MSRB Seeks Comment on Concept Proposal to Enhance Protections for Online Municipal Securities Investors

Date: August 9, 2012

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


Alexandria, VA – In light of the growing use of the internet for investing, the Municipal Securities Rulemaking Board (MSRB) today published a concept release requesting comment on a proposal to enhance protections for individual investors who use electronic brokerage platforms to invest in municipal securities.

Electronic brokerage platforms provide a way for investors to purchase and sell securities online, often without the assistance of an investment professional. The MSRB seeks to improve the likelihood that such investors would adequately understand the features and risks of municipal securities and make purchases that are appropriate based on their financial situation and risk tolerance.

“The MSRB is exploring potential new requirements for electronic brokerages to ensure that proper protections are in place for online investors in the municipal market,” said MSRB Executive Director Lynnette Kelly. “We want to hear from market participants as to whether the proposal to strengthen account opening and supervisory practices of dealers would help protect individual investors without imposing an undue burden on dealers.”

The MSRB’s concept release outlines possible new requirements for electronic brokerages, including the delivery of an educational disclosure document to individual investors, collection of information regarding the investment profile of individual investors and more rigorous supervision of accounts and transactions. These new requirements aim to strengthen protections for individual investors, which is central to the mission of the MSRB.

The concept proposal is intended to elicit input from the public on potential benefits and burdens of establishing new account opening and supervision guidelines for electronic brokerages, as well as on potential alternatives. Following a review of the comments received, the MSRB would determine whether to publish a specific rule proposal for further comment. 

Comments should be submitted no later than September 21, 2012.

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.