Dealer and non-dealer municipal advisers have until Dec. 31 to register with the Municipal Securities Rulemaking Board under a new system launched Monday.
The MSRB is requiring advisory firms to electronically complete an amended Form G-40 that will provide it with basic contact details and information about the categories of advisory work they perform. The Securities and Exchange Commission signed off on the system and the amended form late last week and the board described the new requirements in a notice issued Monday.
A related proposal to extend the MSRB’s rules G-5 on disciplinary actions and G-17 on fair dealing to municipal advisers is still pending before the SEC.
Individual municipal advisers are not required to register with the MSRB unless they are sole proprietors, the board said in the notice, which also explained that dealer-advisers already registered with the MSRB as dealers must still register with the board as muni advisers.
However, the MSRB said it has significantly improved the registration process for dealers, streamlining it to an all-electronic system that replaces an outdated one based on paper. Both dealer and adviser registrations will be handled electronically going forward, the board said.
Before registering with the MSRB, advisers must first register as muni advisers with the SEC, which implemented a temporary registration system in September.
In addition to collecting basic contact information about advisory firms and the categories of advice they provide, the SEC also is asking for applicants to provide disciplinary histories for their firms and employees, if they exist.
The SEC plans to roll out a permanent registration system in the coming months, commission officials have said.
The dual registration systems reflect provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act that require SEC registration and MSRB oversight of advisers as of six weeks ago, on Oct. 1.
Under the new law, the SEC must enforce MSRB advisory rules.
For months, some industry groups, particularly the Securities Industry and Financial Markets Association, have sought clarification from federal regulators concerning perceived ambiguities about advisory provisions in the law and to whom they apply. But the MSRB’s system does not directly address those concerns. Instead, the board and SEC are expected to draft guidance over the coming months and years.
Under the Dodd-Frank law, muni advisers are defined as individuals that provide advice to, or solicit, “municipal entities” or obligated persons about municipal financial products or the issuance of muni securities.
They include but are not limited to financial advisers, swap advisers, guaranteed investment contract brokers, placement agents, and solicitors.
The law specifically exempts some market participants from registration.
They include employees of municipal entities, dealers acting as underwriters, SEC-registered investment advisers providing investment advice, Commodity Futures Trading Commission-registered trading advisers providing advice related to swaps, attorneys providing legal advice or “traditional” legal services, and engineers providing engineering advice.
The SEC registration system is free. But the MSRB’s system requires that advisers first pay an initial fee of $100 and then an annual fee of $500. The fees are waived for dealer-advisers that have already registered as dealers.
As with the SEC, the MSRB is making available to the public a list the firms that are registered as advisers.