Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1300 I Street NW
Suite 1000
Washington, DC 20005

Re: MSRB Notice 2018-22: Request for Comment on Draft Interpretive Guidance on Pennying and Draft Amendments to Existing Guidance on Best Execution

Dear Mr. Smith:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates this opportunity to respond to Notice 2018-22 (the “Notice”)2 issued by the Municipal Securities Rulemaking Board (the “MSRB”) in which the MSRB is requesting comment on draft interpretive guidance related to “pennying” and draft amendments to existing guidance on best execution relating to the posting of bid-wanteds on multiple trading platforms. On balance, SIFMA appreciates the principles-based approach that the MSRB has taken, however, our members feel additional clarity is necessary.

I. Pennying Interpretive Guidance

a. Definitions

i. Pennying and “Last Look”

In the Notice, the MSRB states that pennying may have harmful effects on the municipal securities market based upon concerns from “several dealers.” Our members believe this is not a pervasive practice. “Pennying” may mean different things to different market participants. SIFMA and its members believe that “pennying” should be defined as the persistent or pattern of internalization of orders for which the dealer internalized at prices that are only nominally better than the cover bids.

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