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Milestones in Municipal Securities Regulation

Milestones in Municipal Securities Regulation

Over the decades since its creation, the Municipal Securities Rulemaking Board has created and updated rules to safeguard the integrity of the municipal securities market and to provide market transparency. Listed below is a selection of some of the more impactful regulatory and transparency initiatives undertaken by the MSRB.


1975 – Creation of the Municipal Securities Rulemaking Board
The MSRB was established by Congress as a self-regulatory organization to protect investors and the public interest by promoting a fair and efficient municipal securities market. The MSRB’s role includes developing rules to regulate the securities firms and banks involved in underwriting, trading and selling municipal securities. The MSRB Board, composed of members from the municipal securities dealer community and the public, sets standards for all municipal securities dealers. All MSRB rules are subject to oversight by the Securities and Exchange Commission.

1976 – MSRB Establishes Uniform Practice Rule
The MSRB creates standardized industry practices for trade confirmation, clearance and settlement, making it easier for dealers to complete transactions with one another.

1978 − MSRB Creates Rules on Underwriting Practices
New rules, including MSRB Rule G-11 on underwriting practices, are created to address major concerns among market participants regarding the operation of underwriting syndicates purchasing new issue bonds from issuers. 

1978 – Fair Practice Rules Created
The MSRB establishes high ethical standards for dealers in the municipal securities industry, including rules on suitability, pricing and fair dealing.

1978 – MSRB Creates Standard for Yield Comparisons
The MSRB establishes a standard for a fixed-income securities market that allows investors in fixed-income instruments to more easily compare yields to analyze alternative investment opportunities in municipal securities.

1979 – MSRB Requires Use of CUSIP Numbers
Alphanumeric codes, or CUSIPs, were assigned by CUSIP Global Services to reflect the differences in securities that are relevant to trading and investment decisions. A new MSRB rule requires that CUSIP numbers appear on confirmations of transactions and that the securities delivered on those transactions match the CUSIP numbers appearing on the confirmations. The rule sets the stage for the computerization of the municipal securities market.


1980 – MSRB Releases Report on Pricing
The landmark report marks the MSRB’s first public attempt to address pricing practices in the municipal securities market. The report grew out of dialog with the industry aimed at establishing broad parameters for acceptable spreads in transaction prices taking into account bond maturity and market risks and other factors.

1982 – Tax Equity and Fiscal Responsibility Act Enacted
One provision of the Tax Equity and Fiscal Responsibility Act called for the elimination of all bearer securities. This provision encouraged the municipal bond market to move to electronic book-entry-only issuance, which has eliminated the use of paper certificates.   

1984 – Automated Clearance and Settlement Systems
Through the MSRB’s adoption of new uniform practice rules, the municipal securities industry takes progressive steps toward an all-electronic standard for processing transactions in inter-dealer and institutional customer trades. This eventually eliminates the need for paper confirmations and physical settlements of these transactions.  

1989 – SEC Adopts Rule 15c2-12
The SEC mandates that underwriters for most bond issues obtain the issuer’s agreement to deliver an official statement to the underwriter within seven business days after the date of sale. The SEC also requires underwriters to review the official statement to determine whether all key factors had been disclosed. The landmark rule promotes increased disclosure and transparency in the municipal securities market.


1990 – MSRB Requires Filings of Disclosure Documents
The MSRB adopts a rule requiring dealers to send the MSRB two copies of the official statement. The MSRB begins serving as the central repository for official statements.

1993/94 – Groundbreaking Pay-to-Play Rule G-37 Adopted
The MSRB adopts its pay-to-play Rule G-37, which prohibits a dealer from negotiating business with an issuer within two years after the dealer or one of its municipal finance professionals makes a political contribution to an issuer official.  

1995 – MSRB Creates Transaction Reporting System
The MSRB develops a daily summary report of bonds traded between dealers, a first step in providing comprehensive price transparency in the municipal securities market.

1996 – MSRB Adopts Rule on Use of Outside Consultants
A new MSRB rule sheds light on dealer use of consultants to solicit municipal securities business. MSRB Rule G-38 requires that issuers contracted by consultants be informed that the consultants are working on behalf of a dealer.

1998 – MSRB Publishes Daily Trade Reports
The MSRB implements another major step in providing market transparency, expanding its daily reports on dealer trading to include transactions with customers.


2000/2001 – MSRB Adopts Rules on 529 Plans and Other Municipal Fund Securities
The MSRB adopts an initial set of fair practices and other rules relating to dealer transactions in 529 college savings plans and local government investment pools, known as municipal fund securities.

2001 – The MSRB Launches the Muni Council
The MSRB assembles leading municipal securities industry groups and initiates a long-range planning process that results in the creation of the Muni Council and a multi-year process to improve the efficiency and effectiveness of disclosure practices in the municipal securities market.

