On February 26, 2016, FINRA issued a press release (http://www.finra.org/newsroom/2016/finra-approves-enhanced-price-disclosure-retail-investors-fixed-income-securities) announcing that its Board of Governors approved the previously announced proposed changes to FINRA Rule 2232, relating to customer confirmations. The proposed amendments would require member firms to disclose on retail customer confirmations the "mark-up" or "mark-down" for many types of transactions in corporate and agency debt securities.
Under the proposal, if a firm sells or buys a corporate or agency fixed-income security from a retail customer, and on the same day buys or sells the same security as principal from another party, the firm would have to disclose on the customer confirmation the firm's mark-up or mark-down from the prevailing market price. The confirmation would also have to include a reference (and hyperlink if the confirmation is electronic) to trade-price data in that security from the TRACE system. FINRA expects that the proposed rules will help retail customers understand and compare transaction costs in these types of securities.
We previously described the proposals in more detail in the attached MoFo publication: http://www.mofo.com/~/media/Files/Newsletter/2015/11/151104StructuredThoughts.pdf.
The proposal is now subject to SEC review and approval before becoming final.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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