WASHINGTON — Since the Securities and Exchange ­Commission and the Municipal Securities Rulemaking Board rolled out separate registration systems for municipal advisers this fall, there has been ­widespread confusion over the requirement that advisers register with both regulators.

This appears evident from the huge difference in the number of advisers that have registered with each. While 784 advisory firms had registered with the SEC as of yesterday, only 150 had signed up with the MSRB. 

Confusion about the dual ­registration system prompted the MSRB to issue a reminder notice Monday, warning that “registration with one regulatory organization will NOT satisfy the registration requirement of the other regulator organization.”

To be sure, the SEC required that muni advisers register with it by Oct. 1 to coincide with the effective date of Dodd-Frank law provisions regulating advisers. The MSRB is giving advisers until Dec. 31 to register and many advisers, faced with a crush of end-of-year business, said Monday that they will register when they have a chance before the end of the year.

“It’s just a matter of logistics and timing,” said Thomas Johnsen, a principal at Fieldman, Rolapp & Associates in Irvine, Calif., whose firm was planning to register with the board this week.

Though SEC registration is free, MSRB registration requires the payment of an initial fee of $100 as well as an annual fee of $500 per firm.

Regulators have said that they are most concerned about reaching advisers who do not work in the municipal market on a daily basis and may have no idea that they fall under new federal oversight — particularly placement agents and solicitors.

“We know that new regulations for municipal advisers are unfamiliar territory for some,” said MSRB executive director Lynnette Hotchkiss in a statement. “But all municipal advisers that provide advisory services to municipal entities — including dealers that act as financial advisers and individuals that act as third-party marketers to pension funds — are required to follow MSRB rules, including those on registration.”

Joy Howard, a principal at WM Financial Strategies in St. Louis, said confusion might be cleared up if the SEC informed firms on its site that they must also register with the MSRB. Because the commission site does not contain any such notification, many “non-traditional” muni market participants don’t know that there is another step they have to complete when they sign up with the commission, she said.

Under Dodd-Frank, “municipal advisers” are defined as businesses that advise municipal entities or conduit borrowers about municipal financial products or the issuance of municipal securities. They include financial advisers, swap advisers, and guaranteed investment contract brokers. The law also covers those who solicit certain types of business from municipal entities on behalf of unrelated dealers or advisers.

However, the law exempts from the adviser definition dealers serving as underwriters, attorneys offering legal advice or providing “traditional” legal services, as well as engineers providing engineering advice.

But the Dodd-Frank definitions leave lots of gray areas, as they do more to define the behavior that constitutes advisory work than list all the market participants that must register. The Securities Industry and Financial Markets Association is currently seeking clarification from the SEC about these kinds of ambiguities in the law, including the scope of the underwriter exception from the definition of municipal adviser.

While many firms may not know they must register with both the SEC and MSRB, at least one SEC registrant appears to have no business registering with either regulator: “The Redeeming Ministries of Jesus Christ,” a Philippines-based church offering “physical, emotional, social, intellectual, spiritual, material salvation through the LORD GOD JEHOSHUA JESUS CHRIST.”

The group could not be reached for comment. An e-mail sent last week to Daniel Saladaga, the contact on the registration form, was not returned. Though market participants believe its registration is a joke, the church indicates that it participates in all categories of municipal advisory work, including advice concerning the issuance of municipal debt, the investment of bond proceeds as well as advice concerning guaranteed investment contracts and the use of municipal derivatives.

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