WASHINGTON — Muni advisory issues will continue to dominate the Municipal Securities Rulemaking Board at its packed three-day meeting Wednesday through Friday in San Diego.

The MSRB is meeting for the third time since it was reconstituted as a majority-public self-regulator on Oct. 1 and began to oversee muni advisers. Though it typically meets just four times each calendar year, it’s on pace to double that figure, reflecting its busy agenda and new mandates.

Sources said that the 21-member board will discuss whether to issue the first of several sets of guidance on how advisers should comply with its Rule G-17 on fair dealing. The Securities and Exchange Commission approved extending the rule to advisers last month, generally prohibiting them from engaging in any deceptive, dishonest, or unfair practices.

But board officials have said it will take years to fully flesh out guidance on how the rule applies to specific fact patterns involving advisers. 

The MSRB also will weigh whether it is fair and equitable to assess additional fees on the newly regulated advisers. Currently, they must pay an initial fee of $100 and an annual registration fee of $500. Dealers must pay those and many other fees, including new transaction fees that were raised this month to defray the costs tied to the regulation of advisers and the continued development of the Electronic Municipal Market Access, or EMMA, site.

In addition, the MSRB plans to consider how to extend its existing Rule G-20 on gifts and gratuities to muni advisers, sources said. Under the rule, dealers generally can not give gifts to clients valued at more than $100 per year.

As it begins to weigh professional qualifications for advisers, the MSRB is hosting a focus group with advisers Wednesday in Los Angeles, in which it will solicit topics for a test to be developed for advisers. The board is close to signing off on changes to Rule G-23 that would prohibit dealers from first serving as financial advisers and then becoming underwriters in the same transactions. Once the measure is submitted to the SEC, it will be subject to another round of public comments before it is approved.

The MSRB has delayed submitting the measure for several months, but it is not expected to make any substantive alterations to it compared to draft changes floated in August.

Currently, G-23 allows dealer-FAs to become underwriters in negotiated transactions if they disclose to the issuer possible conflicts of interest stemming from the role switch, disclose their expected compensation, and obtain the issuer’s consent. In competitive deals, dealer-FAs must obtain the issuer’s written consent before bidding on the bonds.

But in a May speech, chairman Mary Schapiro said role-switching is a “classic conflict of interest” and essentially ordered the rule overhauled.

Many of the items before the board are administrative in nature, including signing off on its annual Internal Revenue Service Form 990. The board must also consider whether to launch a subscription service for the historical data and information it has collected.

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