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In November, the MSRB and Financial Industry Regulatory Authority (FINRA)
released companion proposals that would require disclosure
of pricing reference information on customer confirmations for transactions in
fixed income securities. The proposals are similar but each seeks input on
factors that may be unique to the corporate or municipal bond markets. Read the MSRB’s
request for comment. Read FINRA’s request for comment.
Under the two proposals, bond dealers in retail-sized fixed income
transactions would be required to disclose on the customer’s confirmation the
price of certain same-day principal trades in the same security, as well as the
difference between this reference price and the customer’s price.
The MSRB's consideration of a pricing reference information disclosure requirement is the next step
in its efforts to improve price transparency in the municipal securities
market.
The MSRB and FINRA are seeking input on the two proposals. Specific
comment is also sought as to alternatives that could similarly increase price
transparency. Comments should be submitted no later than January 20, 2015.
The MSRB is making changes to its Electronic Municipal Market Access
(EMMA®) system to accept disclosures about municipal asset-backed securities as
required by Securities Exchange Act Rule 15Ga-1. In 2011, the Securities
and Exchange Commission (SEC) designated EMMA as the venue to collect and
disseminate certain disclosures related to municipal asset-backed securities to
facilitate use by municipal securities investors.
Included in the changes to EMMA are enhancements to its search functionality
and email alert service to assist investors in finding ABS disclosures on EMMA.
The MSRB also will provide resources for municipal securitizers, including
updated information on the document submission process and the ability to
subscribe to email reminders about recurring disclosure obligations.
The precise
effective date of changes in January 2015 will be announced in a notice
published on the MSRB website. For more information on the SEC rule on
disclosures related to asset-backed securities, click here. The rule stems
from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The MSRB continues to advance its development of professional
qualification requirements for municipal advisors. In November it filed a proposed rule
change with the SEC to create baseline standards of professional qualification
for municipal advisors.
The proposed amendments to the MSRB’s existing Rule G-3 on professional
qualifications establish two classifications of municipal advisor
professionals, representative and principal, with firms required to designate
at least one principal to oversee the municipal advisory activities of the
firm. The proposed rule change also will require each municipal advisor
representative and principal to take and pass a qualification test.
The Dodd-Frank Wall Street
Reform and Consumer Protection Act charged the MSRB with developing
professional qualification standards as part of a comprehensive regulatory framework for
municipal advisors. The creation of uniform standards of competency will help
ensure municipal advisors engaged in advisory work are qualified in their
duties.
The MSRB has engaged in
extensive outreach to gather input from municipal advisors and others about the
development of a professional qualification exam. The MSRB currently is developing the content
outline for the test and plans to administer a pilot exam in 2015.
 According to the Investment Company Institute, municipal
bond mutual funds have experienced 10 straight months of net cash inflows in
2014, after 10 straight months of outflows that began in March 2013 and ended
in December that year. In 2013, net cash
outflow of municipal bond funds reached $16.6 billion in June, the lowest
level since 2007, the earliest publicly available information. Net cash flow into
municipal bond mutual funds in October 2014 was $2.2 billion, a decrease from
the $3 billion inflow in September 2014. In contrast to net inflows for municipal bond
mutual funds, taxable bond funds experienced a net cash outflow of more than $30
billion in September and October of 2014.
For municipal new issuance, trading activity, continuing
disclosures or variable rate resets, visit the MSRB’s
EMMA website.
SEC Approves MSRB Rule G-18 on Best Execution of Transactions in Municipal Securities and Related Amendments to Exempt Transactions with Sophisticated Municipal Market Professionals December 8, 2014
Amendments to EMMA Continuing Disclosure
Service to Add Asset-Backed Securities Disclosures Under Securities Exchange
Act Rule 15Ga-1 November 25,
2014
Proposed Rule Change Consisting of Amendments
to MSRB's Electronic Municipal Market Access (EMMA) System to Add Disclosures
Related to Municipal Asset-Backed Securities November 25, 2014
Proposed Rule Change Consisting of Amendments
to Rule G-1, on Separately Identifiable Department or Division of a Bank; Rule
G-2, on Standards of Professional Qualification; Rule G-3, on Professional
Qualification Requirements; and Rule D-13, on Municipal Advisory Activities November 18, 2014
Request for Comment on Draft Rule Amendments
to Require Dealers to Provide Pricing Reference Information on Retail Customer
Confirmations November
17, 2014 |
