MSRB NOTICE 2012-09 (FEBRUARY 29, 2012)


The Municipal Securities Rulemaking Board (the “MSRB”) engages in long-range planning undertaken in support of its mission, and recently published a long-range plan for its market transparency products. This plan establishes a vision for the evolution of the MSRB’s information systems consistent with regulatory priorities and available resources.

In addition to planning for the development of specific market transparency products, the MSRB conducts an annual assessment to establish regulatory and other priorities for the next fiscal year, which begins in October. This planning process takes into account ongoing analyses of market risks, enforcement actions, market trends and other developments that inform the MSRB’s activities. Consideration of new municipal market products and transactions, the information needs of investors and state and local governments, and the conduct of municipal market professionals also support the MSRB’s annual assessment of priorities.

The MSRB has published on its website its priorities for the current fiscal year, which began on October 1, 2011. The current fiscal year’s priorities include initiatives relating to retail investor protection, municipal entity protection, market transparency program initiatives and long-range planning, 529 college savings plans, electronic trading and brokerage, and municipal advisors. The long-range plan for market transparency products described above, and the various initiatives announced by the MSRB since October 1, 2011, represent steps taken during this fiscal year to implement these priorities.

As the MSRB begins to develop its priorities for the fiscal year beginning October 1, 2012 (“fiscal year 2013”), it is seeking feedback from market participants, other stakeholders and the general public to ensure that its planning activities include the broadest-possible array of input and information to help establish regulatory and other priorities.

This year, the MSRB’s annual planning process for fiscal year 2013 will take into account rulemaking related to municipal advisors that was suspended in fiscal year 2011 (to the extent not completed in the current fiscal year),[1] and initiatives contemplated in the MSRB’s long-range market transparency plan, as well as other issues the MSRB is already assessing during the current fiscal year, including price transparency and disclosure of material information. Also considered during the planning process are the MSRB’s established activities, including operation of its Electronic Municipal Market Access (EMMA®) system, regulatory enforcement support, market leadership, outreach and education programs. Importantly, the MSRB must continually assess how, given current funding levels and multiple priorities, it can best serve the municipal securities investors and municipal entities it is charged with protecting.

The result of the MSRB’s annual planning exercise will be the development of a work plan with specific initiatives prioritized for the upcoming fiscal year. It should be noted that the MSRB’s annual initiatives support long-term strategic objectives and represent priorities executed in conjunction with the MSRB’s ongoing regulatory and market transparency activities.

In the past, the MSRB has informally solicited views from a broad audience for its annual planning activities; however, this year marks the first time that the MSRB is formally seeking public input, which will be made available to all interested parties on the MSRB’s website, at The MSRB believes that creating a mechanism to collect and make public feedback received on MSRB priorities will enhance the MSRB’s annual analysis, potentially raise new topics and issues for inquiry and review, and provide a new level of transparency in the MSRB’s operations. 

The establishment of the MSRB’s fiscal year priorities remains the responsibility of the Board of Directors, balancing its statutory mandate, current market practices and conditions, emerging trends and risks, and available resources. Any prioritization process is likely to result in competing priorities and resource limitations, initiatives that may be outside the scope of the MSRB’s jurisdiction or mission, and others best undertaken by other regulatory organizations or by the private sector.

As the MSRB implements initiatives throughout the fiscal year, the public and others will have additional opportunities to comment on individual aspects of these initiatives as they are advanced by the MSRB.

When providing feedback, the MSRB encourages commenters to be as specific as possible and provide as much information as possible about particular issues and topics. In addition to providing the MSRB with specific concerns, the MSRB encourages commenters to provide input on the following questions:

  1. Are there significant market risks that the MSRB should be addressing?
  2. Are there activities undertaken by brokers, dealers, municipal securities dealers or municipal advisors that pose risks to investors, municipal entities (including their taxpayers) or the integrity of the market as a whole?
  3. What, if any, changes could be made in the municipal market that would promote its fairness and efficiency for all participants?

Commenters may submit their feedback through March 23, 2012.

The MSRB is a self-regulatory organization with primary responsibility under the Securities Exchange Act of 1934 (the “Exchange Act”) for rulemaking in the municipal securities market. The mission of the MSRB is to protect investors, state and local government issuers, other municipal entities and the public interest by promoting a fair and efficient municipal market.

Under the Exchange Act, the MSRB is charged with adopting rules with respect to transactions in municipal securities effected by brokers, dealers and municipal securities dealers and advice provided to or on behalf of municipalities or obligated persons by municipal advisors with respect to municipal financial products, the issuance of municipal securities, and solicitations of municipal entities or obligated persons undertaken by municipal advisors.

In addition to its comprehensive body of rules governing the activities of brokers, dealers, municipal securities dealers and municipal advisors, the MSRB provides market transparency products with the goal of making market information as widely available as possible. Market leadership, outreach and education provided by the MSRB also support its investor and issuer protection mission.

The MSRB does not regulate municipal entities or obligated persons, and has no jurisdiction over their activities. The MSRB does not enforce its rules, as enforcement activities are conducted by the Financial Industry Regulatory Authority, the Securities and Exchange Commission and bank regulators.  .

February 29, 2012

[1] See MSRB Notice 2011-51 (September 12, 2011). Such rulemaking was suspended awaiting final adoption by the Securities and Exchange Commission (the “SEC”) of its permanent municipal advisor registration rule and related definitional rulemaking. See Exchange Act Release No. 63576 (December 20, 2010), 76 FR 824 (January 6, 2011). The MSRB noted in MSRB Notice 2011-51 that it expected to resubmit the suspended rulemaking to the SEC after its adoption of a permanent municipal advisor registration rule.