II 

113TH CONGRESS 

2D SESSION S. 2114 

To amend the Securities Exchange Act of 1934 with respect to disclosures 

to investors in municipal and corporate debt securities, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 12, 2014 

Mr. WARNER (for himself and Mr. COBURN) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Securities Exchange Act of 1934 with respect 

to disclosures to investors in municipal and corporate 

debt securities, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Bond Transparency 

5 Act of 2014’’. 

6 SEC. 2. MARKUP DISCLOSURE IN RISKLESS PRINCIPAL 

7 TRANSACTIONS IN MUNICIPAL SECURITIES. 

8 Section 15B of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78o–4) is amended— 


tjames on DSK6SPTVN1PROD with BILLS
2 

•S 2114 IS

1 (1) by redesignating subsection (e) as sub2 section (f); and 

3 (2) by inserting after subsection (d) the fol4 lowing: 

5 ‘‘(e) MARKUP DISCLOSURE IN RISKLESS PRINCIPAL

6 TRANSACTIONS.— 

7 ‘‘(1) DEFINITION.—In this subsection, the term 

8 ‘riskless principal transaction’ means— 

9 ‘‘(A) a transaction in which a broker, deal10 er, or municipal securities dealer receives a cus11 tomer order to buy or sell any municipal securi12 ties and, after receiving the customer order, 

13 buys the municipal securities from, or sells the 

14 municipal securities to, another person, while 

15 acting as principal for its own account, to com16 plete the customer order; and 

17 ‘‘(B) any other transaction the Commis18 sion identifies by rule as a riskless principal 

19 transaction. 

20 ‘‘(2) DISCLOSURE REQUIRED.—A broker, deal21 er, or municipal securities dealer that effects a risk22 less principal transaction shall disclose to the cus23 tomer, in writing, at or before the time of comple24 tion of the transaction, the amount of the difference 

25 between— 


tjames on DSK6SPTVN1PROD with BILLS
3 

•S 2114 IS

1 ‘‘(A) the customer’s purchase price and the 

2 broker’s, dealer’s or municipal securities deal3 er’s purchase price; or 

4 ‘‘(B) the customer’s sale price and the bro5 ker’s, dealer’s, or municipal securities dealer’s 

6 sale price.’’. 

7 SEC. 3. MARKUP DISCLOSURE IN RISKLESS PRINCIPAL 

8 TRANSACTIONS IN CORPORATE DEBT SECU9 RITIES. 

10 Section 15 of the Securities Exchange Act of 1934 

11 (15 U.S.C. 78o) is amended by adding at the end the fol12 lowing: 

13 ‘‘(p) MARKUP DISCLOSURE IN RISKLESS PRINCIPAL

14 TRANSACTIONS IN CORPORATE DEBT SECURITIES.— 

15 ‘‘(1) DEFINITIONS.—In this subsection— 

16 ‘‘(A) the term ‘specified debt security’— 

17 ‘‘(i) means any security that— 

18 ‘‘(I) evidences a liability of the 

19 issuer (including any such security 

20 that is convertible into stock or simi21 lar security), including bonds, deben22 tures, notes, or any similar instru23 ments, and any fractional or partici24 pation interests in any of the fore25 going; and 


tjames on DSK6SPTVN1PROD with BILLS
4 

•S 2114 IS

1 ‘‘(II) constitutes— 

2 ‘‘(aa) United States dollar3 denominated securities issued by 

4 the United States or a foreign 

5 private issuer; or 

6 ‘‘(bb) any other security the 

7 Commission identifies by rule as 

8 a specified debt security for the 

9 purposes of this subsection; and 

10 ‘‘(ii) does not include a municipal se11 curity, as defined in section 3(a)(29) of 

12 this Act; and 

13 ‘‘(B) the term ‘riskless principal trans14 action’ means— 

15 ‘‘(i) a transaction in which a broker 

16 or dealer receives a customer order to buy 

17 or sell any specified debt securities and, 

18 after receiving the customer order, buys 

19 the specified debt securities from, or sells 

20 the specified debt securities to, another 

21 person, while acting as principal for its 

22 own account, to complete the customer 

23 order; and 


tjames on DSK6SPTVN1PROD with BILLS
5 

•S 2114 IS

1 ‘‘(ii) any other transaction the Com2 mission identifies by rule as a riskless 

3 principal transaction. 

4 ‘‘(2) DISCLOSURE REQUIRED.—A broker or 

5 dealer that effects a riskless principal transaction 

6 shall disclose to the customer, in writing, at or be7 fore the time of completion of the transaction, the 

8 amount of the difference between— 

9 ‘‘(A) the customer’s purchase price and the 

10 broker’s or dealer’s purchase price; or 

11 ‘‘(B) the customer’s sale price and the bro12 ker’s or dealer’s sale price.’’. 

Æ 


tjames on DSK6SPTVN1PROD with BILLS