How new MSRB chair hopes to improve communication with stakeholders

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WASHINGTON – New Municipal Securities Rulemaking Board Chair Gary Hall is focused on stakeholder communication and says he is committed to “rightsizing” the MSRB’s considerable financial reserves.

Hall, a senior managing director, national head of investment banking and an equity partner at Siebert Cisneros Shank & Co., succeeded Davenport & Co.’s Lucy Hooper as chair with the start of the board’s new fiscal year on Monday.

The Chicago native and “unapologetic White Sox fan” told The Bond Buyer that he is a true believer in the power of the municipal market and wants market participants to know that the MSRB hears them.

“I’ve got a true reverence for the municipal market,” said Hall, who joined the board in 2014 and had his term extended two years last year. “Public service has always been connected to who I am.”

Hall holds a bachelor’s degree in business administration from Howard University and his first job out of college was working in the Chicago Mayor's Office of Budget and Management. He went on to earn a law degree from the University of Notre Dame.

He also was an executive director in the public finance–investment banking group of JPMorgan Securities, a member of the mergers and acquisitions group at Banc One Capital Markets, and practiced law in the corporate finance department of Gardner, Carton and Douglas (now Drinker, Biddle and Reath). Hall worked for the U.S. Department of the Treasury as a White House fellow under President Bill Clinton.

Hall said isn’t common around the world for citizens to be able to invest in public infrastructure and that he was attracted to the muni market in part because it allows people to be invested in the infrastructure that benefits them.

Hall said that being an MSRB board member has made him a better listener. He wants the market to know that he and the rest of the MSRB are listening to the concerns of broker-dealers, municipal advisors, investors, issuers, bond lawyers, and other members of the public.

“One of the things we’re really committed to doing this year is listening to our stakeholders,” said Hall. He cited the fact that three advisory market groups will report to the MSRB this year. In addition to renewing its Compliance Advisory Group set up last year, the MSRB has created a Retail Investor Advisory Group and a Municipal Fund Securities Advisory Group. The board said that feedback from the groups will help it prioritize its agenda.

“That’s an opportunity for us to get real-time feedback,” Hall said.

Hall’s push for greater clarity in communication between the MSRB and the market comes as the board faces criticism for speaking out on issues that some market participants believe are beyond its statutory regulatory authority.

The most controversial example is the board’s 2017 advisory warning against issuers' “selective disclosure” of information to only a few potential investors. The “market advisory” triggered instant and lasting criticism, with MSRB Chief Regulatory Officer Lanny Schwartz having to fend off rebukes and answer questions about it at last week’s National Association of Bond Lawyers conference in Chicago.

MSRB President and Chief Executive Officer Lynnette Kelly, who participated in the interview with Hall, said the board is mindful of the reaction of the market.

“There’s no question we could have done a better job,” she said. “We own that.”

Hall said he believes that a more active dialogue will help identify perceived problems.

“I think this proactive engagement will help us tease out concerns,” he said.

Hall said also that he is committed to efforts to reduce the MSRB’s financial reserves, another sore spot over the years particularly among the broker-dealers who supply the majority of the MSRB’s revenues through fees. The fiscal 2019 budget summary released on Monday showed that the MSRB expects to run a roughly $4.3 million operating deficit this year with revenues of $36.1 million and expenses of $40.5 million.

The board recently approved a temporary three-month reduction in the organization’s underwriting, transaction and technology fees to take place at the start of the 2019 fiscal year.

“This temporary fee relief is estimated to reduce our excess reserves by $2.6 million, advancing our goal of fair and equitable fees across regulated entities,” Hall said in a release accompanying the budget summary.

Hall also discussed a planned upgrade to EMMA’s search functionality, which is currently under development. The MSRB has gotten near unanimous feedback that EMMA needed that upgrade and Hall said work will continue toward that goal this year.

An ongoing retrospective rule review will also continue, with the MSRB continuing to revisit and solicit comment on existing rules. Hall said the MSRB is also working to further its goal of helping dealers and muni advisors comply with existing rules. The board is working with the Financial Industry Regulatory, Securities and Exchange Commission, and others as part of this goal, he said.

“We’re working a lot behind the scenes with those examiners,” said Hall, adding that the board will be “very, very proactive in helping with compliance support.”

Hall said he is comforted by the knowledge that his dedication to the MSRB’s agenda is matched by that of his colleagues, and that he hopes to be doing a “victory lap” on the goal of improving communication and support for market participants at the end of his term as chair.

Hall will serve as board chair until his term on the board ends on Sept. 30, 2019.

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MSRB rules Securities law Broker dealers Financial regulations MSRB Siebert Williams Shank Washington DC