Mark-Up Disclosure Requirements Thursday, September 14 2:15 p.m. 3:15 p.m. This session focuses on FINRA and MSRB mark-up disclosure requirements. Panelists discuss securities covered by the new rule, when mark-up disclosure requirements are triggered and recent guidance on how to calculate mark-ups based on prevailing market price. Panelists share their perspectives on effective practices and helpful tips they have identified. Moderator: Alexander Ellenberg Associate General Counsel FINRA Office of General Counsel Panelists: Margaret (Peg) Henry Deputy General Counsel Stifel Financial Corp. Michael Moran Vice President Charles Schwab & Co., Inc. Paige Pierce Management Consultant Larimer Capital Corporation Michael Post General Counsel Municipal Securities Rulemaking Board (MSRB) 2017 Financial Industry Regulatory Authority, Inc. All rights reserved. 1
Mark-Up Disclosure Requirements Panelist Bios: Moderator: Alex Ellenberg is Associate General Counsel in FINRA s Office of General Counsel. Mr. Ellenberg works with others in the Office to develop and interpret FINRA rules and to provide legal and policy advice to FINRA management and staff. His work focuses in particular on matters related to market structure, market integrity, and order and trade reporting for equity, options, and fixed income securities. Mr. Ellenberg worked previously in the SEC s Division of Trading and Markets and in private practice, and he received a J.D. from Cornell Law School and a B.A. from the University of Pennsylvania. Panelists: Peg Henry is Deputy General Counsel of Stifel Financial Corp, where she is responsible for all legal matters concerning the Municipal Finance Group. Ms. Henry has worked in the municipal bond industry since 1981 in private practice, federal and local government, and investment banking. She has served as General Counsel for Market Regulation of the Municipal Securities Rulemaking Board, Attorney- Adviser for the Securities and Exchange Commission s Office of Municipal Securities, Tax Counsel to the Majority Tax Staff of the Ways and Means Committee of the U. S. House of Representatives, Attorney-Adviser to the U.S. Treasury Department, and Tax Counsel to New York City s Office of Management and Budget. She was also in-house counsel for the municipal securities groups of Jefferies LLC and UBS Securities. Ms. Henry received a bachelor's degree from Georgetown University and law degrees from George Washington University. Mike Moran is Vice President in the Compliance Department at Charles Schwab & Co., Inc. Mr. Moran leads the firm's compliance efforts in support of its fixed income trading, sales and operations business lines. Over the course of his career, Mr. Moran has held senior level compliance positions at large and small firms alike, and has provided fixed income related compliance support for business activities such as, trading, public finance, and retail and institutional sales. In his current role, Mr. Moran works closely with the firm s senior management to support fixed income related initiatives and to address ongoing regulatory developments. In addition to his fixed income related responsibilities, he also leads the firm s compliance efforts in support of its research offering and its ETF and mutual fund marketplace platforms. Mr. Moran holds a degree in Finance from the University of San Francisco and is Series 7, 24, 53 and 63 licensed. Paige W. Pierce brings more than 25 years of senior level investment industry experience with small firms and major corporate entities in the North American capital markets to her corporate position and board work. She specializes in start-ups and turn-around operations in fast paced environments, as well as regulatory and legislative affairs in the investment and banking industries. Driven by purpose and the desire to make a difference, while consistently and strategically innovating to drive performance, she challenges norms and conventions to forge new paths and create value at every level. Ms. Pierce has significant regulatory and legislative experience working with and lobbying members of U.S. Congress, staff, the Federal Reserve, and industry regulators for the interests of SMEs and retail investors in the investment industry. She has vast Executive Committee experience serving on numerous corporate, regulatory and industry association boards, committees, and councils. Ms. Pierce was the first Interdealer Broker executive to be elected to represent the interests of Small Firms on both the Financial Industry Regulatory Authority (FINRA) Small Firms Advisory Board (Chair 2017) and FINRA's National Adjudicatory Council, the appellate body for regulatory actions brought by FINRA against members and member firms within the investment industry, as well as membership application appeals. She was elected in 2008 and 2015 to serve 3-year terms on the FINRA District 3 Committee (Chair 2010) and was honored to have been the first IDB chosen for the FINRA Fixed Income Committee. She was a co-founder of the PSA Women in the Investment Industry group, the SIFMA Municipal Securities Broker's Broker Committee, the Bond Dealers of America Small Firm Division, and the Municipal Bond Information System. In 2008, Ms. Pierce was appointed by the United States Air Force 388 th Fighter Wing as Honorary Commander and Falcon at Hill Air Force Base in Utah, and serves to this day with pride. She is an alumnus of the London Business School having completed the 5-year YPO LBS Executive Education Program May 2017. Following graduation, Ms. Pierce was named Chair of the YPO London Business School Executive Education Program (2018-2020). 2017 Financial Industry Regulatory Authority, Inc. All rights reserved. 2
