5384 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 50605 (Oct. 29, 

2004), 69 FR 64346 (Nov. 4, 2004), File No. SR– 

MSRB–2004–06; see also MSRB Notice 2004–29 

(Approval by the SEC of Real-Time Transaction 

Reporting and Price Dissemination: Rules G–12(f) 

and G–14) (September 2, 2004). 

4Rule G–14 RTRS Procedures Section (d)(iii) 

defines ‘‘Time of Trade’’ as the time at which a 

contract is formed for a sale or purchase of 

municipal securities at a set quantity and set price. 

5Transactions in securities without CUSIP 

numbers, transactions in municipal fund securities, 

and certain inter-dealer securities movements not 

eligible for comparison through a clearing agency 

are currently exempt from the reporting 

requirements under Rule G–14(b)(v). 

6The RTRS Users Manual is available at https:// 

www.msrb.org/RTRS-Users-Manual. Prior to the 

creation of RTRS in 2005, the MSRB collected trade 

data on an end-of-day basis for next day 

dissemination and surveillance purposes through a 

predecessor transaction reporting system. 

7See Rule G–14(b)(i). Transaction information 

collected by RTRS is also used in connection with 

assessments under MSRB Rule A–13(d). 

8See MSRB Notice 2009–22 (MSRB Receives 

Approval to Launch Primary Market Disclosure 

Service of MSRB’s Electronic Municipal Market 

Access System (EMMA) for Electronic 

Dissemination of Official Statements) (May 22, 

2009). 

9See MSRB Notice 2013–02 (Request for 

Comment on More Contemporaneous Trade Price 

Information Through a New Central Transparency 

Platform) (Jan. 17, 2013); MSRB Notice 2013–14 

(Concept Release on Pre-Trade and Post-Trade 

Pricing Data Dissemination through a New Central 

Transparency Platform) (July 31, 2013); MSRB 

Notice 2014–14 (Request for Comment on 

Enhancements to Post-Trade Transaction Data 

Disseminated Through a New Central Transparency 

Platform) (Aug. 13, 2014); MSRB Notice 2022–07 

(Request for Comment on Transaction Reporting 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99402; File No. SR–MSRB– 

2024–01] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing of a Proposed 

Rule Change To Amend MSRB Rule G– 

14 To Shorten the Timeframe for 

Reporting Trades in Municipal 

Securities to the MSRB 

January 19, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on January 12, 2024, the Municipal 

Securities Rulemaking Board (‘‘MSRB’’ 

or ‘‘Board’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the MSRB. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The MSRB filed with the Commission 

a proposed rule change to (i) amend 

Rule G–14 RTRS Procedures under 

MSRB Rule G–14, on reports of sales or 

purchases (‘‘Rule G–14’’), to shorten the 

amount of time within which brokers, 

dealers and municipal securities dealers 

(individually and collectively, 

‘‘dealers’’) must report most transactions 

to the MSRB, require dealers to report 

certain transactions with a new trade 

indicator, and make certain clarifying 

amendments, and (ii) make conforming 

amendments to MSRB Rule G–12, on 

uniform practice (‘‘Rule G–12’’), and the 

MSRB’s Real-Time Transaction 

Reporting System (‘‘RTRS’’) Information 

Facility (‘‘IF–1’’) to reflect the shortened 

reporting timeframe (collectively, the 

‘‘proposed rule change’’). 

If the Commission approves the 

proposed rule change, the MSRB will 

announce the effective date of the 

proposed rule change in a regulatory 

notice to be published on the MSRB 

website. 

The text of the proposed rule change 

is available on the MSRB’s website at 

https://msrb.org/2024-SEC-Filings, at 

the MSRB’s principal office, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

MSRB included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. The MSRB has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Background 

Since 2005, the MSRB has collected 

and disseminated information from 

dealers about their municipal securities 

purchase and sale transactions.3 Dealers 

currently are required to report their 

transactions to RTRS within 15 minutes 

of the Time of Trade,4 absent an 

exception,5 in accordance with Rule G– 

14, the Rule G–14 RTRS Procedures, 

and the RTRS Users Manual.6

The transaction information collected 

by the MSRB in accordance with Rule 

G–14 serves the dual primary purposes 

of market transparency and market 

surveillance.7 To advance the goal of 

market transparency, the MSRB 

disseminates trade reporting 

information from RTRS to paid 

subscribers through certain data 

subscription feeds. These data 

subscription feeds serve as the core 

source of price-related information used 

by market participants, industry utilities 

and vendors that, among other things, 

operate pricing-related tools and 

services used throughout the municipal 

market to support execution of trades at 

fair and reasonable prices that reflect 

current market values. To further 

advance the goal of market transparency 

and to make such price-related 

information available to individual 

investors and other market participants 

contemporaneously with data flowing to 

market professionals through the RTRS 

subscription feeds, the MSRB 

disseminates trade reporting 

information free of charge to the general 

public through the MSRB’s centralized 

Electronic Municipal Market Access 

(‘‘EMMA®’’) website.8

To advance the goal of market 

surveillance, the MSRB maintains a 

comprehensive database of transaction 

information, which is made available to 

the examining authorities, including the 

Commission, the Financial Industry 

Regulatory Authority (‘‘FINRA’’), and 

other appropriate regulatory agencies. 

The availability of trade reporting data 

strengthens market transparency, 

promotes investor protection and 

reduces information asymmetry 

between institutional and retail 

investors. 

Fixed income markets have changed 

dramatically since the current 15- 

minute requirement went into effect in 

2005, including a significant increase in 

the use of electronic trading platforms 

or other electronic communication 

protocols to facilitate the execution of 

transactions. The MSRB has continued 

to explore ways to modernize the rule 

and provide for more timely, granular 

and informative data to further enhance 

the value of disseminated transaction 

data. In doing so, the MSRB has taken 

a measured and data-driven approach, 

using available trade reporting data and 

the public comment process to help 

inform its policy objectives and actions. 

The MSRB has utilized a series of 

concept releases, requests for comments 

and extensive outreach to solicit input 

from market participants and 

stakeholders.9 As a result of these efforts 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5385 

Obligations under MSRB Rule G–14) (Aug. 2, 2022) 

(the ‘‘2022 Request for Comment’’). 

10See, e.g., Exchange Act Release No. 75039 (May 

22, 2015), 80 FR 31084 (June 1, 2015), File No. SR– 

MSRB–2015–02, and Exchange Act Release No. 

77366 (Mar. 14, 2016), 81 FR 14919 (Mar. 18, 2016), 

File No. SR–MSRB–2016–05 (expanding and adding 

trade indicators); Exchange Act Release No. 83038 

(Apr. 12, 2018), 83 FR 17200 (Apr. 18, 2018), File 

No. SR–MSRB–2018–02 (modernizing RTRS 

Information Facility (IF–1)). 

11See infra ‘‘Self-Regulatory Organization’s 

Statement on Burden on Competition—Trade 

Reporting Analysis’’ in Section 4(a) Table 1. Trade 

Report Time by Trade Size—Cumulative 

Percentages. January to December 2022. 

12Rule G–14 RTRS Procedures Section (d)(ii) 

defines ‘‘RTRS Business Day’’ as 7:30 a.m. to 6:30 

p.m., Eastern Time, Monday through Friday, unless 

otherwise announced by the MSRB. 

13RTRS has three ‘‘Portals’’ for submission of 

transaction data, and aspects of RTRS are designed 

to function in coordination with the Real-Time 

Trade Matching (‘‘RTTM’’) system of the Depository 

Trust & Clearing Corporation (‘‘DTCC’’) in 

conjunction with its subsidiary National Securities 

Clearing Corporation. Rule G–14 RTRS Procedures 

Section (a)(i) describes the three RTRS Portals: 

Message Portal used for trade submission and trade 

modification as described in Section (A) thereof; 

RTRS Web Portal used for low-volume transaction 

submission and modification as described in 

Section (B) thereof; and RTTM Web Portal used 

only for inter-dealer transactions eligible for 

automated comparison as described in Section (C) 

thereof. 

14Three of these existing exceptions, consisting of 

List Offering Price/Takedown Transactions, trades 

in certain short-term or variable rate instruments, 

and away from market trades, require that trades be 

reported by the end of the day on which they are 

executed and do not rely on the Time of Trade. 

These three end-of-trade-date reporting exceptions 

would be retained without change and would be 

redesignated as Rule G–14 RTRS Procedures 

Section (a)(ii)(A)(1), (2) and (3), respectively. Two 

other existing exceptions for certain special 

circumstances would also be retained without 

change, consisting of dealers reporting inter-dealer 

‘‘VRDO ineligible on trade date’’ transactions, 

which must be reported by the end of the day on 

which the trade becomes eligible for automated 

comparison, and of dealers reporting inter-dealer 

‘‘resubmission of an RTTM cancel,’’ which must be 

reported by the end of the next RTRS Business Day 

following cancellation of the original trade. These 

two exceptions would be redesignated as Rule G– 

14 RTRS Procedures Sections (a)(ii)(B)(1) and (2), 

respectively. 

15The two new intra-day reporting exceptions, 

consisting of trades by dealers with limited trading 

activity and trades with a manual component, 

would be designated as Rule G–14 RTRS 

Procedures Sections (a)(ii)(C)(1) and (2), 

respectively. 

and of RTRS re-engineering to ensure its 

on-going effectiveness as demands on 

the system were expected to rise over 

time, the MSRB has implemented 

various refinements to RTRS, RTRS 

Information Facility (IF–1), and the 

content and quality of trade-related 

information made available to investors 

and the public.10

The MSRB has found that, in 2022, 

approximately 73.7 percent of the trades 

in the municipal securities market that 

are currently subject to the 15-minute 

reporting timeframe were reported 

within one minute of execution, and 

approximately 97 percent of trades in 

the municipal securities market that are 

currently subject to the 15-minute 

reporting timeframe were reported 

within five minutes of execution.11 In 

light of the technological advances and 

evolving market practices in the 

intervening 19 years since the MSRB 

first adopted the 15-minute reporting 

requirement, including the increase in 

electronic trading, and consistent with 

the MSRB’s longstanding goals of 

increasing transparency and improving 

access to timely transaction data, the 

MSRB is proposing updates to 

modernize the reporting timeframes and 

provide timelier transparency. In this 

effort, the MSRB would continue to 

assess its RTRS reporting requirements 

in light of market developments, 

including reporting timeframes, and 

consider whether any further 

modifications are warranted. 

Proposed Rule Change 

The proposed rule change is intended 

to bring about greater market 

transparency through more timely 

disclosure and dissemination of 

information to market participants and 

market-supporting vendors so that the 

information better reflects current 

market conditions on a real-time basis, 

while carefully balancing the 

considerations raised by commenters 

throughout the rulemaking process. 

The proposed amendments to Rule G– 

14 RTRS Procedures under Rule G–14 

would: 

• Establish a baseline one-minute 

trade reporting requirement; 

• Establish a requirement that, with 

limited exceptions, trades be reported as 

soon as practicable and that dealers 

adopt policies and procedures in 

connection with this requirement; 

• Create two new exceptions to the 

new one-minute reporting requirement, 

consisting of (1) a 15-minute exception 

for dealers with ‘‘limited trading 

activity,’’ and (2) a phased-in approach 

for implementation from 15 minutes to 

an eventual five-minute reporting 

requirement for ‘‘trades with a manual 

component’’; 

• Maintain and clarify all existing 

exceptions to the current 15-minute 

reporting requirement, as well as the 15- 

minute from start of next day reporting 

requirement for trades conducted 

outside the trading day, so that they 

would continue to apply under the new 

one-minute reporting requirement; 

• Require that dealers reporting any 

trade with a manual component use a 

new special condition indicator when 

the trade is reported to the MSRB; 

• Specify that dealers may not 

purposely delay the execution or 

reporting of a transaction, introduce any 

manual steps following the Time of 

Trade, or otherwise modify any steps to 

execute or report the trade for the 

purpose of utilizing the manual trade 

exception; 

• Provide that a rule violation would 

be found where there is a ‘‘pattern or 

practice’’ of late trade reporting without 

‘‘reasonable justification or exceptional 

circumstances’’; and 

• Clarify within Rule G–14 RTRS 

Procedures the usage of all existing and 

new special condition indicators. 

The proposed rule change would also 

make certain conforming technical 

changes to Rule G–12(f)(i) and IF–1. A 

more detailed description of the 

proposed rule change follows. 

If the proposed rule change is 

approved, the MSRB would review the 

available trade reporting information 

and data arising from implementation of 

the changes to trade reporting 

introduced by the proposed rule change, 

including but not limited to the two 

exceptions to the one-minute reporting 

requirement. Such monitoring would 

inform any further potential changes by 

the MSRB, through future rulemaking, 

to the trade reporting requirements due 

to increasing marketplace and 

technology efficiencies, process 

improvements, continuing or new 

barriers to accelerated reporting, 

unanticipated market impacts, or other 

factors. 

New Baseline Reporting Requirement: 

One Minute After the Time of Trade 

Proposed amendments to Rule G–14 

RTRS Procedures Section (a)(ii) 

generally would provide that 

transactions effected with a Time of 

Trade during the hours of an RTRS 

Business Day 12 must be reported to an 

RTRS Portal 13 ‘‘as soon as practicable, 

but no later than one minute’’ (rather 

than within the current 15-minute 

standard) after the Time of Trade, 

subject to several existing reporting 

exceptions, which would be retained in 

the amended rule,14 and two new intraday reporting exceptions relating to 

dealers with limited trading activity and 

trades with a manual component that 

would be added by the proposed rule 

change, as described below.15 Except for 

those trades that would qualify for a 

reporting exception, all trades currently 

required to be reported within 15 

minutes after the Time of Trade would, 

under the proposed rule change, be 

required to be reported no later than one 

minute after the Time of Trade. 


lotter on DSK11XQN23PROD with NOTICES2
5386 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

16See infra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Dealers with Limited 

Trading Activity.’’ 

17See infra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component.’’ 

18See e.g., FINRA Rule 6730(a). 

19See Supplementary Material .03(b) of FINRA 

Rule 6730. See also infra ‘‘Purpose—Proposed Rule 

Change—Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component’’ for a discussion of the new exception 

for trades with a manual component. 

20See current Rule G–14 RTRS Procedures 

Section (d)(iii). 

21See Exchange Act Release No. 49902 (June 22, 

2004), 69 FR 38925 (June 29, 2004), File No. SR– 

MSRB–2004–02; see also MSRB Notice 2004–13 

(Real-Time Transaction Reporting: Notice of Filing 

of Proposed Rule Change to Rules G–14 and G– 

12(f)) (June 1, 2004); IF–1. 

22See Rule G–8(a)(vi) and (vii); see also RTRS G– 

14 Transaction Reporting Procedures (FAQs 

regarding Time of Trade Reporting) at question 8 

(Aug. 1, 1996); MSRB Notice 2016–19 (MSRB 

Provides Guidance on MSRB Rule G–14, on Reports 

of Sales or Purchases of Municipal Securities) at 

question 1 (Aug. 9, 2016) (the ‘‘2016 RTRS FAQs’’). 

Pursuant to Rule G–15(a)(vi)(A), the time of 

execution reflected on customer confirmations is 

required to be the same as the time of execution 

reflected in the dealer’s records and thus should 

generally be consistent with the time of trade 

reported by the dealer. 

23See RTRS Users Manual (Questions and 

Answers on Reporting Trades), at question 1 (Aug. 

09, 2016), available at https://www.msrb.org/ 

Questions-and-Answers-Notice-Concerning-RealTime-Reporting-Municipal-Securities-Transactions. 

Similarly, transactions effected outside of the hours 

of an RTRS Business Day are required to be 

reported within 15 minutes after the start of the 

next RTRS Business Day. The time the trade was 

executed (rather than the time that the trade report 

is made) is the ‘‘Time of Trade’’ required to be 

reported. 

24See FINRA Regulatory Notice 16–30 (Trade 

Reporting and Compliance Engine (TRACE): FINRA 

Reminds Firms of their Obligation to Report 

Accurately the Time of Execution for Transactions 

in TRACE-eligible Securities) (Aug. 2016) 

(describing this meeting of the minds that 

substantively parallels the guidance provided by 

the MSRB in the 2016 RTRS FAQs at questions 1 

and 2). 

25See MSRB Notice 2004–18 (Notice Requesting 

Comment on Draft Amendments to Rule G–34 to 

Facilitate Real-Time Transaction Reporting and 

Explaining Time of Trade for Reporting New Issue 

Trades) (June 18, 2004) (‘‘Transaction reporting 

procedures define the ‘time of trade’ as the time 

when a contract is formed for a sale or purchase of 

municipal securities at a set price and set quantity. 

For purposes of transaction reporting, this is 

considered to be the same as the time that a trade 

is ‘executed.’’’) (internal citations omitted); see also 

2016 RTRS FAQs at question 1. 

New Requirement To Report Trades ‘‘as 

Soon as Practicable’’ 

The proposed amendment to Rule G– 

14 RTRS Procedures Section (a)(ii) adds 

a new requirement that, absent an 

exception, trades must be reported as 

soon as practicable (but no later than 

one minute after the Time of Trade). In 

addition, this same ‘‘as soon as 

practicable’’ requirement would apply 

to trades subject to longer trade 

reporting deadlines under the two new 

exceptions for dealers with limited 

trading activity pursuant to Rule G–14 

RTRS Procedures Section (a)(ii)(C)(1) 

and Supplementary Material .01,16 or 

trades with a manual component 

pursuant to Rule G–14 RTRS Procedures 

Section (a)(ii)(C)(2) and Supplementary 

Material .02,17 as described below. 

The new ‘‘as soon as practicable’’ 

language, which does not currently 

appear in Rule G–14 RTRS Procedures, 

would harmonize this element of RTRS 

trade reporting requirements for 

municipal securities with FINRA’s trade 

reporting requirement for its Trade 

Reporting and Compliance Engine 

(‘‘TRACE’’) for TRACE-eligible 

securities.18 Thus, while Rule G–14 

RTRS Procedures do not currently 

explicitly prohibit a dealer from waiting 

until the existing 15-minute deadline to 

report a trade notwithstanding the fact 

that the dealer could reasonably have 

reported such trade more rapidly, under 

the proposed rule change a dealer could 

not simply await the deadline to report 

a trade if it were practicable to report 

such trade more rapidly. 

In connection with the new ‘‘as soon 

as practicable’’ requirement, the 

proposed rule change includes new 

Supplementary Material .03 relating to 

policies and procedures for complying 

with the ‘‘as soon as practicable’’ 

reporting requirement. Under proposed 

Supplementary Material .03(a), 

consistent with Supplementary Material 

.03(a) of FINRA Rule 6730, dealers 

would be required to adopt policies and 

procedures reasonably designed to 

comply with the ‘‘as soon as 

practicable’’ standard and would be 

required to implement systems that 

commence the trade reporting process 

without delay upon execution. Where a 

dealer has reasonably designed policies, 

procedures and systems in place, the 

dealer generally would not be viewed as 

violating the ‘‘as soon as practicable’’ 

requirement because of delays in trade 

reporting due to extrinsic factors that 

are not reasonably predictable and 

where the dealer does not intend to 

delay the reporting of the trade (for 

example, due to a systems outage). 

Dealers must not purposely withhold 

trade reports, for example, by 

programming their systems to delay 

reporting until the last permissible 

minute or by otherwise delaying reports 

to a time just before the deadline if it 

would have been practicable to report 

such trades more rapidly. 

For trades with a manual component, 

and consistent with Supplementary 

Material .03(b) of FINRA Rule 6730, the 

MSRB recognizes that the trade 

reporting process may not be completed 

as quickly as, for example, where an 

automated trade reporting system is 

used. In these cases, the MSRB expects 

that the regulatory authorities that 

examine dealers and enforce 

compliance with this requirement 

would take into consideration the 

manual nature of the dealer’s trade 

reporting process in determining 

whether the dealer’s policies and 

procedures are reasonably designed to 

report the trade ‘‘as soon as practicable’’ 

after execution.19

Time of Trade Discussion 

The ‘‘Time of Trade’’ is the time at 

which a contract is formed for a sale or 

purchase of municipal securities at a set 

quantity and set price.20 While the 

definition of Time of Trade would not 

be changed, the precision with which 

the establishment of the Time of Trade 

for a particular transaction would 

become more critical in the context of 

the proposed shorter, one-minute 

reporting requirement compared to the 

current 15-minute reporting 

requirement because, absent an 

exception, dealers would have less time 

to report the trade. The time taken to 

report the trade is measured by 

comparing the Time of Trade reported 

by the dealer with the timestamp 

assigned when the initial trade report is 

received by an RTRS Portal.21 For 

transaction reporting purposes, Time of 

Trade is considered to be the same as 

the time that a trade is ‘‘executed’’ and, 

generally, is consistent with the ‘‘time of 

execution’’ for recordkeeping 

purposes.22 Importantly, the time that 

the trade is executed is not necessarily 

the time that the trade information is 

entered into the dealer’s processing 

system. For example, if a trade is 

executed on a trading desk but not 

entered for processing until later, the 

time of execution (not the time of 

entering the record into the processing 

system) is required to be reported as the 

‘‘Time of Trade.’’ 23

While the principles of contract law 

are mostly governed by state statutory 

and common law, generally, in order to 

form a valid contract, there must be at 

least an offer and acceptance of that 

offer. As a result, dealers should 

consider the point in time at which an 

offer to buy or sell municipal securities 

was met with an acceptance of that 

offer. This offer and acceptance, or a 

‘‘meeting of the minds,’’ 24 cannot occur 

before the final material terms, such as 

the exact security, price and quantity, 

have been agreed to and such terms are 

known by the parties to the 

transaction.25 Further, dealers should be 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5387 

26See FINRA Regulatory Notice 16–30 (Trade 

Reporting and Compliance Engine (TRACE): FINRA 

Reminds Firms of their Obligation to Report 

Accurately the Time of Execution for Transactions 

in TRACE-eligible Securities) (Aug. 2016). 

27 2016 RTRS FAQs at question 2. 

28See MSRB Interpretive Guidance, Rule G–12 

(Confirmation: Mailing of WAII Confirmation) (Apr. 

30, 1982). In the same vein, retail orders submitted 

during a retail order period under MSRB Rule G– 

11 are viewed as conditional commitments. See 

MSRB Rule G–11(a)(vii) (defining the term ‘‘retail 

order period’’). See also, e.g., MSRB Notice 2014– 

14 (Request for Comment on Enhancements to PostTrade Transaction Data Disseminated Through a 

New Central Transparency Platform) (Aug. 13, 

2014) (describing the conditional nature of 

conditional trading commitments). 

29Transactions effected by such a dealer with a 

Time of Trade outside the hours of an RTRS 

Business Day would be permitted to be reported no 

later than 15 minutes after the beginning of the next 

RTRS Business Day pursuant to Rule G–14 RTRS 

Procedures Section (a)(iii). As is the case today, 

transactions for which an end-of-trade-day or posttrade-day reporting exception is available under 

redesignated Sections (A) and (B) would continue 

to have that exception available. 

30This number of transactions is expected to 

capture approximately 1.5 percent of the trades in 

the municipal securities markets in a given calendar 

year, based on transaction data from calendar year 

2022, and generally aligns with FINRA’s proposal 

to similarly shorten trade reporting requirements for 

TRACE-eligible securities, in which FINRA would 

except dealers with similarly limited trading 

activity for the respective markets of TRACEeligible securities. See File No. SR–FINRA–2024– 

004 (Jan. 11, 2024) (the ‘‘2024 FINRA Proposed Rule 

Change’’). 

31See infra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Dealers with Limited 

Trading Activity.’’ 

clear in their communications regarding 

the final material terms of the trade and 

how such terms would be conveyed 

between the parties to ensure that such 

a valid trade contract has been formed.26

In the context of new issue securities, 

the MSRB has previously stated that a 

transaction effected on a ‘‘when, as and 

if issued’’ basis cannot be executed, 

confirmed and reported until the 

municipal security has been formally 

awarded by the issuer.27 Thus, while 

dealers may take orders for securities 

and make conditional trading 

commitments prior to the award, dealers 

cannot execute transactions, send 

confirmations or make a trade report 

prior to the time of formal award. The 

MSRB has previously characterized presale orders as expressions of the 

purchasers’ firm intent to buy the new 

issue securities in accordance with the 

stated terms, which order may only be 

executed upon the award of the issue or 

the execution of a bond purchase 

agreement.28 Importantly, such 

expressions of an intent to purchase 

municipal securities are subject to 

material conditions that negate 

execution of an agreed upon offer and 

acceptance until the issuer has 

committed to the issuance of the 

securities. 

The MSRB believes that this same 

rationale applies to secondary market 

transactions where the commitment of 

the parties is subject to material 

conditions. When a sales representative 

of a dealer takes a customer order, but 

is unable to execute that order until 

their trader performs supervisory or 

other firm-mandated reviews or 

approvals of such order—for example, 

to determine that the customer order 

does not exceed internally-set risk and 

compliance parameters or to complete 

best-execution, suitability/best interest 

or fair pricing protocols that may result 

in a changed price or quantity to the 

customer or in not completing execution 

of the trade—the dealer reasonably may 

determine that the ‘‘meeting of the 

minds’’ has not yet occurred until such 

processes, procedures or protocols have 

been completed and the dealer has 

affirmatively ‘‘accepted’’ the order. In 

such circumstances, the dealer should 

be clear in its communications with its 

counterparty regarding the final terms of 

the trade and how such terms would be 

conveyed between the parties to ensure 

that such a valid trade contract has been 

formed, such as clearly communicating 

to the customer that the order should 

not be viewed as accepted until such 

processes, procedures or protocols are 

completed and the trade is finally 

executed. Such processes, procedures or 

protocols should be appropriately 

reflected in a dealer’s written policies 

and procedures. Because the Time of 

Trade is tied to the contractual 

agreement (that is, offer and acceptance, 

whether oral or written) between the 

parties to a transaction, a dealer and its 

counterparty may come to an express 

agreement as to the Time of Trade for 

a given transaction, as appropriate, that 

is consistent with the time at which the 

agreement becomes binding upon the 

parties under contract law. 

