Market Regulation

The Municipal Securities Rulemaking Board's (MSRB) market regulation activities include rulemaking, regulatory support and qualification of municipal market professionals.

MSRB Rules

MSRB rules govern the conduct of regulated entities and are designed to reflect the special characteristics of the municipal market and its unique regulatory needs. MSRB rules can generally be categorized as (1) professional qualification rules that establish qualifications for conducting business; (2) fair practice rules that protect investors, municipal entities, obligated persons and the public interest; (3) uniform practice rules that ensure consistent behavior of regulated entities in the marketplace; (4) market transparency rules that provide for full and timely flow of information to the marketplace; and (5) regulated entity administration rules that set internal requirements for firms.

These rules require regulated entities to observe the highest professional standards in their activities and relationships with customers and municipal entities, and go significantly beyond the general anti-fraud principles of the federal securities laws.

Retrospective Rule Review

The MSRB recognizes that to be effective, its rules must be responsive to changes in the municipal securities market and in the policymaking, economic, stakeholder and technological environments. MSRB rules also must be consistent, where appropriate, with rules of other financial market regulators to provide for more efficient compliance. To address these imperatives, the MSRB regularly reviews and assesses the effectiveness of its rules, and proposes amendments as necessary and appropriate. 

In October 2018, the MSRB Board of Directors identified the ongoing retrospective rule review efforts as a strategic priority. In 2019, the MSRB is engaged in reviewing MSRB Rule G-23, on activities of financial advisors, and a recently implemented requirement under MSRB Rule G-34, on CUSIP numbers, new issue and market information requirements. In addition, the Board has approved the filing with the U.S. Securities and Exchange Commission (SEC) of proposals to eliminate MSRB Rule G-29, which requires dealers to maintain a copy of the MSRB rulebook in each office in which certain municipal securities activities are conducted, and to updated certain references in and make other technical corrections to MSRB rules.

Read more about the MSRB's retrospective rule review and rules amended to date.

Rulemaking Process

The Securities Exchange Act of 1934 sets forth certain areas in which the MSRB is directed to conduct rulemaking, including rules to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and to serve various other specific purposes described in the Exchange Act. In order to provide the maximum opportunity for industry participation, the MSRB generally publishes rulemaking proposals as requests for comment and provides for public comment periods. In the earliest stages of rulemaking, the MSRB may issue a concept proposal, responses to which assist the Board in assessing whether to undertake rulemaking with regard to a particular matter. A concept proposal does not represent a formal rulemaking proposal by the Board, and its issuance does not obligate the Board to move forward with a proposal. Substantive comments on rule proposals received as a result of these procedures continue to influence the MSRB’s deliberations. 

The MSRB integrates an economic analysis into its rulemaking process consistent with its Policy on the Use of Economic Analysis in MSRB Rulemaking. The purpose of this policy is to strengthen the effectiveness and efficiency of the MSRB’s statutory rulemaking function; to meet the rule change approval standards of the Securities and Exchange Commission (SEC), including that a rule change not be designed to impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act; and to help the SEC meet its statutory obligations to consider whether its approval of an MSRB proposed rule change will promote efficiency, competition and capital formation.

Upon adoption by the MSRB in final form, rule proposals are filed with the SEC. In its rule filings, the MSRB is required to describe and explain the purpose of the proposals, the statutory bases for their adoption, an analysis of the comments received and the statutory justification for any anticipated burden on competition the proposals might impose.

The Exchange Act requires the SEC to publish the MSRB’s rule proposals in the Federal Register for public comment. MSRB rules generally become effective upon approval by the SEC or, in very limited circumstances provided under the Exchange Act, immediately upon filing with the SEC. Upon becoming effective, MSRB rules have the force and effect of federal law.

The MSRB’s rules are enforced by the SEC (or its delegate) with respect to municipal advisors, the SEC for certain securities firms and banks, the Financial Industry Regulatory Authority (FINRA) for securities firms that are members thereof, and by bank regulatory agencies (the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation) for banks. An important aspect of the MSRB's rulemaking activities involves the ongoing interpretation of its rules, which is done by means of interpretive letters and notices. Read the MSRB's policy on providing rule interpretations.

Regulatory Coordination and Enforcement Support

The SEC, FINRA and bank regulators have the statutory authority to examine for, and enforce, compliance with MSRB rules. By statute, the MSRB may provide guidance and assistance to these examining authorities. Information on those agencies is available at: 

The examining authorities ensure that underwriting, trading and selling of municipal bonds, and advice on municipal securities and municipal financial products is conducted in compliance with MSRB rules. The MSRB coordinates closely with these agencies and supports their efforts by conducting a variety of regulatory coordination and enforcement support programs including: (a) training of examination and enforcement staff; (b) interpretation of MSRB rules in connection with examinations and enforcement activities; (c) delivery of information products that assist these other regulatory authorities in their surveillance, examinations and enforcement actions; (d) a dedicated website by the MSRB for these agencies; (e) collaboration with the other regulators regarding such activities by identifying emerging risks in the municipal securities market; (f) providing market information, and analytical and statistical data; and (g) reports of potential rule violations. The MSRB also provides the Internal Revenue Service (IRS) with municipal market data to assist the IRS in its enforcement of tax laws related to municipal securities.

Professional Qualification

The MSRB fosters competency of municipal market professionals and compliance with MSRB rules through required professional qualification examinations and continuing education. The MSRB's professional qualification program requires associated persons of brokers, dealers and municipal securities dealers that engage in municipal securities activities and municipal advisors that engage in municipal advisory activities to meet professional qualification standards outlined in MSRB Rule G-3. The MSRB's professional qualification examinations are designed to ensure that such associated persons have the baseline knowledge of the federal securities laws, rules and regulations, including MSRB rules, applicable to the role and responsibilities of such associated persons in the municipal securities market.