On August 17, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 20-29 to request comment on the practice of internalizing customer trades in the corporate bond market after obtaining auction responses, commonly known as “pennying.” The Securities and Exchange Commission’s Fixed Income Market Structure Advisory Committee (FIMSAC) defined “pennying” as a practice where a dealer initiates a bid or offer-wanted auction process on behalf of a customer, reviews the auction responses, and then executes the customer order itself at a price that either matches or slightly improves the best-priced auction response. FIMSAC stated that pennying may appear to benefit a customer but may harm overall auction competitiveness over time.
Continue Reading FINRA Requests Comment on the Practice of Pennying in the Corporate Bond Market
FIMSAC
FINRA Requests Comment on Proposed Pilot Program to Study Changes to Corporate Bond Block Trade Dissemination
By Michael T. Foley & Gregory A. Uffner on
Posted in Broker-Dealer
On April 12, the Financial Industry Regulatory Authority (FINRA) published a regulatory notice (the “Notice”) requesting comment on a proposed pilot program to study proposed changes regarding corporate bond block trade dissemination based upon recommendations by the Fixed Income Market Structure Advisory Committee (FIMSAC) of the Securities and Exchange Commission. The changes are aimed at improving corporate bond block trade dissemination—mainly, by increasing block liquidity without imposing significant costs on market participants. Currently, FINRA’s Trade Reporting and Compliance Engine (TRACE) provides information to the marketplace regarding corporate bonds and other debt securities. It is intended that the pilot program will study FIMSAC’s recommendations to determine whether such recommendations can enhance current TRACE protocols.
Continue Reading FINRA Requests Comment on Proposed Pilot Program to Study Changes to Corporate Bond Block Trade Dissemination