Exceptions to the Baseline Reporting 

Requirement 

Proposed amendments to Rule G–14 

RTRS Procedures Section (a)(ii) add two 

new exceptions to the proposed oneminute reporting requirement. New 

Section (C)(1) provides an exception for 

a dealer with ‘‘limited trading activity’’ 

and new Section (C)(2) provides an 

exception for a dealer reporting a ‘‘trade 

with a manual component.’’ These two 

new exceptions would have the 

narrowly-tailored purpose of addressing 

the timing of trade reporting for the 

dealers and transactions qualifying for 

one of the exceptions (either retaining 

the current 15-minute timeframe or 

taking a more stepwise approach to 

shortening the reporting timeframe). As 

with the existing exceptions, these two 

new exceptions would not alter or 

diminish any of the investor protections 

afforded by other MSRB rules or federal 

securities laws or regulations applicable 

to pricing, best execution, disclosure, 

suitability/best interest, and other 

aspects of the trades being reported. 

Exception for Dealers With Limited 

Trading Activity 

A dealer with ‘‘limited trading 

activity’’ would be excepted from the 

one-minute reporting requirement 

pursuant to new Section (a)(ii)(C)(1) and 

would instead be required to report its 

trades as soon as practicable, but no 

later than 15 minutes after the Time of 

Trade for so long as the dealer remains 

qualified for the limited trading activity 

exception, as further specified in new 

Supplementary Material .01.29

Proposed Section (d)(xi) of Rule G–14 

RTRS Procedures defines a dealer with 

limited trading activity as a dealer that, 

during at least one of the prior two 

consecutive calendar years, reported to 

an RTRS Portal fewer than 1,800 

transactions, excluding transactions 

exempted under Rule G–14(b)(v) and 

transactions specified in Rule G–14 

RTRS Procedures Sections (a)(ii)(A) and 

(B) (i.e., transactions having an end-oftrade-day reporting exception).30 A 

dealer relying on this exception to 

report trades within the 15-minute 

timeframe, rather than the new standard 

one-minute timeframe, must confirm 

that it meets the criteria for a dealer 

with limited trading activity for each 

year during which it continues to rely 

on the exception (e.g., the dealer could 

confirm its eligibility based on its 

internal trade records and by checking 

MSRB compliance tools, as described 

below, which would indicate a dealer’s 

transaction volume for a given year).31

If a dealer does not meet the criteria for 

a given calendar year (that is, has 1,800 

or more transactions not having an endof-trade-day or post-trade-day reporting 

exception in both preceding calendar 

years), such dealer would not be eligible 

for the exception, after a three-month 

grace period at the beginning of such 

calendar year, for transactions reported 

on and after April 1 of such calendar 

year. Therefore, the dealer would be 

required to report transactions to RTRS 

no later than one minute after the Time 

of Trade for the remainder of that 

calendar year, unless another exception 

under the rule applies. A dealer that 

meets the criteria for a given calendar 


lotter on DSK11XQN23PROD with NOTICES2
5388 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

32A previously active dealer that newly becomes 

eligible for the exception for dealers with limited 

trading activity following the first year of the 

implementation of the proposed rule change may 

continue to see their trades marked as late on RTRS 

report cards and related RTRS feedback based on 

the one-minute deadline for a short period of time 

at the beginning of a new calendar year until the 

MSRB is able to systematically update the dealer’s 

status in the RTRS system. Any such late indicator 

would not, for examination or enforcement 

purposes, be viewed as a violation by a dealer that 

otherwise was qualified as a dealer with limited 

trading activity at the time of the report. 

33While the first two years of data shown in the 

chart represent trades occurring in years prior to the 

likely effective date of the proposed rule change, 

such data would be used to determine whether a 

dealer would be eligible for the limited trading 

activity exception in the first years after the 

effective date. The chart assumes that the first 

calendar year in which the new reporting 

timeframes under the proposed rule change, 

including the exception for a dealer with limited 

trading activity, would be effective is calendar year 

2026. 

34The trade count is intended to reflect the 

number of transactions not subject to a reporting 

exception under proposed Section (a)(ii) of Rule G– 

14 RTRS Procedures. For purposes of illustration, 

the hypotheticals include manual trades subject to 

an intra-day exception as proposed. 

35See supra n.32. 

36Approximately 30 out of 647 dealers reporting 

trades, or less than five percent of such dealers, 

were within a 20 percent deviation of 1,800 trades 

in 2022. 

37See infra ‘‘Purpose—Proposed Rule Change— 

New Requirement to Report Trades ‘as Soon as 

Practicable.’ ’’ 

38Transactions effected with a Time of Trade 

outside the hours of an RTRS Business Day would 

be permitted to be reported no later than 15 minutes 

after the beginning of the next RTRS Business Day 

pursuant to Rule G–14 RTRS Procedures Section 

(a)(iii). 

39See infra ‘‘Purpose—Proposed Rule Change— 

Manual Trade Indicator.’’ As described therein, 

such new indicator would be required for any trade 

with a manual component, whether the dealer 

reports such trade within the new one-minute 

timeframe or the dealer seeks to take advantage of 

the longer timeframes permitted for trades with a 

manual component. 

year may utilize the exception on or 

after January 1 of such calendar year.32

For example, assume the following 

hypothetical trade counts for Dealer X 

for a given calendar year: 33

Calendar 

year Trade count 34 Eligible for exception during calendar year? 

2024 ............ 1,900 N/A. 

2025 ............ 1,700 N/A. 

2026 ............ 2,000 Yes, based on 2025 trade count below the 1,800 threshold. 

2027 ............ 1,900 Yes, based on 2025 trade count below the 1,800 threshold. 

2028 ............ 1,700 No, based on 2026 and 2027 trade counts above the 1,800 threshold in both years (must transition reporting to 

one minute on and after April 1, 2028). 

2029 ............ 2,000 Yes, based on 2028 trade count below the 1,800 threshold (may resume reporting in 15 minutes on January 1, 

2029). 

Based on the hypothetical data 

presented in the table above, Dealer X 

would be eligible for the exception as a 

dealer with limited trading activity for 

the calendar years 2026 and 2027 

effective January 1 of each such year,35

based on trade count for the year 2025. 

However, Dealer X would no longer 

qualify for such an exception for the 

calendar year 2028. As a result, for 

2028, beginning on and after April 1, 

2028, after the three-month grace 

period, Dealer X must begin reporting 

all of its trades (other than those subject 

to another exception) no later than one 

minute after the Time of Trade. 

However, Dealer X would again qualify 

for calendar year 2029 as a dealer with 

limited trading activity based upon its 

2028 trade count and may resume 

reporting its trades no later than 15 

minutes after the Time of Trade on 

January 1, 2029. 

As shown above, this approach may 

cause some dealers’ eligibility for the 

exception to change from year to year. 

However, based on substantial historical 

trade reporting data, the majority of 

dealers that are eligible for the 

exception are expected to stay within 

the exception. Similarly, the majority of 

dealers that are not eligible for the 

exception are expected to remain 

ineligible for the exception in 

subsequent years.36

Notwithstanding the foregoing, 

dealers with limited trading activity are 

reminded of the new overarching 

obligation to report trades as soon as 

practicable, as described above.37

Exception for Trades With a Manual 

Component 

A ‘‘trade with a manual component’’ 

as defined in new Section (d)(xii) of 

Rule G–14 RTRS Procedures would be 

excepted from the one-minute reporting 

requirement pursuant to Rule G–14 

RTRS Procedures Section (a)(ii)(C)(2). 

Instead, dealers with such trades would 

be required to report such trades as soon 

as practicable and within the time 

periods specified in new Supplementary 

Material .02, unless another exception 

from the one-minute reporting 

requirement applies under proposed 

Rule G–14 RTRS Procedures Sections 

(a)(ii)(A) and (B) (i.e., transactions 

having an end-of-trade-day or posttrade-day reporting exception) or 

(a)(ii)(C)(1) (i.e., transactions by dealers 

with limited trading activity).38

Trades Having a Manual Component 

As proposed, Section (d)(xii) of Rule 

G–14 RTRS Procedures would define a 

‘‘trade with a manual component’’ as a 

transaction that is manually executed or 

where the dealer must manually enter 

any of the trade details or information 

necessary for reporting the trade directly 

into an RTRS Portal (for example, by 

manually entering trade data into the 

RTRS Web Portal) or into a system that 

facilitates trade reporting (for example, 

by transmitting the information 

manually entered into a dealer’s inhouse or third-party system) to an RTRS 

Portal. As described below, a dealer 

reporting to the MSRB a trade meeting 

the definition for a ‘‘trade with a manual 

component’’ would be required to 

append a new trade indicator so that the 

MSRB can identify manual trades.39

This ‘‘manual’’ exception would 

apply narrowly, and would normally 

encompass any human participation, 

approval or other intervention necessary 

to complete the initial execution and 

reporting of trade information after 

execution, regardless of whether 

undertaken by electronic means (e.g., 

keyboard entry), physical signature or 

other physical action. To qualify as a 

trade with a manual component, the 

manual aspect(s) of the trade generally 

would occur after the relevant Time of 

Trade (i.e., the time at which a contract 

is formed for the transaction). Any 

manual aspects that precede the time of 

trade (e.g., phone calls to locate bonds 

to be sold to a customer before the 

dealer agrees to sell such bonds to a 

purchasing customer) would normally 

not be relevant for purposes of the 

exception unless they have a direct 

impact on the activities that must be 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5389 

40This manual exception applies to the reporting 

of a trade upon the trade being executed. If a report 

has been made and the dealer detects a mistake that 

requires cancellation or correction, any 

modification of an already submitted trade report 

must be performed as soon as possible pursuant to 

Rule G–14 RTRS Procedures Section (a)(iv). See 

MSRB Interpretive Guidance (Reminder Regarding 

Modification and Cancellation of Transaction 

Reports: Rule G–14) (Mar. 2, 2005), available at 

https://www.msrb.org/Reminder-RegardingModification-and-Cancellation-TransactionReports-Rule-G-14. While a trade modification to a 

previously reported automated trade may be 

manual in nature (for example, the trade is 

corrected through the RTRS Web Portal or is 

corrected through a dealer’s system and not using 

a cancel and replace process), that manual 

modification process would not, by itself, result in 

the initial trade qualifying as a trade with a manual 

component. Where the trade correction is made 

through a cancel and replace process, the time of 

trade must reflect the time of execution of the initial 

trade report and not the time when the modification 

was reported to RTRS. While RTRS will continue 

to provide dealers with the option to either modify 

the trade or cancel and replace the trade, the MSRB 

has stated that modification is preferred when 

changes are necessary because a modification is 

counted as a single change to a trade report, 

whereas cancellation and resubmission are counted 

as a change and (unless the resubmission is done 

within the original deadline for reporting the trade) 

also as a late report of a trade. Id.; see also infra 

n.50. 

41 Dealers experiencing significant levels of postTime of Trade price adjustments due to such posttrade best execution processes should consider 

whether these processes are well suited to the 

dealer’s obligations under MSRB Rule G–18 and 

whether the dealer is appropriately evaluating 

when a contract has in fact been formed with its 

customer. 

42 In instances where a dealer trades a basket of 

securities at a single price for the full basket, rather 

than individual prices for each security based on its 

then-current market price, such price likely would 

be away from the market, requiring inclusion of the 

‘‘away from market’’ special condition indicator 

and qualifying for an end-of-trade-day reporting 

exception under proposed Rule G–14 RTRS 

Procedures Section (a)(ii)(A)(3). 

43 Dealers should undertake this review 

regardless of whether they intend to take advantage 

of the longer timeframes permitted for trades with 

a manual component since all reports of trades 

meeting the definition of a trade with a manual 

component would be required to append the new 

manual trade indicator, as described infra 

‘‘Purpose—Proposed Rule Change—Manual Trade 

Indicator.’’ 44See infra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component—Prohibition on Purposeful Insertion of 

Manual Steps in Trade Reporting Process.’’ 45 Id. 46See infra ‘‘Purpose—Proposed Rule Change— 

New Requirement to Report Trades ‘as Soon as 

Practicable.’ ’’ 47See infra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component.’’ For trades with a manual component, 

the MSRB recognizes that the trade reporting 

process may not be completed as quickly as, for 

example, where an automated trade reporting 

system is used. In these cases, the MSRB expects 

that the regulatory authorities that examine dealers 

and enforce compliance with this requirement 

would take into consideration the manual nature of 

the dealer’s trade reporting process in determining 

whether the dealer’s policies and procedures are 

reasonably designed to report the trade ‘‘as soon as 

practicable’’ after execution. 

undertaken post-execution to enter 

information necessary to report the 

trade.40

In that regard, while an exhaustive list 

cannot be provided here, the MSRB 

contemplates that the exception would 

often be appropriately applicable to the 

following situations, depending on the 

specific facts and circumstances, due to 

the manual nature of components of the 

trade execution or reporting process that 

would make reporting a transaction 

within one minute of the Time of Trade 

unfeasible, even where the dealer makes 

reasonable efforts to report the trade as 

soon as practicable after execution (as 

required): 

• where a dealer executes a trade by 

manual or hybrid means, such as voice 

or negotiated trading by telephone, 

email, or through a chat/messaging 

function, and subsequently must 

manually enter into a system that 

facilitates trade reporting all or some of 

the information required to book the 

trade and report it to RTRS; 

• where a dealer executes a trade 

(typically a larger-sized trade) that 

requires additional steps to negotiate 

and confirm details of the trade with a 

client and manually enters the trade 

into risk and reporting systems; 

• where a dually-registered brokerdealer/investment adviser executes a 

block transaction that requires 

allocations of portions of the block trade 

to the individual accounts of the firm’s 

advisory clients that must be manually 

inputted in connection with a trade; 

• where an electronically or manually 

executed trade is subject to manual 

review by a second reviewer for risk 

management (e.g., transactions above a 

certain dollar or par amount or other 

transactions meriting heightened risk 

review) and, as part of or following the 

review, the trade must be manually 

approved, amended or released before 

the trade is reported to RTRS; 

• where a dealer’s trade execution 

processes may entail further diligence 

following the Time of Trade involving a 

manual step (e.g., manually checking 

another market to confirm that a better 

price is not available to the customer); 41

• where a dealer trades a municipal 

security, whether for the first time or 

under other circumstances where the 

security master information may not 

already be populated (e.g., information 

has been removed or archived due to a 

long lapse in trading the security), and 

additional manual steps are necessary to 

set up the security and populate the 

associated indicative data in the dealer’s 

systems prior to executing and reporting 

the trade; 

• where a dealer receives a large 

order or a trade list resulting in a 

portfolio of trades with potentially 

numerous unique securities involving 

rapid execution and frequent 

communications on multiple 

transactions with multiple 

counterparties, and the dealer must then 

book and report those transactions 

manually, one by one; 42

• where a broker’s broker engages in 

mediated transactions that involve 

multiple transactions with multiple 

counterparties; and 

• where a dealer reports a trade 

manually through the RTRS Web Portal. 

Dealers should review their trade flow 

and processes and consider which of 

their trades would be deemed a ‘‘trade 

with a manual component’’ under the 

proposed rule change.43

The appropriateness of treating any 

step in the trade execution and 

reporting process as being manual must 

be assessed in light of the anticircumvention provision included in 

the proposed rule change with regard to 

the delay in execution or insertion of 

manual tasks for the purpose of meeting 

this new exception.44 New 

Supplementary Material .02(a) would 

require all trades with a manual 

component to be reported as soon as 

practicable and would specify that in no 

event may a dealer purposely delay the 

execution of an order, introduce any 

manual steps following the Time of 

Trade, or otherwise modify any steps 

prior to executing or reporting a trade 

for the purpose of utilizing the 

exception for manual trades.45 New 

Supplementary Material .03 would 

require that dealers adopt policies and 

procedures for complying with the as 

soon as practicable reporting 

requirement, including by 

implementing systems that commence 

the trade reporting process without 

delay upon execution and provides for 

additional guidance for regulatory 

authorities that enforce and examine 

dealers for compliance with this 

requirement to take into consideration 

the manual nature of the dealer’s trade 

reporting process.46

In light of the overarching obligation 

to report trades as soon as practicable, 

dealers should consider the types of 

transactions in which they regularly 

engage and whether they can reasonably 

reduce the time between a transaction’s 

Time of Trade and its reporting, and 

more generally should make a good faith 

effort to report their trades as soon as 

practicable.47 Each dealer seeking to 

comply with the proposed rule 

change—including the one-minute 


lotter on DSK11XQN23PROD with NOTICES2
5390 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

48While the deadline for reporting during this 

first year would remain the same as the current 15- 

minute timeframe, such trade reports would also be 

subject to the new requirement that they be 

reported as soon as practicable. See supra 

‘‘Purpose—Proposed Rule Change—New 

Requirement to Report Trades ‘as Soon as 

Practicable.’ ’’ 

49See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component—Trades Having a Manual Component.’’ 

50Rule G–14 RTRS Procedures Section (a)(iv) 

currently requires that transaction data that is not 

submitted in a timely and accurate manner must be 

submitted or corrected as soon as possible. See also 

supra n.40. The manual trade indicator is not 

intended to be used to reflect the manual nature of 

any correction to a prior trade report; rather the use 

of the indicator is driven solely by whether or not 

the initial trade had a manual component. 

reporting requirement and new or 

existing exceptions from such 

requirement—should consider the 

extent to which it can automate its trade 

reporting and related execution 

processes, consistent with its client’s 

needs and the dealer’s best execution 

and other regulatory obligations. Where 

automation is not feasible at a 

reasonable cost in light of the specific 

facts and circumstances with respect to 

the dealer’s trading activity and overall 

business (e.g., the level, nature and 

economic viability of its activity in 

municipal securities), dealers should be 

implementing more efficient trade entry 

processes to meet the applicable 

reporting requirement, including the 

new requirement to report trades as 

soon as practicable, particularly with a 

view to the phased-in reduction in the 

reporting timeframe for trades with a 

manual component under the proposed 

rule change where a process that may 

provide sufficient time to report timely 

during the first year may not be 

sufficiently efficient to meet the further 

shortened timeframe in a subsequent 

year. The MSRB expects that dealers 

would periodically assess their systems 

and processes to ensure that they have 

implemented sufficiently efficient 

policies and procedures for timely trade 

reporting. 

The MSRB currently collects and 

analyzes data regarding dealers’ historic 

reporting of transactions to RTRS under 

various scenarios and such data will 

continue to be available to the regulators 

for analysis under the proposed oneminute standard. Subject to the 

Commission approval of the proposed 

rule change, the MSRB would be 

reviewing the use of the manual 

exception and would share with the 

examining authorities any analyses 

resulting from such reviews. 

Phase-In Period for Trades With a 

Manual Component 

New Supplementary Material .02(b) 

would subject trades with a manual 

component to a phase-in period for 

timely reporting over three years 

(‘‘phase-in period’’). Specifically, during 

the first year of effectiveness of the 

exception, trades meeting this definition 

would be required to be reported as 

soon as practicable, but no later than 15 

minutes after the Time of Trade.48

During the second year, such trades 

would be required to be reported as 

soon as practicable, but no later than 10 

minutes after the Time of Trade. After 

the second year and thereafter, such 

trades would be required to be reported 

as soon as practicable, but no later than 

five minutes after the Time of Trade. 

In establishing the phase-in period, 

the MSRB intends to provide sufficient 

time for dealers to implement 

programming and/or other policy and 

process changes necessary to meet an 

eventual five-minute reporting 

requirement, as well as to provide 

regulators an opportunity to assess any 

potential market impact from the 

gradual reduction in reporting 

timeframe. However, dealers are also 

reminded that the ‘‘as soon as 

practicable’’ reporting obligation as 

described above may, depending on the 

facts and circumstances, require quicker 

reporting than the applicable outer 

reporting obligation during and after the 

phase-in period. For example, while 

dealers must report their trades with a 

manual component no later than 15 

minutes from the Time of Trade during 

the first year that the rule is operational, 

dealers should be reviewing their 

policies, procedures and practices and 

considering whether they can report 

such trades more quickly. In general, the 

MSRB would expect a dealer’s trade 

reporting statistics to show overall 

improvements in trade reporting speed 

without compromising data quality, due 

to the new ‘‘as soon as practicable’’ 

obligation and the two new intra-day 

exceptions. 

If the proposed rule change is 

approved, the MSRB would be 

reviewing the available trade reporting 

information and data arising from 

implementation of the changes to trade 

reporting introduced by the proposed 

rule change, including but not limited to 

the two exceptions to the one-minute 

reporting requirement, as well as 

marketplace developments, feedback 

from market participants, and 

examination or enforcement findings 

from the Commission, FINRA and the 

other appropriate regulatory agencies. 

Such monitoring would inform any 

further potential changes by the MSRB 

to the trade reporting requirements. 

Prohibition on Purposeful Insertion of 

Manual Steps in Trade Reporting 

Process 

As noted above, new Supplementary 

Material .02(a) would specifically 

prohibit dealers from purposely 

delaying the execution of an order, 

introducing any manual steps following 

the Time of Trade, or otherwise 

purposefully modifying any steps to 

execute or report a trade to utilize the 

exception for manual trades. This would 

not prohibit reasonable manual steps 

that are taken for legitimate purposes 

(such as a manual review of trades that 

exceed certain risk thresholds or that 

meet certain criteria for regulatory 

purposes). Further, this prohibition 

would not apply to any steps that are 

taken prior to the time of trade that do 

not have the effect of delaying the 

subsequent reporting of such trade. 

It is important to note that a manual 

step added to the trade execution or 

reporting process that may have only a 

nominal or pretextual purpose other 

than qualifying a trade for the exception 

for manual trades, particularly where 

such purpose can be effectively fulfilled 

in an alternative manner that does not 

introduce such manual step into the 

trade execution or reporting process, 

may be viewed as being made for the 

purpose of qualifying for this exception 

within the meaning of proposed 

Supplementary Material .02(a), 

depending on the facts and 

circumstances. This express prohibition 

is intended to facilitate movement in the 

direction of more timely reporting and 

increased transparency in circumstances 

where there is no reasonable 

justification for the delay in trade 

execution and related subsequent trade 

reporting or for insertion of manual 

steps after the Time of Trade. 

Manual Trade Indicator 

Proposed amendments to Rule G–14 

RTRS Procedures Section (b)(iv) would 

require the report of a trade meeting the 

MSRB’s definition for a ‘‘trade with a 

manual component,’’ as defined in 

proposed Section (d)(xii) of Rule G–14 

RTRS Procedures,49 to append a new 

trade indicator to such a trade report. 

This indicator would be mandatory for 

every trade that meets the standard to 

append the indicator,50 regardless of 

whether the trade is actually reported 

within one minute after the Time of 

Trade, is reported within the applicable 

timeframe under the manual trade 

exception or is otherwise subject to 

another reporting exception. 

In addition to serving as a critical 

component of the manual trade 

exception, this trade indicator would 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5391 

51The manual trade indicator would be used for 

regulatory purposes only and would not, under the 

proposed rule change, be included in the trade data 

disseminated to the public through the EMMA 

website and subscription feeds. This information 

would help inform the MSRB regarding broader 

trends in the marketplace beyond the specific 

provisions of the proposed rule change. For 

example, the use of the manual trade indicator 

would help identify changes in the prevalence of 

manual trades as market conditions change or in 

light of other events or trends having an impact on 

the municipal securities market. 

52Late trade designations are currently, and 

would continue to be, available to regulators and, 

through the MSRB compliance tool described below 

in ‘‘Purpose—Proposed Rule Change—Compliance 

Tools,’’ to the dealer submitting the late trade. See 

Section 2.9 of the Specifications for Real-Time 

Reporting of Municipal Securities Transactions in 

connection with error codes currently generated by 

RTRS with respect to late trade reports. The trade 

data disseminated to the public through the EMMA 

website and subscription feeds does not currently 

and would not have appended to it a late report 

indicator nor an indicator of which deadline was 

applicable (other than the indicators currently 

published). 

53For example, the MSRB currently produces a 

series of reports for dealers submitting trades to 

RTRS, including a Dealer Data Quality Report 

(commonly referred to as a ‘‘report card’’). See 

MSRB Real-Time Transaction Reporting System 

(RTRS) Manual (Nov. 2022), available at https://

www.msrb.org/sites/default/files/RTRSWeb-UsersManual.pdf. This report describes a dealer’s 

transaction reporting data with regard to status, 

match rate, timeliness of reporting, and the number 

of changes or corrections to reported trade data. For 

most statistics, the industry rate is also provided for 

comparison. The Lateness Breakout portion of the 

report has a category for each type of reporting 

deadline, showing how many trades were reported 

Continued 

allow the MSRB to collect additional 

data to help it better understand the 

extent to which the municipal securities 

market continues to operate manually.51

Such understanding would assist the 

MSRB in engaging with market 

participants regarding impediments to 

greater use of automation, and help 

determine the effectiveness and 

potential impediments to full 

compliance with the proposed phase-in 

period to determine whether 

adjustments should be made or other 

next steps should be taken. 

