MUNICIPAL SECURITIES

General

(NEW) MSRB Updates Rule A-8, on Rulemaking Procedures

The Municipal Securities Rulemaking Board (MSRB) filed an immediately effective rule change with the SEC on May 19, 2021 that makes certain changes to the Board’s rulemaking procedures. These amendments update descriptions of Board rulemaking processes and eliminate redundant or obsolete provisions

MSRB Regulatory Notice 2021-09 (May 19, 2021): MSRB Updates Rule A-8 on Rulemaking Procedures

 

MSRB to Retire Select Interpretive Guidance for Dealers and Municipal Advisors

The MSRB is undertaking a retrospective review of the catalogue of interpretive guidance in its rule book. The goal of this comprehensive review is to streamline and modernize the rule book by clarifying, amending and/or retiring guidance that no longer achieves its intended purposes. The MSRB believes that this multi-year initiative will complement the MSRB’s other retrospective rule review initiatives and will be an impactful way to support compliance and reduce unnecessary costs and burdens for regulated entities, while fulfilling the MSRB’s regulatory obligation to protect investors, municipal entities, obligated persons, and the public interest. As an initial step, the MSRB is retiring 15 pieces of guidance from the MSRB rule book effective May 10, 2021. Such guidance will be archived on the MSRB Archived Interpretive Guidance page of the MSRB.org website, where it can be accessed for its historical value. This retirement date affords an opportunity for any stakeholders to contact the MSRB with any specific comments, questions or concerns.

MSRB Regulatory Notice 2021-02 (February 11, 2021): MSRB to Retire Select Interpretive Guidance for Dealers and Municipal Advisors

 

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

 

Obligations of Senior Syndicate Managers Utilizing Electronic Communications

In November 1998, the MSRB published an interpretation about the use of electronic media to deliver and receive information by brokers, dealers and municipal securities dealers under Board rules (the “1998 Interpretation”). The 1998 Interpretation addresses how dealers may use electronic media to satisfy their delivery obligations under MSRB rules, including communications among dealers and between dealers and issuers. It states, “. . . a dealer that undertakes communications required under Board rules with other dealers and with issuers in a manner that conforms with the principles stated [in the 1998 Interpretation] relating to customer communications will have met its obligations with respect to such communications.” The MSRB wishes to remind dealers of the 1998 Interpretation, particularly in light of the January 13, 2020 compliance date for certain amendments to MSRB Rule G-11, on primary offering practices.

MSRB Regulatory Notice 2020-01 (January 6, 2020): Obligations of Senior Syndicate Managers Utilizing Electronic Communications

 


Amendments to Underwriters’ Fair Dealing Obligations to Issuers Under Rule G-17

The MSRB received approval from the SEC on November 6, 2019 (the “SEC approval order”) to amend and restate the MSRB’s August 2, 2012 Interpretive Notice regarding the fair dealing obligations underwriters owe to issuers of municipal securities under MSRB Rule G17, on conduct of municipal securities and municipal advisory activities (the “Revised Interpretive Notice”). The Revised Interpretive Notice incorporates various amendments to the 2012 Interpretive Notice. See MSRB Notice 2019-20 for more information about the Revised Interpretive Notice and the amendments to the 2012 Interpretive Notice approved by the SEC.

MSRB Regulatory Notice 2019-20 (November 8, 2019): SEC Approves Amendments to Underwriters’ Fair Dealing Obligations to Issuers Under Rule G-17

 

Municipal Advisors

FINRA issued this Notice to remind member firms of their supervisory obligations under FINRA Rules 3110 (Supervision) and 3120 (Supervisory Control System) if they hold or transact in customer accounts owned by municipal entities or obligated persons (municipal clients), as defined in Section 15B of the Securities Exchange Act of 1934 (Exchange Act), and participate in investment-related activities with municipal clients, such as recommending or selling non-municipal securities products to such municipal clients. Under these circumstances, member firms are obligated to determine if such activities require registration as a municipal advisor.

FINRA Regulatory Notice 19-28 (August 16, 2019): Guidance Regarding Member Firms’ Supervisory Obligations When Participating in Investment-Related Activities with Municipal Clients

 

SEC Approves Amendments to MSRB Rules and Data Collection Related to Primary Offering Practices

The MSRB received approval from the SEC on June 27, 2019 of amendments to MSRB Rule G-11, on primary offering practices, MSRB Rule G-32, on disclosures in connection with primary offerings and MSRB Form G-32, regarding a collection of data elements provided in electronic format to the Electronic Municipal Market Access Dataport (EMMA® Dataport) system in connection with primary offerings. The compliance date for the amendments to Rule G-11 and Rule G-32 became effective on January 13, 2020.

MSRB Regulatory Notice 2019-15 (June 28, 2019): SEC Approves Amendments to MSRB Rules and Data Collection Related to Primary Offering Practices

 

Best Execution Rule

The MSRB adopted clarifying amendments to implementation guidance on Rule G-18, on best execution. The Implementation Guidance primarily provides answers to frequently-asked questions (FAQs) about Rule G-18. Since the MSRB’s best execution requirements became effective in 2016, some market participants have communicated to the MSRB that the practice of posting the same bid-wanted for a municipal security simultaneously on multiple trading platforms may have harmful effects on dealers, investors and the market as a whole while not necessarily achieving improved execution for customers. While the posting of bid-wanteds simultaneously on multiple trading platforms is not prohibited by MSRB rules and may be considered by dealers under prevailing facts and circumstances to be consistent with their best-execution obligations and beneficial to their customers, the MSRB has stated previously, including in the Implementation Guidance, that such simultaneous posting is not required.

MSRB Regulatory Notice 2019-05 (February 7, 2019): MSRB Amends Implementation Guidance On MSRB Rule G-18, On Best Execution