A multi-year rate card proposal filed with the Securities and Exchange Commission by the Municipal Securities Rulemaking Board on Tuesday drew a mix of reactions from industry groups representing broker-dealers and municipal advisors.
The Securities Industry and Financial Markets Association "applauds the effort the MSRB has put into revising its rate card," Leslie Norwood, managing director, associate general counsel and head of municipal securities at SIFMA, said in a statement.
"The MSRB's Multi-Year Rate Card provides for more stability in dealer fees, which is important for dealers calculating their regulatory costs of doing business," Norwood said. "SIFMA appreciates the proposed 45% credit on market activity fees in 2026 and 2027 to return excess MSRB reserves to the regulated broker dealer community that funded the reserves."
SIFMA looks forward to "the SEC approving this rate card, and the resulting fee reductions," Norwood said.
Michael Decker, senior vice president for research and public policy at the Bond Dealers of America, said BDA looks forward to reviewing the rate card proposal and appreciates "the MSRB's outreach on budget and fee issues" as it developed the amendments relating to multi-year rate card. Still, Decker sounded a bit less enthusiastic about the proposal than Norwood.
"I like the 45% credit too, but when you dig down a little bit you see that really it's just returning money to dealers that they've been over-paying for the last two years," Decker said, adding that "BDA will file comments on the initiative with the commission."
The new multi-year rate card replaces the MSRB's annual
"Over the past 18 months we have listened to feedback from our stakeholders and worked to address their concerns regarding our budget, reserves and fees following the suspension of our proposed 2024 rate card," MSRB CEO Mark Kim said in the release. "The new Multi-Year Rate Card provides greater transparency, stability and certainty in fees for regulated entities, resulting in a more predictable, rate-setting model for MSRB."
In November 2023, the MSRB filed with the SEC proposed amendments to MSRB Rules A-11 and A-13 to institute rate card fees for 2024. Comment letters submitted to the SEC regarding the 2024 rate card proposal cited concerns "related to the MSRB's rate setting processes and the volatility and unpredictability of rates under the current rate card model," the filing said.
The SEC subsequently suspended the MSRB's proposed 2024 rate card.
In response, the MSRB withdrew its proposed 2024 rate card, reverted to fees in the 2023 rate card "and began conducting extensive stakeholder outreach to solicit feedback prior to proposing the next iteration of its rate card," according to FAQs on its website which were updated on Sept. 30 to address questions concerning the new rate card proposal.
During its final quarterly
The MSRB's proposal would keep rates of assessment the same as the rates in effect currently for the underwriting fee, transaction fee and trade count fee described in MSRB Rule A-13, according to the FAQs, which referred to those fees collectively as market activity fees.
The existing 2023 rates will stay in place through 2029 "with no fee increase," according to the FAQs.
"Additionally, a temporary 45% credit for all market activity fees in 2026 and 2027 is projected to return surplus reserves to the industry," according to the FAQs. "The credit would result in the Market Activity Fees for 2026 and 2027 to be assessed at a net rate 45% below their current levels."
The MSRB's municipal advisor professional fee described in MSRB Rule A-11 will undergo an increase of $70 per year, rising to $1,340 in 2029 from $1,060 in 2025 "in order to maintain target contribution rates and enhance the fairness of fee burdens between broker-dealers and municipal advisors," according to the FAQs.
"We are aware of the increase in MA fees over the next four years, and are reviewing the filing," Susan Gaffney, executive director of the National Association of Municipal Advisors, said.
Gaffney added that NAMA's comments to SEC regarding the rate card filing will likely focus on the following items: "how fee assessments relate to the MSRB's budget, the change from an annual to a multi-year rate card, the importance of maintaining a per-MA fee assessment, and whether the fee increases burden MA firms, especially small MA firms."
