Message from Leadership


To immediately bring reserve levels closer to the new target, we approved a temporary, six-month fee reduction transaction, underwriting and technology fees based on activity beginning April 1, 2019.

- Gary Hall, Chair

Dear Municipal Market Stakeholders,

I am pleased to provide an update to my October 2018 letter introducing the MSRB’s FY 2019 Executive Budget Summary. My message today addresses the rigorous oversight by the MSRB Board of Directors of the organization’s resources and three important decisions with immediate impacts.

As we announced previously, late last summer the Board began an extensive review of the level of financial reserves needed by the MSRB to mitigate fluctuations in its revenue stream and to provide a backstop for funding those services essential to the efficiency of the market. The MSRB’s revenues are primarily driven by municipal market underwriting and trading activity, which is largely unpredictable and requires the MSRB to establish adequate financial reserves.

Our review focused on determining the appropriate reserve levels to maintain in light of market conditions and organizational demands. The Board’s analysis considered the unique role and function of the MSRB while acknowledging the significant role of fee assessments in supporting the maintenance of financial reserves.

As a result of our analysis and consistent with the Board’s fiduciary responsibilities, our first decision was to implement a new construct for establishing reserve levels that categorizes them based on liquidity needs in four target areas: working capital reserves, risk reserves, strategic investment reserves and regulatory reserves. Application of the new construct has led to our second decision—to reduce the overall target level. And, in order to immediately bring reserve levels closer to the new target, our third decision was to approve a temporary, six-month fee reduction in underwriting, transaction, and technology fees (which comprise the preponderance of the MSRB’s revenues and contributed correspondingly to the current reserve levels) based on activity beginning April 1, 2019.

The reduction by approximately one-third in the fee rates paid by dealers on activity related to underwriting, transaction and technology fees is expected to result in approximately $5.2 million in foregone revenue for the MSRB, thereby reducing reserves by a like amount. Given the six-month duration of the fee reduction, we believe it will capture a representative portion of dealer activity, resulting in as equitable a reduction as possible across the dealer community.

You will see further steps by the MSRB to right-size our reserve levels, including a plan to use $15 million of reserves to fund budget deficits in fiscal years 2019, 2020 and 2021 – though that plan will be reevaluated in conjunction with our FY 2020 budget development. Our financial projections show reserves falling below the new target, beginning in fiscal year 2021. Depending on actual results, increases in current revenue sources or additional revenue sources will need to be considered to ensure sufficient revenue to fund operations and no longer operate with budget deficits, thereby maintaining the financial health of the organization.

Evaluating reserve levels and their appropriate target has been a strategic priority for the Board and today’s announcement demonstrates our ability to accomplish that goal, while ensuring that the MSRB can continue to fund core operations and meet unexpected, unpredictable and strategic investment needs over the long-term.

I believe that these decisions, as well as our transparency about the process, are consistent with the Board’s governance responsibilities.


Gary Hall
March 14, 2019

Fiscal Year 2019 Objectives


"This year, input from stakeholders, as well as the demand to keep pace with both market and technological change will feature prominently in our activities"

- Gary Hall, Chair
Lynnette Kelly, President and CEO

Our objectives for fiscal year 2019 align closely with the mission we strive to uphold not only through our statutorily driven activities, but also our interaction with stakeholders and what we hear from them.  This year, input from stakeholders, as well as the demand to keep pace with both market and technological change will feature prominently in our activities.

To do that, we are exploring big data and cloud computing in two ways. We are conducting a feasibility assessment of a potential cloud migration for our market transparency systems to ensure that we address long-term reliability, data quality and security. We are also leveraging the power of cloud computing to begin an analysis of unstructured market data to evaluate their potential and value to the market and its participants.

As a self-regulatory organization, our market participants are essential to our work. These participants come from all sides of municipal market transactions—they are the investors and the municipal entities that we protect and the financial professionals that we regulate. Fostering an open forum all market participants to share feedback with us will aid in the development of our compliance resources, as well as improve the disclosure submission process. This year, we have formed new advisory groups to add greater insight to policy questions under consideration. These groups will include members from all areas of the municipal securities market. We also are making other changes to expand the MSRB’s access to balanced, expert market knowledge from a variety of professionals in the market. This year, we MSRB Board members, not just staff, will have multiple touchpoints with stakeholders through  formal meetings, town halls and firm visits.

In FY 2019, our focus for regulated entities will be to ensure that our rules are up-to-date, effective and reflective of current market practices. We also will prioritize efforts to support consistent interpretation of the rules by examination and enforcement authorities. We will continue an ongoing retrospective rule review with an eye toward fine-tuning market regulations to ensure that they are appropriately tailored, function efficiently and are consistent with those of other regulators, when possible.

As always, our crown jewel, the Electronic Municipal Market Access (EMMA®) website, will continue to be a priority. This year, we will make improvements for municipal entities that submit bond disclosure information to EMMA. The improvements are responsive to stakeholder feedback gathered through focus groups and other engagement and will improve the quality of indexing data for disclosure documents and integrate relevant tools and resources for issuers throughout the submission process.

Fiscal year 2019 will bring changes and challenges for our market and the MSRB. An ever-changing environment requires us to be nimble and responsive. While we continue to evolve and adapt to change, we welcome any feedback or suggestions to help make our work and processes as appropriate and efficient as possible.

Gary Hall, Chair
Lynnette Kelly, President and Chief Executive Officer