Michael L. Post is General Counsel of the Municipal Securities Rulemaking Board (MSRB), where he is a legal and policy advisor to the MSRB and its Board of Directors. He oversees Board governance, rulemaking for municipal securities dealers and municipal advisors, regulatory relationships and legislative affairs. Prior to joining the MSRB in 2013, Mr. Post served for more than 10 years in various senior roles at the U.S. Securities and Exchange Commission. From 2007 to 2009, he was counsel to Chairman Christopher Cox, assisting with the development and implementation of an agency-wide regulatory agenda. In that capacity, Mr. Post advised on a broad range of legal, policy and management issues arising primarily out of the Divisions of Trading and Markets and Enforcement as well as the Office of the General Counsel and Office of Municipal Securities. Mr. Post also served as a senior appellate litigator in the SEC Office of the General Counsel, representing the SEC in the Circuit Courts of Appeals and U.S. Supreme Court in matters arising out of rulemakings, enforcement actions and adjudications as well as the SEC s amicus curiae program. He is a recipient of the Manuel F. Cohen Outstanding SEC Younger Lawyer Award. Earlier in his career, he was a member of the Supreme Court and Appellate Litigation Group at Sidley Austin LLP, and a law clerk on the U.S. Court of Appeals for the Tenth Circuit. Mr. Post earned a bachelor s degree in economics from the University of California, Los Angeles, and a juris doctor, with high honors, from the George Washington University Law School, where he was a senior editor of the Law Review. 2017 Financial Industry Regulatory Authority, Inc. All rights reserved. 3
2017 Fixed Income Conference September 14 Dallas, TX Mark-Up Disclosure Requirements
Panelists Moderator Alexander Ellenberg, Associate General Counsel, FINRA Office of General Counsel Panelists Margaret (Peg) Henry, Deputy General Counsel, Stifel Financial Corp. Michael Moran, Vice President, Charles Schwab & Co., Inc. Paige Pierce, Management Consultant, Larimer Capital Corporation Michael Post, General Counsel, Municipal Securities Rulemaking Board (MSRB) FINRA Fixed Income Conference 2017 FINRA. All rights reserved. 1
To Access Polling Under the Schedule icon on the home screen, Select the day, Choose the Mark-Up Disclosure Requirements session, Click on the polling icon: FINRA Fixed Income Conference 2017 FINRA. All rights reserved. 2
Polling Question 1 1. Does your firm plan to use a vendor to facilitate compliance with the new mark-up disclosure requirements? a. Yes; the firm plans to use vendor for a complete solution to assist with all states of the waterfall. b. In part; the firm plans to use a vendor to assist with part or parts of the waterfall. c. No d. The firm is still considering its options. FINRA Fixed Income Conference 2017 FINRA. All rights reserved. 3
Polling Question 2 2. Does your firm plan to provide voluntary disclosure beyond what the FINRA and MSRB rules require? a. Yes, the firm will provide mark-up disclosure on all retail trades in the securities subject to the rules (corporate, agency, municipal). b. Yes, the firm will provide mark-up disclosure on all retail trades in other fixed income securities as well. c. No, the firm will provide disclosure as required by the FINRA and MSRB rules. FINRA Fixed Income Conference 2017 FINRA. All rights reserved. 4
Polling Question 3 3. When will your firm capture PMP for confirmation generation purposes? a. In periodic batches throughout the trading day. b. At the time of each trade throughout the day. c. At the end of the trading day. FINRA Fixed Income Conference 2017 FINRA. All rights reserved. 5
Mark-Up Disclosure Requirements Thursday, September 14 2:15 p.m. 3:15 p.m. Resources FINRA Resources Proposed Rule Change File (SR-FINRA-2016-032) Proposed Rule Change Relating to FINRA Rule 2232 (Customer Confirmations) to Require Members to Disclose Additional Pricing Information on Retail Customer Confirmations Relating to Transactions in Fixed Income Securities www.finra.org/industry/rule-filings/sr-finra-2016-032 FINRA Regulatory Notice 17-08, Pricing Disclosure in the Fixed Income Markets, Effective date: May 14, 2018 (February 2017) www.finra.org/sites/default/files/notice_doc_file_ref/regulatory-notice-17-08.pdf Fixed Income Confirmation Disclosure: Frequently Asked Questions (FAQ) www.finra.org/industry/faq-fixed-income-confirmation-disclosure-frequently-asked-questions-faq Municipal Securities Rulemaking Board (MSRB) Resources Proposed Rule Change File (SR-MSRB-2016-12) Proposed Rule Change to Extend the MSRB s Customer Complaint and Related Recordkeeping Rules to Municipal Advisors and to Modernize Those Rules www.msrb.org/rules-and-interpretations/sec-filings/2016-filings.aspx MSRB Regulatory Notice 2017-12, MSRB Provides Implementation Guidance on Confirmation Disclosure and Prevailing Market Price (July 2017) www.msrb.org/~/media/files/regulatory-notices/announcements/2017-12.ashx?la=en MSRB Regulatory Notice 2016-28, New Disclosure Requirements Under MSRB Rule G-15 and Prevailing Market Price Guidance Pursuant to Rule G-30 Effective May 14, 2018 (November 2016) http://msrb.org/~/media/files/regulatory-notices/announcements/2016-28.ashx?n=1 2017 Financial Industry Regulatory Authority, Inc. All rights reserved. 1