MSRB Requests Comment On Agency Execution Procedures

The MSRB requested comments on draft interpretive guidance regarding two agency trading practices in the municipal market: (i) "pennying" and (ii) posting bids-wanted on multiple trading platforms.

"Pennying" refers to the practice of (i) a dealer posting a request for a bid on a customer's securities and (ii) the dealer eventually buying the securities itself by either matching the best bid received or beating that bid by an insignificant amount. According to the MSRB, over the long run, that practice may tend to injure customers because it discourages municipal firms from responding to requests for quotes since the firm asking for the quote always has what is, in effect, a "last look" right to pull back the securities and take them internally. The draft interpretive guidance would consider that the use of bids-wanted "(whether distributed via an [alternative trading system] or broker's broker) solely for price discovery purposes would be an unfair practice within