According to The Bond Buyer, several dealer groups have spoken to the Municipal Securities Rulemaking Board (MSRB) over data dissemination, warning that disclosing certain information to retail dealers may actually hurt the secondary market.
These warnings have sprung from the MSRB reaching out to dealer groups like the Securities Industry and Financial Market Association and the Bond Dealers of America for feedback on their concept for pre and post- trade pricing data dissemination. The MSRB wanted to know what types of data would be useful for retail investors, and were particularly curious over “conditional trade agreements,” where dealers seek to allocate orders before signing an actual bond purchase agreement. These agreements are often priced differently than what is reflected in the market when the official bonds are signed.
While the dealers are adamant about saying they are for making the market more transparent, they fear that some information may lead to compromising broker strategies, high operating costs, and the bewilderment of retail investors with too much information.
The BDA is concerned that giving out too much information may cause market participants to ease up on trading and decrease liquidity.
While the MSRB is still considering the best way to go about pricing data dissemination, it may be some time before they institute anything, as they are prioritizing rules based off the SEC’s municipal advisor registration rule.