The Financial Industry Regulatory Authority has proposed that broker-dealers disclose any revenue-splitting arrangements they have with mutual funds at the time they sell their shares to investors.

Comments are due on the proposal on so-called “shelf-space payments” are due by May 31. The proposal was published in the Federal Register on May 9. If adopted, it would replace an older NASD Rule 2830.

FINRA says that broker-dealers should “prominently disclose that additional cash compensation may influence the selection of investment company securities that the member and its associated persons offer or recommend to investors.”

Broker-dealers would also have to provide a “prominent reference to a web page or toll-free telephone number where the investor could obtain additional information concerning these arrangements.” The additional information would include a description of the compensation, and the names of the fund companies. The new rule would not apply to sales loads; 12b-1 fees or shareholder servicing fees described in mutual fund prospectuses.

FINRA’s proposal would not require broker-dealers to disclose the actual amounts of the fee split. The revenue-sharing agreements between broker-dealers and funds differ by firm and fund. Some broker-dealers do disclose which funds they have agreements with and the maximum amount any fund company can pay.

When FINRA’s initiative for greater point-of-sale disclosure concerning mutual funds was first floated in 2009 it met with plenty of criticism. Some said that it would be too confusing for investors and unfairly single out mutual funds. However, FINRA counters that requiring revenue-sharing disclosures would “further inform investors of the potential conflicts that can arise from the sale of mutual funds.”

FINRA’s proposal coincides with an initiative by the Securities and Exchange Commission to raise the level of care broker-dealers must make with regard to selling products to their clients to a “fiduciary duty.” That standard of care would mean increased disclosures about conflicts of interest and fees.