New SEC FINRA retail transaction rules: Further Brokers pricing disclosure


The new set of SEC FINRA retail transaction rules will help retail clients understand the transaction costs in corporate and agency debt securities. How Forex traders will benefit from the new framework?

21 November, AtoZForex The Securities and Exchange Commission (SEC) has confirmed the new set of rules by the Financial Industry Regulatory Authority (FINRA). These rules are demanding members to expose mark-ups and mark-downs for particular fixed-income securities on retail customer’s trade confirmations.

SEC FINRA retail transaction rules

The new rules by FINRA will help retail clients understand the transaction costs in corporate and agency debt securities. The revelation agreement will provide significant pricing data that helps retail investors observe costs. Moreover, it helps retail investors to get valuable insights into their broker’s pricing decisions. Additionally, these rules will help individual traders to avoid overpaying.

Digging deeper, in case a firm is involved in a principal trade with a retail customer in a corporate or agency debt security, and then implements a transaction with one or multiple parties for the same security within the same trading day, it will be demanded to make its markup or the mark-down public.

Moreover, the member company will have to state the implementation time. The rules also require the reference to trade-price information in the security from TRACE. TRACE stands for FINRA’s Trade Reporting and Compliance Engine.

How Forex traders will benefit ?

In addition, Municipal Securities Rulemaking Board has also suggested adjusting the existing framework. This proposal comprised requiring the disclosure of different pricing data for particular retail transactions in debt securities. The US regulator has approved the proposal by MSRB to balance the requirements of FINRA’s rules. Therefore, the regulators ease the implementation process for the securities industry.

The agreement of disclosure will not apply to securities acquired in a fixed-price offering and sold the same day to the retail client at the fixed price offering price. Moreover, the rules won’t apply in cases where the company does not possess an offsetting principal trade in the bonds sold to the retail customer on the same day.

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