The Municipal Securities Rulemaking Board would have more leeway to select members on a 15-member majority-public board under a revised draft of financial regulatory reform legislation released yesterday by the Senate Banking Committee.

The committee announced it will begin debate on the bill Thursday, with members providing opening statements. Members will then have until Nov. 23 to submit amendments and the committee will begin consideration of them during the week of Nov. 30. A markup of the bill is tentatively scheduled for Dec. 2, sources said.

Also under the revised draft, the Government Accountability Office, rather than the MSRB, would complete a study within one year of enactment of the transparency of muni market trading and how it could be improved. The GAO would also still be charged with conducting a separate study on muni disclosure issues, including whether the so-called Tower Amendment should be repealed.

The revised draft would give the MSRB more flexibility over the selection of eight “public” members on its board by requiring only that they consist of at least one issuer official, one representative of retail and institutional investors, and one member of the public with knowledge of or experience in the muni industry.

In contrast, an earlier draft of the bill would have required at least three investor representatives and at least two issuer officials, along with at least one individual with knowledge of or experience in the market to serve as public members of the board.

Currently, the board is comprised of five representatives of bank dealer firms, five representatives of securities dealers, and five members of the public, including one representative of issuers and one representative of investors. But the SEC has been pushing SROs to have more independent members on their boards. The MSRB is one of the few SROs that has not made such a change, because its makeup is set by statute and cannot be easily changed.

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