How firms will be selected for a key MSRB test
WASHINGTON – The Municipal Securities Rulemaking Board has issued a notice containing the criteria for designating certain municipal brokers, dealers and advisors to participate in the next test of its business continuity and disaster recovery plans.
These tests of MSRB’s BC/DR plans take place at least once every 12 months and are required By the Securities and Exchange Commission’s Systems Compliance and Integrity (SCI) regulation adopted in late 2014 and MSRB’s Rule A-18, which implemented the SCI roughly a year later.
Under Rule A-18, the MSRB designates as participants in the mandatory functional and performance testing of the board’s BC/DR plans those registered entities whose combined submissions of data account for a meaningful percentage of all data submitted measured for various board systems over a certain period.
For its Real-Time Transaction Reporting System (RTRS), the MSRB will designate its top five registered entities in terms of the number of municipal security trades as reported to the RTRS during the calendar month prior to the testing. These entities’ combined activity accounts must account for at least 30% of the number of municipal security trades reported to the RTRS during that month.
Regarding its Short-term Obligation Rate Transparency system (SHORT), the MSRB will designate the top five registered entities acting as program dealers for auction rate securities or marketing agents for variable rate demand obligations (or providing services on behalf of such dealers) that participated in interest rate resets as reported to SHORT during the calendar month prior to testing. The entities’ activity accounts combined must make up at least 30% of the interest rate resets reported to SHORT during that month.
For the primary market data and document submissions to the MSRB’s Electronic Municipal Market Access (EMMA) system, the MSRB will designate the top five entities registered that engaged in underwriting activity in terms of the par amount underwritten and reported on Forms G- 32 during the calendar month prior to testing. These entities’ combined activity accounts must make up at least 30% of the par amount underwritten during that month.
Pertaining to 529 savings plan information submitted to EMMA pursuant to the MSRB’s Rule G-45, the board will designate the top five registered entities that reported to EMMA in terms of the total assets of plans during the calendar quarter prior to the test. The entities' cumulative activity accounts must make up at least 30% of the plans’ total assets reported to EMMA during that quarter.
The MSRB said that if the “top five” participants do not represent at least 30% of the relevant activity of any of these systems, then the registered entities that together represent at least 30% during the measurement period will be designated as participants.
The registered entities required to participate in the test will be individually notified and given instructions at least 45 calendar days prior to the functional and performance test, the MSRB said in its notice.