Board of Directors Application and Selection Process

At the beginning of each calendar year, the MSRB conducts an application process seeking qualified candidates to serve on its Board of Directors. The MSRB Board of Directors includes 11 members who are public and 10 members who are representatives of MSRB-regulated broker-dealers, banks and municipal advisors. All individuals must be knowledgeable about the municipal market. MSRB Rule A-3, “Membership on the Board,” discusses the nomination and election process, including provisions about eligibility and membership requirements.

The Board of Directors’ Nominating and Governance Committee publicly announces the solicitation of applicants for vacant positions on the Board that begin in October, which is the start of the MSRB’s fiscal year. The committee accepts applications for at least 30 days through the online Board of Directors Application Portal; the beginning and end dates are specified in the announcement(s). Any interested individual with knowledge of the municipal securities market may apply or submit recommendations to the Nominating and Governance Committee. 

MSRB staff conducts an initial review of applicants’ materials to confirm their status as a public or regulated representative and ensure that all necessary information and documentation is provided. Please read the FAQs below for additional information on eligibility. 

At the end of the application submission period, the Nominating and Governance Committee reviews all applications and selects candidates for interviews during the third and fourth quarter of the fiscal year. Additional documentation, including the Board Member Candidate Questionnaire and consent to a background check are required for applicants who are interviewed. After completion of the interview process, the Nominating and Governance Committee nominates selected candidates to the full Board of Directors for election. This occurs during the fourth quarter of the fiscal year and is concluded by September 30. Upon election, the new Board members are publicly announced and the complete list of applicants is published on the MSRB’s website.

If you are considering applying for MSRB Board membership and have questions regarding the different categories of Board membership and standards for eligibility, you may contact MSRB staff at BoardApplication@msrb.org or 202-838-1349 to discuss before applying.

FAQs on MSRB Board Membership Categories and Eligibility

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Why Are There Different Membership Categories?

The MSRB was created by Congress in 1975, through amendments to the Securities Exchange Act of 1934, giving it the authority to adopt rules, with the approval of the Securities and Exchange Commission, to carry out the organization’s basic requirements. Congress also set several specific requirements for the structure and composition of the MSRB Board of Directors. The Board membership categories required by the Exchange Act and MSRB Rule A-3, on membership on the Board, ensure representation of the diverse perspectives of constituencies with an interest in the MSRB’s mission and decisions. These include the perspectives of investors and municipal securities issuers, which the MSRB is mandated to protect; dealers in municipal securities and municipal advisors, over which the MSRB has regulatory authority; and members of the public with knowledge of or experience in the municipal industry.

What Are the Different Membership Categories?

Under the Securities Exchange Act of 1934 and MSRB rules, the Board consists of 21 members who all are required to be “knowledgeable of matters related to the municipal securities market.”  The Board has two broad categories of members: “public representatives” and “regulated representatives,” and is majority public. Eleven of the Board members are public representatives, required to be “independent of any municipal securities broker, municipal securities dealer, or municipal advisor.”  By statute and MSRB rule, the public membership must include at least one person who is representative of institutional or retail investors, at least one person representative of municipal entities, and at least one additional person having knowledge of or experience in the municipal industry.

Ten Board members are regulated representatives, meaning they are associated with a dealer or municipal advisor. By statute and MSRB rule, the regulated membership must include at least one person associated with a non-bank dealer (i.e., a securities firm), at least one person associated with a bank dealer, and at least three associated with non-dealer municipal advisors.

The categories and sub-categories of Board members are:

PUBLIC REPRESENTATIVES

REGULATED REPRESENTATIVES

Institutional or Retail Investor

Non-Bank Dealer (Securities Firm)

Municipal Entity

Bank Dealer

General

Non-Dealer Municipal Advisor


How Is a “Public Representative” Defined?

A public representative must be “independent” of any municipal securities broker, municipal securities dealer, or municipal advisor. Congress directed the MSRB to set requirements by rule regarding the “independence” of its public representatives. Accordingly, MSRB Rule A-3 defines “independent” to mean that the individual has “no material business relationship” with any of these MSRB-regulated entities. Further, to have “no material business relationship” means that, at a minimum, the person:

  • is not associated, and has not been associated within the last two years, with a regulated entity; and
  • does not have a relationship with any regulated entity, whether compensatory or otherwise, that reasonably could affect the person’s independent judgment or decision making.

What Does It Mean to Be “Associated with” a Regulated Entity?

The standard to be “associated with” an entity under the Exchange Act is generally expansive in scope. Certainly, it typically covers most employees of the entity in question, but the standard goes beyond that typical situation. Under the Exchange Act and MSRB Rule A-3, a person also is associated with an entity if the person controls the entity, is controlled by the entity, or the person and the entity are subject to common control. This makes it essential, in analyzing eligibility to be a public MSRB Board member, to consider not only the nature of a potential candidate’s employer, but also all its parent, subsidiary and other affiliated companies.  

What Are Examples of "Public Representative" Ineligibility?

In the past, potential candidates have been ineligible because their employer (such as an investment adviser) had an affiliated broker-dealer that transacts in municipal securities and is therefore an MSRB-regulated entity. This has occurred with many potential candidates who held portfolio management or research roles at “buy-side” firms. Potential candidates similarly have been ineligible where, for example, their employer had a subsidiary company that was a municipal advisor, and therefore a regulated entity. 

To be a public representative, even for a person who is not “associated with” a dealer or municipal advisor, the person must not have a business relationship, compensatory or otherwise, with a regulated entity that could reasonably affect the person’s independence of judgment or decision making. For example, in the past, attorneys who applied to be public members on the Board often have been disqualified because of their, or their law firm’s, client relationships with regulated entities. Similarly, persons who applied to be public members representative of institutional investors have at times been disqualified because of the extent of their employer’s receipt of investment advisory fees from MSRB-regulated dealers. This can occur, for example, in the case of separately managed account arrangements. In analyzing these types of relationships, the proportion of the person’s professional revenues derived from the relationships is considered.