MSRB Funding Policy

As a self-regulatory organization (SRO) under the Securities Exchange Act of 1934 (“Exchange Act”), MSRB is authorized to fund its activities through mandatory assessments on regulated entities. MSRB also charges fees for certain of its market transparency services. Subject to approval by the SEC, rates for regulated entity assessments and subscription service fees can be revised in accordance with MSRB funding needs. MSRB assessment rates and service fees must be found by the SEC to be fair and reasonable and to be consistent with the purposes of the Exchange Act.

MSRB undertakes rulemaking and operates a number of programs and services to protect municipal investors, municipal entities and obligated persons and to foster a fair and efficient municipal securities market. The principles for funding these activities are described below.

Funding Sources

MSRB strives to diversify funding sources among regulated entities and other entities that fund MSRB services in a manner that ensures long-term sustainability, seeking to achieve an equitable balance among regulated entities and a fair allocation of the costs of systems and services among other users and regulated entities to the extent allowed by law.

  1. Regulated Entity Assessments: Funding for MSRB programs and services is derived primarily from assessments on brokers, dealers and municipal securities dealers (collectively “dealers”). The MSRB has begun assessing fees upon a newer class of regulated entities, municipal advisors, which will contribute more to funding MSRB services over time. The goal is to allocate burdens on different classes of regulated entities fairly, taking into consideration the benefits received from operating in a fair and efficient market.1
  2. Data Access Fees: The MSRB collects, stores and provides access to information pertaining to the municipal securities market. When information and documents from the MSRB information systems are made available to users via automated subscriptions-based feeds or customized upon request, data fees may be assessed so long as they are consistent with the MSRB Data Access Fee Policy. Data fees must be commercially reasonable.
  3. Fine Revenue: Fines collected by the SEC or FINRA for violations of the rules of the MSRB are shared with the MSRB as set forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Funding Priorities

Certain funding priorities exist based on MSRB’s responsibilities as an SRO. These priorities are:

  1. funding for rulemaking, including economic analysis, funding to establish a professional qualifications regime, including examinations and continuing education requirements, and funding to provide enforcement support to the regulatory authorities that enforce MSRB rules;
  2. funding for programs and services operated under MSRB rules, interpretations and information facilities; SEC rules or orders; Board direction and approval; or as otherwise provided for under applicable laws and regulations, including funding to update, maintain, and replace any related technology systems;
  3. funding to ensure the MSRB engages in market leadership activities, outreach and education, including receiving information from municipal market participants and other stakeholders to provide input that informs the rulemaking process, as well as ensuring that these stakeholders are aware of regulatory develop­ments that may affect them and are educated on the MSRB rules;
  4. funding to develop and distribute eLearning courses to enhance understanding of the municipal securities market and the MSRB’s rules;
  5. funding to support and administer the activities of the Board and its committees; and
  6. funding sufficient to maintain a prudent level of liquid reserves, taking into consideration a range of reasonably foreseeable market conditions and expected expenditures over a three-year time horizon.

Funding Considerations

In its funding decisions for programs and services (including funding for enhancements), the MSRB considers:
  1. expected benefits to investor, municipal entity, or obligated person protection and the public interest in a fair and efficient municipal securities market;
  2. the level of regulated entity assessments necessary to fund the program or service and resulting burden on regulated entities;
  3. that fees for data services and products are based on a commercially reasonable standard for pricing for information products, the MSRB Data Access Fee Policy, and requirements of the Exchange Act with respect to fees charged for market information services; and
  4. other revenue sources that may be available for funding a program or service.

Reserve Considerations

Organizational reserves are maintained to ensure the MSRB has appropriate financial resources to support mission objectives, respond to regulatory requirements and pursue opportunities, to enable the organization to be fiscally prepared regardless of economic conditions, to provide the MSRB with the requisite level of liquidity to fund ongoing operations, and to ensure the long-term financial sustainability of the organization. The MSRB determines the target for organizational reserves by conducting a detailed and comprehensive analysis of the liquidity needs in four categories: Working Capital, Risk Reserves, Strategic Investment Reserves and Regulatory Reserves. The target is refreshed each year in conjunction with the annual budget development process, with a more detailed and comprehensive analysis completed in conjunction with the strategic planning process.

The Board has determined that if organizational reserves exceed the target at the fiscal year end by more than 15% for two consecutive fiscal years, then the Finance Committee shall evaluate the excess in light of foreseeable market conditions and organizational demands and make a recommendation to the Board as to how the excess should be addressed. If organizational reserves fall below the target at fiscal year-end by more than 10% for two consecutive fiscal years, then the Finance Committee, in the absence of extraordinary events, will recommend an operational budget that includes a projected surplus sufficient to rebuild organizational reserves to the targeted reserve level over a reasonable period of time.


These principles do not bind individual Board decisions, but are instead intended as a guide to provide continuity in funding decisions and to help align strategic, operational and financial planning.


Aligning Strategic, Operating and Financial Planning

The Board reviews its strategic plan and its long-term objectives for MSRB programs and services in accordance with the Board's Policies and Procedures. At its fiscal year fourth quarter meeting, the Board reviews three-year revenue and expense projections and considers whether adjustments in fees or new fees are needed to align funding levels and sources with strategic objectives.

At its fiscal year fourth quarter meeting, the Board also reviews and approves an annual revenue and expense budget for the following fiscal year. The staff uses the approved budget to ensure that the annual operating plan is consistent with the financial resources set forth in the budget to meet the strategic objectives. The operating plan for an upcoming fiscal year is approved by the Board in accordance with the Board's Policies and Procedures.

Strategic, operational and financial planning is conducted with the expectation that unforeseen events will occur in the market and/or in the regulatory environment that will require MSRB response. However, in some cases, unforeseen events or circumstances will require revisions in operational plans and budgets during mid-cycle. Such circumstances also may require funding decisions to be made during mid-cycle.

1 See also MSRB Rules A-11, Assessments for Municipal Advisor Professionals, and A-13, Underwriting and Transaction Assessments for Brokers, Dealers and Municipal Securities Dealers.