WASHINGTON — The Municipal Securities Rulemaking Board has requested public comment on whether to require dealers to ensure that their municipal securities staff receive annual muni bond training.
The MSRB proposal would alter the continuing education requirements laid out in the board's Rule G-3 on classification of principals and representatives to require a minimum of one hour of training focused on municipal securities for professionals whose jobs primarily focus on munis. Firms are already required to offer continuing education to their staffs, but are not required to provided training specifically targeted to work in the municipal market.
"The MSRB recognizes that many dealers already offer continuing education programs that include municipal securities components," said MSRB executive director Lynnette Kelly. "The MSRB's proposal seeks to set a minimum baseline for this type of continuing education to ensure that firms consider the particular training needs of staff responsible for understanding municipal securities products and complying with MSRB rules."
The MSRB said in a release that the request for comments "seeks to reinforce the need for dealer staff primarily engaged in the municipal securities business to stay abreast of issues that affect their job responsibilities and informed about product and regulatory developments."
The requirement will not be based on the specifics of an individual's muni securities job, the MSRB said in its published regulatory notice, and will therefore cover a wider range of professionals than the current rules. Currently, firms are required to provide continuing education only for professionals who have contact with customers, and the supervisors of those individuals.
"The MSRB does not believe that firm element training requirements should distinguish between associated persons who have direct contact with customers and those who do not, or whether an individual is registered in establishing training requirements," the notice states. "Under the proposed standard, the determining factor for participation in Firm Element education would be whether an associated person is primarily engaged in municipal securities activity."
The MSRB also announced it plans to change two categories of professional qualification for municipal securities dealers. If approved by the Securities and Exchange Commission, which oversees the MSRB, the board would no longer require the "financial and operations principal" designation since it is a requirement imposed on dealers by other regulators and therefore duplicative of other regulation, the MSRB said in a statement.
Those individuals who have been qualified to engage in municipal fund securities activities, such as sales of 529 college savings plans, by passing a limited representative examination, would only be permitted to engage in sales-related activity, pending SEC approval. These suggested changes are the result of a review of the MSRB's testing program, the board said.
Comments on the board's proposed changes to Rule G-3 are due Jan. 13.