The Municipal Securities Rulemaking Board wants feedback on plans to retire 15 pieces of interpretive guidance, some of which dates back to the MSRB's earliest days in the 1970s.
On Monday, the MSRB asked for stakeholders to comment on guidance the regulator is planning to retire by May 10. The board first posted a notice in February and held an educational webinar later that month.
“ASA (American Securities Association) appreciates the MSRB taking first steps to modernize the regulatory process, and we look forward to working together to further reducing unnecessary burdens and costly duplicative rules while maintaining important investor protections,” said ASA CEO Chris Iacovella on Monday.
The Securities Industry and Financial Markets Association said the retirement of the guidance is appreciated as part of the MSRB’s ongoing retrospective rule review.
“We believe it is important to remove obsolete guidance to ensure that the MSRB’s guidance reflects market and technology developments and is as understandable as possible to ease compliance by regulated parties,” said Leslie Norwood, managing director, associate general counsel and head of municipals at SIFMA.
Municipal advisors called the guidance retirement a “positive step forward.”
“MSRB’s work to retire and review past guidance in order to reflect the current rulebook, is a positive step forward to help MAs and broker-dealers best understand and comply with MSRB rules,” said Susan Gaffney, executive director at the National Association of Municipal Advisors.
The MSRB issues guidance to help regulated parties understand how to comply with the board’s rules and the guidance effectively becomes part of the rule. Much of the MSRB's guidance dates back decades, and some of it becomes obsolete in the face of newer regulatory developments and changes in the business.
"BDA (Bond Dealers of America) supports the MSRB's efforts to review its catalogue of guidance with an eye towards retiring guidance which is no longer relevant or necessary," said Michael Decker, BDA's senior vice president of policy and research. "We will review the 15 guidance items the MSRB plans to retire and provide feedback to the board as is appropriate."
The MSRB will retire specific Rule G-37 guidance on political contributions.
A 2011 notice generally discusses the application of the rule to contributions given to an official of an issuer who seeks election to a federal office. However, that notice is almost identical to Rule G-37 guidance from 2008, so the MSRB plans to retire that 2011 notice.
The MSRB will retire a notice on Rule G-23 on activities of financial advisors from April 1984. Rule G-23 used to permit a dealer to switch roles from a municipal advisor to an underwriter on the same transaction, with certain conditions such as the issuer’s written consent. That 1984 notice provides guidance on getting that issuer’s consent.
The guidance predates the 2010 passage of the Dodd-Frank Act that regulated municipal advisors, and the Securities and Exchange Commission's adoption of a municipal advisor regulatory regime in 2013. In 2011, the MSRB changed Rule G-23 so that it prohibits a dealer from serving as an MA and underwriter on a transaction, making the old guidance irrelevant.
The MSRB will do the same with a 1981 Rule G-23 notice that provided guidance on getting issuer consent.
The MSRB also will retire MSRB Rule G-3 guidance on professional qualifications requirements from 1978. The rule required a municipal securities representative to serve an apprenticeship period of 90 days before doing business with any public members or receiving compensation.
The guidance from 1978 clarified the applicability of the apprenticeship requirement, but the rule was changed in 2015 and as a result the apprenticeship requirement was deleted from the rule. That guidance will be archived on the MSRB Archived Interpretive Guidance webpage, as will the others.