Pattern or Practice of Late Trade 

Reporting 

Rule G–14 RTRS Procedures Section 

(a)(iv) currently requires that transaction 

data that is not submitted in a timely 

and accurate manner must be submitted 

or corrected as soon as possible—even 

when a dealer is late in reporting a 

trade, the dealer remains obligated to 

report such trade as soon as possible. 

Proposed amendments to this section 

would further provide that any 

transaction that is not reported within 

the applicable time period shall be 

designated as ‘‘late.’’ 52 A pattern or 

practice of late reporting without 

exceptional circumstances or reasonable 

justification may be considered a 

violation of Rule G–14. 

The determination of whether 

exceptional circumstances or reasonable 

justifications exist for late trade 

reporting is dependent on the particular 

facts and circumstances and whether 

such circumstances are addressed in the 

dealer’s systems and procedures. For 

example, failures or latencies of MSRB, 

third-party or internal systems used to 

submit trade information generally 

would constitute exceptional 

circumstances or reasonable 

justifications, particularly where such 

incident is outside of the reasonable 

control of the dealer and could not be 

resolved by the dealer within the 

applicable reporting timeframe. 

However, dealers must have sufficiently 

robust systems with adequate capability 

and capacity to enable them to report in 

accordance with Rule G–14; thus, 

recurring systems issues in a dealer’s or 

a vendor’s systems would not be 

considered reasonable justification or 

exceptional circumstances to excuse a 

pattern or practice of late trade 

reporting. As another example, unusual 

market conditions, such as extreme 

volatility in a security or in the market 

as a whole, can constitute exceptional 

circumstances. In addition, a dealer may 

have reasonable justification for late 

trade reporting where it is executing a 

bid list that includes a large number of 

distinct securities that cannot 

reasonably be reported within the 

applicable timeframe. These three 

examples do not represent the only 

potential situations that could constitute 

exceptional circumstances or reasonable 

justification. Dealers would bear the 

burden of proof related to such 

exceptional circumstances or reasonable 

justification. 

The pattern or practice approach to 

determining rule violations would take 

into consideration factors such as the 

complexity of the trade, differences in 

market segments, differences in the 

execution of trades of varying types of 

municipal securities products, 

impediments to use of straight through 

processing and electronic trading 

venues, the nature and purpose of any 

manual steps involved in the execution 

and reporting of transactions with a 

manual component, the existence of 

systems and procedures that provide for 

reporting timeliness and any other 

relevant factors to determine if a rule 

violation has occurred. While this 

approach recognizes that there may be 

legitimate situations involving 

exceptional circumstances or reasonable 

justification in which trades may not be 

reported within the required time limit, 

dealers are reminded of the overarching 

obligation to report trades as soon as 

practicable in light of the effects of such 

circumstances or justification. As a 

result, all dealers should consider the 

types of transactions in which they 

regularly engage and whether they can 

reasonably reduce the time between a 

transaction’s Time of Trade and its 

reporting, and more generally should 

make a good faith effort to report their 

trades as soon as practicable. 

The MSRB expects that the regulatory 

authorities that examine dealers and 

enforce compliance with the reporting 

timeframes established under Rule G–14 

RTRS Procedures would focus their 

examination for and enforcement of the 

rule’s timing requirements on the 

consistency of timely reporting and the 

existence of effective controls to limit 

late reporting to exceptional 

circumstances or where reasonable 

justifications exist for a late trade report, 

rather than on individual late trade 

report outliers. Notwithstanding such 

expectation, where facts and 

circumstances indicate that an 

individual late report was intentional or 

otherwise egregious, or could 

reasonably be viewed as potentially 

giving rise to an associated fair practice, 

fair pricing, best execution or other 

material regulatory concern under 

MSRB or Commission rules with respect 

to that or a related transaction, the 

regulatory authorities could reasonably 

determine to take action with respect to 

such late trade in the examination or 

enforcement context. 

Compliance Tools 

The MSRB would continue to provide 

various compliance tools to assist 

dealers with compliance and for 

examining authorities to monitor for 

compliance. For example, currently, if a 

trade is reported late, an error message 

indicating this fact is sent in real-time 

to the submitter through the Message 

Portal, through the RTRS Web Portal, 

and by means of electronic mail. Such 

error messages are designed to promote 

dealer awareness of the late report and 

provide an opportunity to evaluate the 

reason for lateness and make 

appropriate adjustments as needed. In 

addition, on a monthly basis, RTRS 

produces statistics on dealer 

performance related to the timely 

submission of transactions and 

correction of errors and provides these 

statistics to dealers as well as to 

regulators. The MSRB expects to create 

additional compliance tools in the form 

of new or modified reports for dealers 

and examining/enforcement authorities, 

allowing them to more easily monitor 

compliance.53 Such tools would be 


lotter on DSK11XQN23PROD with NOTICES2
5392 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

timely and late relative to the applicable deadline. 

Such reports are available in both single-month and 

twelve-month formats. 

54See proposed Supplementary Material .01(a), 

which would require a dealer relying on the 

exception for dealers with limited trading activity 

to confirm on an annual basis that it meets the 

criteria for a dealer with limited trading activity. 

Where a dealer resubmits an RTTM cancel under 

proposed redesignated Rule G–14 RTRS Procedures 

Sections (a)(ii)(B)(2), for purposes of avoiding 

double counting, only the original trade, if not 

otherwise excepted, would count for purposes of 

this exception and not the resubmitted trade. 

55Each of these special condition indicators were 

formally adopted through MSRB rulemaking and 

also appear in various interpretive or other 

regulatory materials. See generally Section 4.3.2 

and Appendix B.2 of the Specifications for RealTime Reporting of Municipal Securities 

Transactions. See also Exchange Act Release No. 

49902 (June 22, 2004), 69 FR 38925 (June 29, 2004), 

File No. SR–MSRB–2004–02; Exchange Act Release 

No. 55957 (June 26, 2007), 72 FR 36532 (July 3, 

2007), File No. SR–MSRB–2007–01; Exchange Act 

Release No. 74564 (Mar. 23, 2015), 80 FR 16466 

(Mar. 27, 2015), File No. SR–MSRB–2015–02. 

56See Section 4.3.2 of the Specifications for RealTime Reporting of Municipal Securities 

Transactions; Exchange Act Release No. 55957 

(June 26, 2007), 72 FR 36532 (July 3, 2007), File No. 

SR–MSRB–2007–01. 

57 15 U.S.C. 78o–4(b)(2). 

58 15 U.S.C. 78o–4(b)(2)(C). 

expected to provide data that would 

permit a dealer to monitor compliance 

patterns as well as provide support for 

the dealer to determine and confirm its 

relevant trade count for the current and 

preceding calendar years, including for 

the purpose, among other things, of 

assisting dealers to determine whether 

the exception for dealers with limited 

trading activity is available.54 Similarly, 

through a late trade indicator, data 

would be available for regulators to 

determine the applicable trade reporting 

obligation for each trade and analyze the 

data to assist in identifying a pattern or 

practice of late trade reporting, based on 

the specific facts and circumstances 

relevant to the particular trade reports. 

Technical Amendments 

Non-Substantive Amendments 

Non-substantive amendments to Rule 

G–14 RTRS Procedures Section (a)(ii) 

regroup and renumber its current 

Sections (A) through (C) to new Sections 

(A)(1) through (A)(3), renumber current 

Sections (D) and (E) to new Sections 

(B)(1) and B(2), and correct a crossreference in Section (b)(iv) to certain of 

these Sections to be consistent with 

such renumbering. In addition, a 

technical amendment to Rule G–14 

RTRS Procedures Section (a)(ii) changes 

the word ‘‘of’’ to ‘‘after’’ and omits the 

word ‘‘within’’ in the phrase ‘‘within 15 

minutes of Time of Trade’’ for clarity 

and consistency of usage throughout the 

Rule G–14 RTRS Procedures as 

amended. 

Clarifying Amendments—Special 

Condition Indicators and Trades on an 

Invalid RTTM Trade Date 

The proposed rule change would 

make certain clarifying amendments to 

Rule G–14 RTRS Procedures Section 

(b)(iv) relating to transactions with 

special conditions. That Section 

currently specifically sets forth 

information regarding certain existing 

special condition indicators while also 

referencing the existence of other 

special condition indicators in Section 

4.3.2 of the Specifications for Real-Time 

Reporting of Municipal Securities 

Transactions. The proposed clarifying 

amendments to Section (b)(iv) of Rule 

G–14 RTRS Procedures would 

incorporate into the language thereof 

reference to all applicable special 

condition indicators, including the new 

trade with a manual component 

indicator and existing special condition 

indicators previously adopted by the 

MSRB but that are currently only 

documented explicitly in the 

Specifications for Real-Time Reporting 

of Municipal Securities Transactions.55

Other than the addition of the new trade 

with a manual component indicator, the 

proposed clarifying amendments to this 

provision would not make any changes 

to the types or usage of existing special 

condition indicators. 

In addition, Rule G–14 RTRS 

Procedures Section (a)(iii) would be 

amended to reflect that, in addition to 

trades effected outside the hours of the 

RTRS Business Day, inter-dealer trades 

may be executed on certain holidays 

(other than those recognized as nonRTRS Business Days) that are not valid 

RTTM trade dates (‘‘invalid RTTM trade 

date’’), and in either case such trades are 

to be reported no later than within 15 

minutes after the beginning of the next 

RTRS Business Day. Such invalid RTTM 

trade date transactions are already 

subject to this same next RTRS Business 

Day reporting requirement.56 The 

proposed clarifying amendment to this 

provision would not make any changes 

to the circumstances or timing of 

reporting of such trades. 

Proposed Conforming Amendments to 

Rule G–12 and RTRS Information 

Facility 

Proposed amendments to Rule G–12, 

on uniform practice, would make 

conforming changes to Section (f)(i) 

thereof to require that each transaction 

effected during the RTRS Business Day 

shall be submitted for comparison as 

soon as practicable, but no later than 

one minute after the Time of Trade 

unless an exception applies. The 

proposed rule change would also 

modify the IF–1 to clarify lateness 

checking against the applicable 

reporting deadline(s) provided for in 

proposed amendments to Rule G–14 

RTRS Procedures, as opposed to the 

current 15-minute requirement. 

Effective Date and Implementation 

The MSRB intends to provide time for 

dealers and the MSRB to undertake the 

programming, process changes and/or 

vendor arrangements needed to 

implement the proposed rule change, as 

well as to provide an adequate testing 

period for dealers and subscribers that 

interface with RTRS or third parties 

involved in the submission and/or 

subscription process (including but not 

limited to DTCC, its RTTM system, 

other dealers, or other key utilities or 

vendors). Thus, if the proposed rule 

change is approved by the Commission, 

the MSRB would announce an effective 

date (for example, approximately within 

18 months from such Commission 

approval) in a notice published on the 

MSRB website. Such effective date 

would be intended to maintain 

implementation of the proposed rule 

change on substantially the same 

implementation timeframe as the 2024 

FINRA Proposed Rule Change. 

2. Statutory Basis 

Section 15B(b)(2) of the Exchange 

Act 57 provides that the MSRB shall 

propose and adopt rules to effect the 

purposes of the Exchange Act with 

respect to, among other matters, 

transactions in municipal securities 

effected by dealers. Section 15B(b)(2)(C) 

of the Exchange Act 58 further provides 

that the MSRB’s rules shall be designed 

to prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in municipal securities and municipal 

financial products, to remove 

impediments to and perfect the 

mechanism of a free and open market in 

municipal securities and municipal 

financial products and, in general, to 

protect investors, municipal entities, 

obligated persons and the public 

interest. 

The MSRB believes the proposed rule 

change, consisting of proposed 

amendments to Rule G–14 RTRS 

Procedures under Rule G–14 as well as 

conforming proposed amendments to 

Rule G–12(f)(i) and IF–1, is consistent 

with Section 15B(b)(2)(C) of the 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5393 

59 Id. 

60 Id. 

61See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting Requirement’’ 

for a discussion of the proposed two new 

exceptions. 

62Based on MSRB’s trade data, approximately 

one percent of the outstanding municipal securities 

trade on a given day. 

63Policy on the Use of Economic Analysis in 

MSRB Rulemaking is available at https://

www.msrb.org/Policy-Use-Economic-AnalysisMSRB-Rulemaking. In evaluating whether there was 

a burden on competition, the MSRB was guided by 

its principles that require the MSRB to consider 

costs and benefits of a rule change, its impact on 

capital formation and the main reasonable 

alternative regulatory approaches. 

Exchange Act 59 because it would 

promote just and equitable principles of 

trade, foster cooperation and 

coordination with personnel engaged in 

regulating and facilitating transactions 

in municipal securities, remove 

impediments to a free and open market 

in municipal securities and generally 

protect investors and the public interest. 

The proposed rule change would 

promote just and equitable principles of 

trade because it would reduce 

information asymmetry between market 

professionals (such as dealers and 

institutional investors) and retail 

investors by ensuring increased access 

to more timely information about 

executed municipal securities 

transactions for all investors. Currently, 

market professionals may in some 

circumstances have better or more rapid 

access to information about trade prices 

through market venues to which retail 

investors do not have access, and the 

reduction in the timeframe for trade 

reporting would shorten or eliminate 

the period during which any such 

asymmetry in access to such 

information may exist. 

The proposed rule change would 

foster cooperation and coordination 

with persons engaged in regulating and 

processing information, facilitating a 

consistent standard for trade reporting 

across many fixed income products, 

including municipal securities. As 

noted above, the proposed rule change 

was developed in close coordination 

with FINRA, which is proposing a 

similar shortened trade reporting 

requirement for many TRACE-eligible 

securities. Fostering a consistent 

standard across classes of securities 

would facilitate greater and more 

efficient compliance among MSRBregistered dealers, the majority of which 

also transact in other fixed income 

securities that are subject to FINRA’s 

regulatory authority. Consistent trade 

reporting requirements reduce the risk 

of potential confusion and may reduce 

compliance burdens resulting from 

inconsistent obligations and standards 

for different classes of securities. A 

shortened trade reporting time, as 

facilitated by the proposed rule change, 

would promote regulatory consistency, 

reducing potential errors caused by 

market participants’ imperfect 

application of differing standards when 

executing and reporting transactions in 

municipal securities. 

The proposed rule change would 

remove impediments to a free and open 

market in municipal securities by 

making publicly available more timely 

information about the market for and 

the price at which municipal 

transactions are executed, which is 

central to fairly priced municipal 

securities and a dealer’s ability to make 

informed quotations. The MSRB 

believes that the proposed rule change 

would promote investor protection and 

the public interest through increased 

market transparency by reducing the 

timeframe for trade reporting, providing 

the market with more efficient pricing 

information, which would enhance 

investor confidence in the market. At 

the same time, the exceptions balance 

potential burdens for dealers with 

limited trading activity in municipal 

securities by permitting such dealers to 

report trades as soon as practicable but 

not later than the currently applicable 

15-minute reporting requirement. The 

proposed rule change also addresses 

potential burdens faced by dealers 

engaged in complex transactions, 

including voice/electronically 

negotiated transactions involving a 

manual post-transaction component, by 

permitting a phase-in period for a 

gradual implementation. This approach 

would enable market participants to 

achieve compliance with the shortened 

reporting target over a period of time 

while not adversely affecting their 

ability to execute such transactions 

consistent with applicable MSRB or 

Commission rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Section 15B(b)(2)(C) of the Exchange 

Act 60 requires that MSRB rules not be 

designed to impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. The 

MSRB does not believe the proposed 

rule change to amend Rule G–14 RTRS 

Procedures under Rule G–14, Rule G– 

12(f)(i) and IF–1would result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act. 

The proposed rule change would apply 

the new one-minute reporting timeframe 

to all transactions in municipal 

securities currently subject to the 15- 

minute reporting requirement and 

would provide two new exceptions 

designed to balance the benefits of 

timelier reporting with the potential 

costs of disrupting markets from 

transactions most likely to realize a 

negative impact by the shortening of the 

timeframe and disproportionally 

impacting less active and smaller 

dealers.61

The proposed rule change is intended 

to provide more immediate post-trade 

transparency in the municipal securities 

market and is consistent with the 

purposes of RTRS. In the past, the 

municipal securities market has 

sometimes been associated with 

information opacity and low trading 

volume for a majority of securities with 

relatively few securities that trade 

compared to the number of outstanding 

securities.62 Information opacity likely 

affects retail investors more than 

institutional investors and other market 

participants; for example, pre-trade 

quotes are not widely available in the 

municipal securities market, especially 

for retail investors who may not have 

the access and may be more reliant on 

trade data. Furthermore, with far fewer 

trades in municipal securities when 

compared to equity securities, Treasury 

and corporate bonds, each additional 

data point from post trade reporting in 

municipal securities would potentially 

be more valuable to investors and other 

market participants than a data point 

from these other markets. The reduction 

in this opacity resulting from the 

proposed rule change would make more 

timely information available to all 

market participants and help level the 

playing field among retail investors, 

institutional investors, and dealers, 

thereby potentially promoting 

competition in the market for municipal 

securities. 

Therefore, the MSRB believes the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act for 

the following reasons. In making this 

determination, the MSRB staff was 

guided by the MSRB’s Policy on the Use 

of Economic Analysis in MSRB 

Rulemaking.63 In accordance with this 

policy, the MSRB evaluated the 

potential impacts on competition of the 

proposed rule change. The proposed 

rule change in trade reporting time to 

one minute after Time of Trade is 

intended to better align with the actual 

time that it takes a dealer to report most 

transactions and provides more 

immediate transparency to the market 


lotter on DSK11XQN23PROD with NOTICES2
5394 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

64The analysis in this rule filing only includes 

trades reportable within 15 minutes and excludes 

trades that are exempt from the current 15-minute 

reporting time including, for example, trades 

flagged as being executed at the List Offering or 

Takedown Transactions, trades in short-term 

instruments maturing in nine months or less, 

Auction Rate Securities, Variable Rate Demand 

Obligations, trades in commercial paper, as well as 

trades ‘‘away from market,’’ among other 

exceptions. See also Rule G–14 RTRS Procedures 

Sections (a)(ii)(A) and (B). For purposes of the 

analysis in this section, if an initially reported trade 

was corrected later, the later timestamp was used 

for calculating the trade reporting time more 

conservatively. All figures are approximate. 65 In 2022, RTRS had the highest number of trades 

on record since its implementation in 2005. The 

record is likely attributable to interest rate rallying 

and volatility throughout the year, though the 

amount of par value traded was not a record high. 

The heightened level of trading persisted through 

2023, with the number of trades reported to RTRS 

exceeding the previous record in 2022. 

66See proposed Rule G–14 RTRS Procedures 

Sections (a)(ii)(A) and (B) for lists of existing end 

of trade day reporting exceptions and post-trade day 

reporting exceptions. 

67By comparison, in 2021, a year with much 

lower overall trading volume than 2022, 76.7 

percent of trades subject to the 15-minute standard 

were reported within one minute, 97.3 percent of 

such trades were reported within five minutes and 

99.5 percent of trades were reported within 15 

minutes. 

68MSRB staff conducted oral interviews with 

dealers and data providers in the fall of 2022 and 

the winter and spring of 2023 and was informed 

that larger institutional-sized trades are more likely 

to be executed via negotiations and involve manual 

processes. 

by reducing the reporting time for the 

remaining transactions to as soon as 

practicable but no later than 15 minutes 

after the Time of Trade standard for 

trades by dealers with limited trading 

activity and to a deadline that would 

ultimately be shortened to five minutes 

after the Time of Trade for trades with 

a manual component. 

The MSRB previously shortened the 

trade reporting timeframe from the end 

of day to 15 minutes from the Time of 

Trade in January 2005 with the creation 

of RTRS. Since the 2005 change, the 

MSRB’s analysis shows that most trades 

are indeed reported much sooner than 

the current 15-minute trade reporting 

deadline, potentially due at least in part 

to the advancement in technology. 

Specifically, as illustrated in Table 1 

below, approximately 73.7 percent of 

trades in 2022 were reported within one 

minute after a trade execution, with 

another approximately 23.3 percent of 

trades reported between one minute and 

five minutes after the Time of Trade.64

As presently reported, due in part to 

technological advancements, most 

trades already satisfy a shorter than 15- 

minute reporting requirement. A shorter 

reporting timeframe is intended to 

provide more immediate transparency 

to a market that historically has been 

associated with low trading volume for 

a majority of Committee on Uniform 

Securities Identification Procedures 

(‘‘CUSIP’’) numbers, relatively few 

securities that trade compared to the 

number of outstanding securities and 

sometimes has been associated with 

information opacity. 

Trade Reporting Analysis 

Table 1 summarizes the MSRB’s 

analysis comparing Time of Trade to 

trade reporting time for all trades 

required to be reported within 15 

minutes in 2022.65 Out of all reportable 

municipal securities trades 66 that are 

not subject to another end of day 

reporting exception or a post-trade day 

reporting exception, approximately 73.7 

percent were reported within one 

minute, while 97.0 percent were 

reported within five minutes and 98.9 

percent were reported in 15 minutes or 

less.67 The MSRB observed a noticeable 

difference in the speed of trade 

reporting by different trade size groups, 

with the reporting time increasing with 

trade size. While 76.2 percent of trades 

with trade size of $100,000 par value or 

less (approximately 84.2 percent of all 

trades) were reported within one 

minute, only 38.4 percent of trades with 

trade size between $1,000,000 and 

$5,000,000 par value and 23.1 percent of 

trades with trade size above $5,000,000 

par value were reported within one 

minute. A possible explanation is that 

larger institutional-sized trades are more 

likely to be executed via non-electronic 

means and may rely upon more manual 

processing steps.68 However, smallersized trades are more likely executed 

and processed electronically, which 

could facilitate faster trade reporting. 

Table 2 illustrates a variation in trade 

reporting time in 2022 between dealers 

with 1,800 trades or more annually 

during both prior two calendar years 

(‘‘Active Dealers’’), and dealers with less 

than 1,800 trades annually during at 

least one of the prior two calendar years 

(‘‘Dealers with Limited Trading 


lotter on DSK11XQN23PROD with NOTICES2EN26JA24.007</GPH>

Table 1. Trade Report Time by Trade Size - Cumulative Percentages 

January 2022 to December 2022 

Difference Between Execution and 

Reported Time 

15 Seconds 

2 Minutes 

3 Minutes 

5 Minutes 

10 Minutes 

15 Minutes 

30 Minutes 

1 Hour 

> 1 Hour 

Market Share of Eligible Trades 

All Trades 

24.9% 

88.5% 

91.9% 

97.0% 

98.6% 

98.9% 

99.5% 

99.5% 

100.0% 

100.0% 

90.2% 83.6% 62.4% 

93.0% 89.1% 73.4% 

97.7% 95.4% 85.3% 

98.9% 97.8% 93.8% 

99.2% 98.3% 95.7% 

99.6% 99.1% 97.5% 

99.6% 99.2% 97.7% 

100.0% 100.0% 100.0% 

84.2% 13.1% 2.1% 

46.7% 

60.7% 

76.0% 

89.0% 

91.9% 

94.0% 

94.6% 

100.0% 

0.6% 
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5395 

69See infra ‘‘Self-Regulatory Organization’s 

Statement on Burden on Competition—Trade 

Reporting Analysis’’ in Table 2. 70The proportion of trades in municipal 

securities conducted by Dealers with Limited 

Trading Activity is aligned with the proportion of 

aggregate trades conducted by dealers with limited 

trading volume in TRACE-eligible securities subject 

to the 2024 FINRA Proposed Rule Change when 

using FINRA’s annual transactions threshold. See 

supra n.30. 

71While low in terms of the trading volume, these 

Dealers with Limited Trading Activity may still 

serve many underserved investors, especially retail 

and institutional investors with a regional focus. 

72See supra n.68. 73See Wu, Simon Z., John Bagley and Marcelo 

Vieira, ‘‘Analysis of Municipal Securities Pre-Trade 

Data from Alternative Trading Systems,’’ Research 

Paper, Municipal Securities Rulemaking Board, 

October 2018; Government Accountability Office 

(‘‘GAO’’), ‘‘Municipal Securities: Overview of 

Market Structure, Pricing, and Regulation,’’ Report 

to Congressional Committees, January 2012, page 6; 

Green, Richard C., Burton Hollifield, and Norman 

Schu ̈rhoff. ‘‘Financial intermediation and the costs 

of trading in an opaque market.’’ The Review of 

Financial Studies 20.2 (2007): 275–314. 

74As an illustration, in its 2022 Request for 

Comment, the MSRB’s economic analysis showed 

that out of the universe of 251,635 ‘‘analyzed 

trades’’ with same-CUSIP-number-matched trades 

in 2021, where a matched trade was executed before 

the analyzed trade’s execution but was reported 

after the analyzed trade’s execution, approximately 

27.9 percent of those analyzed trades had at least 

one matched trade executed more than a minute 

before the analyzed trade’s execution. This suggests 

those analyzed trades would have benefited from 

the matched trades’ execution information if 

matched trades were required to be reported no 

later than one minute after their execution times. 

Activity’’).69 A threshold of 1,800 trades 

a year was selected to demonstrate that 

Dealers with Limited Trading Activity 

as a whole had a relatively small impact 

on the entire market and transparency, 

with approximately 98.5 percent of 

trades in 2022 conducted by Active 

Dealers collectively and only 1.5 

percent of trades conducted by all 

Dealers with Limited Trading Activity. 

