WASHINGTON – The Municipal Securities Rulemaking Board wants to focus on improving the resources market participants have to properly comply with regulations while further developing its EMMA system and maximizing data use, according to its new strategic goals released on Monday.
The five broad strategic goals are the product of the MSRB’s January board meeting where the 21 members held a strategic planning session. The goals are designed to help the MSRB prioritize its future regulatory, educational, and transparency initiatives and were informed by market input.
“The last five years, our agenda has not really been our own,” said Lynnette Kelly, executive director of the MSRB, referring to the MSRB’s Dodd-Frank Act mandate to put together a regulatory framework for municipal advisors and the 2012 Securities and Exchange Commission report on the muni market.
“I think we would say and the industry would agree that we were very prolific in our rulemaking and now there’s a real opportunity to help regulated entities comply with our rules,” Kelly said, talking about the MSRB’s goal to shift to a guidance focus. “The thinking is that we know that the vast majority of regulated entities want to comply, they want to do the right thing and to the extent that they need our help, we owe it to them to provide that help.”
Jessica Giroux, general counsel and managing director of Bond Dealers of America, said that BDA is “pleased” and “encouraged” by the MSRB’s goals but would also like to see the MSRB “more rigorously evaluate not only the clarity of its rules but also their costs and impact on competition amongst dealers, especially smaller dealers.”
Susan Gaffney, executive director of the National Association of Municipal Advisors, said NAMA supports the SEC’s focus on guidance and hopes that guidance extends to the group’s past requests for clarity on MSRB Rule G-42 on core duties of MAs.
Leslie Norwood, managing director, associate general counsel and co-head of SIFMA’s muni division, said SIFMA agrees with the board’s focus on rule guidance and clarification given the number of recent significant rule changes like best execution and markup disclosure.
The MSRB also has plans to “advance the integrity and efficiency” of the market by publishing white papers and commentaries as well as by communicating with policymakers and others about the importance of informed regulation. Kelly said the MSRB, as a neutral credible resource on the market, is often called up to help policymakers, think tanks and others understand data and how the market works.
“I think just a logical extension of that is writing white papers on issues in the market as that credible neutral source,” Kelly said.
The data-focused portions of the MSRB’s strategic goals include “evolving EMMA into an industry-leading platform that meets the needs of market participants.” That will require establishing appropriate guiding principles for future functionality, promoting and enhancing use of EMMA as a tool for satisfying regulatory objectives, and improving the overall user experience of the website, according to the MSRB.
The board will also be working to maximize the availability, utility, and quality of the data it collects for the benefit of market participants and the public, according to the MSRB.
Emily Brock, director of the Government Finance Officers Association’s federal liaison center, said GFOA is “thrilled to see a commitment to an evolution of the EMMA website” and is “energized to see they want to optimize transparency.”
Julie Egan, chair of the National Federation of Municipal Analysts, said NFMA is “pleased to see they are improving transparency and utilization of EMMA.”
“We have shared our concerns and recommendations with the MSRB staff for improving EMMA and we appreciate the outreach efforts that the MSRB has made to a broad range of industry participants,” Egan said.
Financial sustainability will additionally be a top priority for the MSRB in the future as the board will look to “continue its diligent financial stewardship while evaluating ways to diversify its funding sources.”
The MSRB said that in order to fulfill its Congressionally mandated mission, it must have financial stability and sustainability, which includes maintaining sufficient reserves to operate without interruption, regardless of market conditions. Kelly said that it may be a good time for the MSRB to take a fresh look at its funding structure.
It wants to strive to “appropriately allocate funding across the diverse universe of regulated entities in a manner that ensures fairness and long-term organizational sustainability.”
Giroux said BDA is “eager to see how the MSRB will recalibrate its funding sources, since fees on underwriters have historically supported a large share of the overall MSRB budget.”