MSRB Prepares for Municipal Advisor Rulemaking and Expanded Mission

Date: September 15, 2010

Contact:         Jennifer A. Galloway, Chief Communications Officer
                      (703) 797-6600


Alexandria, VA - The Municipal Securities Rulemaking Board (MSRB) announced today it will commence its municipal advisor rulemaking and registration activities after October 1, 2010, the effective date for provisions of Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) that relate to regulation of municipal securities. The MSRB also is preparing for its transition to a majority independent public board of directors with municipal advisor representation, which will be seated on October 1, 2010. As of this date, the MSRB will have a stronger investor and municipal entity protection mandate and its jurisdiction will be broadened to include the regulation of municipal advisors. 

Municipal advisors are required to register with the Securities and Exchange Commission (SEC) by October 1, 2010. The MSRB will begin its own registration process following the adoption of associated MSRB administrative rules. Upon the seating of its new board of directors, the MSRB will begin working on a broad range of administrative and substantive rules to reflect its broadened investor and municipal entity protection mission under Section 15B of the Securities Exchange Act of 1934, as amended by the Dodd-Frank Act. No MSRB rules will apply to municipal advisors prior to such rulemaking by the Board, with the exception of broker-dealers and bank dealers providing financial advisory services to issuers of municipal securities. Dealer financial advisors are already subject to all MSRB rules. 

Municipal advisors include a variety of different types of firms and individuals that provide advice on municipal securities or municipal financial products to state and local governments and other municipal entities, as well as to certain beneficiaries of municipal bond issues – such as hospitals, colleges and other obligated persons. Municipal advisors also include firms and individuals that solicit business on behalf of broker-dealers, bank dealers, other municipal advisors or investment advisers from municipal entities, such as public pension funds, 529 plans, local government investment pools and other state and local governmental entities or funds.[1]

Municipal advisors should note that, pursuant to amended Section 15B(c)(1) of the Exchange Act, they are subject to a federal fiduciary duty to their municipal entity clients as of October 1, 2010, even before MSRB rulemaking on the subject.

To receive news and notices from the MSRB that relate to municipal advisors, sign up for email notification

[1] The definitions of “municipal advisor” and “municipal entity” are found in Sections 15B(e)(4) and (8), respectively, of the Exchange Act of 1934.  Read amended Exchange Act Section 15B.  

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.