2002 – Electronic Official Statement Submission System is Launched
The MSRB launches its online system for the submission of official statements by underwriters, setting the stage for development of the Electronic Municipal Market Access (EMMA®) website.

2005 – MSRB Revises Rule G-38 to Ban Use of Consultants
The MSRB revised its Rule G-38 after industry trends indicate increased dealer compensation to consultants and an increase in political contributions by consultants. The revised rule prohibits hiring persons, other than employees, for the purpose of soliciting municipal securities business.    

2005 – MSRB Makes Comprehensive Real-Time Trade Reports Available
The MSRB requires dealers to submit transaction information to the MSRB within 15 minutes of execution of all trades, providing real-time public access to trade information.

2005/2006 - MSRB Establishes 529 Plan Disclosure and Advertising Standards
In a series of regulatory actions, the MSRB adopts rules for disclosure and advertising of 529 plans that ensure fair and complete disclosure in the 529 plan market, consistent with mutual fund standards.

2006 - MSRB Launches Regulatory Effort to Establish All-Electronic Disclosure System for Municipal Securities
The MSRB publishes a concept release setting forth its vision of a centralized electronic disclosure system for the municipal securities market.

2008 – MSRB Launches the EMMA® Website
The launch of the pilot program for the Electronic Municipal Market Access (EMMA®) website was the first time that historical data and statistics on the municipal securities market were available from a single source, free of charge. EMMA is an online system that provides public access to disclosure documents, real-time trade price data and educational resources for the municipal securities market.

2009 – MSRB Provides Auction Rate Security and Variable Rate Demand Obligation Transparency
The MSRB launches a program to collect information about auction rate securities and variable rate demand obligations from broker-dealers and disseminate it to the public for free through EMMA. Dealers are required to provide the MSRB with interest rates set for auction rate securities and variable rate demand obligations. The program provides all market participants with additional critical information necessary to trade these financial products.

2009 – MSRB Implements All-Electronic Official Statement Dissemination Standard
The MSRB revises its Rule G-32 to require municipal securities underwriters to submit electronic copies of official statements and advance refunding documents (rather than paper copies) to EMMA. Electronic documents make the submission process less costly and speeds dissemination to investors.

2009 – MSRB Begins Collecting and Posting Continuing Disclosures
Under amendments to SEC Rule 15c2-12 adopted by the SEC in 2008, municipal bond issuers began to provide electronic copies of continuing disclosure documents to the MSRB through EMMA, which made them immediately available to the public. In 2009, the MSRB officially begins to collect all disclosure documents associated with municipal bonds under a combination of MSRB and SEC rules.


2010 – MSRB Requires Additional Political Contributions Disclosure
The MSRB revises its Rule G-37 to require disclosure of dealer contributions to municipal bond ballot campaigns. 

2010 – Congress Expands MSRB's Mission and Jurisdiction
The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed by President Barack Obama on July 21, 2010, expands the MSRB's mission to include the protection of municipal entities and obligated persons. It also granted the MSRB rulemaking authority over municipal advisors. The Dodd-Frank Act also established a public majority Board of Directors for the MSRB.

2012 – MSRB Expands Obligations of Underwriters
The MSRB issues an interpretive notice to its Rule G-17 on fair dealing to outline explicit and expanded requirements for underwriters aimed at protecting state and local governments that issue municipal bonds.

2012 – MSRB Begins Formal Retrospective Rule Review Process
The MSRB begins a more formal process of revisiting its rules and their interpretations to help ensure that they continue to achieve their intended purposes and take into account the current state of the municipal securities market. Keep up with the progress here.

2014 – MSRB Prohibits Unexpected Changes in Bond Authorizing Documents
MSRB enhances protections for investors by amending MSRB Rule G-11 to generally prohibit municipal securities dealers from providing consent to changes to authorizing documents.

2014- MSRB Strengthens Retail Order Period Protections
Amendments to MSRB Rule G-11 establish certain basic protections for issuers and investors.

2015 – MSRB Creates Supervision and Professional Qualification Requirements for Municipal Advisors
The MSRB creates explicit obligations for municipal advisors to supervise their personnel and promote compliance with regulatory requirements.  The MSRB also requires that advisors meet threshold requirements in order to engage in municipal advisory activities.

2015 – MSRB Marks 40 Years of Municipal Market Regulation
The MSRB looks back on its four decades of efforts to ensure a fair and efficient municipal market with a commemorative video.

2016 - MSRB Administers First Professional Qualifying Examination for Municipal Advisors
The MSRB begins requiring all municipal advisor representatives to take and pass the Municipal Advisor Representative Qualification Examination (Series 50) to demonstrate understanding of the regulations and business of engaging in municipal advisory activities.

