WASHINGTON — The Municipal Securities Rulemaking Board plans to ask market participants for input on its roughly 300-page Rule Book in December, part of a multi-year review to ensure its rules are effective, efficient and reflect changing market conditions.
MSRB executive director Lynnette Kelly told The Bond Buyer that the review, one of the board’s goals for the coming year, will allow market participants to share concerns about rules and suggest ways they can be revised, consolidated or harmonized with those of the Financial Industry Regulatory Authority.
In addition, the board will review the costs and benefits of its rules, Kelly said.
“Instead of just creating more rules, we are taking the time to look at the existing rule book,” Kelly said. “We will give a request for comment on the entire rule book.”
She did not provide a specific date in December when the board will make the request for comment.
The board will review the comments and decide if rule changes are needed. Any changes would be formally proposed and made available for additional industry comment.
The Bond Dealers of America and the Securities Industry and Financial Markets Association both said in statements that they welcome the opportunity to comment on the MSRB’s rules.
BDA chief executive officer Mike Nicholas added that any new rules or rule changes should be preceded by a thorough cost-benefit analysis.
In addition to the rule review, Kelly said that in 2013 the board will make technology updates to its EMMA system and examine ways to improve issuers’ disclosure. The board also will re-propose muni advisor rules if the SEC releases its final MA definition early next year as expected, she said.
Kelly said the board will conduct its work next year with an eye towards “alternatives to rulemaking.”
“The default in the past was, let’s write rules. Now, we are careful and thoughtful about exploring alternatives,” she said.
Possible alternatives include hosting public outreach events and making available educational materials for issuers, municipal advisors and attorneys. The MSRB could also work more closely with the FINRA on enforcement matters.
In addition, the MSRB may try to help “leverage industry best practices” by acting as a conduit between issuers and industry groups, Kelly said. Specifically, the MSRB could help ensure issuers have access to, and understand, disclosure guidelines and other best practices written by muni market groups.
“We think we are in a position to help issuers improve disclosure,” she said, adding the board would do so without endorsing various guidelines or practices.
Kelly’s comments dovetail with those made by Jay Goldstone, who became the MSRB’s board chair in October.
Goldstone, San Diego’s chief operating and finance officer, told The Bond Buyer in September that he hoped to explore alternatives to rulemaking, noting education and outreach events and enforcement. He said he would lead an effort to “review the existing rules and make sure they are fulfilling” the board’s original intent. á