WASHINGTON — The Securities and Exchange Commission announced Monday that compliance with its final municipal advisor registration rule will not be required until July 1, the date on which the first set of municipal advisors will be required to register under the rule.
The rule's effective date had been Jan. 13, but dealer groups had been urging the SEC to delay it because additional guidance that had been promised was not released by the commission until Jan. 10, less than a full business day before the effective date.
The SEC could have chosen to keep the effective date the same while not taking action on any compliance violations until a later date, but chose instead to have the commissioners approve a delay of the effective date. The July 1 date coincides with the phased-in final registration period provided for in the MA rule when it passed with unanimous commissioner approval in September. Municipal advisors have been required to register under a temporary rule since 2010, but must re-register under the new regime.
Without the delay, record keeping requirements mandating that MAs retain all communications with their clients for five years would have taken effect Monday.
The SEC said the delay will give market participants more time to analyze and plan.
Securities Industry and Financial Markets Association president and chief executive officer Ken Bentsen lauded the SEC's decision. "SIFMA welcomes the SEC's action to postpone the effective date of its municipal advisor rule," he said. "The new compliance date will give firms time they need to fully review the SEC's Jan. 10 guidance and incorporate it into compliance programs and employee training. The new compliance date will also give the industry additional time to identify accounts of municipal entities and obligated persons that contain proceeds of municipal securities."
Susan Collet, senior vice president of government relations at the Bond Dealers of America, praised the SEC for the delay. "The SEC worked swiftly to make critical clarifications and having done so, it appears they want to ensure that firms have an opportunity to strike the right balance in their internal procedures," she said.
But some advisory firms are peeved that they worked hard to be ready for an effective date that is now months away, said National Association of Independent Public Finance Advisors president Jeanine Rodgers Caruso.
"NAIPFA anticipates that this decision will be greeted with happiness by some and with frustration by others," she said. "Although we believe that the SEC's determination was based upon legitimate concerns, we were hopeful that these long awaited regulations would go into effect."
