The Municipal Securities Rulemaking Board will soon issue a request for comment on Rule G-12, on inter-dealer confirmations, where it will engage the market on whether to codify or retire nearly 40 pieces of interpretive guidance related to the rule.
That decision came out of the MSRB’s quarterly Board of Directors meeting on April 26-27, where members discussed that upcoming proposal, as well as the many comments they received as part of their look at Rule G-14 on time of trade, and its filing of updates to Rule G-3 on professional qualification with the Securities and Exchange Commission.
“Through conversations with market participants, the MSRB sees a real opportunity to reduce substantially the volume of guidance in the rule book and facilitate compliance by distilling the relevant investor and issuer protection concepts into clear rule text,” said Mark Kim, chief executive officer of the MSRB. “We anticipate broad market agreement that this provision of our rule book does not merit preserving 40 pieces of interpretive guidance dating back as far as the 1970s.”
The board did not single out any specific next steps for Rule G-14, its time of trade proposal that would require municipal securities transactions to be reported within one minute, down from the current 15-minute reporting window, but many of the comments were discussed as well as the Board’s ongoing coordination with the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
“The MSRB continues to analyze trade data and discuss stakeholder feedback to inform the development of rule amendments that would enhance price transparency in the municipal market for investors,” Kim said. “We appreciate the coordination with fellow regulators and input from market participants to work toward a one-minute standard while remaining mindful of important considerations, such as the relationship between a shortened reporting timeframe and a firm’s best execution obligations, potential impacts on smaller firms and operational considerations associated with manual trades.”
The board also received an update on its ongoing review of comments received in response to its proposed amendments to Rules G-47 on time of trade disclosure and D-15, which defines the term “sophisticated municipal market professional.”
The board will also soon file amendments to its Rule G-3 on professional qualification requirements with the SEC that would create an exemption for municipal advisors forced to requalify their registration with a municipal advisor firm after a two year lapse in their Series 50 exams, a move that is in line with its efforts to promote diversity, equity and inclusion in the municipal market for those who temporarily leave the municipal advisory business.
The soon-to-be-filed amendments will be substantially similar to the language put forth in the draft amendments, and will provide a bit more clarity based on some of the comments it received, the MSRB said.
“In a healthy and dynamic municipal market, practice evolved over time, requiring regulators to continually review the rules and associated guidance to ensure they continue to meet their intended objectives effectively and efficiently,” said MSRB chair Meredith Hathorn. “The MSRB is advancing a series of regulatory proposals that will streamline and modernize the rule book, ensuring that our rules appropriately achieve their issuer and investor protection goals without placing undue compliance burdens on regulated entities. We are making significant progress toward this goal, while recognizing that we have a perpetual responsibility to assess our rules and adapt them as needed to advance our mission to promote a fair and efficient market and facilitate capital formation.”