MUNICIPAL SECURITIES

General

Designation Information Regarding Mandatory Participation in Business Continuity and Disaster Recovery Testing

Annually, the Municipal Securities Rulemaking Board (MSRB) publishes a notice establishing the criteria for designating participants for its mandatory business continuity and disaster recovery testing consistent with Regulation Systems Compliance and Integrity (Regulation SCI), which was adopted by the U.S. Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934.1 The SEC requires the MSRB, as an entity subject to Regulation SCI, to, among other things, require certain brokers, dealers, municipal securities dealers and municipal advisors registered with the MSRB (collectively, “MSRB Registrants”) to participate in the testing of the operation of the MSRB’s business continuity and disaster recovery plans (BC/DR Plans), in the manner and frequency specified by the MSRB, provided that such frequency shall not be less than once every 12 months.2 To facilitate this Regulation SCI requirement, the MSRB adopted MSRB Rule A-18, on mandatory participation in business continuity and disaster recovery testing, on November 2, 2015.

MSRB Regulatory Notice 2022-01 (January 13, 2022): Designation Information Regarding Mandatory Participation in Business Continuity and Disaster Recovery Testing

 

MSRB Provides Additional Regulatory Relief During COVID-19 Pandemic

The MSRB filed a proposed rule change with the SEC to further extend additional regulatory relief on a temporary basis to brokers, dealers and municipal securities dealers in light of the operational challenges that persist due to the sustained COVID-19 pandemic. In a continued effort to afford regulated entities an opportunity to better manage and allocate resources, the proposed rule change will continue to allow dealers to conduct internal inspections remotely, subject to certain conditions, for calendar year 2022 until June 30, 2022. The proposed rule change was filed for immediate effectiveness on October 26, 2021.

• MSRB Regulatory Notice 2021-14 (October 26, 2021): MSRB Provides Additional Regulatory Relief During the COVID-19 Pandemic

 

SEC Approves Amendments to Rules G-10 and G-48 Clarifying Notification Requirements for Dealers

On October 5, 2021, the MSRB received approval from SEC for a rule change consisting of amendments to Rule G-10, on investor and municipal advisory client education and protection, clarifying and aligning the requirements for brokers, dealers and municipal securities dealers to provide required notifications under the rule directly to those customers for whom a purchase or sale of a municipal security was effected in the past year and to each customer who holds a municipal securities position. The SEC also approved an accompanying amendment to Rule G-48, on transactions with sophisticated municipal market professionals (SMMPs), allowing dealers to conditionally excluded SMMPs from the requirements under Rule G-10(a). The rules became effective on October 12, 2021.

MSRB Regulatory Notice 2021-13 (October 6, 2021): SEC Approves Amendments to Rules G-10 and G-48 Clarifying Notification Requirements for Dealers

 

MSRB Harmonizes Rules with Requirements of Regulation Best Interest

The MSRB received approval from the SECon June 25, 2020 of amendments to MSRB rules that align MSRB rules to the Commission’s recently adopted Rule 15l-1 under the Exchange Act (“Regulation Best Interest”). The effective date of the amendments to MSRB rules was June 30, 2020, which is the compliance date for Regulation Best Interest.

MSRB Regulatory Notice 2020-13 (June 26, 2020): MSRB Harmonizes Rules with Requirements of Regulation Best Interest