The Municipal Securities Rulemaking Board issued a notice Wednesday making clear that it will not begin registration and rulemaking activities for non-dealer municipal advisers until after Oct. 1, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The notice comes as many muni advisers have been unclear or concerned about the MSRB’s timing on implementing provisions of the new law that apply to them.
The board also reminded market participants that the advisers it will begin overseeing on Oct. 1 constitute a fairly broad group. It includes many different types of firms and individuals that provide advice on muni securities or financial products to state and local governments and other municipal entities.
They will include advisers to conduit borrowers such as hospitals and colleges, as well as advisers to local government investment pools, public pension funds, and college savings plans set up under Section 529 of the federal tax code.
The MSRB urged market participants that want to receive its news and notices related to municipal advisers to sign up for e-mail notifications.
On the registration process, the board said: “Municipal advisers are required to register with the Securities and Exchange Commission by Oct. 1, 2010. The MSRB will begin its own registration process following the adoption of associated MSRB administrative rules.”
The MSRB noted that it is in the process of trying to expand its board to include a majority of independent, public members — including representatives of non-dealer financial adviser firms.
It hopes the new board will be place as of Oct. 1 and stressed in the notice that it will not begin administrative or rulemaking activities for non-dealer FAs until then.
The board asked the Securities and Exchange Commission two weeks ago to approve rule changes that would allow it to expand to 21 from 15 board members.
Eleven of the members of the expanded board would be independent, public representatives not associated with securities or bank-dealer firms. The current board consists of 10 bank and securities firm representatives and only five members of the public.
As of Oct. 1, “the MSRB will have a stronger investor and municipal entity protection mandate and its jurisdiction will be broadened to include the regulator of municipal advisers,” according to the board.
However, it pointed out that municipal advisers will take on a federal fiduciary duty to their municipal clients as of Oct. 1, even before the MSRB begins rulemaking on the issue.
The enacted Dodd-Frank measure imposes that duty on muni financial advisers as of that date.
Bank and dealer FAs are already subject to the MSRB rules, the board said in its notice.