MSRB Provides Implementation Guidance on Best-Execution Rule

Date: November 20, 2015

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


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today published implementation guidance to assist municipal securities dealers in complying with the MSRB’s new rule on “best execution” for municipal securities transactions, taking effect March 21, 2016.

MSRB Rule G-18, approved by the Securities and Exchange Commission (SEC) in December 2014, requires dealers to seek the most favorable terms reasonably available for their retail customers’ transactions. The adoption of this key investor protection provision supports existing MSRB fair-pricing rules, promotes fair competition among dealers, and aligns with recommendations in the SEC’s 2012 Report on the Municipal Securities Market. 

“The MSRB is issuing this guidance to facilitate dealers’ compliance with their new obligations and ensure that retail investors consistently receive the benefit of fair handling of their orders to buy or sell municipal securities,” said MSRB Executive Director Lynnette Kelly.

The MSRB’s guidance addresses how best-execution concepts, including the standard of “reasonable diligence,” applies to municipal securities transactions. The guidance also addresses the exemption from the new obligation for transactions with sophisticated municipal market professionals (SMMPs). Read the implementation guidance.

As part of its effort to promote regulatory efficiency and consistency across the fixed income markets, the MSRB coordinated with the Financial Industry Regulatory Authority (FINRA) on the finalization of the implementation guidance.  

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.