The Financial Industry Regulatory Authority (FINRA) in the U.S. has published guidance on new disclosure requirements that aim to enhance bond market transparency for retail investors.
The new rules, which take effect on May 14, 2018, will require firms to disclose “mark-ups” or “mark-downs” on retail trade confirmations for certain bond transactions. They will also require retail trade confirmations to include the execution time, and a link to trade-price data from FINRA’s Trade Reporting and Compliance Engine (TRACE).
The rules aim to help retail investors monitor bond trading costs by bolstering price transparency. The new guidance sets out issues such as when the disclosure requirements are triggered; and, the required form and content of disclosure.
Parallel guidance is also being issued by the Municipal Securities Rulemaking Board (MSRB), which is implementing comparable reporting requirements.