Regulatory proposals are driving more broker-dealer firms, particularly minority-owned ones, to join national lobbying efforts.
Mike Nicholas, the chief executive officer of Bond Dealers of America, said Financial Industry Regulatory Authority and Municipal Securities Rulemaking Board proposals have contributed to more interest in BDA from firms who weren’t previously members, and more engagement from existing membership.
One of these was a corporate bond rule proposal that Nicholas said has been especially tough on minority-owned firms, like CastleOak Securities L.P., based in New York City, which recently became a BDA member. The proposal is to reduce the account settlement time-period for syndicate managers which is currently pegged at 90 days. The rule has been on the books since 1985 when the time-period was originally set at 120 days. It was reduced to 90 days in 1987.
“It’s an important issue for CastleOak because as a minority-owned firm they’re included in a lot of corporate syndicate deals, not as a lead manager but as part of the syndicate,” said Nicholas.
Ongoing debate about the regulation has helped draw other minority-owned firms to BDA including Loop Capital based in Chicago, Ramirez & Co. based in New York, and Academy Securities, a veteran-owned firm, also based in New York.
A new proposal plan that would cut bond trade reporting requirements from 15 minutes to one minute is also emerging as a wild card in the regulatory deck and attracting attention. Details of the plan began to emerge earlier this month as comments are being solicited, but the issue has been causing consternation among bond traders for years.
“Although the majority of trades are already being reported within one minute today, it is also clear from the data that certain types of trades are taking longer to be reported,” MSRB CEO Mark Kim said in an Aug. 2 statement.
BDA is still in the early stage of forming an opinion of the proposed changes. “We’re examining it,” says Nicholas. “It’s not an easy issue for all products. Shrinking trade reporting is an important issue for us.”
Other hot-button issues being tracked by BDA include municipal bond provisions such as the permissible uses of private activity bonds. BDA has also added Carty & Company, based in Memphis to its client list and Fifth Third Securities Inc., recently became a full member following a change in leadership. It was an original founding member in 2008.