Calculating Markup with Confidence
Since May 2018, MSRB Rules G-15 and G-30 have required dealers to disclose markups and markdowns on retail customer confirmations for qualifying principal transactions. The disclosed markup must be calculated from the bond's prevailing market price (PMP) at the time of the customer trade, expressed as both a dollar amount and a percentage.
Determining PMP in the municipal market is not straightforward. With over a million outstanding CUSIPs and many bonds trading infrequently, there may be no same-day reported trade to use as a direct reference. The MSRB's "waterfall" guidance under Rule G-30 directs dealers through a hierarchy of inputs—from the dealer's own contemporaneous trades, to inter-dealer trades, to alternative indicators—to arrive at a defensible PMP.
The MBIS Markup tool simplifies this process. Enter two trade prices and their timestamps for the same CUSIP, and the tool calculates the markup using MBIS's aggregation of over 400,000 daily pre-trade quotes from hundreds of dealers. This broad dataset provides additional context for evaluating whether the spread between trades is consistent with prevailing market conditions.
For firms processing large volumes of trades, MBIS also supports batch markup analysis via data feed. Contact us to learn more.
