The Financial Industry Regulatory Authority’s Board of Governors has approved a proposal that would require member firms to disclose to retail investors the “mark-up” or “mark-down” from the prevailing market price for transactions in certain fixed-income securities. Where a firm buys or sells a corporate or agency fixed-income security from a retail investor and subsequently buys or sells the same security as principal for another party on the same day, the disclosure would be required on the retail investor’s customer confirmation. The confirmation also would have to contain a display or hyperlink to trade-price data of that security in FINRA’s Trade Reporting Compliance Engine (TRACE). FINRA Chairman and CEO Richard Ketchum noted that the proposal, which is subject to Securities and Exchange Commission approval, seeks to “assist customers in monitoring costs, promote transparency into firms’ pricing practices and help investor confidence in the market.” The proposal does not apply to transactions in fixed-price new issues.
FINRA’s press release can be found here.