Understanding MSRB Rules in Relation to Municipal Market Risks

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Target Audience


  • Broker-dealers 
  • Municipal securities issuers
  • Municipal advisors

Learning Objectives

At the end of the course the learner will be able to:

  • Identify characteristics of different interest rate environments
  • Determine the types of risk associated with different interest rate environments and the effect of interest rate environments on various types of fixed rate bonds
  • Determine the price/yield relationship for bonds in different interest rate environments; and
  • Apply MSRB’s rules associated with certain municipal securities transactions.  
Course Outline

1. Introduction 
a. Interest rate environments
i. Normal
ii. Upward sloping/steepening
iii. Downward sloping/inverted
iv. Flattening
b. Relationships and characteristics of price and yield

2. Risk Considerations for Municipal Securities
a. Types of Risks
i. Call Risk
ii. Liquidity Risk
iii. Credit Risk
iv. Inflation Risk
v. Legislative Risk
vi. Price Risk
vii. Reinvestment Risk

3. Applicable MSRB Rules
a. MSRB Rule G-19: Suitability of Recommendations and Transactions
b. MSRB Rule G-17: Conduct of Municipal Securities and Municipal Advisory Activities
c. MSRB Rule G-47: Time of Trade Disclosure
d. MSRB Rule G-30: Prices and Commissions

4. Applying Risk Analysis 
a. Client Profile
b. Financial Status
c. Tax Status
d. Financial Objectives
e. Bond Selection
i. Interest rate risk
ii. Reinvestment risk
iii. Credit risk
iv. Price risk

5. Disclosure of Material Information
a. Issuer Information
b. Bond Information
c. Review of MSRB Rules
i. MSRB Rule G-19: Suitability of Recommendations and Transactions
ii. MSRB Rule G-47: Time of Trade Disclosure
iii. MSRB Rule G-30: Prices and Commissions
iv. MSRB Rule G-18: Best Execution

6. Final Assessment