Reuters: Regulatory News: US municipal bond board wants to protect online investors

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US municipal bond board wants to protect online investors Aug 9th 2012, 20:54 Thu Aug 9, 2012 4:54pm EDT Aug 9 (Reuters) - Electronic brokerage platforms in the U.S. municipal bond market would have to provide individual investors with educational documents and more rigorously supervise accounts and transactions under a proposal unveiled on Thursday. The Municipal Securities Rulemaking Board, which writes the rules for the market that the U.S. Securities and Exchange Commission enforces, also proposed requiring the brokerages to collect information on the investment profiles of individual investors. "We want to hear from market participants as to whether the proposal to strengthen account opening and supervisory practices of dealers would help protect individual investors without imposing an undue burden on dealers," said MSRB Executive Director Lynnette Kelly in a statement. Comments on the proposal are due by Sept. 21. The $3.7 trillion market is dominated by individual, or retail, investors, and a recent audit by the federal Government Accountability Office found that they are at a disadvantage to institutional investors in determining fair prices of their bonds. A report released by the SEC last week called for stricter protections for those investors. Over the last year, the MSRB has looked into ensuring that individuals have greater access to financial information about the bonds they purchase. Electronic brokerages, where investors can purchase and sell securities online unassisted by a broker or dealer, are more common in the equities market. Because the municipal bond market is more illiquid, and investors generally buy and hold the debt, it has only a handful of platforms, and some of them only cater to institutional investors. Link this Share this Digg this Email Reprints

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