Regulations have been proposed that would shed more light on the compensation dealers derive from municipal bond sales and dark-pool transactions.

The Municipal Securities Rulemaking Board (MSRB) proposal would require dealers to reveal compensation other than the usual transaction payments on purchases and sales they process.

The extra compensation would be listed on the Electronic Municipal Market Access (EMMA) Web site.

Under the current setup, the same bond can be listed at different prices depending on whether additional fees are applied—a situation that regulators say can confuse investors.

With the rule, a dealer would only have to disclose a non-transaction fee, such as a monthly payment, without revealing the nature and the amount of the fee.

In another proposal, dealers would be obligated to show when an alternative trading system was used in a transaction.

The agency doesn’t have an estimate on what share of municipal bond trading is being done via dark pools. Alternative trading systems regularly account for 10 percent to 15 percent of all stock trading volume, according to the Securities and Exchange Commission.

Under the MSRB proposal, broker-dealers would have to disclose to the EMMA Web site the day, time and pricing of any municipal bond sales conducted before the bonds were made available to the public.

As with initial public offerings, regulators say they are concerned that brokers could be showing improper favoritism to clients by steering hot deals their way that are not being shown to the rest of their customers.

“These proposed changes are among the many steps we are taking to ensure that EMMA continues to evolve in response to changing municipal market practices and technological capabilities.” said MSRB Executive Director Lynnette Kelly.

First « 1 2 » Next