When calculating the market share by 

par value traded, Active Dealers 

conducted 98.2 percent of par value 

traded in 2022 while Dealers with 

Limited Trading Activity conducted 

only 1.8 percent of par value traded.70

In 2022, out of 647 dealers conducting 

at least one transaction in municipal 

securities 474 were Dealers with 

Limited Trading Activity and 173 were 

Active Dealers.71 This difference in 

trade reporting time was pronounced for 

the one-minute trade reporting 

percentages where Active Dealers had 

77.2 percent of trades reported within 

one minute while only 47.5 percent of 

trades conducted by Dealers with 

Limited Trading Activity were reported 

within one minute. 

Benefits, Costs, and Effect on 

Competition 

The MSRB considers the likely costs 

and benefits of a proposed rule change 

when the proposal is fully implemented 

against the context of the economic 

baselines. The baseline is the current 

iteration of Rule G–14 RTRS Procedures 

(a)(ii) that requires transactions to be 

reported within 15 minutes after the 

Time of Trade with limited exceptions, 

while the future state would be 

following the conclusion of the second 

calendar year from the effective date of 

the proposed rule change, with the full 

implementation of the gradual reduction 

in reporting timeframe for trades with a 

manual component. 

In performing this economic analysis 

and related cost-benefit estimates, the 

MSRB has made a number of 

assumptions based on 2022 RTRS data 

as explained in more detail below. For 

instance, there are few publicly 

available sources of information about 

revenue and expense data for relevant 

business lines of a dealer, especially in 

relation to potential spending on 

acquiring or upgrading technology and 

infrastructure for some dealers. The 

effort is further hampered by the fact 

that some dealers are privately-owned, 

who are not required to disclose 

business operation data in public 

filings. Therefore, the MSRB conducted 

interviews with select dealers and 

vendors who provide electronic trade 

reporting services as well as dealer 

subscribers of these services to gauge 

the likely impact from the proposed rule 

change.72 The MSRB believes the 

analysis provides a useful projection on 

the scale of benefits and costs relative to 

the current baseline irrespective of 

whether an assumption changes the 

absolute estimated costs and benefits. 

Benefits 

The primary benefit of the proposed 

rule change on accelerated trade 

reporting would be improved 

transparency in the municipal securities 

market. Historically, the municipal 

securities market has been considered 

less liquid and more opaque when 

compared to other securities markets, 

with only about 1 percent of all 

municipal securities trading on a given 

trading day, and pre-trade quotes are not 

widely available to all market 

participants, especially retail investors 

who may not pay for vendor pricing 

tools and may be more reliant on trade 

data.73 Therefore, post trade data is 

important information available to all 

market participants, including 

particularly to retail investors and the 

market professionals that service retail 

accounts. By implementing the 

proposed rule change, investors would 

receive greater advantages on trade 

pricing information through the 

reporting of more contemporaneous 

transactions.74 This emphasis on 

contemporaneous trades as opposed to 

distant trades would help ensure that 

the pricing information remains vital, 

potentially decreasing trading costs and 

increasing liquidity. In addition, since 

only about 1 percent of municipal 

securities trade on a given trading day, 


lotter on DSK11XQN23PROD with NOTICES2EN26JA24.008</GPH>

Table 2. Trade Reporting Time by Level of Dealer Activity 

January 2022 to December 2022 

Pen:ent of Trades Percent of Trades Market Share of Reported Within Reported Witm 

Oael\fillute Tenl\fillute Trades 

Fll'llls that accouted for 1,800 11.2% 99.3% 98.5% trades or more (Acm•e Dealers) 

Firms that accouted for less than 

1,800 trades (Dealers with Limited 47.5% 96.8% 1.5% 

Tradill2 Acthity) 

l\farket Share of Par 

Vaine Traded 

98.2% 

1.8% 
5396 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

75A 2012 report issued by the GAO stated 

‘‘Broker-dealers we spoke with said that the price 

of a recently reported interdealer trade for a security 

was a particularly good indication of its value for 

that segment of the market. However, if a security 

has not traded recently, they said they instead look 

for recent trades in comparable securities.’’ See 

GAO, ‘‘Municipal Securities: Overview of Market 

Structure, Pricing, and Regulation,’’ Report to 

Congressional Committees, January 2012, page 12. 

76See Sirri, Erik, ‘‘Report on Secondary Market 

Trading in the Municipal Securities Market,’’ 

Research Paper, Municipal Securities Rulemaking 

Board, July 2014, and Chalmers, John, Liu, Yu 

(Steve) and Wang, Z. Jay, ‘‘The Difference a Day 

Makes: Timely Disclosure and Trading Efficiency in 

the Muni Market,’’ Journal of Financial Economics, 

2021. Sirri (2014) estimated that following the 

implementation of RTRS in January 2005, the 

average customer trade spread was reduced, all 

other relevant factors being equal, by 11 basis 

points within the first six-month period and up to 

20 basis points within the one-year period. 

Chalmers, Wang and Liu (2021) found that dealer 

markups across all trade sizes declined by 28 basis 

points (14 percent reduction) in a ten-month period 

(March 2005 through December 2005). The authors 

concluded that the improved timeliness of the 

market resulted in large reductions in the costs of 

trading municipal bonds. 

77As indicated by an increase in the overnight 

and over-the-week dealer capital committed to 

inventory, an increase in the number of dealers 

involved in completing a round-trip transaction, 

and more round-trip transactions that involve 

inventory taking. See Erik Sirri, Report on 

Secondary Market Trading in the Municipal 

Securities Market, July 2014 (Research Paper, 

Municipal Securities Rulemaking Board); John 

Chalmers, Yu (Steve) Liu, & Z. Jay Wang, The 

Difference a Day Makes: Timely Disclosure and 

Trading Efficiency in the Muni Market, 139(1) 

Journal of Financial Economics, 313–335 (2021). 

78See Wu, Simon Z., ‘‘Transaction Costs for 

Customer Trades in the Municipal Bond Market: 

What is Driving the Decline?’’ Research Paper, 

Municipal Securities Rulemaking Board, July 2018, 

Page 15; and Wu, Simon Z., and Ostroy, Nicholas 

J., ‘‘What Has Driven the Surge in Transaction Costs 

for Municipal Securities Investors Since 2022?’’ 

Research Paper, Municipal Securities Rulemaking 

Board, August 2023. 

79Wu and Ostroy (2023). The reduction was 

mostly due to the steadily declining effective 

spreads for retail-sized customer trades, as 

institutional-sized customer trades (par value more 

than $1,000,000) had a relatively stable level of 

effective spreads between 2005 and 2023. 

80 Id. 

information on trades in other 

comparable municipal securities would 

also be valuable in pricing a security. 

Lowering the reporting time would 

make more contemporaneous trades in 

comparable securities transparent for 

other transactions.75 Finally, with far 

fewer trades in municipal securities 

when compared to equity securities, 

Treasury and corporate bonds, each 

additional data point from post trade 

reporting in municipal securities would 

potentially be more valuable to 

investors and other market participants 

than a data point from these other 

markets. According to established 

economic literature, investors, 

especially retail investors, benefit from 

transparency (more and/or better 

information) by enhancing their 

negotiation power with dealers as well 

as reducing dealer’s own search and 

intermediation costs, therefore reducing 

customer trades’ transaction costs, also 

known as bid-ask spread or effective 

spread. The MSRB believes additional 

data points from more contemporaneous 

trades in the same and/or comparable 

securities would increase an investor’s 

negotiating power. Specifically, 

regarding trade reporting time, two 

research papers scrutinized the 

transition in 2005 from reporting trades 

at the end of a trading day to 15 minutes 

after trade execution. Both studies 

revealed a statistically significant 

decrease in the average effective spreads 

for customer trades. When comparing 

the period before and the period after 

January 2005, the reduction in average 

customer trade effective spread ranged 

between 11 to 28 basis points, all else 

being equal.76 In addition, more timely 

reporting has also been shown to 

increase dealer market-making activities 

in the municipal markets, potentially 

enhancing market liquidity.77

Recent MSRB analyses show that 

effective spreads for customer trades 

continued to decline in the last 

decade.78 However, while the difference 

in effective spreads between smaller 

retail-sized customer trades and larger 

institutional-sized customer trades 

shrank over the past decade, the 

shrinkage has stopped, and the gap may 

have started to widen again since early 

2022.79 Therefore, as of September 

2023, retail-sized customer trades 

continue to have significantly higher 

effective spreads than institutional-sized 

customer trades as shown in Chart 1, 

about three times as large.80


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5397 

81 Id. 

82To be conservative, the MSRB uses five basis 

points as an illustration, where a five-basis point 

reduction in price value of a $100 par value bond 

is equivalent to $0.50 per bond. This estimate is less 

than half of the estimated lower-bound reduction 

from the 2005 changeover from end-of-day trade 

reporting to 15 minutes from Time of Trade 

reporting, and is only applicable to noninstitutional-sized customer trades (either sub- 

$1,000,000 par value or $100,000 or lower par value 

customer trades). No change in effective spread for 

other customer trades is included in the analysis, 

as larger-size institutional customers are assumed to 

be sophisticated and already have pricing 

information. 

83 In 2022, $504.8 billion annual par value traded 

from all customer purchase and sell trades with 

trade size below $1,000,000 par value × 0.05 

percent/2 = $126.2 million. Since the five basis 

points are the difference between the average 

customer purchase and customer sell trades, when 

measuring each customer purchase or customer sell 

trade, the amount is divided by two. 

Based on available economic 

literature and the MSRB’s own analysis 

of trade data, the MSRB believes that the 

proposed rule change would further 

reduce customer trade effective spreads 

due to the benefit of more immediate 

transparency, especially for retail-sized 

trades. The MSRB acknowledges the 

difference in the potential impact, due 

to the different scale of the changes, 

between the launch of RTRS in January 

2005 with the introduction of a 15- 

minute reporting window in place of 

end-of-day reporting, on the one hand, 

and the proposed shortening of the trade 

reporting requirement from 15 minutes 

to one minute, on the other hand. 

Nevertheless, while the anticipated 

positive effect of the proposed oneminute trade reporting with two new 

exceptions may not match the 

magnitude of the 2005 RTRS transition, 

it is expected to yield valuable 

advantages for investors through the 

inclusion of more contemporaneous 

trade data points in the same and/or 

comparable securities. This holds 

particularly true for retail investors, 

who have historically paid higher 

effective spreads than institutional 

investors and derived greater benefits 

from post-trade transparency compared 

to institutional investors.81 For 

illustration purposes, hypothetically if a 

shortening of trade reporting time to one 

minute for Active Dealers (except for 

manual trades) would reduce the 

effective spread by an average of five 

basis points 82 for customer trades with 

$1 million or less par value, this would 

result in the annual savings (benefits) 

for investors of approximately $126.2 

million based on the 2022 trading 

volume (see Hypothetical Scenario 1 in 

Table 3).83 Table 3 also shows a more 

conservative scenario when limiting the 

hypothetical effective spread reduction 

to a trade size of $100,000 par value or 

less only, commonly known as a proxy 

for retail-sized trades. A reduction of 

five basis points in effective spreads 

from the proposed rule change 

applicable to these trades would result 

in the annual savings of approximately 

$49 million to retail investors (see 


lotter on DSK11XQN23PROD with NOTICES2EN26JA24.009</GPH>

'~ 

e ·a 

"'' 

·-~ 

~ 

:§. 

., 

i 

1 

j 

~ 'i:: 

l 

"" ;!! 

,s 

.. 

C 

., 

~ 

Q. 

"' 

~ 

uo 

lOO 

00 

ll() 

60 

5() 

:3!) 

20 

Chart 1. Effective Spread for Fixed-Rate Municipal Securities Customer Trades 

January 2019 - September 2023 

-Par Volu~ $10,000o, L~$! 

- - PM V~lu!! $10!),00l , $!19,!1,ffi 

-P,lf V11h11> $Ul,!lOI,, $'2!i,000 

•••••• fl~)r Valu.~$1.000,t'>OO and Ovier 
5398 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

84 In 2022, $196.1 billion annual par value traded 

from all customer trades with trade size at $100,000 

par value or less × 0.05 percent/2 = $49 million. 

85 Davenant, Charles, An Essay upon the Probable 

Methods of Making People Gainers in the Balance 

of Trade (London: James Knapton, 1699). 

86The 0.2 percent volume increase would be 

about half of the lower-bound estimate for the 2005 

change over (see Chalmers, Wang and Liu, 2021). 

Hypothetical Scenario 2 in Table 3).84

On the other hand, while the MSRB 

believes dealers would earn less from 

investors as a result of narrowing 

effective spreads, the shortfall would be 

partially offset by gains in market 

efficiency, potential reduction in dealer 

search and intermediation costs, and 

potentially increased revenue from 

higher customer trading activity as a 

result of lower transaction costs. This is 

in line with the economic theory on the 

law of demand that a reduction in price 

would generally encourage more 

purchasing by consumers, all else being 

equal.85 In the case of secondary market 

trading, the expectation is that a 

reduction in trading costs would 

encourage more trading by existing 

investors and/or bring in new investors 

to the municipal securities market over 

the long term. The MSRB assumes a 

reduction of five basis points in the 

effective spreads for the $1 million par 

value or lower customer trades would 

generate an additional 0.2 percent in 

total customer trading volume for that 

trade size group, while a reduction of 

five basis points in the effective spreads 

for the $100,000 par value or lower 

customer trades would generate an 

additional 0.2 percent in total customer 

trading volume for that trade size 

group.86 The MSRB therefore estimates 

dealers would gain between 

approximately $1 million to $3 million 

from projected additional annual 

customer trading volume. 

While five basis points are used as an 

illustration in Table 3, even if the 

reduction in effective spread was only 

half of the amount, or 2.5 basis points, 

the total annual savings would still 

amount to between $24.5 million and 

$63.1 million approximately. 

In addition to investors benefiting 

from more immediate market 

transparency, other market participants 

would also benefit from the proposed 

rule change, including underwriters and 

issuers who determine evaluated pricing 

of a new issuance, dealers in the 

primary and secondary markets who 

participate in competitive bidding 

activities, and yield curve providers that 

rely upon market transactions to update 

curves or to supply intra-day price and 

yield movement for the market. 

Lastly, any trade that meets the 

definition of a manual trade would be 

required to append a new trade 

indicator to such trade when reported to 

the MSRB, regardless of when the trade 

is reported. This trade indicator would 

help the MSRB identify the extent to 

which the market still operates 

manually and could help determine 

whether the proposed gradual reduction 

in timeframes proposed would be 

feasible to maintain or to continue 

reducing in the future. 

Costs 

The MSRB acknowledges that dealers 

would likely incur additional costs, 

relative to the current state, to meet the 

new one-minute transaction reporting 

time of one minute outlined in the 

proposed amendments to Rule G–14 

RTRS Procedures though the 

compliance costs would be mitigated by 

the fact that nearly 73.7 percent of all 

trades were already reported within one 

minute of an execution in 2022. These 

additional costs would likely include: 

(a) one time or upfront costs (e.g., 

setting up and/or revising policies and 

procedures, education and training and 

implementing the newly required 

manual trades flag); (b) ongoing costs 

related to subscription(s) to electronic 

trade reporting technologies to speed up 

the trade reporting process for some 

Active Dealers; and (c) other ongoing 

costs related to ensuring compliance 

with the new proposed requirements. 

Upfront Costs 

For the upfront costs, it is possible 

dealers may need to seek appropriate 

advice of in-house or outside legal and 

compliance professionals to revise 

policies and procedures in compliance 

with the proposed amendments to Rule 

G–14 RTRS Procedures. Dealers may 

also incur upfront costs related to 

education and/or standards of training 

in preparation for the implementation of 

these proposed amendments, as well as 

establishing the newly required manual 

trades flag. The MSRB believes the 

upfront costs as related to updating 

policies and procedures, training and 

education would be relatively minor, 

perhaps about $6,720 for Dealers with 

Limited Trading Activity and up to 

$11,200 for Active Dealers for a total of 


lotter on DSK11XQN23PROD with NOTICES2EN26JA24.010</GPH>

Table 3. Illustration of Hypothetical Benefit Based on 2022 Trading 

Volume 

Basis Points in Price 

Benefit - Investors 

Reduction in Annual Effective 

Effective Spread (in Spread Savings for 

Basis Points) Investors 

2005: 15-Minute Trade Reportiru! 

Benefit for All Trades 11 to 28 

2023 Proposal: One-Minute Trade Reporting 

Hypothetical Scenario 1 - Benefit for Sub-$1,000,000 Par 5.0 $ 126,472,000 Value Trades Only 

Hypothetical Scenario 2 - Benefit for $100,000 Par Value 5.0 $ 49,044,000 Trades or Lower Only 

Benefit - Dealers 

Gain from Additional 

Customer Trading 

Volume 

$ 2,954,000 

$ 981,000 
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5399 

87The hourly rate data was gathered from the 

Commission’s Amendments to Exchange Act Rule 

3b-16. See Exchange Act Release No. 94062 (Sep. 

20, 2022), 17 CFR parts 232, 240, 242, 249 (Jan. 26, 

2022) (File No. S7–02–22), p. 477 n.1102 (citing the 

original source of the data from SIFMA 

Management & Professional Earnings in the 

Securities Industry—2013. The data reflects the 

2023 hourly rate level after adjusting for the annual 

wage inflation between 2013 and 2023, using the 

Federal Reserve Bank of St. Louis Employment Cost 

Index: Wages and Salaries: Private Industry 

Workers (available at: https://fred.stlouisfed.org/ 

series/ECIWAG). The MSRB uses a blended hourly 

rate of $560 for tasks that could be performed by 

in-house attorneys, outside counsel, compliance 

managers and chief compliance managers, and 

estimates a total of 12 hours for Dealers with 

Limited Trading Activity to update policies and 

procedures, and implement training and education, 

and 20 hours for Active Dealers. As shown in Table 

4, the one-time upfront costs are estimated to be 

$5.1 million ($11,200 × 173 + $6,720 × 474 = $5.123 

million). 

88For example, in 2022, approximately 59 

percent of the secondary market transactions 

executed within the first three days of a new 

issuance were reported within one minute, as 

compared to 77 percent of other secondary market 

trades. This may be largely due to the additional 

time involved in setting up a new CUSIP for the 

secondary market trading. The MSRB anticipates 

that such trades requiring manual intervention 

would be subject to the phased-in reporting 

requirement down to five minutes. 

89For each dealer, the MSRB calculated the 

nearest minute(s) (rounded up) to report at least 90 

percent of its trades in 2022. 

90Some comment letters also cited Bloomberg’s 

Trade Order Management Solutions (‘‘TOMS’’) 

system, which would cost $250,000 per year. See 

Letter from Matthew Kamler, President, Sanderlin 

Securities LLC, dated September 27, 2022, at 1. 

Another commenter estimated the cost at $500,000 

per year. See Letter from John Isaak, Senior Vice 

President, Isaak Bond Investments, dated August 

16, 2022, at 1. The MSRB understands that TOMS 

can be used for many purposes, such as sales, 

trading, risk management, compliance and 

operations, and not just for electronic trade 

reporting. TOMS can also be used for many fixedincome products and not just for municipal 

securities. See https://www.bloomberg.com/ 

professional/product/trade-order-managementsolutions/. Thus, the cost associated with TOMS 

would generally appropriately be allocated among 

the various uses that a dealer is likely to make of 

it. 

91For example, one vendor informed the MSRB 

that it charges up to $1,000 per month for straightthrough processing of trades, or $12,000 annually. 

Some other dealers mentioned $2,000 monthly, or 

about $24,000 annually to incorporate electronic 

trade reporting. 

about $5.1 million (see Table 3).87 In 

addition, there would be a one-time 

upfront cost for software or compliance 

system upgrade to flag manual trades 

and to reprogram the system to comply 

with the shorter reporting timeframe, 

though the amount would depend on 

how this new requirement is 

implemented by the industry. While the 

MSRB does not have sufficient data and 

information presently to estimate the 

cost, the MSRB believes the upfront cost 

for implementing the manual trade flag 

would likely be more substantial than 

the other upfront cost components. 

Ongoing Costs: Annual Technology 

Subscription 

By comparison, the annual ongoing 

technology subscription costs for 

electronic trade reporting would likely 

be more significant for some Active 

Dealers, as these dealers may need to 

obtain assistance from outside vendors 

or increase in-house programming costs. 

It should be noted that some dealers 

may be able to fulfill the new trade 

reporting time requirement without any 

upgrade to their technology. While the 

MSRB is not aware of any evidence that 

dealers are intentionally delaying trade 

reporting, the current Rule G–14 

provides a 15-minute reporting window 

without the ‘‘as soon as practicable’’ 

requirement. As a result, some dealers 

may not have reported their trades as 

soon as practicable in the absence of a 

regulatory obligation. In addition, it is 

possible that, instead of upgrading 

existing technologies, some dealers, 

especially those with relatively few 

trades in municipal securities, may 

augment their workforce to ensure a 

shorter reporting lag after a trade 

execution. Finally, dealers executing 

voice trades and secondary market 

trades in newly issued securities may 

not be able to speed up the trade 

reporting process due to the manual 

nature of these trades, even with the 

electronic trade reporting technology in 

place.88

For the ongoing cost estimate, the 

MSRB assumes that Active Dealers 

would not need to acquire electronic 

trade reporting technology if 90+ 

percent of the dealer’s trades are 

currently reported between one and two 

minutes after the Time of Trade,89 as 

those dealers are assumed to be able to 

report the trades within the proposed 

one-minute trade reporting requirement 

without resorting to an additional 

technology subscription. However, if a 

dealer reports 90+ percent of trades by 

more than two minutes, the MSRB 

assumes the dealer would need to 

upgrade its technology to achieve the 

one-minute requirement. The MSRB 

believes the proposed rule change 

would provide an incentive to adjust 

internal policies and procedures or to 

improve reporting time without 

resorting to additional technology 

subscription, especially with the new 

one-minute trade reporting requirement 

for non-excepted trades as well as the 

new ‘‘as soon as practicable’’ 

requirement that harmonizes with the 

current analogous FINRA rules. As to 

the MSRB’s usage of the 90+ percent 

threshold as opposed to a 100 percent 

threshold, the proposed rule change 

provides an exception for manual trades 

for these Active Dealers, meaning that a 

100 percent compliance rate with the 

baseline one-minute timeframe may not 

be required. The MSRB believes that 

many of the trades that took longer than 

one minute to report likely had a 

manual component; therefore, it may be 

that a threshold lower than the 90 

percent threshold would still satisfy the 

new requirements in the proposed rule 

change, providing Active Dealers 

additional time to report by using the 

new exception for manual trades. 

However, because the MSRB does not 

know the actual share of manual trades 

for each dealer at this time, to be 

aggressive (i.e., conservative) in 

estimating the costs, the MSRB includes 

these Active Dealers in the ongoing 

technology subscription cost 

calculation. 

Chart 2 below illustrates the estimated 

technology subscription cost of 

acquiring the electronic trade reporting 

technology for these dealers. From the 

industry outreach effort, the MSRB 

learned it would cost a dealer 

approximately up to an additional 

$60,000 annually, which includes a 

bundle of services in addition to the 

electronic trade reporting.90 The MSRB 

believes, however, this cost estimate 

may be on the high side because: (1) 

dealers may not need to purchase the 

bundle simply to speed up the trade 

reporting depending on their existing 

subscription services; 91 and (2) some 

dealers may have more than 10 percent 

of their trades having a manual 

component, and since the proposed rule 

change would use a phase-in period for 

these trades, with the requirement of as 

soon as practicable but no later than five 

minutes after the Time of Trade after the 

second year, it may reduce the need or 

the scale to pay for the technology 

subscription costs. Furthermore, since 

the requirement for the one-minute 

trade reporting would likely be 

applicable to other TRACE-eligible 

fixed-income securities such as 

corporate bonds under the 2024 FINRA 

Proposed Rule Change, dealers that 

trade both municipal securities and 

corporate bonds may only need to pay 

the subscription cost once, or at least 

not need to pay double the amount. 

Still, to be aggressive in the cost 

estimate, the MSRB would use the 

$60,000 as the minimum annual cost for 

dealers who would need the new 

technology subscription. In addition, it 

is possible that some dealers, especially 

larger dealers, may need more than one 

vendor for automated trade reporting 

when executing orders on multiple 


lotter on DSK11XQN23PROD with NOTICES2
5400 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

92The MSRB assumes these dealers would need 

a second vendor, but instead of doubling the 

amount from $60,000 to $120,000, the MSRB 

estimates the amount to be approximately $100,000 

assuming there would be some efficiency gain. 

93A market share of between 0.01 percent and 0.1 

percent based on the 2022 data. 

94Of the 173 Active Dealers, 82 dealers had 

12,000 trades or more in 2022 and 91 had less than 

12,000 trades. For Dealers with Limited Trading 

Activity, the MSRB assumes there is no need for 

technology subscription since they would be able 

to utilize one or both new exceptions, and therefore 

the proposed new requirement is similar to the 

present requirement in Rule G–14 for these dealers. 

electronic platforms. Therefore, the 

MSRB estimates, among Active Dealers 

who would need new technology 

subscription to comply with the 

proposed rule change, such Active 

Dealers would incur approximately 

$100,000 annually to adopt the 

electronic trade reporting to comply 

with the proposed rule change,92 while 

a dealer with less than 12,000 trades 

annually 93 would incur $60,000 

annually.94

Table 4 provides an estimated total 

cost of approximately $5.1 million for 

the one-time policies and procedures 

revision for all 647 dealers. As to the 

annual ongoing costs, MSRB staff 

estimated a total of $6.6 million for the 

annual technology subscription for the 

88 Active Dealers who would need the 

subscription. 

Note: There would also be upfront 

costs for system upgrade to flag manual 

trades as well as ongoing costs for 

ensuring compliance. The MSRB cannot 

provide an estimate for these costs 

presently because of insufficient 

information. 

