Memo #
33008

SEC's Fixed Income Market Structure Advisory Committee Issues Annual Report
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[33008]

December 22, 2020 TO: ICI Members
Equity Markets Advisory Committee
ETF (Exchange-Traded Funds) Committee
ETF Advisory Committee
Fixed-Income Advisory Committee
Investment Advisers Committee
Municipal Securities Advisory Committee SUBJECTS: Disclosure
Exchange-Traded Funds (ETFs)
Fixed Income Securities
Investment Advisers
Municipal Securities
Trading and Markets RE: SEC's Fixed Income Market Structure Advisory Committee Issues Annual Report

 

On December 21, 2020, Securities and Exchange Commission (“Commission”) Chairman Jay Clayton issued a statement[1] announcing that the Commission’s Division of Trading and Markets released its staff report on the Fixed Income Market Structure Advisory Committee’s work over the past year (“FIMSAC Report”).[2] 

In October, Chairman Clayton, with the concurrence of the other commissioners, extended the Committee’s term until March 2021 to complete the current work of the FIMSAC’s subcommittees and continue to assist the Commission with its ongoing efforts to monitor and respond to the effects of the COVID-19 pandemic on the fixed income markets. 

The FIMSAC Report summarizes the Committee’s work and recommendations during 2020, focusing on the efforts of each of its five subcommittees: (1) Corporate Bond Transparency Subcommittee, (2) Municipal Securities Transparency Subcommittee, (3) ETFs and Bond Funds Subcommittee, (4) Technology and Electronic Trading Subcommittee, and (5) Credit Ratings Subcommittee. In 2020, the FIMSAC made six recommendations to the Commission, which the Report describes in greater detail: 

  1. A series of recommendations designed to improve the timeliness of municipal securities disclosure;[3]
  1. A recommendation that the Commission determine whether there are actions that can be taken by it, the Municipal Securities Rulemaking Board, or others to provide additional pre-trade price transparency in the municipal securities market;[4]
  1. A recommendation regarding additional TRACE reporting indicators for corporate bond trades;[5]
  1. A recommendation to modernize Rule 17a-7 under the Investment Company Act of 1940 regarding cross trades;[6]
  1. A recommendation to define “electronic trading” for consistent regulatory application and reporting purposes;[7] and
  1. A recommendation regarding ways to mitigate conflicts of interest in credit ratings.[8]

 

Sarah A. Bessin
Associate General Counsel

Nhan Nguyen
Counsel, Securities Regulation

 

endnotes

[1] Chairman Jay Clayton, Statement on the Fixed Income Market Structure Advisory Committee (Dec. 21, 2020), available at https://www.sec.gov/news/public-statement/clayton-fimsac-2020-12-21.

[2] SEC Staff Report on the Third Year of the Fixed Income Market Structure Advisory Committee (Dec. 21, 2020), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-report-2020.pdf.

[3] See FIMSAC Recommendation Regarding Timeliness of Financial Disclosures in the Municipal Securities Market (Feb. 10, 2020), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-muni-financial-disclosures-recommendation.pdf.

[4] See FIMSAC Recommendation Concerning Pre-Trade Transparency in the Municipal Securities Market (June 1, 2020), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-recommendations-pre-trade-transparency.pdf.

[5] See FIMSAC Recommendation Regarding Additional TRACE Reporting Indicators for Corporate Bond Trades (Feb. 10, 2020), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-additional-trace-flags-recommendation.pdf.

[6] See FIMSAC Recommendation Regarding Modernizing Rule 17a-7 under the 1940 Act (June 1, 2020), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-recommendation-internal-fund-cross.pdf.

[7] See FIMSAC Recommendation Regarding Defining “Electronic Trading” for Regulatory Purposes (Oct. 5, 2020), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-recommendation-definition-of-electronic-trading.pdf.

[8] See FIMSAC Recommendation Regarding Ways to Mitigate Conflicts of Interest in Credit Ratings (June 1, 2020), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-recommendations-credit-ratings-subcommittee.pdf.