Today, BDA submitted comment letters to both FINRA and MSRB in response to their request for comment on a proposed rule to require a pricing reference disclosure on certain retail-size fixed income trades.
BDA submitted an identical comment letter to both FINRA and MSRB in response to their request for comment on a proposed rule to require a pricing reference disclosure on certain retail-size fixed income trades. The BDA’s letter can be accessed here.
The BDA’s letter focuses on several core issues with the proposed rule.
- Regulators have yet to explore or even begin to understand what this proposal means from a day-to-day operational standpoint for dealers. BDA requests that regulators engage in a feasibility study in order to be informed of the operational and technological impact of this proposal.
- The scope of the universe of trades that the proposed rule applies to is too broad and is not based on any empirical, market-based data. BDA urges regulators to provide an data-driven explanation for why the time scale and trade size makes sense.
- The proposed disclosure would trigger a requirement to disclose information to investors that is incomplete and potentially misleading without the appropriate context.
- BDA urges regulators to explore alternatives to the proposed rule that would allow the regulators to meet their goals through improvements to EMMA and TRACE.
- BDA urges regulators to allow dealers to make the specialized disclosure in whichever way best fits with their existing system capabilities.
- Finally, BDA urges regulators to exclude ‘retail-size’ trades with sophisticated institutional investors from the scope of the proposed rule. Additionally, BDA urges regulators to focus the proposed rule on secondary market trades and exclude primary market transactions.
01-20-15