A new rule compelling US brokers to reveal how much money they make buying and selling corporate and municipal bonds came into effect on 14 May. The regulation, designed to improve transparency and crack down on abusive sales practices, could lead to retail investors negotiating lower fees with brokers or, alternatively, shifting towards mutual funds or exchange-traded funds for fixed-income exposure. But the rules are not without their critics. There is also concern notifying investors of the fees by regular mail could lead to notices never being read.
A new rule compelling US brokers to reveal how much money they make buying and selling corporate and municipal bonds came into effect on 14 May. The regulation, designed to improve transparency and crack down on abusive sales practices, could lead to retail investors negotiating lower fees with brokers or, alternatively, shifting towards mutual funds or exchange-traded funds for fixed-income exposure. However, some critics of the rule said it does not go far enough to protect investors. There is also concern notifying investors of the fees by regular mail could lead to notices never being read.