MSRB Holds Quarterly Meeting

Date: February 4, 2014

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

MSRB HOLDS QUARTERLY MEETING

Alexandria, VA – The Board of Directors of the Municipal Securities Rulemaking Board (MSRB) held its quarterly meeting January 29-31, 2014 in Atlanta, Georgia, where it advanced the MSRB’s efforts to protect investors, improve the efficiency of the municipal securities market and develop a regulatory framework for municipal advisors.

The Board agreed to seek public comment on a proposed rule that would establish for the first time an explicit “best-execution” standard for transactions in the municipal market. The proposed rule would increase municipal securities dealers’ obligations when they buy and sell on behalf of retail investors. The proposed best-execution rule would be harmonized with the Financial Industry Regulatory Authority’s best execution rule for the equity and corporate fixed income markets but be tailored to the characteristics of the municipal securities market.

“A best-ex rule is a key step to complement dealers’ current obligations to achieve a price that is fair and reasonable,” said MSRB Board Chair Daniel Heimowitz. “The MSRB is committed to improving the structure and efficiency of the municipal market for the benefit of retail investors.” The MSRB’s overall strategy includes a plan to create a platform on the MSRB’s Electronic Municipal Market Access (EMMA®) website to display additional pricing information for investors and to provide the ability for investors to easily compare historical pricing on EMMA for municipal securities with similar characteristics.

At its meeting, the Board also focused on implementation of a regulatory framework for municipal advisors. It agreed to request comment on a proposed rule to establish baseline supervision requirements for municipal advisors, designed to help prevent legal violations and to serve as a foundation for the full regulatory regime. The principles-based rule draws on the strengths of regulatory analogs but takes into consideration the diversity of the municipal advisory population, including small and single-person firms.

To help ensure that municipal advisors demonstrate a minimum level of competency before providing or continuing to provide financial advisory services to state and local governments, the MSRB is developing a professional qualification test for municipal advisor professionals. The MSRB will be proposing that all municipal advisor professionals be required to take the exam. Next steps in the development of the test include a survey of municipal advisors on their core activities to inform the MSRB on the areas to be tested and the preparation of a study outline, which must be approved by the Securities and Exchange Commission (SEC). The MSRB will soon request comment on a proposal to establish certain key features of the exam with an eye toward implementing a pilot exam in late 2014 or early 2015.

Finally, the Board directed MSRB staff to seek approval from the SEC to charge municipal advisor firms an annual fee of $300 per professional, to be implemented during the second half of 2014 in parallel with the SEC’s permanent registration process for municipal advisors. The MSRB has been working to establish appropriate and equitable assessments on municipal advisors to fairly distribute assessments across all regulated entities.


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 Congressionally-chartered, 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 subject to oversight by the Securities and Exchange Commission.