MSRB to discuss rule changes in the name of clarity at quarterly board meeting

The Municipal Securities Rulemaking Board is expected to discuss making changes to an investor and municipal advisor client education and protection rule in an effort to bring about more clarity during its board meeting next week.

The MSRB announced that and other agenda items Wednesday morning ahead of the April 21-22 virtual quarterly meeting.

The agenda includes discussion of possible changes to MSRB Rule G-10, on investor and municipal advisory client education and protection. The rule requires dealers and MAs to provide certain notices to customers and clients within certain time frames. Potential changes would be aimed to help reduce unnecessary compliance burdens through additional clarity as to which customers would benefit from annual disclosure, the MSRB said.

This is part of the MSRB’s ongoing retrospective rule review. In February, the MSRB retired decades-old guidance as part of that review.

The board will also continue to discuss input from its request for comment on strategic priorities and plans to adopt a strategic plan this fiscal year. That plan will guide their efforts starting in FY 2022 and for the next three to five years. The MSRB’s last strategic plan was created in 2017.

In January comment letters, stakeholders told the MSRB to focus more on its role as a regulator such as concentrating on rulebook modernization and emerging pandemic trends such as remote work.

Some said the MSRB too often engages in activities that go beyond its congressional mandate. The MSRB has the authority under federal law to develop rules for broker-dealers and municipal advisors, disseminate market data, and conduct education and outreach.

Next week the board will also consider “housekeeping amendments” to its rulemaking procedures under Rule A-8. It will also continue discussing Environmental, Social and Governance, particularly climate risk. The MSRB plans to discuss recent initiatives of market participants and financial regulators to promote transparency around ESG.

In March, the Government Finance Officers Association released its first-ever ESG best practice. ESG has gained regulatory attention over the last few months. Last month, the Securities and Exchange Commission announced the creation of a climate and ESG task force in its environment division to find ESG-related misconduct. In February, acting SEC Chair Allison Herren Lee directed the SEC Division of Corporate Finance to increase its focus on climate-related disclosure.

The MSRB will also receive an update on a Government Accounting Standards Board project to rename the acronym for Comprehensive Annual Financial Report. GASB announced in December that it was working on a project to eliminate the use of the acronym, which when spoken aloud resembles a word deeply offensive to Black South Africans.

In March, GFOA said it was dropping the acronym immediately for the same reason.

The board will then discuss next steps for updating EMMA and other MSRB references to conform to the new name that GASB adopts.