Other Ongoing Compliance Costs 

The MSRB anticipates ongoing costs 

of ensuring the compliance of relevant 

trades to be reported within one minute, 

and manual trades to be reported within 

the timeframes as proposed during and 

after the phase-in period, with a new 

trade indictor for such trades. 

Comparatively speaking, these ongoing 

compliance costs would be relatively 

minor and may not significantly exceed 

the costs in the current baseline, as all 

dealers should already have compliance 

programs in place in relation to the 

current trade reporting requirement. 


lotter on DSK11XQN23PROD with NOTICES2EN26JA24.011</GPH> EN26JA24.012</GPH>

Chart 2. Diagram for Determining Estimated Technology 

Subscription Cost for Active Dealers 

Active Dealers 

j 

90+% of Trades Reported 

Between One and Two 

Minutes? 

No 

No Subscription 

~Yes 

Cost Above 

Annual 

12,000? 

Trades 

~ 

j 

Subscription Cost 

$100,000 Annually 

Annual Trades 

Below 12,000? 

j 

Subscription Cost 

$60,000 Annually 

Table 4. Estimate of Upfront and Ongoing Costs Based on 2022 Trading Volume 

Upfront Cost - Annual 

Ongoing Costs Policies and 

Procedures Technology 

Subscription 

One-Minute Reporting for Active Dealers and 15-Minute $ 5,123,000 $ 6,560,000 Reporting for Dealers with Limited Trading Activity 
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5401 

95See Letter from Michael Decker, Senior Vice 

President for Public Policy, Bond Dealers of 

America, dated October 3, 2022, at 2–3 (‘‘Trades 

negotiated and executed by phone, still the 

predominant execution method for block-sized 

trades in municipals . . . require human 

involvement and data entry, delaying the reporting 

process easily past one minute.’’); Letter from Seth 

A. Miller, General Counsel, President, Advocacy 

and Administration, Cambridge Investment 

Research, Inc., dated October 3, 2022, at 4; Letter 

from Howard Meyerson, Managing Director, 

Continued 

Proposed Supplementary Material .02 

would require all manual trades from 

Active Dealers to be reported within five 

minutes eventually, following the 

conclusion of the second calendar year 

from the effective date. While the RTRS 

database currently does not flag manual 

trades, assuming all trades currently 

reported more than one minute after the 

Time of Trade are ‘‘manual’’ trades, 

Table 5 illustrates that 90.4 percent of 

all trades from Active Dealers were 

already reported within five minutes in 

2022. Hence, the MSRB believes a fiveminute trade reporting requirement is 

achievable for manual trades from 

Active Dealers, with a three-year phasein period, which provides ample time 

for them to prepare and for the industry 

to create solutions. 

Effect on Competition, Efficiency and 

Capital Formation 

The MSRB believes the proposed 

change to Rule G–14 RTRS Procedures 

would improve market efficiency by 

providing more immediate trade 

reporting transparency to the market. If 

indeed there would be a reduction in 

customer transaction costs, as illustrated 

by the 2005 RTRS transition, even if on 

a smaller scale, the benefits to 

customers would accrue over a longer 

period that would offset the investment 

in upgrading technologies by select 

dealers. In addition, it is possible that 

lower transaction costs may increase 

investor participation and stimulate 

market activities by encouraging more 

trading by existing investors and/or 

bringing in new investors to the 

municipal securities market over the 

long term, therefore contributing to an 

overall increase in capital formation. 

Finally, the harmonization of MSRB 

rule requirements for municipal 

securities with FINRA requirements for 

other TRACE-eligible fixed-income 

markets, as proposed in the 2024 FINRA 

Proposed Rule Change, would create 

consistency for dealers who have 

trading operations in all these markets, 

and, thus, would increase efficiency in 

terms of their compliance burdens. 

Therefore, the MSRB believes that the 

proposed rule change would facilitate 

capital formation. 

Some dealers may be impacted by the 

proposed rule change more than other 

dealers to meet the new reporting time. 

However, the broader impact on 

competition in the municipal securities 

market is expected to be minor. The 

proposed change to Rule G–14 RTRS 

Procedures provides a two-tier system 

(one-minute trade reporting requirement 

for Active Dealers with an exception for 

manual trades and 15-minute trade 

reporting requirement for Dealers with 

Limited Trading Activity) to mitigate 

any potential unfavorable financial 

impact for Dealers with Limited Trading 

Activity because of a lower revenue 

base. Therefore, the MSRB does not 

believe the proposed change to Rule G– 

14 RTRS Procedures would result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act. 

Identifying and Evaluating Reasonable 

Alternative Regulatory Approaches 

The MSRB has considered and 

evaluated several reasonable regulatory 

alternatives. One alternative the MSRB 

reviewed was to introduce a five-minute 

trade reporting period for Active 

Dealers. According to the MSRB’s 

estimates, as shown in Table 1 above, 

23.3 percent (97–73.7 percent) of all 

reported trades in municipal securities 

would have satisfied the five-minute 

reporting requirement but not the oneminute reporting requirement in 2022. If 

the MSRB instituted a five-minute trade 

reporting period, most of the industry 

would already satisfy the obligations of 

a five-minute requirement and it would 

likely be less of a burden for dealers to 

comply. In effect, MSRB rulemaking 

would merely align with current market 

practices. However, considering that 

most trades (97 percent) already took 

five minutes or less to be reported to 

RTRS, the MSRB believes the fiveminute reporting requirement, while 

easier for dealers to comply with, would 

not have advanced the immediacy of 

information transparency by a 

meaningful amount that would make a 

difference for investors, especially retail 

investors, and other market participants. 

Another alternative would be for the 

MSRB to change the trade reporting 

time by trade size. The MSRB was 

informed by comments received in 

response to the 2022 Request for 

Comment described below that largesized trades are in many instances still 

negotiated telephonically and require 

more dealer attention, and therefore 

would be considered as trades with a 

manual component during the trading 

reporting process.95 Table 1 above 


lotter on DSK11XQN23PROD with NOTICES2EN26JA24.013</GPH>

Table 5. Trade Report Time for Estimated Manual Trades from Active Dealers 

January 2022 to December 2022 

Difference Between 

Execution and Reported 

Time 

All Trades 
5402 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

Financial Information Forum, dated October 3, 

2022, at 4; Letter from Edward J. Smith, General 

Counsel and Chief Compliance Officer, Hartfield, 

Titus & Donnelly, LLC, dated September 14, 2022, 

at 4; Letter from Robert D. Bullington, Vice 

President, Compliance Officer, InspereX LLC, dated 

October 3, 2022, at 4–5; Letter from John Isaak, 

Senior Vice President, Isaak Bond Investments, 

dated August 16, 2022, at 1; Letter from Robert 

Blum, President, Robert Blum Municipals, Inc., 

dated September 16, 2022 at 1; Letter from 

Christopher Ferreri, President, RW Smith & 

Associates, LLC, dated September 13, 2022, at 4; 

Letter from Lee Maverick, Chief Compliance 

Officer, SAMCO Capital Markets, Inc., dated 

September 30, 2022, at 2; Letter from Kenneth E. 

Bentsen, Jr., President and Chief Executive Officer, 

Securities Industry and Financial Markets 

Association and the SIFMA Asset Management 

Group, dated October 3, 2022, at 8–9; Letter from 

Nyron Latif, Head of Operations, Wells Fargo 

Wealth and Investment Management, and Todd 

Primavera, Head of Operations, Wells Fargo 

Corporate and Investment Bank, Wells Fargo & 

Company, dated October 3, 2022, at 3; Email from 

Glenn Burnett, Zia Corporation, dated September 6, 

2022, at 1. See also MSRB Notice 2013–02 (Request 

for Comment on More Contemporaneous Trade 

Price Information Through a New Central 

Transparency Platform) (Jan. 17, 2013) (eliciting 

similar comments), available at https://

www.msrb.org/Request-Comment-MoreContemporaneous-Trade-Price-InformationThrough-a-New-Central-Transparency. 

96For example, the most widely used curve is the 

Refinitiv® Municipal Market Data (MMD) AAA 

benchmark yield curve that only includes 

institutional block size trades of $2 million par 

amount or more in the secondary or primary 

market. For additional information regarding the 

MMD AAA curve, see Cameron Marcus Arial, 

‘‘Public Administrator Choice Idaho School District 

Finance Policy Observed’’ (May 2019). Boise State 

University Theses and Dissertations, File No. 1516, 

page 68, available at https://

scholarworks.boisestate.edu/cgi/ 

viewcontent.cgi?article=2639&context=td. This is in 

addition to the IHS Markit AAA Curve and 

Bloomberg BVAL municipal AAA curves displayed 

on the MSRB’s EMMA website, which exclude 

small-sized trades from their methodologies. 

97While more immediate transparency is 

beneficial to the market in general, there has been 

some concerns about information leakage if largesized trades were reported and disseminated 

sooner. See Letter from Sarah A. Bessin, Associate 

General Counsel, Investment Company Institute, 

dated October 3, 2022, at 11. 

98See MSRB Notice 2022–07 (Request for 

Comment on Transaction Reporting Obligations 

under MSRB Rule G–14) (Aug. 2, 2022), available 

at https://www.msrb.org/sites/default/files/2022-09/ 

2022-07.pdf. 

99Memorandum from John Bagley, Chief Market 

Structure Officer, MSRB (Supplemental Data with 

respect to MSRB Notice 2022–07 Request for 

Comment on Transaction Reporting Obligations 

under MSRB Rule G–14) (‘‘MSRB Memorandum’’) 

(providing supplemental trade report time data), 

(Sep. 12, 2022), available at https://www.msrb.org/ 

sites/default/files/2022-09/2022-07-MSRB.pdf. 

100See Letter from Kelli McMorrow, Head of 

Government Affairs, American Securities 

Association (‘‘ASA’’) dated September 30, 2022; 

Letter from Mike Petagna, President, Amuni 

Financial, Inc. (‘‘AMUNI’’), dated August 23, 2022; 

Email from Bill Bailey (‘‘Bailey’’), dated August 4, 

2022; Letter from Matt Dalton, Chief Executive 

Officer, Belle Haven Investments, L.P. (‘‘Belle 

Haven’’), dated October 3, 2022; Letter from Ronald 

P. Bernardi, President and Chief Executive Officer, 

Bernardi Securities, Inc. (‘‘BSI’’), dated September 

30, 2022; Letter from Will Leahey, Head of 

Regulatory Compliance, BetaNXT Inc. (‘‘BetaNXT’’), 

dated October 3, 2022; Letter from Michael Decker, 

Senior Vice President for Public Policy, Bond 

Dealers of America (‘‘BDA’’), dated October 3, 2022; 

Letter from David Long, Executive Vice President, 

Correspondent Banking/Capital Markets, and 

Vincent Webb, Managing Director, Bryant Bank 

Capital Markets, Bryant Bank (‘‘BB’’), dated 

September 28, 2022; Letter from Seth A. Miller, 

General Counsel, President, Advocacy and 

Administration, Cambridge Investment Research, 

Inc. (‘‘Cambridge’’), dated October 3, 2022; Email 

from Jay Lanstein, Chief Executive Officer and Chief 

Technology Officer, Cantella & Co., Inc. (‘‘C&C’’), 

dated September 16, 2022; Email from Maryann 

Cantone, Cantone Research, Inc. (‘‘CRI’’), dated 

August 2, 2022; Letter from J.D. Colwell 

(‘‘Colwell’’), dated September 9, 2022; Email from 

Raymond DeRobbio (‘‘DeRobbio’’), dated August 3, 

2022; Letter from Gerard O’Reilly, Co-Chief 

Executive Officer and Chief Investment Officer, and 

David A. Plecha, Global Head of Fixed Income, 

Dimensional Fund Advisors LP (‘‘Dimensional’’), 

dated September 26, 2022; Letter from Robert A. 

Estrada, Esq., Chairman (Emeritus), Estrada 

Hinojosa & Co., Inc. (‘‘EH&C’’), dated October 3, 

2022; Letter from Melissa P. Hoots, Chief Executive 

Officer and Chief Compliance Officer, Falcon 

Square Capital, LLC (‘‘Falcon Square’’), dated 

October 3, 2022; Letter from Howard Meyerson, 

Managing Director, Financial Information Forum 

(‘‘FIF I’’), dated October 3, 2022; Supplemental 

Letter from Howard Meyerson, Managing Director, 

Financial Information Forum (‘‘FIF II’’), dated April 

27, 2023; Letter from Jonathan W. Ford, Senior Vice 

President, Ford & Associates, Inc. (‘‘F&A’’), dated 

September 9, 2022; Letter from Edward J. Smith, 

General Counsel and Chief Compliance Officer, 

Hartfield, Titus & Donnelly, LLC (‘‘HTD’’), dated 

September 14, 2022; Letter from Melissa Messina, 

Executive Vice President, Associate General 

Counsel, R. Jeffrey Sands, Managing Principal, 

General Counsel, and William Sims, Managing 

Principal, Herbert J. Sims & Co., Inc. (‘‘HJS’’), dated 

October 3, 2022; Email from Deborah Higgins, 

Higgins Capital Management, Inc. (‘‘HCM’’), dated 

September 19, 2022; Letter from Lana Calton, 

Executive Managing Director, Head of Clearing, 

Hilltop Securities (‘‘Hilltop’’), dated October 3, 

2022; Letter from Joe Lee, Chief Executive Officer, 

Honey Badger Investment Securities, Inc. (‘‘Honey 

shows a noticeable difference in the 

speed of trade reporting by different 

trade size groups, with the reporting 

time increasing with trade size. The 

MSRB could propose that small and 

medium-sized trades, i.e., trades with 

par value below $1,000,000 which 

constitute about 97.3 percent of all 

trades, be reported within one minute 

while proposing a longer threshold, for 

example, a five-minute threshold for 

larger-sized trades which constitute 

about 2.7 percent of all trades. However, 

trades with a manual component are 

already excepted from the one-minute 

requirement under the proposed rule 

change, regardless of the trade size, 

which would be superior to this 

alternative method because the length of 

time to report a trade is heavily 

influenced by the trade reporting 

process rather than the size of the trade 

per se. In addition, anecdotal evidence 

suggests that large-sized trades do have 

more of an impact on the direction of 

the market, as many market participants 

weigh larger trades more heavily in 

determining market movements and 

many of the existing market produced 

yield curves either exclude small-sized 

trades from their analysis or weigh them 

much less than larger-sized trades.96

While there may be both benefits and 

costs for large-sized trades to be 

reported sooner where possible,97

adding a trade size-based reporting 

regime with delayed reporting by largesized trades on top of the manual 

component exception may cause 

additional complication in trade 

reporting, potentially resulting in 

increased trade reporting errors and/or 

trade cancellations and corrections. 

A slight variation of the above 

alternative on divergent trade reporting 

requirements would consider trades on 

Alternative Trading System (‘‘ATS’’) 

platforms and other non-ATS trades 

differently, since the speed of reporting 

differs between these two groups of 

inter-dealer trades, with 79.7 percent of 

inter-dealer trades on an ATS platform 

being reported within one minute in 

2022 while only 69 percent of non-ATS 

inter-dealer trades being reported within 

one minute. However, variation of 

requirements could similarly cause 

confusion and may further add burden 

on dealers who may have to maintain 

policies and procedures with multiple 

exception paths. In addition, there is a 

possibility that this alternative may 

impact the competition between ATS 

platforms and other non-ATS platforms. 

Finally, ATS platforms also report 

trades differently, with some ATS 

platforms being the reporting party 

while other ATS platforms let 

participants on the ATS platforms 

report trades directly to RTRS. Hence, 

not all ATS platforms have the same 

reporting procedures. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

On August 2, 2022, the MSRB 

published the 2022 Request for 

Comment to solicit comment on a 

potential amendment to Rule G–14 to 

require that, absent an exception, 

dealers report transactions to an RTRS 

Portal as soon as practicable, but no 

later than within one minute following 

the Time of Trade (the ‘‘Proposal’’).98

The MSRB also published a 

memorandum during the comment 

period for the 2022 Request for 

Comment providing supplemental data 

regarding counts of trade volume and 

time of reporting.99

In response to the 2022 Request for 

Comment, the MSRB received 53 

comment letters from 51 commenters.100


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5403 

Badger’’), dated September 30, 2022; Letter from 

Robert Laorno, General Counsel, ICE Bonds 

Securities Corporation (‘‘ICE Bonds’’), dated 

September 30, 2022; Letter from Robert D. 

Bullington, Vice President, Compliance Officer, 

InspereX LLC (‘‘InspereX’’), dated October 3, 2022; 

Letter from Scott Hayes, President and Chief 

Executive Officer, and Chris Neidlinger, Chief 

Compliance Officer, Institutional Securities 

Corporation (‘‘ISC’’), dated September 30, 2022; 

Letter from Sarah A. Bessin, Associate General 

Counsel, Investment Company Institute (‘‘ICI’’), 

dated October 3, 2022; Email from Darius Lashkari, 

Investment Placement Group (‘‘IPG’’), dated August 

2, 2022; Letter from John Isaak, Senior Vice 

President, Isaak Bond Investments (‘‘IBI I’’), dated 

August 16, 2022; Letter from Donald J. Lemek, Vice 

President—Operations and Chief Financial Officer, 

Isaak Bond Investments, Inc. (‘‘IBI II’’), dated 

October 3, 2022; Email from Mike Kiley, Owner, 

Kiley Partners, Inc. (‘‘KPI’’), dated September 27, 

2022; Letter from Gary Herschitz, Chief Executive 

Officer, Madison Paige Securities (‘‘MPS’’), dated 

September 30, 2022; Email from Christopher Mayes 

(‘‘Mayes’’), dated September 27, 2022; Letter from 

Kathy Miner (‘‘Miner’’), dated October 2, 2022; 

Letter from Randy Nitzsche, President and Chief 

Executive Officer, Northland Securities Inc. 

(‘‘NSI’’), dated October 3, 2022; Letter from James 

W. Oberweis, President, Oberweis Securities, Inc. 

(‘‘OSI’’), dated September 28, 2022; Letter from H. 

Deane Armstrong, Chief Compliance Officer, and 

Joseph A. Hemphill III, Chief Executive Officer, 

Regional Brokers, Inc. (‘‘RBI’’), dated October 3, 

2022; Letter from Robert Blum, President, Robert 

Blum Municipals, Inc. (‘‘RBMI’’), dated September 

16, 2022; Letter from F. Gregory Finn, Chief 

Executive Officer, Roosevelt & Cross, Inc. (‘‘R&C’’), 

dated October 3, 2022; Letter from Christopher 

Ferreri, President, RW Smith & Associates, LLC 

(‘‘RWS’’), dated September 13, 2022; Letter from 

Lee Maverick, Chief Compliance Officer, SAMCO 

Capital Markets, Inc. (‘‘SAMCO’’), dated September 

30, 2022; Letter from Matthew Kamler, President, 

Sanderlin Securities LLC (‘‘Sanderlin’’), dated 

September 27, 2022; Letter from Kenneth E. 

Bentsen, Jr., President and Chief Executive Officer, 

Securities Industry and Financial Markets 

Association and the SIFMA Asset Management 

Group (collectively, ‘‘SIFMA’’), dated October 3, 

2022; Letter from Joseph Lawless, Chief Executive 

Officer, Sentinel Brokers Company, Inc. (‘‘SBC’’), 

dated September 30, 2022; Email from Edward 

Sheedy (‘‘Sheedy’’), dated August 2, 2022; Letter 

from Glen Essert, Stern Brothers & Co. (‘‘Stern’’), 

dated October 3, 2022; Letter from Jesy LeBlanc and 

Kat Miller, TRADEliance, LLC (‘‘TRADEliance’’), 

dated September 28, 2022; Email from William 

Tuma (‘‘Tuma’’), dated August 8, 2022; Letter from 

Nyron Latif, Head of Operations, Wells Fargo 

Wealth and Investment Management, and Todd 

Primavera, Head of Operations, Wells Fargo 

Corporate and Investment Bank, Wells Fargo & 

Company (‘‘Wells Fargo’’), dated October 3, 2022; 

Letter from Keener Billups, Managing Director, 

Municipal Bond Department, Wiley Bros.-Aintree 

Capital (‘‘Wiley’’), dated September 20, 2022; Email 

from Thomas Kiernan, Wintrust Investments, LLC 

(‘‘Wintrust’’), dated August 2, 2022; Email from 

Glenn Burnett, Zia Corporation (‘‘Zia’’), dated 

September 6, 2022. All comments are available at: 

https://www.msrb.org/sites/default/files/2023-03/ 

All-Comments-to-Notice-2022-07.pdf. 

101See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting Requirement.’’ 

102See Dimensional; Tuma. 

103See ICE Bonds at 1; ICI at 2; SIFMA at 2; Wells 

Fargo at 1. 

104Simultaneously with the MSRB’s publication 

of the 2022 Request for Comment, FINRA published 

a request for comment on a proposal to similarly 

shorten FINRA’s TRACE trade reporting timeframe 

for transactions in TRACE-eligible securities (the 

‘‘FINRA TRACE Proposal’’). See FINRA Regulatory 

Notice 22–17 (FINRA Requests Comment on a 

Proposal to Shorten the Trade Reporting Timeframe 

for Transactions in Certain TRACE-Eligible 

Securities From 15 Minutes to One Minute) (Aug. 

2, 2022); see also 2024 FINRA Proposed Rule 

Change. Many commenters responding to the 2022 

Request for Comment also commented on the 

FINRA TRACE Proposal. The discussion of 

comments herein is mostly confined to those 

comments addressing the Proposal or the MSRB. 

105See SIFMA at 4, 7, 17, 21–22. BetaNXT, HJS, 

Hilltop and R&C expressed general support for 

SIFMA’s comment letter. 

106See Dimensional; EH&C at 2; SIFMA at 4, 7, 

17, 21–22. 

107Rather, commenters opposing the Proposal, as 

discussed herein, focused on the shortening of the 

deadline from 15 minutes to one minute. 

108See BDA at 1–2; HJS at 5; SBC at 2. Hilltop 

and R&C expressed general support for BDA’s 

comment letter. 

109See Belle Haven at 7. 

110See SIFMA at 21–22. 

111Transactions would also be required to be 

reported as soon as practicable, as described above. 

Following consideration of the 

comments received and in light of 

ongoing engagement with affected 

market participants, FINRA, the 

Commission and other stakeholders, the 

MSRB determined to file the proposed 

rule change, which incorporates certain 

key modifications to the Proposal 

designed to address many of the key 

concerns expressed by commenters and 

other market participants, including the 

establishment of the two new intra-day 

exceptions 101 to the baseline reporting 

requirement. 

While two commenters expressed 

support for the Proposal,102 and several 

other commenters expressed some 

support for the overall goal and certain 

specific aspects of the Proposal,103 most 

commentors objected to shortening the 

timeframe for reporting from 15 minutes 

to one minute after the Time of Trade. 

The comments received in response to 

the 2022 Request for Comment are 

summarized below by topic and the 

corresponding MSRB responses are 

provided.104

As Soon as Practicable Requirement 

The MSRB sought comment on the 

Proposal’s addition of a requirement 

that trades must be reported as soon as 

practicable. Section (a)(ii) of the Rule G– 

14 RTRS Procedures does not currently 

include the requirement to report trades 

as soon as practicable. Adding this 

requirement would harmonize this 

provision with FINRA Rule 6730(a), 

which currently requires that, with 

certain exceptions, trades in TRACEeligible securities be reported as soon as 

practicable. 

One commenter suggested that the 

MSRB more closely harmonize its trade 

reporting requirements with FINRA’s 

requirements by adopting the existing 

‘‘as soon as practicable’’ provision of 

FINRA Rule 6730(a),105 and most 

commenters addressing this aspect of 

the Proposal supported this change or 

viewed it as consistent with current 

practices.106 No commenter that 

opposed the Proposal noted that the 

addition of the ‘‘as soon as practicable’’ 

language was the basis for such 

opposition.107 Several commenters 

noted that the market already effectively 

reports trades as soon as practicable.108

Another commenter, while not 

explicitly supporting the ‘‘as soon as 

practicable’’ language, supported the 

notion of examining and investigating 

dealers to ensure compliance with such 

standard as an alternative to shortening 

the timeframe for reporting.109 One 

commenter also recommended that the 

MSRB provide supervisory guidance 

that parallels the provisions of 

Supplementary Material .03 of FINRA 

Rule 6730 with respect to the obligation 

to report trades as soon as 

practicable.110

In light of the comments received, the 

MSRB proposes to incorporate the 

requirement that trades be reported as 

soon as practicable into the proposed 

rule change for trades subject to an 

intra-day reporting deadline, as well as 

to require the establishment of policies 

and procedures for complying with the 

as soon as practicable reporting 

requirement in proposed new 

Supplementary Material .03. As 

discussed in ‘‘Purpose—Proposed Rule 

Change—New Requirement to Report 

Trades ‘‘as Soon as Practicable’’ above, 

where a dealer has reasonably designed 

policies, procedures and systems in 

place to comply with this standard, and 

does not purposely withhold trade 

reports if it would have been practicable 

to report such trades more rapidly, the 

dealer generally would not be viewed as 

violating the ‘‘as soon as practicable’’ 

requirement because of delays in trade 

reporting due to extrinsic factors that 

are not reasonably predictable and 

where the dealer does not purposely 

intend to delay the reporting of the trade 

(e.g., due to a systems outage). 

