MSRB Seeks Approval to Consolidate and Harmonize Fair Dealing Obligations for Municipal Securities Dealers

Date: September 18, 2013

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


Alexandria, VA The Municipal Securities Rulemaking Board (MSRB) today asked the Securities and Exchange Commission (SEC) to approve a package of rule proposals to consolidate existing interpretive guidance under MSRB Rule G-17 related to three key fair dealing obligations for municipal securities dealers. The proposals establish or revise stand-alone rules for time-of-trade disclosures to investors, sophisticated municipal market participants and suitability.

“A year ago the MSRB promised to look for ways to make our rules easier to understand and more consistent with other regulators,” said MSRB Chair Jay Goldstone. “We have been doing so in several areas, and the focus on these three key principles of fair dealing will help dealers more easily identify and comply with their obligations.”

The package of rule proposals filed with the SEC includes a proposed Rule G-47 on time-of-trade disclosures that consolidates existing requirements for dealers to disclose material information to customers in connection with the purchase or sale of a municipal security. Another proposal seeks to consolidate municipal securities dealers’ obligations to experienced investors called sophisticated municipal market professionals (SMMPs).

The MSRB is also asking the SEC to approve its proposal to harmonize proposed MSRB Rule G-19 on suitability with that of the Financial Industry Regulatory Authority’s suitability provisions by adding additional considerations for analyzing the suitability of a recommendation to a customer.

All of the proposed rules are presented in a new, simplified format consisting of rule language followed by supplementary material. This format is the same as that used by FINRA and other self-regulatory organizations (SROs). The MSRB intends generally to transition to this structure for all of its rules going forward in order to streamline the rules, harmonize the format with that of other SROs and make the rules easier for dealers and municipal advisors to understand and follow.

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.