MSRB Proposes Faster Size Disclosure for Large Trades

The MSRB sought approval of a proposal from the SEC to provide for more rapid public dissemination of trade size information for municipal securities transactions valued between $1 and $5 million through the MSRB Real-Time Transaction Reporting System (RTRS). Currently, transaction information disseminated from RTRS includes the exact par value on all transactions with a par value of $1 million or less but includes an indicator of "1MM+" in place of the exact par value on transactions where the par value is greater than $1 million. The exact par value of such transactions is disseminated from RTRS five business days later.

The proposed amendment would enhance the transaction data publicly disseminated from RTRS in real-time by including the exact par value on all transactions with a par value of $5 million or less and including an indicator of "MM+" in place of the exact par value on transactions where the par value is greater than $5 million. The exact par value of transactions where the par value is greater than $5 million will be disseminated from RTRS five business days later.

The MSRB proposes that the amendments be made effective on November 5, 2012 to coincide with other planned changes to RTRS.

[Lofchie Comment: The proposed rule change raises the issue as to what is the trade-off between (i) the benefit of providing to the market with full disclosure as to trade size and (ii) the disadvantage to the actual parties to the trade of having their trading positions disclosed. The same issue is arising as to CFTC Rule 43.5, which allows for a time delay in regard to the reporting of block transactions. (Lawyers do not have any expertise that would allow them to even guess as to the appropriate trade-off. That said, my concern is that we may be giving too much weight to immediate public reporting in light of the fact that "transparency" has become one of those words symbolizing "good" regulation.) Given the importance of this issue to institutional market participants and to the liquidity of the markets generally, I would feel that we had a better regulatory system if the issue were jointly addressed by both the CFTC and the securities regulators in an open fashion that enouraged study and comment by both market participants and academics.]

View Regulatory Notice in full here (links externally to MSRB website). Additional Materials: Press Release