SIE: 2.13.3. Fair-Pricing For Municipal Securities

2.13.3.  Fair-Pricing for Municipal Securities

Recall that principal transactions are securities that are sold out of a dealer’s own inventory. On these kinds of transactions, the dealer often adds a markup or markdown to the transaction. When a broker acts as an intermediary between a buyer and a seller, it is called an agency transaction, and the broker will often take a commission on the transaction. The Municipal Securities Rulemaking Board (MSRB) requires that markups and markdowns for principal transactions and commissions for agency transactions be fair and reasonable.

To determine what is fair and reasonable, dealers ca