BDA today filed comments with the SEC supporting FINRA’s proposal to amend their Rule 11880 to shorten the time bookrunning managers of corporate bond underwritings have to pay out revenue to syndicate members. Under the proposal, bookrunners would be required to pay out 70 percent of gross syndicate revenue to comanagers no later than 30 days after deal closing and the remaining 30 percent net of syndicate expenses within 90 days. Under current rules bookrunners have 90 days to pay all revenue.
In our letter we told the SEC “BDA fully supports all elements of the Proposal. We encourage the Commission to approve it as soon as practical. The rule changes in the Proposal are long overdue and represent a fair and balanced approach to syndicate settlement.” We also said “The Proposal would benefit any broker-dealer who serves as a syndicate member on a corporate bond underwriting, even the largest, most capitalized firms, who are comanagers more often than they are bookrunners.”
FINRA’s proposal is in the final stage of consideration. If the SEC approves the proposal, FINRA has set a January 1, 2023 compliance implementation deadline. Today’s letter follows a 3-year campaign by BDA to petition for this change. BDA’s letter is available here. As always, please call if you have any questions.