WASHINGTON — The Municipal Securities Rulemaking Board sent letter to the Securities and Exchange Commission defending the MSRB’s proposal to loosen the standard of independence for public board members.

The letter is a response to largely negative comments that issuers, non-dealer municipal advisors, and financial reform advocates have filed with the SEC regarding the MSRB’s proposed modification to its Rule A-3, which governs how board members are appointed. The rule states that public board members cannot have worked for a broker-dealer in the past two years and cannot have a “material business relationship” with broker-dealers, which it defines as a “relationship with any municipal securities broker, municipal securities dealer, or municipal advisor, whether compensatory otherwise, that reasonably could affect the independent judgment or decision making of the individual.”

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