowledge the invaluable feedback we received from our stakeholders during the comment period, which resulted in a rule that is not only more fair and equitable but also one that advances the public interest in a more transparent municipal securities market.”

The MSRB will publish an additional notice announcing the effective date of the rule change in the coming months.

“As we strive to enhance transparency in the municipal securities market, it is important to acknowledge the critical roles served by firms of all types and different manners of trading,” MSRB Chief Regulatory and Policy Officer Ernesto Lanza said. “The amendments approved today represent a significant modernization of the trade reporting paradigm. They allow investors and other market participants to have access to more contemporaneous prices, while ensuring firms executing manual trades and those with limited trading volumes can continue to effectively serve the diverse range of customers participating in this market.”

The changes will include the long-sought exceptions for manual trades and for firms with de minimis or limited trading activity, though some concerns around the proposal persist.

“The SEC has approved the MSRB’s rule changes related to one-minute reporting as expected,” said Michael Decker, senior vice president of federal policy and research at the Bond Dealers of America. “The final amendments include significant exceptions to one-minute reporting for manual trades and for dealers with de minimis trade counts. We remain concerned about the ability to report certain manual trades in less than 15 minutes, which will begin in the second year the changes are in effect. And we urge the MSRB to provide a 24-month implementation period for the rule changes.”

“We did get some more feedback from the industry around what some of the issues are, what the timing might be, so we’re gonna be looking at some of that and look at the calendar at where the market flows occur during certain times of year as well as any other main regulatory obligations, particularly those that are technology based, to try to find the right spot so that people have plenty of time to do whatever changes they need to make, both technologically and procedurally,” Lanza said.

The board will also be going through all of its existing technical support documentation to make sure it reflects the new requirements, Lanza said. He also said that the coming months will be a very open door process in setting the upcoming requirements and urges firms to continue to engage with the board.