PHOENIX – The Municipal Securities Rulemaking Board’s net assets rose to $74.4 million in fiscal year 2017 from $69.3 million the prior year according to the board’s newly-released audited financial report, which the self-regulator’s chief financial officer said reflects the organization’s stability.

The MSRB released its financial report Thursday. The 32-page document, which also includes descriptions of board activities and information about the muni market, shows the MSRB’s year-over-year financial changes during the year that ended Sept. 30, 2017. The more than $5 million increase in the MSRB’s net assets followed a slight dip from fiscal 2015 to 2016. Both revenues and expenses were nearly flat on a year-over-year basis, the numbers show.

Nanette Lawson, MSRB CFO
Nanette Lawson, MSRB CFO

The MSRB’s revenues totaled $40.95 million in fiscal 2017, with about $25 million of that tied to underwriting assessment fees and transaction fees charged to dealer firms. Technology fees brought in nearly $8 million, annual and initial fees about $2 million, data subscriber fees $1.9 million, and municipal advisor fees $1.2 million. Rule violation fines brought in less than $1 million, and the remainder of the board’s revenues came from data subscriber fees and other income.

While revenues on paper were higher than the $35.38 million the MSRB totaled in fiscal 2016, said Nanette Lawson, the MSRB’s chief financial officer, the 2016 figure is net of some $5 million of rebates that the board returned to regulated entities. As such, Lawson said, revenues were actually quite consistent with the prior year.

The MSRB’s expenses were $35.8 million in fiscal year 2017, up just slightly from fiscal 2016’s $35.6 million. Market structure, transparency and operations expenses accounted for about $17.6 million of the 2017 figure, while market regulation and professional qualifications represented another $7.5 million.

Executive leadership, finance, risk and administration expenses totaled $5.7 million, and the remainder of expenses was attributed to market outreach and the board of directors.

“The takeaway is that we’re a stable organization that has the resources to execute our mission,” said Lawson.

MSRB executive director Lynnette Kelly said in the documents that the MSRB strives to maintain resources allowing it to fulfill its mission in the face of an inherently volatile revenue forecast.

“The MSRB is dedicated to managing resources responsibly and maintaining sufficient reserves to operate without interruption, regardless of market conditions,” said Kelly. “The majority of our revenues are based on inherently volatile market conditions, which makes annual budgeting an art as much as a science.”

“We strive to make reasonable predictions, such as for bond volume, which remains challenging given economic factors, the unpredictability of the direction of interest rates, the impact on refundings and new-money issuance, alternative sources of capital for issuers, and public policy changes including tax reform,” Kelly continued.

Lawson said the MSRB’s audited financials represent historical documents, in contrast to the MSRB’s new executive budget summaries, the first of which was released in October. The MSRB said at that time that it was expecting $39.8 million of revenues and had budgeted for $40.5 million of expenses.

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Kyle Glazier

Kyle Glazier

Kyle Glazier is a reporter covering market trends, infrastructure, and the Far West region for The Bond Buyer.