One Minute Timeframe for Reporting 

The MSRB sought comment on 

shortening the timeframe for reporting 

transactions currently required to be 

reported within 15 minutes after the 

Time of Trade to one minute after the 

Time of Trade under the Proposal.111

As noted above, most commenters 

objected to shortening the timeframe for 

reporting from 15 minutes to one 

minute after the Time of Trade, raising 

a number of issues regarding the merits 

of shortening the reporting timeframe, 


lotter on DSK11XQN23PROD with NOTICES2
5404 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

112See Colwell at 3. 

113See BSI at 2; Colwell at 2; ISC at 2; ICI at 3; 

IBI II at 1; SIFMA at 14, 20–21; TRADEliance at 1. 

114See Belle Haven at 5. 

115See HJS at 4 (quoting SIFMA at 9). 

116See HTD at 4. 

117See FIF I at 4. BetaNXT expressed general 

support for FIF’s comment letter. 

118See SIFMA at 7. 

119See supra ‘‘Purpose—Proposed Rule Change— 

Time of Trade Discussion’’ for a discussion of and 

related guidance on the definition of Time of Trade 

under Rule G–14 RTRS Procedures Section (d)(iii). 

120See BB at 1; Colwell at 2; Falcon Square at 1– 

2; FIF I at 2; HTD passim; OSI at 1; TRADEliance 

at 2. 

121See HTD at 5; RWS at 5; Sanderlin at 6. 

122See Baily at 1. 

specific operational aspects of 

implementing a shortened timeframe, 

the range of transactions and dealers 

subject to the new timeframe, and the 

speed and manner of transitioning to a 

general one-minute reporting 

requirement. 

Operational Issues Relating To 

Reporting Within One Minute 

Time of Trade 

In the 2022 Request for Comment, the 

MSRB noted that the time to report a 

trade is triggered at the time at which a 

contract is formed for a sale or purchase 

of municipal securities at a set quantity 

and set price. The 2022 Request for 

Comment asked whether ‘‘Time of 

Trade,’’ as currently defined, is the 

appropriate trigger and, if not, what 

other elements of the trade should be 

established before the reporting 

obligation is triggered. 

One commenter agreed that the 

definition of ‘‘Time of Trade’’ 

referenced in the 2022 Request for 

Comment is the appropriate trade 

reporting trigger.112 Several other 

commenters expressed a desire for 

greater clarity regarding the definition of 

‘‘Time of Trade.’’ 113

A few commenters discussed certain 

trading scenarios in which they believed 

that the ‘‘Time of Trade,’’ as defined by 

the MSRB, would not be the appropriate 

trigger for trade reporting. One 

commenter noted that manual trade 

entry does not necessarily begin at the 

time of execution, particularly for firms 

that manually report trades to the RTRS 

Web Portal.114 This commenter noted 

that a number of issues may arise that 

can result in a delay of the manual trade 

entry process, including information 

gaps due to new or unfamiliar securities 

or having to wait to receive necessary 

information from the other side of the 

transaction. 

Two commenters acknowledged that 

while personalized negotiation 

effectively occurs prior to the formal 

time of execution that marks the 

beginning of the trade reporting process, 

the two stages are inextricably linked.115

These commenters were concerned that 

mandating one-minute trade reporting 

across the board would require a delinking of these two processes, which 

could introduce artificiality into the 

broker-client relationship and hinder 

execution until adequate technological 

advances are developed. Another 

commenter argued that the primary 

consideration should be the business 

method used in trade execution, such as 

in the case of the business model of a 

voice broker. This commenter provided 

an example of a one-on-one transaction 

created between a buyer and seller 

when a dealer executes a trade with a 

customer, and contrasted this with an 

intermediated trade by a voice dealer 

that includes multiple components. For 

these types of intermediated trades, the 

commenter noted that perhaps an 

appropriate trigger would be when the 

intermediate transaction is complete 

(e.g., when all underlying trades of the 

intermediate transaction are 

executed).116

One commenter noted that if dealers 

are not permitted 15 minutes to report 

manually executed trades, a firm that 

wants to continue to execute trades 

manually might need to reach an 

agreement or understanding with its 

customers that the execution time for a 

trade agreed to by telephone, instant 

messaging or chat communication is the 

time that the firm inputs the trade into 

the firm’s books and records in a 

systematized format for reporting to 

RTRS without manual input.117

Another commenter noted that 

current fixed income trade matching 

processes are not keyed off of time of 

execution, which would naturally have 

an impact on the degree of precision of 

the time of trade execution data when 

looking at finer time gradations, such as 

within a single minute.118

The MSRB is not seeking to amend 

the definition of ‘‘Time of Trade’’ in 

conjunction with the proposed oneminute reporting requirement. However, 

the MSRB has provided a discussion of 

certain factors that may be relevant to 

determining the Time of Trade that 

should address many of the concerns 

that the shorter reporting timeframe 

would create greater pressure and 

require greater precision in determining 

the Time of Trade.119 The MSRB 

believes that its use of the term ‘‘Time 

of Trade’’ is appropriate and consistent 

with how that term is understood by 

FINRA in connection with the reporting 

of TRACE-eligible securities to TRACE 

under applicable FINRA rules, and that 

the guidance provided herein would 

provide more assurance for dealers in 

determining the Time of Trade with 

greater clarity and precision. 

Automation of Trade Execution and 

Reporting 

The 2022 Request for Comment noted 

that 76.9 percent of trades in 2021 

subject to the existing 15-minute 

reporting requirement were reported 

within one minute and requested input 

on whether there are any commonalities 

with the trades that were reported 

within one minute or reported after one 

minute. The 2022 Request for Comment 

also noted that, based on the MSRB’s 

analysis, trades conducted on ATS 

platforms in 2021 were reported in less 

time than trades not conducted on ATS 

platforms (‘‘non-ATS trades’’), with 84.4 

percent of inter-dealer trades conducted 

on an ATS platform being reported 

within one minute while only 74.9 

percent of non-ATS trades were 

reported within one minute. The 2022 

Request for Comment sought 

information on the reason(s) it takes 

more time to report non-ATS trades. 

Commenters generally noted that the 

commonalities in the trades reported 

within one minute or after one minute 

depend on the extent of human 

intervention required to execute and 

report a trade.120 In general, these 

commenters acknowledged that faster 

reporting may be achieved for the 

remaining approximately 20–25 percent 

of trades depending on the level of 

automation of trades with more straightthrough processing and progressively 

reduced human intervention. 

Commenters generally agreed that the 

shorter reporting times of ATS trades 

are the result of those trades being 

executed on a fully automated and 

connected trading venue.121 They 

acknowledged that in a connected 

system, trades flow automatically and 

timing is almost instantaneous, with 

little to no manual intervention.122 In 

contrast, these commenters 

acknowledged that trades executed 

away from an ATS take more time to 

report due to higher levels of human 

intervention. 

The MSRB understands that 

automated processes currently play a 

significant role in facilitating rapid 

reporting of trade information to RTRS. 

The MSRB is aware, both through its 

own statistics and from input from 

commenters, as more fully discussed 

below, that trades that involve full 

automation through the trade execution 

and reporting process typically achieve 

near instantaneous trade reporting that 

is already consistent with the proposed 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5405 

123See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component’’ for a discussion of and related 

guidance on trades having a manual component. 

124See e.g., ASA at 4–5; Bailey at 2; C&C at 1; 

and FIF I at 1–2; HTD passim; HJS at 2–4; ISC at 

2; IBI I at 1; KPI at 1; Mayes at 1; RBMI at 1; RWS 

at 1–5; SAMCO at 1–2; SIFMA at 8–12, 24; SBC at 

1–2; TRADEliance at 2; Wells Fargo at 3; Wintrust 

at 1. Hilltop, Honey Badger, MPS and RBI expressed 

general support for ASA’s comment letter. 

125See FIF at 2. 

126 ISC at 2. 

127See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component’’ discussing the proposed exception for 

trades with a manual component. 

128While the MSRB believes that the exception 

for trades with a manual component effectively 

addresses the core issues raised in the comments 

described in Subsections (1) through (6) below, the 

MSRB also addresses certain other related 

comments not fully resolved by such exception in 

‘‘One Minute Timeframe for Reporting—Potential 

Negative Consequences of the One Minute 

Requirement.’’ 

129See e.g., ASA at 3–4; AMUNI at 1; Bailey at 

1; BDA at 2; Cambridge at 4; Colwell at 3; HTD 

passim; FIF at 3, 4; HJS 2, 5; InspereX at 3–5; ICI 

at 3, 4, 7, 9, 11; IBI I at 1; RBMI at 1; RWS at 1– 

5; SAMCO at 1–2, 4; SIFMA at 5, 8, 11, 15, 24; SBC 

at 2; Wells Fargo at 3; Wintrust at 1. 

130See Wells Fargo at 3. 

one-minute timeframe, but that other 

trades face higher challenges to 

achieving one-minute reporting. As 

discussed previously, the MSRB 

reminds dealers seeking to comply with 

the proposed rule change—including 

the one-minute reporting requirement 

and new or existing exceptions from 

such requirement—that they should 

consider the extent to which they can 

automate their trade reporting and 

related execution processes, consistent 

with their clients’ needs and the dealers’ 

best execution and other regulatory 

obligations.123

Manual Steps in the Negotiation, 

Execution and Reporting Process 

Several commenters raised issues 

about the potential impact of the 

proposed rule change on trades that are 

negotiated by voice and/or where the 

reporting process includes one or more 

manual components in execution or 

trade reporting, such as in the case of 

large block trades that require 

subsequent allocation, portfolio trades 

or other types of complex trades that 

require some form of human 

intervention.124 These commenters 

generally agreed that while manual 

trades represent a relatively small 

percentage of trades by trade count, for 

the types of trades identified above, a 

dealer may not be able to input and 

verify trade data within one minute if 

that process involves human 

intervention. These commenters further 

asserted that the proposed rule change 

would disproportionately impact firms 

that accept orders that are not 

electronically entered into an order 

management system (including orders 

received via telephone or instant 

message) and would effectively prohibit, 

by trade reporting rule, an entire 

category of transactions that are 

otherwise customary industry practice. 

These commenters also noted that this 

practice was particularly important to 

the municipal securities industry where 

large institutional trades or block trades 

are more likely to be negotiated and 

executed by voice and processed 

manually. 

Another commenter argued that in 

most cases, it is not financially feasible 

for a firm to report a trade to RTRS or 

TRACE within one minute if the trade 

has been executed manually. This 

commenter noted that manual trading is 

common in the very large universe of 

fixed income securities for various 

reasons.125 One commenter noted that 

the only way for a trade to be entered 

within 60 seconds is if two opposing 

traders are on the phone at the same 

time and they agree to drop their tickets 

at that very moment and input the data 

immediately.126

The MSRB recognizes that for some 

trades in the municipal securities 

market, the trade details are entered 

manually due to the inherent nature and 

characteristics of such trades. The 

MSRB also understands that voice and 

electronic communications as a means 

of trade execution that are not utilizing 

straight-through processing or are not 

part of an automated trade execution 

and reporting process are common for 

the municipal securities market. For 

these trades, the trade reporting process 

might be difficult or impossible to 

complete within one minute following 

the time of trade, even where the dealer 

has established efficient reporting 

processes and commences reporting the 

trade without delay. 

As outlined below, commenters 

discussed a number of specific scenarios 

involving such communications or other 

manual steps in the process of executing 

and reporting trades for which 

shortening the trade reporting timeframe 

could, in their view, potentially result 

in adverse consequences. 

To address these concerns, including 

the specific aspects raised by 

commenters outlined in subparagraphs 

below, the MSRB has included in the 

proposed rule change an exception from 

the proposed one-minute trade reporting 

timeframe for trades with a manual 

component, which would retain the 

existing 15-minute deadline for the first 

year in which the proposed rule change 

is effective and then provide for a 

measured decline in the timeframe to 

five minutes beginning two years after 

such effectiveness, as discussed in 

greater detail herein.127 This phased 

approach would provide dealers 

effecting trades with a manual 

component with a phased approach to 

achieving compliance that, the MSRB 

believes, appropriately addresses the 

concerns that commenters expressed.128

Voice and Negotiated Trading 

Many commenters expressed concern 

about the potential impact of the 

Proposal specifically on voice and 

negotiated trading, asserting that, unlike 

equity markets, business in fixed 

income markets is often conducted 

through voice negotiations, for 

institutional customers as well as 

certain retail investors.129

One commenter that is a dual 

registrant as a dealer and investment 

advisor noted that an accelerated trade 

reporting regime would negatively 

impact market participants that 

continue to prefer manually negotiated 

trades for some portion of their fixed 

income trading activity. While 

acknowledging that the volume of fixed 

income trades executed electronically 

has risen, this commenter stated that 

many investors still prefer to trade with 

dealers by voice or electronic message 

(manually negotiated trades) rather than 

on an electronic platform to benefit from 

receiving input on market color, 

including credit information and 

information about comparable bonds 

trading in the market. The commenter 

stated that some investors may also 

prefer to negotiate on price directly 

because they are executing block-size 

trades or portfolio trades. This 

commenter stated that trades negotiated 

and executed manually (by voice or 

electronic message) take longer to input 

and report in comparison to trades 

executed electronically. This 

commenter further noted that a oneminute reporting requirement would 

present a variety of process-oriented, 

timing, and operational challenges, 

especially for a trading desk engaging 

with multiple clients simultaneously 

and, therefore, the proposed 

acceleration of reporting could alter the 

efficiency of fixed income markets.130

One commenter noted that the issue 

is not that dealers that execute larger 

trades are using inefficient processes but 

that such trades are typically executed 

by institutions using voice brokers. This 

commenter also noted that there is a 

difference between institutional, voice 

brokered fixed income markets and 

retail fixed income markets with respect 


lotter on DSK11XQN23PROD with NOTICES2
5406 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

131See SAMCO at 1–2. 

132See SIFMA at 14–16. 

133See ICI at 13 n.41. 

134 Id. at 9 n.30. 

135See RWS at 1; see also SIFMA at 15. 

136See RWS at 1. 

137See AMUNI at 2; BSI at 3; BetaNXT at 5; HJS 

at 4; ICI at 6, NSI at 1, RWS at 3; SIFMA at 10, 15, 

19, Wells Fargo at 2–4. 

138See Wells Fargo at 2–3. 

139See SIFMA at 15. 

140 Id. 

141See BSI at 2; BB at 1; ICI at 13 n.41; FIF I at 

4; SIFMA at 14–15; Wells Fargo at 4. 

142See BSI at 2; BB at 1; FIF I at 4; HJS at 6; 

SIFMA at 14–15; Wells Fargo at 4. 

143See FIF I at 4. 

to the manner in which trades in these 

markets are negotiated, executed and 

processed. This commenter expressed 

concern that one-minute reporting 

would effectively eliminate voice 

trading.131

Larger-Sized Trades 

The 2022 Request for Comment noted 

that larger-sized trades take longer to 

report than smaller-sized trades and 

requested input on the reason(s) it takes 

a firm that reports larger-sized trades 

more time to report a trade (e.g., voice 

trades). The MSRB also asked if dealers 

and investors would need process 

changes for executing and/or reporting 

larger-sized trades in a shorter 

timeframe and if so, how. 

A commenter stated that many small 

trades are executed on electronic 

platforms and require minimal, if any, 

manual intervention, allowing many 

smaller trades to be executed and 

reported almost instantly. In contrast, 

the commenter stated that larger trades 

typically require traders to negotiate and 

confirm details with a client and 

manually enter the transaction into risk 

and reporting systems. This commenter 

noted that large trades generally require 

greater focus on risk management to 

promptly source and accurately hedge 

the transaction in question, and an 

inability for firms to manage their risk 

could hamper firms’ willingness to 

incur risk, which could dampen 

liquidity, increase systemic risk if 

dealers become less capable of hedging 

on a timely basis and reduce execution 

quality for the institutional investor.132

A trade association commenter 

representing regulated investment funds 

with members that are participants in 

the municipal securities market noted 

that many of its members send large 

trades to dealers that are worked 

throughout the day, which may have 

implications for dealers’ ability to report 

transactions within one minute or an 

otherwise shortened timeframe.133 This 

commenter also noted that certain 

characteristics of trades, particularly 

large trades and trades in less liquid 

securities, are often done via ‘‘high 

touch’’ methods such as voice protocol, 

often involving negotiation as to prices 

and size of the trade.134

Mediated Transactions 

One commenter identified itself as a 

broker’s broker that engages in mediated 

transactions with other dealers to 

facilitate anonymity. It noted that these 

mediated trades are often voice 

negotiated and require manual 

intervention and processing from the 

point of execution through the clearance 

and settlement processes. The 

commenter stated that these trades are 

not reported within five minutes of 

execution, especially for trades 

involving multiple counterparties, but 

that dealers use their best efforts to 

report their trades as soon as 

practicable. The commenter noted that 

processing of such trades is typically 

manual given the complexities of 

mediated institutional transactions.135

This commenter further asserted that 

broker’s brokers and other inter-dealer 

brokers often are tasked by their dealer 

clients to anonymously facilitate trades 

in numerous different credits as part of 

the clients’ trading needs on behalf of 

their own customers, requiring reports 

of a large number of trades executed at 

the same time. The commenter added 

that in some cases a transaction involves 

the simultaneous purchase of a security 

and a hedge or other corresponding 

security with multiple counterparties 

(e.g., buyer and seller is intermediated 

by a broker’s broker). The commenter 

stated that, to the extent that all of these 

securities have a one-minute reporting 

requirement, both set of trades would 

need to be reported within the same 

minute, which may be functionally 

impossible.136

Block Trades and Trade Allocations 

A few commenters expressed 

concerns about large block trades 

executed by firms that are dual 

registrants as dealers and investment 

advisers, noting that these large trades 

must be further allocated to their 

advisory customers. They noted that 

large block trades may be executed 

contemporaneously with one or more 

counterparties, usually through voice 

negotiation and a coordinated effort, 

and the allocation may involve several 

additional smaller transactions with 

multiple customers to fully reflect the 

deal and may potentially involve 

multiple systems.137

Specifically, one commenter noted 

that a trade reporting exception is 

necessary for block trades executed by 

a dealer and allocated to client accounts 

of a registered investment adviser that is 

part of the same legal entity. This 

commenter noted that as a dual 

registered dealer and investment 

adviser, it regularly executes and reports 

block trades and allocates portions of 

those trades to individual advisers’ 

client accounts and the sub-account 

allocations are executed at the same 

price as the initial block trade.138

Another commenter noted that when a 

dually-registered dealer/investment 

adviser purchases a large block from the 

secondary market, it must report the 

block trade to RTRS and also report 

each allocation to the sub-accounts held 

in its investment adviser capacity, 

including managed retail customer 

accounts.139 This commenter stated that 

the reporting issues presented by such 

allocations are similar to those for the 

reporting of portfolio trades, particularly 

the difficulty of reporting potentially 

thousands of portfolio trades or 

allocations within a one-minute 

reporting paradigm, as described 

below.140

Portfolio Trades and Trade Lists 

Multiple commenters noted that 

dealers may receive large orders and 

trade lists that involve rapid execution 

and frequent communications on 

multiple transactions with multiple 

counterparties. They stated that these 

trades may be executed as a series of 

trades that then must be entered into the 

system one-by-one and could be 

difficult to report within one minute 

following the Time of Trade.141 In 

addition, several commenters noted that 

some transactions including large blocks 

of transactions such as portfolio 

transactions may be subject to a firm’s 

internal approval processes for risk and 

regulatory compliance and additional 

due diligence by way of, for example, a 

second review to ensure accuracy.142

One trade association commenter 

noted that its members execute and 

report their portfolio trades 

electronically because of the challenges 

presented by manually inputting a large 

number of trades within a limited time 

period.143 In contrast, another trade 

association commenter stated that many 

customers engaging in portfolio trades 

seek to do so through personalized 

negotiation rather than through 

electronic venues, due in part to the 

complexity of counterparties assessing 

potentially thousands of different 

securities without the targeted 

interactions that occur in personalized 

negotiation, and because of concerns 

about potential pre-execution leakage of 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5407 

144See SIFMA at 14. 

145See Wells Fargo at 4. 

146See ICI at 13 n.41. 

147See ASA at 5; Bailey at 1; BetaNXT at 4; 

Colwell at 2, 4; ISC at 2, RWS at 4; SAMCO at 3; 

Sanderlin at 6–7. 

148See FIF I at 8. 

149See ICI at 4 n.9. 

150See Bailey at 1; BetaNXT at 3–4; BB at 1–2; 

Cambridge at 2; ISC at 2; RWS at 5; Sanderlin at 

6; SIFMA at 11–12; TRADEliance at 2. 

151See FIF I at 8; SAMCO at 3; SIFMA at 22–23; 

Wells Fargo at 4; Zia at 1. 

152See SAMCO at 3. 

153See SIFMA at 22. 

154See Zia at 1. 

155See FIF I at 6–7 nn.25–28. 156See BSI at 2; Colwell at 2; Falcon Square at 

1–2; HTD at 6; Hilltop at 1; RBMI at 1; Wells Fargo 

at 4. 157See BSI at 2. 158See Sanderlin at 6. 

information regarding the nature of the 

investor’s positions and trading 

strategies from electronic trading 

venues.144

One commenter noted that dealers 

often provide liquidity for portfolios of 

bonds, including portfolios with more 

than one hundred individual bonds. 

This commenter asserted that under a 

one-minute reporting rule, dealers may 

not be able to execute these types of 

portfolio trades at one point in time and 

report the trades in a timely manner. 

The commenter advocated for an 

exception for portfolio trades and for 

instances where market participants 

solicit actionable bids or offers on 

multiple securities, such as a portfolio 

trade or a ‘‘bid wanted’’ list.145

Another trade association commenter 

representing regulated investment funds 

with members that are participants in 

the municipal securities market noted 

that some of its members engage in 

portfolio trades, which require members 

to give certain information to dealers, 

and that this may have implications for 

those dealers’ ability to report 

transactions within one minute or an 

otherwise shortened timeframe and 

encouraged the MSRB to fully explore 

potential operational issues.146

Trading a Bond for the First Time/ 

Security Master Issues 

The 2022 Request for Comment 

sought information on any necessary 

process(es) a dealer needs to complete 

before trading a bond for the first time 

that could impact the ability to report a 

trade within a reduced timeframe (e.g., 

querying an information service 

provider to obtain indicative data on the 

security). 

Many commenters were concerned 

about delays introduced by trades of 

newly issued or infrequently traded 

securities where the security reference 

information or indicative data is not 

already available within the firm’s or 

the clearing firm’s security master.147

One trade association commenter 

advocated that the MSRB provide an 

exception for a security that may not be 

in a firm’s security master at the time 

the trade is executed. It also maintained 

that this exception should extend to 

instances where a firm maintains 

separate security masters for different 

customers.148 Another trade association 

commenter noted that one-minute 

reporting may raise practical challenges 

for certain asset classes, citing as an 

example, the municipal securities 

market as being characterized by a large 

number of individual security 

references, many of which are 

infrequently traded.149

Relatedly, some commenters noted 

that the absence of a centralized global 

security master for municipal securities 

introduces delays in the trade execution 

and reporting process and advocated for 

the MSRB to consider hosting a security 

master for municipal securities.150 A 

few commenters suggested that a oneminute trade reporting deadline would 

be more practicable if the MSRB hosted 

a security master or hosted a securities 

master jointly with FINRA.151 One 

commenter stated that most market 

participants, including large clearing 

firms, do not have the entire municipal 

securities market reference information 

in their database, with new security 

references created daily and old 

securities maturing. This commenter 

noted that, in general, if a security is not 

set up in a security master, it is because 

there has not been a past transaction at 

the dealer or clearing firm, and the time 

necessary to process the set-up of a 

security in the security master greatly 

exceeds one minute.152 A trade 

association commenter observed that its 

members state that it takes almost all of 

the allotted 15 minutes to query an 

information service provider to upload 

the missing security master information 

and indicative data to refresh their 

securities master, then submit the trade 

report.153 Another commenter stated 

that some back-office systems that 

provide the connection to the MSRB for 

reporting of corresponding trades also 

require the security master update to be 

performed manually and therefore 

cannot report a received trade within 

one minute.154

The exception for trades with a 

manual component is designed to 

address these concerns as described 

above. While the MSRB acknowledges 

the suggestion that it host a global 

security master for use by dealers in 

reporting trades to RTRS, and while the 

MSRB continues to focus on making its 

market transparency systems more 

useful for market participants, the 

MSRB would not at this time be 

instituting such a global security master 

in connection with the proposed rule 

change. 

Multiple Layers in Reporting Process 

A commenter opined that the current 

RTRS workflow is not suitable for 

reporting trades within a one-minute 

time frame due to multiple layers (i.e., 

third-party vendors and systems) that 

trade reports often pass through before 

they are received by RTRS. This 

commenter identified the various layers, 

including submission of the trade by the 

executing firm to RTTM; if an executing 

firm is not a clearing firm, the need to 

have the clearing firm report the 

executing firm’s trade to RTTM; and, if 

the clearing firm outsources the trade 

reporting function to a service provider, 

such provider must make the 

submission in the format accepted by 

RTRS. To address limitations faced by 

some vendors, this commenter 

advocated for allowing trade 

submissions of municipal securities to 

be made directly to TRACE using FIX, 

rather than RTRS, or that the 

implementation period for the RTRS 

reporting changes be postponed until a 

reasonable period after the TRACE 

reporting changes proposed in the 

FINRA TRACE Proposal have been 

implemented to avoid dealers being 

overburdened with implementing 

reporting changes for two different 

systems at the same time.155 Other 

commenters expressed similar concerns 

regarding the reliance on a third party 

for clearing and trade reporting.156

One commenter noted that while 

many firms use semi-automated 

systems, many others use a manual 

system to execute trades with their 

clearing firm, and that converting to a 

fully automated system is far too 

expensive and therefore an impractical 

solution for many firms.157 Another 

commenter stated that it relies on a 

third party for clearing and trade 

reporting to RTRS, and such clearing 

firm performs the trade reporting within 

one minute of the time the trade is 

submitted by the dealer using the 

clearing firm’s order entry system. 

