WASHINGTON — The Municipal Securities Rulemaking Board is expected to file a proposal with the Securities and Exchange Commission that would consolidate its existing rules on pricing and execution, as well as guidance on fair dealing, into a single new fair pricing rule.
If approved by the SEC, the rule would consolidate MSRB Rules G-18 on execution of transactions and G-30 on prices and commissions, and incorporate existing guidance regarding fair pricing currently included in interpretive guidance to MSRB Rules G-17 on fair dealing and G-30. The proposed changes would create a single general rule, G-30, on prices and remuneration. The consolidation is part of the MSRB's effort to streamline interpretive guidance, especially on G-17, which has ballooned to many pages explaining a one-sentence rule.
The MSRB proposed the merging of these rules and guidance in August. "Consolidating this guidance into rule language would ease the burden on brokers, dealers, and municipal securities dealers and other market participants who seek to understand, comply with, and enforce fair-pricing requirements," it said.
The new rule would preserve the substance of the existing rules and interpretive guidance.
If the SEC approves it, the new rule would supercede several pieces of interpretive guidance under G-30 and they would be deleted from the MSRB's rulebook. The MSRB intends to move the remaining G-30 interpretive guidance, which addresses topics other than fair pricing, to other general rules. Interpretive guidance under Rule G-17 that addresses topics other than fair pricing also will remain intact.
The filing comes on the eve of the MSRB's board meeting in Atlanta, which begins Wednesday and lasts through Friday. The board plans to discuss another dealer obligation in the form of draft rules creating a best execution standard requiring broker-dealers to seek the best deal for a customer. That proposal was issued for public comment at the same time as the proposed fair pricing rule, but generated far more controversy because it would do more than just reorganize existing obligations.
Best execution has been a concern for dealer groups, who have warned that a corporate bond-style rule requiring dealers to seek the best prices for their customers would not work in the more opaque and illiquid muni market.
The SEC has final say over all MSRB rulemaking.
