Criteria for the expanded definition of sophisticated municipal market professional (SMMP), which takes effect July 9.
* SMMPs must be customers with an “institutional account,” which can include accounts of corporations, partnerships, trusts or individuals with total assets of at least $50 million. Institutional accounts can also be those of banks, savings and loan associations, insurance companies, registered investment companies and investment advisors.
* To be considered an SMMP, dealers must have a reasonable basis to believe the customer can evaluate investment risks and market value independently, both in general and with regard to particular muni transactions. To determine “reasonable basis,” dealers should consider the amount and type of the customers’ municipal securities holdings.
* Customers must “affirmatively indicate” they are exercising independent judgement in evaluating dealers’ recommendations. Affirmations can apply to individual trades, trades of types of securities or all transactions in a customer’s account.
