MSRB Proposes Expanding Pool of Eligible Public Candidates for its Board

Date: July 3, 2013

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


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today proposed amending the administrative rule that defines the scope of candidates eligible to serve as public representatives on its Board of Directors. The 21-member Board, which establishes regulatory policies and oversees the operations of the MSRB, has eleven independent public members and ten members drawn from entities regulated by the MSRB, including broker-dealers, banks and municipal advisors.

The proposed amendment to MSRB Rule A-3, filed with the Securities and Exchange Commission, addresses the concern that the current rule limits the pool of qualified potential public representatives. Currently, the standard for independence disqualifies many individuals with the expertise and knowledge to represent investors because these individuals have a regulated entity within their employer’s corporate structure.   

The MSRB seeks to adopt a more function-oriented approach that would not categorize all individuals who have a municipal securities dealer within their corporate structure as regulated representatives. The proposed amendment would allow individuals nominally affiliated with a regulated entity to be considered as public representatives as long as their affiliation would not reasonably affect their independent judgment.

“The MSRB believes that this approach will provide the Board with the flexibility to consider a broader set of qualified candidates to represent varied investor perspectives and that it is consistent with the standards of an independent, public-majority board,” said MSRB Executive Director Lynnette Kelly. 

The proposed amendment aligns the MSRB’s standard with that used by the Financial Industry Regulatory Authority to determine the eligibility of its public board candidates.

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 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.