The privately held BondDesk Group LLC, operator of the leading retail fixed-income trading platform, is introducing MarketView & Trade Monitor System, a new price discovery and reporting tool that will be available to BondDesk users.
Like other online trading tools, MarketView organizes the array of municipal information that is available in the market. Users can sort through municipal issues by Cusip number, bond maturity, rating, coupon, or duration. Unlike other trading tools, MarketView allows the user to see all bids and offers of comparable inventory on BondDesks own trading platform of 25,000 offerings. But in addition to helping users gauge and understand market conditions, MarketView also assists them in offering the best possible execution for their customers.
The value is two-fold, said Stephanie Jacoby, a senior director for BondDesk Group. It can be used as a pre-trade tool that offers a better view of the market and current pricing, but it is also valuable in that it helps ensure a customers trades are in-line with the market and that the proper documentation is recorded. So it both empowers and protects the broker-dealer and its customers.
Users can tailor the product to flag any trades that fall outside their criteria for fair and reasonable pricing standards. The system determines if trades are being executed at fair and reasonable prices by comparing individual executions against a bevy of market information. If a trade is executed outside of the firms set parameters for fair and reasonable pricing, MarketView TMS will notify users of the service by generating a report.
The report essentially is a snapshot of all relevant market conditions at the time of the trade, including comparable live offerings, the overall depth of the market for a particular security, and other pertinent information. That report is then sent to the appropriate party within the users firm for review. The system also records the traders documentation and any supervisory or compliance notes. Those notes are then stored and are retrievable for up to seven years.
The creation of the service is a direct response to the current regulatory environment. The introduction of real-time pricing earlier this year in the municipal bond market has brought greater scrutiny to pricing practices.
Although the total amount of fines for pricing infractions is not statistically tracked, securities regulator NASD has levied a series of fines against firms for failing to offer clients fair and reasonable execution on trades, including last Junes fining of eight firms a total of $610,000 for abusive pricing practices.
Broker-dealers already monitor their respective trading practices, but when an infraction does occur, gathering all the proper documentation manually can be problematic.
Looking for examples of unfair transactions can be very time-consuming and difficult to do, said one participating dealer on the platform who is familiar with MarketView but declined to be identified. I think if you look at where the regulatory landscape is moving, there will be greater and greater requirements on the part of the broker-dealers to show that they are providing fair and reasonable pricing for their customers.
The service is the latest addition to a growing number of online trading tools and platforms that have been introduced in the hopes of making the municipal market more transparent. BondDesks main online competitors include TheMuniCenter LLC and Hartfield, Titus & Donnelly LLCs HTDonline service, but those applications are geared more towards larger institutional orders.
