WASHINGTON -- The Securities and Exchange Commission will probably propose a rule soon that would require municipal dealers to disclose price markups in so-called "riskless principal transactions," commissioner Richard Roberts was expected to say in a speech this morning.

The SEC also may propose that dealers disclose on investor confirmations whether the bonds they are trading are rated, and it may strongly encourage the Municipal Securities Rulemaking Board to strengthen its rule that governs how syndicate members are selected, Roberts was scheduled to say at a closed-door seminar sponsored by CS First Boston in Orlando.

"Riskless principal trades are those in which there is a commitment on both the buy and the sell sides of a transaction," Roberts said in prepared remarks obtained yesterday.

The SEC already requires markup disclosure for many such trades in the stock market, and "I anticipate that the commission will propose a new rule" modeled after the existing rule for municipals, Roberts said in the text of his speech.

The SEC staff will seek industry comments on the costs of implementing such a disclosure requirement and on what, if any, changes are needed to tailor the equities market rule to municipal bonds, Roberts said.

SEC Chairman Arthur Levitt first signaled the agency's concerns about the need for dealers to disclose markups for riskless principal transactions in testimony before Congress in September.

"Individual investors [in municipal bonds] in many instances don't understand what they're buying or what they're paying for," Levitt told the House Energy and Commerce Committee's subcommittee on telecommunications and finance. "The confirmation statement really should show the broker dealer's markup in a riskless principal transaction so that customers will be better able to evaluate the price that they pay for a bond," Levitt said at the time.

Roberts' speech notes that the SEC proposed requiring disclosure of markups in riskless principal transactions for tax-exempts 15 years ago. The agency dropped the effort when industry members argued that such rules generally would be unnecessary because there were no abuses of these transactions in the municipal market.

"During the intervening 15 years, the municipal securities market has changed a great deal. Investors need to know their transaction costs in order to accurately assess the yield of their investments," Roberts said in his speech.

He also said that the SEC's new confirmation rule may also address ratings. "The commission is considering plans to include in this new rule a provision requiring brokers, dealers, and municipal securities dealers to disclose whether the municipal bond being traded has not been rated by a nationally recognized statistical rating organization," the SEC commissioner said.

Levitt suggested at the House hearing in September that the agency would look at the issue. "I think that confirmations should tell customers whether or not a bond is rated or unrated. That doesn't suggest that we're going to make a judgment on that score, but I think the customer should make that judgment."

Roberts acknowledged in his speech that requiring disclosure of additional information on confirmations may not prove to be a very effective method of communicating to investors, given that the municipal industry may eventually join the stock market in settling deals within three days of trade date, or the so-called T plus three initiative.

But that should not deter the SEC from action, Roberts said. It is "dangerous" to "play the game of ifs, ands, or buts" on this issue, he said.

"I understand that the MSRB is contemplating the introduction of another document to serve as something of a substitute for the confirmation in a T plus three settlement environment, and I suspect that the additional disclosure matters which I am discussing today would then need to be shifted over to that document," Roberts said.

Roberts said he "strongly encourages" the MSRB to consider amending its rules to require the senior syndicate manager to "obtain and to disclose information" about how syndicate members are selected and ranked.

"While many issuers routinely document the process through which they select underwriters and other syndicate members, others are not as thorough," Roberts said. "I understand that California issuers routinely produce elaborate paper trails in making decisions regarding the selection of underwriting syndicate members and other professionals.

"In contrast, the New Jersey Turnpike Authority acknowledged last May that it had no documentation explaining how it selected the 48 firms that handled its $2.9 billion in refundings in 1991 and 1992."

Roberts said that senior syndicate managers could be required to disclose:

* Who was employed in the issue, either as a member of the syndicate or otherwise, and how much, and on what basis, were such persons compensated.

* On what basis were such persons chosen, which persons were chosen by someone other than the senior syndicate manager, and whether it was necessary to hire another person to supplement the work of a person not chosen by the senior syndicate manager.

"Issuers have a great deal of input in" setting the priorities used to select syndicates, "and may in fact dictate the priority provisions in full," Roberts said in the speech. "This is not necessarily evil. It should, however, be made known to syndicate participants, and thus to the marketplace and to investors," he said.

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