However, this commenter states it does 

not have an automated order entry 

system, indicating the trade may be 

input into the clearing firm’s order entry 

system after the time of trade and entails 

manual steps.158 A third commenter 

noted that the industry generally fulfills 

the regulatory trade reporting obligation 

further downstream in the trade 


lotter on DSK11XQN23PROD with NOTICES2
5408 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

159See SIFMA at 20–21. 160See Colwell at 4; SAMCO at 1; HTD at 6; RWS 

at 5. 161See Colwell at 2. 162See id.; FIF I at 6–7; FIF II at 1–2; SIFMA at 

23–24. 

163See https://www.msrb.org/System-Status. 

164See ASA at 5; BB at 1; Cambridge at 3; Colwell 

at 2; EH&C at 1–2; HJS at 2–3; ICI at 12–13; IBI II 

at 1–2; Miner at 1; SIFMA at 15–17. 

165 InspereX at 5. 

166 Id. at 5–6. Accord. Cambridge at 3; HTD at 6; 

RWS at 5; SAMCO at 2. 

167ASA at 5. See also SIFMA at 17. 

168See SIFMA at 16. 

169See Colwell at 2; HJS at 2–3; ICI at 12–13; 

InspereX at 6; Miner at 1. 

170 ICI at 12–13. 

171See SIFMA at 16. 

management process, and that 

industrywide processes may need 

further rearchitecting and significant reengineering of systems to move trade 

reporting upstream. This commenter 

noted that this problem is of particular 

concern for firms that rely on third 

parties for trade reporting or for firms 

that employ systems that, by design, 

report trades through their respective 

back-end systems.159

Trades Reported Through RTRS Web 

Interface 

The MSRB noted that submitting 

transactions to RTRS directly through 

the RTRS Web interface takes longer. 

The 2022 Request for Comment sought 

information regarding the average 

amount of time required to report a 

trade through the RTRS Web interface, 

how the MSRB could improve the 

process for reporting through the RTRS 

Web interface and the instance(s) in 

which a dealer might choose to or need 

to use the RTRS Web interface. 

A few commenters noted that their 

trades are reported electronically by 

their clearing firms and that they do not 

normally report trades via the RTRS 

Web interface.160 One commenter noted 

that, at least until alternative methods of 

reporting trades are developed to allow 

dealers to efficiently and effectively 

report the types of trades that they 

currently report manually, retaining but 

considerably improving the existing 

web interfaces is necessary.161 The 

commenter requested greater 

transparency in system outages and 

performance degradations, heightened 

service level agreements and 

emphasized that dealers should not be 

penalized for MSRB system outages. 

Similarly, some commenters noted that 

there may be issues external to MSRB 

systems, including internet and other 

types of broad-based or localized 

outages or degradations outside the 

control of dealers that may sometimes 

interfere with their ability to make 

timely trade reports through the SRO 

web interfaces, which would be 

increasingly problematic with any 

potential shortening of the trade 

reporting window.162

The RTRS Web interface is one of 

three available RTRS Portals under Rule 

G–14 RTRS Procedures Section (a)(i)(B) 

(RTRS Web Portal or RTRS Web) and 

would be maintained as such under the 

proposed rule change. The MSRB will 

continue to explore ways in which to 

assure RTRS Web’s reliability and 

efficiency for use. With regard to 

systems outages, the MSRB maintains a 

Systems Status Page on the MSRB 

website,163 which indicates the current 

operational status of each of the MSRB’s 

market transparency systems and 

related supporting systems and provides 

any then-applicable status updates. In 

addition, users are able to access a 

historical catalogue of past MSRB 

systems outages through the Systems 

Status Page. 

Potential Negative Consequences of the 

One Minute Requirement 

Accuracy of Information Reported and 

Potential Data Entry Errors 

The MSRB requested input on 

whether reducing the timeframe to as 

soon as practicable, but no later than 

within one minute after the Time of 

Trade, would affect the accuracy of 

information reported and/or the 

likelihood of potential data entry errors 

and if so, the reason for such impact. 

A number of commenters predicted 

that a rapid transition to a one-minute 

standard would result in increased 

errors and corrections in trade reporting 

as well as late trade reporting that 

would lead to increased enforcement 

action.164 One commenter observed that 

the current 15-minute reporting 

timeframe allows for traders to 

adequately review trade tickets for 

errors in settlement, price, amount, and 

similar data fields. This commenter 

stated that, even with the current 15- 

minute reporting window, human errors 

in completing trade tickets often lead to 

trade cancellations and 

modifications.165 Some commenters 

noted that reducing the trade reporting 

time to one minute would likely have a 

detrimental effect on reporting accuracy 

because market participants would be 

far more concerned with timely 

reporting than reviewing for accurate 

trade information.166 Other commenters 

expressed the concern that, if the 

Proposal were to be adopted, firms may 

not have sufficient time to correct errors 

and would therefore be in violation of 

trade reporting requirements.167

One commenter expressed concern 

that portfolio trades with potentially 

thousands of unique securities might 

overwhelm the error and correction 

process, or result in a surge of late trade 

reports, if placed under a one-minute 

reporting standard. This commenter 

stated that, depending on the nature of 

an adjustment or other small change in 

terms in the context of a portfolio trade, 

that single adjustment might result in 

the need for trade reporting correction 

for all the reported trades for the basket 

of securities within the portfolio.168

Additional commenters felt that the 

dissemination of inaccurate data caused 

by rushed reporting would be 

detrimental to the MSRB’s goal of 

increased market transparency.169 One 

of these commenters stated that, if a 

sizable percentage of trades must be 

revised or are reported late due to 

practical limitations regarding dealer 

operational workflow, this could result 

in inaccurate data being reported to the 

MSRB and disseminated publicly, thus 

undercutting a key purpose of adopting 

the shortened reporting timeframes.170

A commenter noted that large trades 

require a higher level of review than 

other trades and, as a result, large trades 

could land in error queues or other 

queues for manual reviews for margin or 

credit issues. The commenter stated that 

it would be extraordinarily difficult to 

engage in these types of reviews in an 

effectively instantaneous manner as 

would be required under a one-minute 

reporting regime. This commenter 

further stated that ensuring that large 

trades are executed accurately is 

critically important not only because of 

the higher financial stakes inherent in 

large trades, but also because the larger 

trades are often viewed by the market as 

the most informative, as to current price 

levels, have the greatest influence on 

market indices and generally set market 

tone. The commenter believed that the 

Proposal, if adopted, could significantly 

curtail parties’ ability to engage in 

manual handling of trades and would 

have negative impacts on risk 

management and liquidity, with, at best, 

little to no actual benefit to the overall 

quality of market data.171

The MSRB believes that the degree to 

which a shortened trade reporting 

timeframe might result in a greater 

prevalence of the reporting of inaccurate 

information is significantly ameliorated 

by the inclusion of the two new 

reporting exceptions under the 

proposed rule change since the most 

likely circumstances where the risk of 

errors could be heightened would be in 

the case of trades with a manual 

component or trades by dealers that 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5409 

172See Hilltop at 1; ICI at 10; R&C at 1; SIFMA 

at 11, 15–16. 

173See SIFMA at 11, 15–16. 

174See ASA at 5; AMUNI at 1; BSI at 2; HJS at 

5; ISC at 2; IBI II at 1–2; SAMCO at 2; SIFMA at 

9; SBC at 2. 

175See BSI at 2. 

176See HJS at 5. 

177See ASA at 5. 

178See ASA at 3–4; AMUNI at 1; Belle Haven at 

2–7; BSI at 1; BDA at 3–4; Cambridge at 3–4; CRI 

at 1; DeRobbio at 1; EH&C at 1–2; Falcon Square at 

1; F&A at 1; HCM at 1; HBIS at 1; ICE Bonds at 1; 

InspereX at 1–2; ISC at 2–3; IPG at 1; IBI I at 1; IBI 

II at 1–2; KPI at 1; Miner at 1–2; NSI at 1; OSI at 

1–2; RBMI at 1; SAMCO at 3–4; Sanderlin passim; 

SIFMA at 4–8, 12–13; SBC at 1–2; TRADEliance at 

1–2; Wiley at 1–2; Wintrust at 1; Zia at 1. 

179See SBC at 1; see also ASA at 1. 

180See BDA at 3. 

181See NSI at 1. 

182See ISC at 1; NSI at 1. 

only engage in limited municipal 

securities trading activities. Under the 

exception for trades with a manual 

component, the existing 15-minute 

deadline would be retained for the first 

year in which the proposed rule change 

is effective and then decline in phases 

to five minutes beginning two years 

after such effectiveness to provide 

dealers adequate time to adjust their 

processes and systems. The exception 

for dealers with limited trading activity 

would retain the current 15-minute 

timeframe and therefore there would be 

no appreciable impact on the accuracy 

of trade reports for such dealers’ 

transactions. 

Impact on Risk Management and 

Hedging 

Several commenters articulated 

concern that one-minute trade reporting 

would result in a decreased ability of 

dealers to manage risks through timely 

hedging activity. These commenters 

noted that unlike securities that are 

purchased and sold to customers almost 

immediately, securities that are held in 

a firm’s own inventory may require 

additional coordination and diligence to 

hedge those positions or take down a 

hedge when the position is unwound.172

One commenter noted that institutional 

clients and/or dealers trading in blocks 

often need to simultaneously take action 

to hedge their risk on such trades, 

particularly during periods of volatility. 

This commenter expressed concern that 

the need for dealers to attend to trade 

reporting to meet a one-minute 

requirement on their fixed income 

trades in lieu of immediately focusing 

on hedging or assisting institutional 

clients with their own hedging would 

have an adverse impact on such 

efforts.173

Based on the comments received on 

the 2022 Request for Comment, the 

MSRB believes that such risk 

management or other hedging activities 

typically occur during the course of the 

types of municipal securities 

transactions that commenters identified 

as requiring manual or other human 

intervention. Such trades would, in 

many cases, qualify for the exception for 

trades with a manual component, 

thereby providing dealers with a phased 

approach to reducing the reporting 

timeframe to an eventual five minutes in 

a manner that should allow such dealers 

to put in place appropriate process or 

systems changes that would 

significantly mitigate these concerns. 

Impact on Best Execution Obligations 

Many commenters also expressed 

concern that compliance with the 

proposed rule change would negatively 

impact some firms’ best execution 

obligations.174 For example, one 

commenter noted that it built out a 

semi-automated system to incorporate 

the human element, purposely relying 

on a person to check and verify several 

factors before trade execution, so that its 

process protocol reduces trade error 

frequency and helps ensure compliance 

with due diligence, best execution and 

other obligations.175 Another 

commenter noted that, due to the 

human factor of voice brokerage 

activities and the impracticability, if not 

impossibility, of automating these 

modes of trading, any attempt to 

decrease reporting time would require 

additional personnel to essentially 

shadow traders, preparing tickets and 

performing accuracy checks, best 

execution checks and suitability checks, 

while the trader is verbally negotiating 

the terms of the transaction with the 

counterparty or broker. This commenter 

expressed concern about the ongoing 

costs as well as the practicality of such 

shadowing of traders.176 One 

commenter noted that the Proposal 

could create an incentive for firms to 

‘‘auto-route’’ more orders to help with 

compliance, resulting in fewer 

individuals at such firms being involved 

with handling orders with the potential 

consequences for price improvement 

and best execution obligations.177

While it is likely that many dealers 

fulfill their best execution obligations 

under MSRB Rule G–18 using processes 

that would not normally have an impact 

on the timing of trade reporting of 

individual transactions, the MSRB 

understands from commenters that 

some dealers may have instituted 

processes with respect to their best 

execution obligations that include 

manual steps or require other human 

intervention occurring after the Time of 

Trade and therefore could have an 

impact on the timing of trade reporting. 

The MSRB believes that the exception 

for trades with a manual component 

would provide dealers that use such a 

post-trade best execution process with a 

phased approach to reducing the 

reporting timeframe to an eventual five 

minutes in a manner that should allow 

them to make any appropriate 

adjustments to such process that would 

significantly mitigate these concerns. 

Burden on Dealers That Report a Small 

Number of Trades 

The MSRB noted that, on average, 

dealers that report a smaller number of 

trades per year take longer to report 

trades than dealers that report a larger 

number of trades and requested 

information on the reason(s) it takes a 

firm that reports a small number of 

trades more time to report a trade and 

if and how their processes need to 

change to report trades in a shorter 

timeframe. 

Commenters generally agreed that 

many small dealers manually input 

their trades into RTRS because their 

trade volume does not warrant the cost 

to employ automated solutions and that 

manually inputting trades means the 

reporting process takes longer because 

all of the required information must be 

keyed in by a human.178 Commenters 

argued that a significant increase in 

costs would disproportionately impact 

small dealers.179 One commenter noted 

that shortening the reporting deadline 

would eliminate manual entry and 

human intervention and force small 

firms to use expensive front-end trade 

order management systems.180 Another 

commenter stated that the municipal 

securities market lacks a cost-effective 

software solution for all dealers to 

comply with the Proposal and any new 

system would have to be implemented 

over existing technology. It stated that 

the prohibitive cost would reduce 

participation and efficiency in the 

market.181 Commenters noted that this 

would impose a disproportionate 

financial burden on small- and mediumsized dealers, as they would have to 

invest a significant amount of capital to 

comply with the Proposal. As a result, 

these commenters expressed concern 

that many small dealers including those 

with regional knowledge may exit fixed 

income secondary trading. The 

commenters noted that this exit would 

lead to a further concentration of 

municipal bond trading among the 

largest dealers in the industry.182 A 

commenter opined that this would, in 

turn, reduce competition, concentrate 


lotter on DSK11XQN23PROD with NOTICES2
5410 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

183See BDA at 3–4. 

184See SIFMA at 12; see also Belle Haven at 5. 

185See Belle Haven at 5. 

186See ISC at 2. 

187See SIFMA at 12. 

188See Stern at 1; SIFMA at 12. 

189See Stern at 1. 

190See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Dealers with Limited 

Trading Activity’’ discussing the proposed 

exception for dealers with limited trading activity. 

191See ICE Bonds at 1. 

192See Bailey at 1; BSI at 2–3; Colwell at 3; 

TRADEliance at 2. 

193See HJS at 2; see also ICI at 10. 

194See, e.g., BDA at 4; FIF I at 2; HJS at 2. 

195See Wells Fargo at 2, 4. 

196See SIFMA at 17–18; FIF I at 7–8. 

197See SIFMA at 17. In addition to primary 

market transactions, these exceptions relate to 

trades in short-term instruments and ‘‘away from 

market trades’’ (including customer repurchase 

agreement transactions, unit investment trust 

related transactions, and tender option bond related 

transactions). 

198 Id. 

risk among fewer dealers and give the 

remaining dealers more power over 

prices.183

Two commenters argued that while 

small dealers may presently have the 

technology or personnel to handle 

trades within 15 minutes, the move to 

one minute may be beyond the reach of 

many due to the fact that they likely 

lack the necessary resources to 

implement the requisite technological 

changes and acquire any other necessary 

resources.184 One commenter explained 

that smaller dealers may not just 

struggle with the upfront costs related to 

the implementation of technologies 

necessary to speed up their trade 

reporting, which it estimated to be 

upwards of half a million dollars, but 

would also face ongoing costs associated 

with third-party reporting systems.185

One commenter noted that without 

the bids placed by small and mid-sized 

dealers the efficiency of the market and 

quality of best execution would 

deteriorate. This commenter noted that 

the bids made by small and mid-sized 

dealers contribute to a more dynamic 

bid-ask process and optimization of 

prices.186 Another commenter 

emphasized the critical role played by 

smaller, specialized or other subsets of 

dealers trading particular products and 

representing historically underserved 

communities and retail investors.187

Two commenters stated that the 

Proposal would have a negative impact 

on minority-, women- and veteranowned dealers, which tend to be smaller 

firms.188 One of these commenters 

further stated that many issuers and 

institutional buyers seek or require that 

minority-, women- or veteran-owned 

dealers participate in the municipal 

securities business they undertake, 

noting that such dealers’ ability to 

participate in the secondary market is 

vital to their ability to be relevant to 

both buy side and borrower clients.189

To address these concerns, the MSRB 

has included in the proposed rule 

change an exception from the proposed 

one-minute trade reporting timeframe 

for dealers with limited trading activity 

in municipal securities, which would 

retain the existing 15-minute deadline, 

as discussed in greater detail herein.190

Thus, such dealers would not have to 

comply with a shorter deadline, 

although they would be subject to the 

new ‘‘as soon as practicable’’ 

requirement included in the proposed 

rule change. 

Alternatives to One Minute 

Requirement 

One commenter, while expressing 

support for the MSRB’s efforts to 

provide more timely and informative 

data to enhance the value of 

disseminated transaction data and 

stating that shortening the trade 

reporting timeframe is an important step 

in these efforts, cautioned that the 

industry is not prepared at this time to 

report all trades in municipal securities 

within one minute after the Time of 

Trade. This commenter acknowledged 

that based on MSRB data all but 2.7 

percent of trades are reported by the 

five-minute mark and therefore the 

industry is prepared to report most 

trades within five minutes of 

execution.191 Other commenters also 

suggested that the MSRB should target 

five minutes as the appropriate 

shortened timeframe.192

Other commenters emphasized that 

not all types of trades must have the 

same timeframe for reporting. For 

example, one commenter noted that the 

heterogenous nature of the securities 

that fall within the MSRB’s jurisdiction 

makes a ‘‘one-size-fits-all’’ approach (or 

‘‘one-minute-fits-all’’ approach) 

inappropriate.193 A few commenters 

recommended that, if the MSRB 

proceeds to shorten the reporting 

timeframe, trades with a manual 

component should be excluded from 

that shortened timeframe and continue 

to be subject to the current 15-minute 

timeframe.194 One commenter suggested 

exceptions from an accelerated trade 

reporting timeframe for internal 

allocations at dually-registered dealers/ 

investment advisers, trades in securities 

not in a firm’s security master, certain 

reverse inquiries and portfolio trades.195

Comments regarding existing and 

specific potential exceptions to the 

proposed one minute timeframe and the 

MSRB’s responses are discussed below. 

The MSRB believes that the proposed 

rule change would establish appropriate 

timeframes for the submission of trade 

reports to RTRS that avoid establishing 

a one-size-fits-all approach while 

requiring that all such trades be 

reported as soon as practicable. While 

most trades subject to the current 15- 

minute timeframe would become 

subject to the new baseline one-minute 

timeframe, trades with a manual 

component would, under a phased 

approach that provides dealers with 

time to adjust their processes and 

systems, eventually become subject to a 

five-minute timeframe through 

measured steps, and trades by dealers 

with limited trading activity in 

municipal securities would remain 

subject to the existing 15-minute 

timeframe. 

Exceptions to the One Minute 

Timeframe 

Continuation of Current Exceptions 

In the 2022 Request for Comment, the 

MSRB noted that Rule G–14 currently 

provides exceptions for certain trades to 

be reported at end of day and requested 

input on if these exceptions are still 

necessary and if so, whether end of day 

is still the appropriate timeframe for 

reporting these transactions. 

The MSRB received two comment 

letters requesting existing end-of-day 

trade reporting exceptions to be 

preserved.196 One commenter described 

the complexity of trade reporting for 

new issue transactions and voiced 

concern that if the current end-of-day 

reporting exception for List Offering 

Price/Takedown Transactions is 

eliminated, then large transactions with 

up to 100 syndicate members and 

thousands of trades would need to be 

pushed through a firm’s systems much 

faster than in today’s environment. This 

commenter advocated that the MSRB 

should maintain the other current endof-day and non-immediate reporting 

standards and potentially broaden such 

exemptions if a one-minute trade 

reporting requirement is instituted.197

This commenter acknowledged that 

these trades are required to be reported 

to ensure completeness for regulatory 

audit trail purposes but they do not add 

relevant price information to the 

marketplace since the prices for these 

transactions are either known to the 

market or are off market.198

The proposed rule change would 

preserve all existing end-of-day trade 

reporting and other non-immediate 

exceptions without change. 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5411 

199See OSI at 1; RWS at 2; Wiley at 1. 

200See OSI at 1. 

201See RWS at 2; Wiley at 1. 

202See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Dealers with Limited 

Trading Activity.’’ 

203See generally Dimensional; Tuma. 

204See FIF I at 2; see also BDA at 4; HJS at 2. 

205FIF I at 2. The proposed rule change would 

require that trades with a manual component be 

reported with a new manual trade indicator, 

consistent with this comment. 

206 InspereX at 6; ICI at 13–14. 

207 InspereX at 6. 

208See supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component’’ regarding scenarios where, depending 

on facts and circumstances, a dealer may consider 

a trade as a trade having a manual component. 

Additional Trade Reporting Exceptions 

The 2022 Request for Comment 

inquired if reducing the reporting 

timeframe to one minute would require 

additional trade reporting exceptions, 

other than end of day exceptions, to 

allow for certain trades to be reported at 

a different time (e.g., three minutes). If 

so, the MSRB requested commenters to 

identify the types of trades that would 

require an exception and why such are 

believed to be necessary. 

The MSRB has included two 

proposed new exceptions to the 

proposed one-minute reporting 

timeframe in the proposed rule change 

to address comments received from 

commenters regarding other potential 

trade reporting exceptions that could be 

included in the Proposal. Commenters 

also suggested other potential new 

exceptions from the reporting 

timeframe, which the MSRB did not 

include in the proposed rule change. 

These comments and the MSRB’s 

responses are discussed below. 

Proposed New Exception for Dealers 

With Limited Trading Activity 

Several commentors stated that 

requiring all dealers, regardless of size, 

to report within one minute of the Time 

of Trade might harm the market by 

pricing smaller firms out of the 

industry.199 One commenter predicted 

that the proposed rule change would 

necessarily require a fully integrated 

and automated trading system, requiring 

almost no manual input. This 

commenter stated that this constituted 

an unfair burden and would likely lead 

to fewer small-firm market makers.200

Commenters identified trade volume or 

trading activity as a metric that might 

indicate which firms were likely to be 

significantly negatively impacted by the 

proposed rule change.201

The MSRB recognizes that, absent any 

exceptions, dealers that report a smaller 

number of trades may be more affected 

if they are required to report trades by 

no later than one minute after the Time 

of Trade. As discussed above, the 

proposed rule change includes an 

exception for a ‘‘dealer with limited 

trading activity.’’ 202 A dealer with 

‘‘limited trading activity’’ would be 

excepted from the one-minute reporting 

requirement pursuant to new exception 

described in ‘‘Purpose—Proposed Rule 

Change—Exceptions to the Baseline 

Reporting Requirement—Exception for 

Dealers with Limited Trading Activity’’ 

and would instead be required to report 

its trades as soon as practicable, but no 

later than 15 minutes after the Time of 

Trade for so long as the dealer remains 

qualified for the limited trading activity 

exception. 

The MSRB believes that this new 

exception in the proposed rule change 

would address commenters concerns 

regarding the potential negative impact 

on smaller dealers under the Proposal. 

In effect, dealers with limited trading 

activity would continue to be subject to 

the same 15-minute reporting deadline 

as under the current rule provisions, 

although they would also be subject to 

the new overarching obligation to report 

trades as soon as practicable. 

Proposed New Exception for Trades 

With a Manual Component 

As described above, except for two 

commenters 203 that expressed support, 

all other commenters expressed the 

general view that reporting all trades 

within one minute after the Time of 

Trade, particularly those having a 

manual component, is not always 

possible. One commenter argued that 

the Proposal, absent an exception from 

the 15-minute reporting timeframe for 

manual trades, would severely impair 

the ability of firms to continue to trade 

manually and, as a result, could result 

in less liquidity and wider spreads that 

could negatively impact investors. The 

commenter further stated that the lack 

of such an exception could adversely 

impact smaller dealers and their 

customers. This commenter 

recommended that electronic trade 

executions would be reportable as soon 

as practicable and no later than within 

one minute of the trade time while 

manual trade executions would 

continue to be reportable within 15 

minutes after the trade time.204 The 

commenter noted that this would 

require adding a field to the RTRS 

systems for an executing dealer to report 

whether a trade was executed manually 

or electronically.205

At least two commentors pointed to 

the need for an exception to address 

unpredictable technological/operational 

issues, and one proposed a permanent 

enforcement exception for trades 

reported late due to a lag in reporting, 

outage, or other disruption directly 

caused by the third-party.206 One 

commenter suggested that enforcement 

actions should consider only the 

dealer’s conduct during the reporting 

timeframe, and perhaps independently 

review the conduct of any third-party 

reporting entities.207

The MSRB recognizes that not all 

trades in municipal securities currently 

are executed and reported through 

straight-through processes or other 

electronic means, and while the 

proportion of trades executed and 

reported in that manner appears to be 

growing over time, it is not likely that 

certain segments of the marketplace or 

trades conducted under certain 

circumstances would migrate to fully 

electronic processes in the immediate 

future. The commenters raised many 

scenarios, described above, where 

dealers currently would face significant 

challenges to completing the trade 

reporting process within one minute 

following the Time of Trade, and in 

some cases it might not be possible at 

all at this time unless significant 

technology and/or process changes are 

first undertaken by dealers and the 

overall industry that could entail 

considerable costs or cause material 

impacts to counterparties in 

transactions with such dealers. The 

MSRB believes that, depending on the 

specific facts and circumstances, and 

based on many of the situations 

highlighted by commenters where 

human intervention occurs in the course 

of reporting a trade to RTRS, such trades 

could be viewed as a trade with a 

manual component.208

For example, the MSRB acknowledges 

commenters’ views that voice brokerage 

and negotiated trading continue to be 

legitimate means of executing fixed 

income securities transactions that may 

require the manual entry of data or other 

human intervention after the Time of 

Trade to report trade details to RTRS. 

