MSRB Board to Focus on Strategic Planning, MA Continuing Education

WASHINGTON – The Municipal Securities Rulemaking Board will focus on strategic planning and will discuss continuing education for municipal advisors as well as continuing disclosure during its quarterly board meeting here next week.

The self-regulator announced its agenda for the meeting, which is scheduled for Jan. 24-26 and will also include discussion about advertising rules and CUSIP numbers.

The board's strategic planning session follows a call in October for market input on how it should direct its strategic plan. The MSRB received numerous comments from participants. Suggestions for goals included improving the self-regulator's EMMA system, increasing transparency of board operations and costs, and doing more cost-benefit analyses of its rulemaking.

The National Federation of Municipal Analysts recommended that the MSRB improve EMMA's search function and provide more descriptive information in alerts, among other things. The Government Finance Officers Association asked that the MSRB make it easier for issuers to correct or modify the data they have already submitted to EMMA.

Other groups complained about the complexities and burdens that have arisen from increased rulemaking. Bond Dealers of America recommended the MSRB conduct a study to consider how the cumulative regulatory changes from the regulator have increased costs, burdens, and inefficiencies in the market.

The MSRB's discussion about continuing education for municipal advisors (MAs) will center on comments the self-regulator received from a number of firms that generally asked that the board more carefully evaluate and explain the proposed requirements.

The MSRB's proposed CE requirements for MAs would create a "single-pronged" approach similar to one of the two prongs that dealers are currently required to satisfy for their continuing education requirements. All associated persons of MAs who engage in MA activities as well as those who manage, direct, or supervise the firm's municipal advisor activities and its associated persons would be required to participate.

MAs would have to: annually complete a needs analysis that evaluates and prioritizes their applicable training needs; develop a written training plan; and document that the firm provided the training to the covered individuals. The plan should be developed in a way that is appropriate for an MA's business and, at a minimum, would have to cover training on applicable regulatory requirements as well as MA fiduciary duty obligations, according to the MSRB.

The National Association of Municipal Advisors suggested that the MSRB step back and complete an analysis of the impact that the implementation of all the new rules and qualification standards in the framework will have on MAs. Then, NAMA said, the MSRB can determine the scope of continuing education standards and what is best to include in Rule G-3 on professional qualification requirements.

NAMA and other firms also emphasized the need for the MSRB to keep small MAs in mind as it pursues its requirements so that they do not create an overwhelming economic or administrative burden.

When the MSRB board talks about the often-discussed topic of continuing disclosure in the market, it will do so with the goal of determining how it can facilitate improved timeliness of annual financial and operating information. The self-regulator is expecting to update a report issued in May 2015, which, among other things, detailed the amount of time it takes issuers to file their disclosures, a spokesperson said.

The self-regulator's discussion on CUSIP numbers will center on whether it should publish a request for comment to amend its Rule G-34 on CUSIP numbers, new issue and market information, to harmonize certain definitions with its Rule G-32 on disclosures in connection with primary offerings.

Rule G-34 details when underwriters and financial advisors must apply for the assignment of a CUSIP number for a new issue of munis. The MSRB, in a prior agenda for a quarterly meeting, had said it has historically interpreted the underwriter definition in G-34 to include placement agents and dealers that purchase securities from an issuer as principal, and that the proposed amendment it was considering would codify the rule's original intent.

The board's attention to advertising rules during the upcoming meeting would entail updating existing dealer advertising rules and applying comparable provisions to municipal advisors. MSRB Rule G-21 currently deals with advertising rules for dealers. The MSRB's goal of updating Rule G-21 while expanding it to MAs would follow a trend of proposing similar changes to other originally dealer-specific rules.

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