Question: Why usually regulators want compliance in Fixed Income?
Answer: The most important reason is pricing for fixed income securities in secondary market. Specially for the corporate bonds. And provide greater transparency of pricing for fixed income securities. And overall reduce the spread between bid and ask price of the fixed income securities and also helps in lowering the trading cost for selling and purchasing of corporate bonds.
Question: What is TRACE and stands for?
Answer: TRACE is managed by FINRA for reporting and disseminating corporate bond trade information, and TRACE stands for Trade Reporting and Compliance Engine. There is a mandate that all eligible transactions in corporate bonds or issues be reported by dealers within 15 minutes of trade completion. Later on TRACE was further expanded other than corporate bonds which are for federal government agency debt and in primary market transactions for corporate bonds.
Question: What is MSRB stands for?
Answer: Municipal Securities Rule Board’s.
Question: What is the MSRB regulatory requirement with regards to the Municipal Bonds pricing?
Answer: All eligible transactions needs to be reported to the MSRB’s Real-Time Transaction Reporting System or RTRS. And also needs to be reported within 15 minutes of trade execution.