2016 - MSRB Implements Best-Execution Standard for Municipal Securities Transactions
The MSRB adapts an important investor protection from the corporate and equity markets for the municipal market with the creation of Rule G-18, which requires municipal securities dealers to exercise due diligence in obtaining the most favorable terms available when executing transactions for retail investors.

2016 - MSRB Makes ABLE Offering Documents Available on EMMA
Program disclosure documents for tax-advantaged savings vehicles established by states under the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act) are available on EMMA.

2016 - MSRB Extends Gifts Limits to Municipal Advisors
Municipal advisors become subject to Rule G-20, which protects against improprieties and conflicts of interest that may arise when regulated entities or their associated persons give gifts or gratuities in relation to the municipal securities or municipal advisory activities of the recipients’ employers.

2016 - MSRB Establishes Core Conduct Rule for Municipal Advisors
The MSRB creates Rule G-42 to ensure firms and individuals that advise state and local governments on municipal finance transactions and products are subject to detailed regulations on their professional conduct, including rules furthering the federal fiduciary duty to their municipal entity clients established under Dodd-Frank Wall Street Reform and Consumer Protection Act.

2016 - Pay-to-Play Regulations Apply to Municipal Advisors
MSRB Rule G-37 is extended to municipal advisors to curb the giving of political contributions to state and local officials in exchange for the award of municipal advisory business, and provide greater transparency regarding the municipal advisors' political contributions.

2017 - MSRB Establishes Continuing Education Requirements for Municipal Advisors
The MSRB established continuing education requirements for municipal advisor firms to ensure that individuals providing municipal advisory services to municipal entities and obligated persons remains current in their industry knowledge. 

2018 - MSRB Creates Mark-up Disclosure Rule
In an effort to improve investors’ ability to assess the cost of transacting in municipal bonds, the MSRB created a rule to require municipal securities dealers to provide retail investors information about compensation dealers receive when buying municipal bonds from, or selling them to, investors.

2018 - MSRB Establishes Formal Academic Program to Further Support Market Research 
The MSRB established a formal Academic Program as part of its mission to support academic and other researchers. The program includes a new Visiting Scholar position and the ongoing provision of multiple municipal market data sets to universities and other research institutions whose work can help inform regulatory policy.

2019 - MSRB Launches Series 54 Examination for Municipal Advisors 
The MSRB developed and required a qualifying examination for municipal advisor principals—those individuals directly engaged in the management, direction or supervision of the municipal advisory activities of a municipal advisor firm and its associated persons.

2019 - MSRB Establishes Advertising Rules for Municipal Advisors
The MSRB created MSRB Rule G-40, on advertising by municipal advisors, and established new interpretive guidance on the use of social media. The MSRB also updated existing advertising rules for dealers.


2020 – MSRB Reforms Governance Practices
Following a year-long review of its governance practices, the MSRB instituted several notable reforms, resulting in a smaller, more efficient Board and tighter eligibility requirements for Board members.

2020 – MSRB Responds to COVID-19

The MSRB closely monitored the impact of the coronavirus disease (COVID-19) on municipal market participants and market activity. The MSRB then proactively provided targeted, temporary regulatory relief to MSRB-regulated entities and published data and research to help municipal market stakeholders. The MSRB periodically extended some of this relief, as appropriate, over the course of the next few years.

2021 – MSRB Launches Rule Book Modernization Initiative

The MSRB began a multi-year initiative to review its entire library of interpretive guidance and streamline and modernize its rule book by clarifying, amending or retiring outdated guidance. The MSRB kicked off this initiative by retiring 15 pieces of dated guidance.

2022 -- MSRB Implements Structural Changes to Its Fee Setting Process

The MSRB instituted a new fee setting process that better manages its reserves while ensuring the organization sufficient revenues to fund its operations.

2022 -- MSRB Applies Regulation Best Interest to Bank Dealers

The MSRB amended Rule G-19, on suitability of recommendations and transactions, to align the rule with the SEC’s Rule 15l-1 under the Exchange Act (Regulation Best Interest) for certain municipal securities activities of bank dealers.

2022 -- MSRB Amends Rule G-3 on Dealer Continuing Education Program Requirements

The MSRB proposed change to Rule G-3 modified Continuing Education requirements for dealers to update the Regulatory Element and Firm Element requirements.

2023 -- MSRB Creates New Rule G-46 on Duties of Solicitor Municipal Advisors

The new rule established the core standards of conduct for solicitor municipal advisors when engaging in solicitation activities that would require them to register with the SEC and the MSRB as municipal advisors.

2023 -- MSRB Approves Moving Municipal Market Trading to T+1 Settlement

The MSRB adopted amendments to Rules G-12 and G-15 to transition the municipal securities settlement cycle to T+1 beginning in May 2024.

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