WASHINGTON — The Municipal Securities Rulemaking Board on Friday asked the Securities and Exchange Commission to approve rule changes that would allow it to expand from 15 to 21 board members, 11 of which would be independent, public representatives not associated with securities or bank-dealer firms.
The proposed changes to Rule A-3 on membership, which would take effect at the start of the board’s fiscal year 2011 on Oct. 1, are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act that was enacted on July 21.
The new law required the MSRB to move to a majority public-member board — a change from its current composition, in which securities dealers and bank representatives make up 10 of 15 members.
The 15 board members have staggered three-year terms so that five typically leave and are replaced every year.
In its notice on the proposed rule changes, the MSRB said it plans to elect 11 new members: eight from the public and three from the municipal advisory community.
The elections will give the board 11 public members, seven broker-dealer and bank-dealer members and three muni advisers.
Of the 11 public members, at least one will be a representative of institutional or retail investors in muni securities and at least one will be a representative of municipal issuers or other entities. In addition, at least one will be a member of the public with knowledge
of or experience in the municipal industry.
Of the 10 regulated members, at least one will be associated with and representative of a broker-dealer and at least one that is associated with and representative of a bank dealer. In addition, at least one, and not less than 30%, of the total number of regulated representatives will be associated with and representative of a municipal adviser.
“The board believes that such composition is fair to each regulated constituency and to the public,” the board said in the notice.
The financial regulatory reform law authorizes the MSRB for the first time to write rules governing the conduct of municipal advisers who must be fairly represented on the board.