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MSRB Notice

Amendments to Rules A-3(f) and A-6(c), on Board Member Compensation

On December 16, 2005, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) amendments to Rules A-3(f) and A-6(c) relating to Board member compensation.[1]  The MSRB has been reviewing its Administrative Rules (“A-Rules”) to make sure that they are consistent with Virginia law (where the MSRB is incorporated) and current good corporate governance practices.  Rule A-3(f), on compensation and expenses, and Rule A-6(c), on committees of the Board, both pertain to Board member compensation practices.  These two provisions are somewhat outdated and do not allow the Board appropriate administrative flexibility to implement improved compensation and reimbursement practices consistent with the Board’s corporate governance practices.  To accomplish this goal, the Board determined that Rule A-6(c) should be deleted and Rule A-3(f) should be modeled on a provision found in the NASD and Nasdaq By-Laws[2] such that the Board has a general grant of authority to provide for reasonable compensation and/or reimbursement to Board and committee members.  The amendments became effective upon filing with the SEC.

Questions about this filing may be directed to Carolyn Walsh, Senior Associate General Counsel.

 December 16, 2005

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Rule A-3:        Membership on Board

(a) – (e) No change

(f) Compensation and Expenses. The Board may provide for reasonable compensation of the MSRB Chair, Committee Chairs, members of the Board, and members of any Committee, including Committees made up entirely of non-Board members.  The Board also may provide for reimbursement of actual and reasonable expenses incurred by such persons in connection with the business of the MSRB.   [Members shall be entitled to an allowance for transportation expenses, to the extent provided by resolution of the Board, from their home to the site of a meeting of the Board and from the site of such meeting to their home, together with a per diem to be set by the Board for those days or fraction thereof on which they attend Board meetings or participate in other designated activities. Members of the Board shall also be entitled to reimbursement for actual and necessary expenses incurred by them in connection with any other official business of the Board. Except as provided in section (c) of rule A-6, no member of the Board shall be entitled to receive any other compensation from the Board.]

Rule A-6:        Committees of the Board

(a)- (b) No change

[(c) Members of a standing or special committee of the Board shall be entitled to a per diem allowance to be set by the Board for those days or fraction thereof on which such committee meets, subject, however, to the approval of the Chairman of the Board with respect to each such meeting.]

[1] File No. SR-MSRB-2005-17.  Comments submitted to the SEC should refer to this file number.

[2] See NASD By-Law Sec. 9.1, on Compensation of Board, Council, and Committee Members (Amended by SR-NASD-97-71 eff. Jan 15, 1998.); and Nasdaq By-Law Sec. 6.1, on Compensation of Board, Council, and Committee Members (Amended by SR-NASD-97-71 eff. Jan 15, 1998.)

[3] New language is underlined; deletions are in brackets.