The MSRB also acknowledges 

commenters’ views that dealers and 

their customers may have legitimate 

reasons for preferring to execute largersized trades or trades in portfolios of 

securities manually rather than through 

electronic execution, and in many cases 

such manual processes may include 

steps to address regulatory compliance 

or risk management issues. In addition, 

the MSRB acknowledges commenters’ 

descriptions of individual trades that 

may be part of a more complex set of 

inter-dependent transactions, such as 


lotter on DSK11XQN23PROD with NOTICES2
5412 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

209Once the appropriate indicative data is 

initially set up in the security master, this issue 

would abate with respect to such security and the 

dealer would thereafter be able to report the trade 

within the required timeframes for subsequent 

trades absent other manual factors. 

210Furthermore, since a trade that is reported 

through the RTRS Web Portal may be considered a 

trade with a manual component and subject to an 

exception to the one-minute trade reporting 

requirement, the MSRB believes that concerns 

regarding the ability to enter trade reports through 

this portal are addressed by the proposed exception. 

Therefore, the MSRB does not believe that 

additional technological changes to the RTRS Web 

interface to address this concern are necessary for 

this proposed rule change. 

211See supra ‘‘Purpose—Proposed Rule Change— 

Pattern or Practice of Late Trade Reporting’’ for a 

discussion regarding pattern or practice of late 

reporting. 

212See SIFMA at 18. 

213 Id. 

214See FIF I at 9. 

215See FIF I at 7; SIFMA at 18. 

216See FIF I at 7–8. 

certain mediated transactions 

undertaken by broker’s brokers, 

transactions among multiple parties 

(including simultaneous allocations to 

multiple advisory clients of duallyregistered dealers/investment advisers). 

Furthermore, the MSRB understands 

that individual trades may require 

information necessary for reporting that 

may not be immediately available to the 

executing dealer, such as in the case of 

a security that has not been recently 

traded and therefore may not be 

included in the dealer’s or its clearing 

firm’s security master.209

For many trades facing the foregoing 

and other circumstances, the MSRB 

realizes that a dealer’s trade reporting 

process might not always be completed 

within one minute following the Time 

of Trade, even where the dealer has 

established efficient reporting processes 

and commences to report the trade 

without delay. Accordingly, in response 

to the commenters’ concerns, the MSRB 

is proposing to adopt a new exception 

for trades with a manual component. 

The new exception in Rule G–14 RTRS 

Procedures and Supplementary Material 

.02 to Rule G–14 provides an additional 

year from the effective date of the 

proposed rule change for firms reporting 

transactions with a manual component 

to continue to report their trades by no 

later than 15 minutes after the Time of 

Trade. This time would gradually phase 

down to ten minutes for the subsequent 

year and five minutes beginning the 

following year, providing additional 

transitional time for dealers to plan for 

and adjust their systems and processes 

to the new reporting requirements. The 

MSRB notes that some commenters had 

suggested that the MSRB establish a 

baseline five-minute timeframe for trade 

reporting, rather than the 15-minute 

timeframe included in the Proposal. 

Transactions with a manual component 

would have a trade reporting deadline 

that matches the proposed eventual fiveminute reporting timeframe.210

In addition, proposed amendments to 

Rule G–14 RTRS Procedures Section 

(a)(iv) would provide that a pattern or 

practice of late reporting without 

exceptional circumstances or reasonable 

justification may be considered a 

violation of Rule G–14. The 

determination of whether exceptional 

circumstances or reasonable 

justifications exist for late trade 

reporting is dependent on the particular 

facts and circumstances. The MSRB has 

provided guidance regarding scenarios 

that generally would constitute 

exceptional circumstances such as 

incidents that are outside the reasonable 

control of the dealer or where 

reasonable justification exists 

depending on the specific facts and 

circumstances, and based on many of 

the situations highlighted by 

commenters where human intervention 

occurs in the course of reporting a trade 

to RTRS.211

Potential Incorporation of Certain 

FINRA Exceptions 

A commenter suggested that the 

MSRB adopt FINRA’s approach to not 

require the reporting of customer 

repurchase agreement transactions, 

stating that such transactions do not 

provide price information with value to 

market participants.212 The MSRB notes 

that such transactions are required to be 

reported to RTRS with the ‘‘away from 

market’’ indicator, which results in 

transaction information not being 

disseminated to the public but is made 

available to the regulatory authorities 

charged with enforcing MSRB rules for 

oversight purposes. The MSRB does not 

believe that it should reduce the 

information currently made available for 

such oversight purposes as part of the 

proposed rule change and therefore has 

not made the suggested change. 

This commenter also observed that 

FINRA does not require reporting of list 

offering price transactions and 

takedown transactions for TRACEeligible securities until the next 

business day and suggested that the 

MSRB harmonize its current end-oftrade-day reporting requirement for List 

Offering Price/Takedown Transactions 

in municipal securities to this FINRA 

reporting deadline.213 Relatedly, 

another commenter suggested that all 

secondary market trades occurring on 

the first day of trading of a municipal 

securities offering be provided with the 

same end-of-trade day reporting 

deadline as for List Offering Price/ 

Takedown Transactions.214

The MSRB is not aware of any 

existing issues regarding the reporting of 

List Offering Price/Takedown 

Transactions by the end of the trade day 

and does not believe the market would 

benefit by delaying the public 

dissemination of such information until 

the next day. The MSRB also notes that 

if secondary market transactions that 

occur on the first day of trading is at a 

price that is different from the list offer 

price and is permitted to be reported on 

the next business day, all market 

participants may not have access to the 

prevailing market price of those 

secondary market transactions on the 

date the trade is executed. Such 

secondary market trades would, in 

many cases, have prices reflecting thencurrent market conditions rather than 

list offering prices that may have been 

set one or more days prior. Delaying 

dissemination of such price information 

would significantly reduce real-time 

transparency in the municipal securities 

market precisely on the day on which 

many securities experience their highest 

level of trading. Thus, the MSRB has 

determined not to include these 

suggested changes in the proposed rule 

change as they would reduce market 

transparency. 

Other Operational Considerations 

Trades Executed When System is Not 

Open 

Two commenters advocated for the 

continuation of a next-business day 15- 

minute reporting standard for trades 

executed when the respective trade 

reporting system is not open. These 

commenters supported the continuation 

of the current MSRB standard for 

transactions effected with a Time of 

Trade outside the hours of the RTRS 

Business Day to be reported no later 

than 15 minutes after the beginning of 

the next RTRS Business Day.215 One 

trade association commenter noted that 

the FINRA rules for equity trade 

reporting and TRACE reporting 

currently provide a 15-minute reporting 

period after the facility opens the next 

business day for trades executed when 

the reporting facilities are not open.216

This commenter stated that its members 

have found the 15-minute period for 

reporting overnight trades to be 

important in ensuring that an 

appropriate review of overnight trades is 

being performed by U.S.-based staff 

prior to submission. The commenter 

also noted that its members are 

concerned about technical challenges 

with reporting within one minute after 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5413 

217See SIFMA at 18. 

218However, a proposed technical amendment to 

Rule G–14 RTRS Procedures Section (a)(iii) would 

clarify and make explicit in the text thereof that 

inter-dealer trades on an ‘‘invalid RTTM trade date’’ 

are also not required to be reported until 15 minutes 

after the next RTRS Business Day. This provision 

currently is set out in Section 4.3.2 of the 

Specifications for Real-Time Reporting of 

Municipal Securities Transactions. 

219See FIF I at 4; SIFMA at 6, 17–19. 

220See FIF I at 4. 

221See SIFMA at 19. 

222See Exchange Act Release No. 68081 (Oct. 22, 

2012); 77 FR 65433 (Oct. 26, 2012), File No. SR– 

MSRB–2012–07, available at https://

www.govinfo.gov/content/pkg/FR-2012-10-26/pdf/ 

2012-26340.pdf. 

223See SIFMA at 22. 

224See InspereX at 4. 

225See FINRA Regulatory Notice 13–19 (May 23, 

2013), available at https://www.finra.org/rulesguidance/notices/13-19. 

226See supra ‘‘Purpose—Proposed Rule Change— 

Pattern or Practice of Late Trade Reporting’’ for a 

discussion on pattern or practice of late trade 

reporting and related expectations for regulatory 

authorities that enforce and examine dealers for 

compliance with Rule G–14. 

227See Bailey at 1; ICE Bonds at 2; ICI at 4–7; 

InspereX at 4; SIFMA at 2–6. 

228See FIF I at 2 and 6. See also ASA at 1–2; ICE 

Bonds at 2. 

the opening of a reporting system due to 

potential connectivity lags, which could 

in turn mean that connectivity and 

reporting must occur within one minute 

at the same time as many other industry 

members are seeking connectivity to the 

reporting system. Thus, this commenter 

expressed support for maintaining a 15- 

minute reporting requirement for 

transactions effected with a Time of 

Trade outside the hours of the RTRS 

Business Day. 

The other commenter argued that 

given the lapse of time between 

execution and reopening inherent in a 

situation where trades are executed 

when the system is not open, there is no 

value in changing this deadline. It 

further stated that even for National 

Market System stocks and Over the 

Counter equity securities, which have 

been subject to a 10-second trade 

reporting timeframe for many years, 

trades occurring after normal trading 

hours are required to be reported within 

the first 15 minutes after the applicable 

FINRA equity trade reporting facility reopens the next trading day.217

The MSRB is not proposing a change 

to the current reporting standard for 

trades executed when the RTRS system 

is not open, which will continue to be 

reportable within 15 minutes after the 

start of the RTRS Business Day.218

More Rapid Dissemination and Masking 

of Trades 

Two commenters expressed concerns 

about the potentially more rapid 

dissemination of trade prices that they 

believed could result in a negative 

outcome under a one-minute reporting 

requirement and advocated for the 

continuation of the practices related to 

dissemination caps by FINRA or 

masking of certain trades by the 

MSRB.219 One commenter noted that in 

connection with the Proposal, the MSRB 

should provide firms the option to 

report non-disseminated data elements 

on an end-of-day basis or in some cases, 

on a next day basis.220 The other 

commenter expressed concern that more 

rapid dissemination of trade data for 

block trades would raise the risk of 

significant negative liquidity impacts. 

The commenter suggested that MSRB 

action would be needed to address the 

heightened ability that one-minute 

dissemination would provide 

opportunistic market participants to use 

such data on larger trades to further 

advantage themselves and reduce the 

ability of such blocks to achieve 

favorable levels of liquidity.221

The MSRB notes that currently 

transaction information disseminated 

from RTRS includes exact par value on 

all transactions with a par value of $5 

million or less but includes 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 having a 

par value greater than $5 million is 

disseminated from RTRS five business 

days later. The MSRB implemented this 

approach in response to concerns that, 

given the prevalence of thinly traded 

securities in the municipal securities 

market, it is sometimes possible to 

identify institutional investors and 

dealers by the exact par value included 

on trade reports.222 While the MSRB 

would continue to evaluate whether this 

threshold is appropriate, the MSRB is 

not proposing a change to its masking 

practices at this time. The MSRB notes 

that, based on the comments, many 

larger trades likely would qualify for the 

exception for trades with a manual 

component and therefore would be 

subject to the measured phased 

approach to shortening the reporting 

timeframe to five minutes, thereby 

giving the market time to adjust to any 

incremental changes in behavior 

resulting in the masked trades being 

made publicly available on a shorter 

timeframe. 

Examination and Enforcement 

One commenter noted that FINRA 

and SEC examination staff should take 

the opportunity, when they are at their 

closest interaction with dealer 

personnel during the examination 

process, to provide appropriate feedback 

to firms they believe are not reporting 

trades as soon as practicable to assist in 

achieving more fully compliant trade 

reporting.223 Another commenter noted 

that violations for late trade reporting 

are black and white and that there are 

no other evidentiary measures necessary 

in order for a regulator to bring 

examination or an enforcement action 

against the late-reporting firm.224

As noted in ‘‘Purpose—Proposed Rule 

Change—Pattern or Practice of Late 

Trade Reporting,’’, the proposed rule 

change would incorporate pattern or 

practice language, similar to the existing 

pattern or practice language included in 

FINRA’s equity trade reporting rules,225

and has noted that this should be the 

focus of examining authorities as 

opposed to individual outlier late trade 

reports, absent extenuating 

circumstances.226 The MSRB already 

produces a series of report cards 

accessible to dealers that describe the 

dealer’s transaction reporting data with 

regard to status, match rate, timeliness 

of reporting, and the number of changes 

or corrections to reported trade data. For 

most statistics, the industry rate is also 

provided for comparison. The Lateness 

Breakout portion of the report has a 

category for each type of reporting 

deadline, showing how many trades 

were reported timely and late relative to 

the applicable deadline. Such reports 

are available in both single-month and 

twelve-month formats. The MSRB 

expects to make certain enhancements 

to the report cards in connection with 

the implementation of the proposed rule 

change if approved. 

Phased Implementation 

Several commentors advocated for a 

phased implementation of new 

requirements, the appropriate 

assessment of market impacts, and the 

leveraging of lessons learned and 

technology or process innovations for 

use at the next step.227 One trade 

association commenter noted that its 

members also could face challenges 

with reporting electronic executions 

within one minute after execution 

because some trades are transmitted 

across multiple layers of systems, 

meaning multiple firm and vendor 

systems before they are reported, and 

that some of these firms and reporting 

vendors would need to implement 

system and workflow changes to ensure 

that they can report all electronic 

executions within one minute.228

The MSRB recognizes that sudden 

and substantial changes to reporting 

deadlines would require some dealers to 

make potentially significant changes to 


lotter on DSK11XQN23PROD with NOTICES2
5414 Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 

229See discussion supra ‘‘Purpose—Proposed 

Rule Change—Exceptions to the Baseline Reporting 

Requirement—Exception for Trades with a Manual 

Component’’ and ‘‘Purpose—Effective Date and 

Implementation.’’ 

230See Dimensional at 1; Tuma at 1. 

231See Dimensional at 1. 

232See Tuma at 1. 

233See NSI at 1. 

234See SIFMA at 3, 13; see also Colwell at 1. 

235See ISC at 1. 

236See NSI at 1. 

237See ASA at 3–4; AMUNI at 1; Belle Haven at 

2–7; BSI at 1; BDA at 3–4; Cambridge at 3–4; CRI 

at 1; DeRobbio at 1; EH&C at 1–2; Falcon Square at 

1; F&A at 1; HC at 1; HBIS at 1; ICE Bonds at 1; 

InspereX at 1–2; ISC at 2–3; IPG at 1; IBI I at 1; IBI 

II at 1–2; KPI at 1; Miner at 1–2; NSI at 1; OSI at 

1–2; RBMI at 1; SAMCO at 3–4; Sanderlin passim; 

Sheedy at 1; SIFMA at 4–8, 12–13; SBC at 1–2; 

TRADEliance at 1–2; Wiley at 1–2; Wintrust at 1; 

Zia at 1. 

238See supra ‘‘One Minute Timeframe for 

Reporting—Operational Issues Relating to Reporting 

Within One Minute—Manual Steps in the 

Negotiation, Execution and Reporting Process’’ 

generally. 

239See Bailey at 4; Oberweis at 1; SIFMA at 21. 

240See SIFMA at 13. 

241See Stern at 1. 

242See BSI at 4; BDA at 4–5; BB at 2; C&C at 1; 

Falcon Square at 2–3; HJS 3–5; Honey Badger at 1; 

processes and technology. Therefore, if 

the proposed rule change is approved by 

the Commission, the MSRB would 

announce an effective date (for example, 

approximately within 18 months from 

such Commission approval) in a notice 

published on the MSRB website, and 

the proposed rule change also includes 

a phased standard for manual trades to 

provide dealers time to adjust to the 

proposed rule change.229 The MSRB 

acknowledges the need for maintaining 

regulatory harmonization between the 

MSRB with respect to the proposed rule 

change and FINRA with respect to its 

similar planned changes to TRACE 

reporting pursuant to the 2024 FINRA 

Proposed Rule Change, and the MSRB’s 

effective date for the proposed rule 

change would be intended to maintain 

implementation thereof on substantially 

the same implementation timeframe as 

the 2024 FINRA Proposed Rule Change. 

Potential Benefits, Costs and Burdens 

Benefits 

The 2022 Request for Comment 

sought to understand the benefits to 

investors, dealers, municipal advisors, 

issuers and other market participants 

(i.e., yield curve providers, evaluated 

pricing services etc.) and if those 

benefits would be different for 

institutional investors than individual 

investors, whether the benefits would 

differ among dealers and if the benefits 

to dealers differ from benefits to 

investors. 

Two commenters strongly supported 

the Proposal to amend Rule G–14 to 

require that transactions be reported as 

soon as practicable, but no later than 

within one minute of the time of 

trade.230 One commenter agreed with 

the MSRB that the municipal securities 

market historically has been considered 

less liquid and more opaque than other 

securities markets, consequently making 

post-trade data the most important 

source of information for market 

participants. This commenter believed 

that the proposed shortening of the 

reporting timeframe would enhance 

transparency and reduce information 

asymmetries in the municipal securities 

market. It asserted that the enhanced 

transparency also enhances investors’ 

power to negotiate with dealers, leading 

to reduced transaction costs.231 The 

other commenter noted the importance 

of being able to see all sides of the 

trades in a particular bond—purchase 

from customer, inter-dealer, and sale to 

customer—as soon as possible to 

accurately evaluate bonds.232

One commenter noted that the 

Proposal’s stated benefits are improved 

transparency, price relevance, and 

immediate impact on market direction, 

which are relevant to large block trades, 

large issue sizes and ubiquitously 

viewed credits. This commenter further 

noted that these ‘‘relevant’’ trades can 

be market leading, telling, and 

important for comparison.233

Some commenters expressed concern 

that the Proposal would 

disproportionately benefit certain 

segments of the market such as 

algorithmic trading entities and other 

market participants positioned to take 

advantage of information arbitrage,234

large wire house firms and the 

vendors 235 who provide automated 

reporting services and applications at 

the expense of others including retail 

and traditional institutional investors, 

while others believe the market is 

operating as intended and further 

changes are not necessary.236

Costs and Burdens 

The 2022 Request for Comment 

sought to understand if a one-minute 

trade reporting requirement would have 

any undue compliance burdens on 

dealers with certain characteristics or 

business models and if so, requested 

suggestions on how to alleviate the 

undue burdens. The 2022 Request for 

Comment also requested input on the 

likely direct and indirect costs 

associated with the one-minute 

requirement and who might be affected 

by these costs and in what way. The 

MSRB asked for data on these costs and 

if firms would have to make system 

changes to meet a new timeframe for 

trade reporting, how long would firms 

need to implement such changes. 

Regarding these questions, the 

majority of commenters in turn 

questioned whether the potential 

benefits of a one-minute reporting 

requirement for all fixed income trades, 

absent appropriate exceptions, 

outweighed the costs to market 

participants and the impact to the fixedincome market structure.237

These concerns appear to primarily 

stem from concerns regarding the 

potential impact on certain types of 

trades requiring additional time to 

report. Examples include trades 

executed by dealers that utilize a thirdparty clearing firm, situations where 

trade reporting occurs further 

downstream or involves multiple layers 

and trades that involve manual steps in 

the negotiation, execution and reporting 

process; on large-sized trades including 

voice and negotiated trades and the 

corresponding impact on best execution 

obligations; and on dealers that report a 

small number of trades.238 Commenters 

generally agreed that certain types of 

transactions may be reported 

successfully with a one-minute 

reporting requirement, depending on 

the level of automation.239

One trade association commenter 

stated some of its members were 

concerned that shortening the reporting 

timeframe might most benefit 

algorithmic trading firms or other 

market participants positioned to take 

advantage of information arbitrage to the 

potential detriment of retail investors 

and more traditional institutional 

investors.240 This commenter further 

noted that the retail market therefore is 

unlikely to observe a positive liquidity 

effect from automated trading 

methodologies that could leverage the 

immediacy of trade data under the 

Proposal. 

One commenter asserted that the size 

of a dealer’s market share should not 

dictate whether the burdens such dealer 

bears are acceptable or not and stated 

that a failure to engage in a fulsome 

cost-benefit analysis that incorporates 

the needs and barriers such dealers face 

would be inconsistent with recent 

initiatives undertaken by regulators in 

support of small enterprises.241

Many commenters described how the 

potential issues they identified might 

lead to a broader negative impact by 

way of, for example, increased 

compliance costs that may force many 

firms out of the industry, thereby 

reducing competition, liquidity, and 

market accessibility for certain types of 

issuers and investors.242 One 


lotter on DSK11XQN23PROD with NOTICES2
Federal Register / Vol. 89, No. 18 / Friday, January 26, 2024 / Notices 5415 

ISC at 3; ICI at 4; IBI II at 1–2; Miner at 1; NSI at 

1; OSI at 1–2; RBMI at 1; SAMCO at 3–4; Wiley at 

1–2. 

243See F&A. 

244 Id. 

245See ISC at 3; NSI at 1. See also SIFMA at 5. 

246See NSI at 1. 

247See ISC at 3. 

248See id.; NSI at 1. 

249See Bailey at 1. 

250For a detailed discussion of the two 

exceptions created by the proposed rule change, see 

supra ‘‘Purpose—Proposed Rule Change— 

Exceptions to the Baseline Reporting Requirement.’’ 

251These two exceptions should provide 

considerable relief from potentially higher 

compliance costs for smaller dealers that may in 

many cases constitute dealers with limited trading 

activity and may primarily engage in transactions 

with a manual component, thereby potentially 

qualifying for both exceptions. 252 17 CFR 200.30–3(a)(12). 

commenter stated that the Proposal 

would have an unreasonable impact on 

smaller dealers, which likely lack the 

technological systems available to large 

firms, and to the extent the small firms 

exit the market or limit trading in 

response to new or amended regulation, 

issuers and investors suffer.243 This 

commenter further stated that, to the 

extent that the Proposal makes 

participating in the market more 

difficult and costly for regulated 

entities, it would negatively impact 

local governments.244

Some commenters asserted that the 

Proposal appears to make fixed income 

markets operate more like the equity 

markets although they are different.245

One commenter observed that there are 

innate differences between the 

municipal marketplace and the equity 

marketplace,246 and another commenter 

noted that equity securities can trade 

thousands of shares in seconds, making 

the need for price transparency in an 

extremely short period of time a 

necessity but that, in contrast, 

municipal securities rarely trade twice 

in the same day or multiple times in 

one, five or 15 minutes.247 Both 

commenters questioned whether 

municipal securities would benefit from 

the shortening of the reporting 

timeframe to one minute, in contrast to 

the equity markets, noting the lack of 

cost-effective technology solutions for 

municipal securities and the likely 

prohibitive costs of the Proposal, 

particularly to small and medium-sized 

dealers.248 Another commenter noted 

that there are some 70,000 different 

issuers of municipal securities unlike 

the less than 5,000 equity issuers and 

that the market is not there yet 

technologically to do one-minute 

trading.249

The MSRB believes that it has 

engaged in a fulsome cost-benefit 

analysis that incorporates the needs and 

barriers dealers would face upon 

implementation of the proposed rule 

change, as described in ‘‘Self-Regulatory 

Organization’s Statement on Burden on 

Competition’’ above. Specifically, the 

MSRB recognizes that meeting the new 

one-minute transaction reporting 

requirement under Rule G–14 RTRS 

Procedures may result in additional 

costs for certain dealers. Additionally, 

the MSRB understands that the trade 

reporting process for certain types of 

trades, including trades with a manual 

component, may take longer to report 

than a trade for which an automated 

execution and reporting system was 

used. 

The MSRB has taken into 

consideration the various operational 

considerations raised by commenters 

and identified through subsequent 

outreach. As a result of this industry 

input, the proposed rule change 

introduces two new exceptions to 

address the concerns related to the 

balance of costs and benefits and to 

alleviate potential compliance burdens: 

(1) an exception for firms with limited 

trading activity, and (2) an exception for 

transactions with a manual component, 

which includes a phased approach to an 

eventual five-minute reporting 

requirement.250 The two exceptions 

created by the proposed rule change are 

designed to reduce potential costs and 

compliance burdens to less active 

dealers and on certain transactions that 

are most likely to realize a negative 

impact by shortening of the 

timeframe,251 and these proposed 

exceptions were taken into 

consideration in the MSRB’s economic 

analysis included in ‘‘Self-Regulatory 

Organization’s Statement on Burden on 

Competition’’ above. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period of 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) by order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or Send an email to 

rule-comments@sec.gov. Please include 

File Number SR–MSRB–2024–01 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–MSRB–2024–01. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the MSRB. Do not include 

personal identifiable information in 

submissions; you should submit only 

information that you wish to make 

available publicly. We may redact in 

part or withhold entirely from 

publication submitted material that is 

obscene or subject to copyright 

protection. All submissions should refer 

to File Number SR–MSRB–2024–01 and 

should be submitted on or before 

February 16, 2024. 

For the Commission, pursuant to delegated 

authority.252

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–01394 Filed 1–25–24; 8:45 am] 

BILLING CODE 8011–01–P 


lotter on DSK11XQN23PROD with NOTICES2