How should a dealer approach price quotes in municipal markets?

• A. Price quotes should be fair and transparent, with no disclosure requirements.
• B. Offer fair, transparent quotes, avoid misrepresentation, and disclose any material limitations or factors affecting price.
• C. Quotes must be issued only after issuer approval.
• D. There is no obligation to maintain price transparency in municipal markets.

Answer: (B)

In municipal markets, price quotes owe fairness and clarity to investors. Dealers should provide quotes that are fair and transparent, and they must avoid misrepresentation. Importantly, they should disclose any material limitations or factors that could affect the price—such as whether the quote is for a specific trade size, whether it includes or excludes accrued interest, whether the quote is firm or indicative, or any conditions that would cause the price to change. This transparency helps customers understand exactly what is being offered and enables meaningful comparison with other quotes, aligning with MSRB rules on fair dealing and price transparency. Statements suggesting there are no disclosure requirements, that quotes require issuer approval, or that there is no obligation to maintain price transparency would not fit these standards.