WASHINGTON -- The Securities and Exchange Commission has requested comment on a rule proposed by the Municipal Securities Rulemaking Board that would lay the groundwork for the board's upcoming pilot program for price and transaction reporting.

The rule, which was approved by the board earlier this year, would require all dealers to report transactions in municipal securities to the board or its agent, the National Securities Clearing Corp.

The information would be used beginning in January of next year when the board launches a pilot program, announced on Jan. 11, that would supply daily volume and prices for frequently traded municipal bonds, the SEC said in a six-page notice that appeared in last Thursday's Federal Register. Comments on the proposed rule are due Aug. 25.

The SEC said the proposed rule should not impose new requirements on dealers since board rules already require them to provide trade information to a registered clearing agency as part of the automated comparison process.

Nevertheless, the rule is "a first step to increase transparency in the municipal securities market," said the SEC, which has been stepping up pressure on the board to improve the so-called transparency of prices in the municipal market.

While the daily reports would not identify dealer firms, the rulemaking board would make regular reports to enforcement agencies identifying firms and prices involved in the interdealer transactions, the SEC said, repeating a statement that the MSRB made in its Jan. 11 announcement.

The board has said that its pilot program would use interdealer transaction information to produce daily public reports, which would cover bond issues that trade at least four times a day.

"As trading in an issue increases, it will be reported; as [its] trading frequency decreases, it will be replaced by others that are trading frequently," the SEC's notice said. "In this way, the daily report will reflect the ever-changing pattern of trading activity in the universe of some 1.2 million municipal securities."

The board anticipates that the daily list of frequently traded issues would range between 80 and 350, with an average of about 180 issues a day, the SEC said. In addition, the daily report would be provided to subscribers by about 6 a.m. the day after the trade, or what is known as T plus 1, the SEC's notice said. As the board gains more experience collecting interdealer trade information, it would add retail and institutional trades to its pilot system, the SEC said. The "ultimate goal" is to have reporting of trades close to the time that the trades were done, the SEC said.

The daily report of prices would be available as a computer-readable file and as a printed report, the SEC said. It would include aggregate information on the total par value traded for the day, the number of compared transactions, and the number of issues traded.

The information about frequently traded securities would include the Cusip number and security description, the total number of transactions in the security and total volume traded, the highest and lowest prices of transactions in the security, and the number of transactions in the security involving par values between $100,000 and $1,000,000 inclusive and the average price of those transactions, the SEC said.

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