MSRB Requests Comment on Two Fair Pricing Proposals

Date: August 6, 2013

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

MSRB REQUESTS COMMENT ON TWO FAIR PRICING PROPOSALS 

Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) is requesting public comment on two related proposals – one to streamline municipal securities dealers’ existing fair pricing obligations and one on whether to require the use of specific procedures designed to promote fair pricing.

As a first step, the MSRB is proposing to consolidate into a single rule dealers’ existing obligations related to fair pricing now contained in three separate rules: MSRB Rule G-30 on prices and commissions, MSRB Rule G-18 on execution of transactions, and interpretations to MSRB Rule G-17 on fair dealing. Under the proposal, all pricing obligations would be contained in MSRB Rule G-30. This proposal would simplify the fair-pricing rules and not make any substantive change to the obligations of municipal securities dealers.

“This is another step in the MSRB’s ongoing efforts to streamline our rulebook, particularly the numerous interpretations to MSRB Rule G-17 on fair dealing,” said MSRB Executive Director Lynnette Kelly. “Consolidating all fair pricing obligations into a single rule highlights their importance and makes it easier for dealers to comply.”

The MSRB is also seeking input on the merits of requiring municipal securities dealers to use specific procedures to fulfill their fair pricing obligations to investors buying and selling municipal securities. The corporate bond and equity markets have so-called “best-execution” rules. However, the municipal market does not have similar standards, a concern highlighted in the July 2012 report from the Securities and Exchange Commission on the municipal securities market.

“The MSRB wants to hear from market participants about the costs and benefits of enhanced standards of diligence for dealers’ pricing practices and their potential to improve pricing for investors,” Kelly said. “We are gathering broad public input through a concept proposal in order to be as fully informed as possible before deciding whether to recommend applying any best execution-like principles to our market.”

Comments on the consolidation of existing fair pricing rules are due by September 20, 2013. Comments on the best-execution concept release should be submitted to the MSRB no later than October 7, 2013.


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.