MSRB Monthly Update: December 2016

Dec Monthly Update

SEC Approves MSRB Mark-up Disclosure Rule


Ushering in an historic change for transparency of the municipal market, the MSRB in November received approval from the Securities and Exchange Commission to require municipal securities dealers (dealers) to disclose their compensation when transacting with retail investors. When implemented in May 2018, the new mark-up rule will provide retail investors with information to help them better evaluate the overall cost of their municipal securities transactions. The MSRB expects the disclosure requirement to affect an estimated 8,000 retail investor municipal securities transactions each day. Read the recent press release. 

The MSRB is hosting a webinar for dealers on mark-up disclosure requirements on January 12, 2017. Find more information and a link to register in the Upcoming Events section below. Read the notice to dealers about their mark-up disclosure obligations.

MSRB Publishes Reminders on Time-of-Trade Disclosure Obligations and Rising Interest Rates

Following the steep rise in municipal bond yields in November, the MSRB issued reminders to dealers and investors about potential implications for municipal bond transactions and holding. The MSRB informed dealers of their obligations under MSRB Rule G-47 to disclose to their customers, at or prior to the time of trade, all material information known about the transaction and material information about the security that is reasonably accessible to the market. In periods when interest rates rise, municipal bonds may frequently be sold in the secondary market for less than par value at a market discount. The MSRB's interpretation states that the fact that a municipal security bears a market discount is material information that must be disclosed under Rule G-47 to a customer that is not a sophisticated municipal market professional. The existence of market discount may have significant tax implications and therefore impact an investor's decision to purchase or sell an affected bond or determination of what price to pay or accept for such bond. Read the regulatory notice.

Earlier in the month, the MSRB issued a statement cautioning investors about the potential risks to bond positions and bond portfolios of rising interest rates. Executive Director Lynnette Kelly cited higher yields as support for the MSRB’s recommendation that investors review their municipal bond holdings with their financial professionals. The MSRB also recommended that investors monitor market developments and educate themselves about the risks of rising interest rates. Read the press release. 

Upcoming Events

Calendar of Events

MSRB Webinar: Amended MSRB Rules G-15 and G-30 on Required Disclosure of Mark-ups and Mark-downs to Retail Customers on Certain Transactions and to Provide Guidance on Prevailing Market Price

Thursday, January 12, 2017
3:00 p.m. - 4:00 p.m. ET

During this free webinar, MSRB staff will review key new provisions of MSRB Rule G-15 on confirmation, clearance, settlement and other uniform practice requirements with respect to retail customer transactions and MSRB Rule G-30 on prices and commissions related to disclosure of mark-ups and mark-downs on customer confirmations. Participants may receive one regulatory ethics CPE credit upon participation in the full webinar. Register here

New Issue Calendar Coming To EMMA®


Beginning in January 2017, users of the Electronic Municipal Market Access (EMMA®) website will have free, convenient access to a new issue calendar enabling individual investors, issuers and other market participants to see new bond issues coming to market as well as final pricing scales for bond issues sold through competitive and negotiated sales.

Individual investors can use the calendar to locate upcoming bond offerings of interest while state and local governments that may be planning on issuing municipal bonds will have the ability to identify, monitor and compare prices of similar issues that are coming to market or have been recently sold. Learn more about other tools and resources on EMMA.

New Board Member Application Window Coming Soon

The MSRB will be accepting applications for its Board of Directors beginning January 9, 2017. The Board sets the strategic direction of the organization, makes policy decisions, authorizes rulemaking and market transparency initiatives, and oversees MSRB operations. 

To be considered for a position on the MSRB Board of Directors, candidates must submit an application, which will be available on the MSRB Board of Directors Application Portal, in January.

Recent Press Releases

December 1, 2016: MSRB Provides Guidance on Application of Rules to Transactions in Managed Accounts

November 18, 2016: Municipal Securities Investors to Gain Access to Dealer Compensation Information

November 14, 2016: MSRB Reminds Investors of Risks of Rising Interest Rates in Municipal Market

November 11, 2016: MSRB Announces Operations and Technology Leadership Transition

November 10, 2016: MSRB Identifies Potential Risks for Retail Municipal Market Investors

November 10, 2016: MSRB Announces Members of Investor Advisory Group

Regulatory Round Up

December 1: Interpretive Notice on the Application of MSRB Rules to Transactions in Managed Accounts

November 29: New Disclosure Requirements Under MSRB Rule G-15 and Prevailing Market Price Guidance Pursuant to Rule G-30 Effective May 14, 2018

November 22, 2016: Interpretive Notice Regarding Rule G-47, on Time of Trade Disclosure

November 17, 2016: MSRB Announces the Effective Date of the Academic Historical Transaction Data Product

November 1, 2016: Proposed Rule Change to Extend the MSRB’s Customer Complaint and Related Recordkeeping Rules to Municipal Advisors and to Modernize Those Rules

October 25, 2016: Proposed Rule Change to Establish Fees Related to the MSRB Academic Historical Transaction Data Product

October 24, 2016: Proposed Rule Change to Amend the Requirements in MSRB Rule A-4, on Meeting of the Board, Regarding the Formation of a Quorum (refiled to make technical changes, originally filed on October 14, 2016)

September 1, 2016: Proposed Rule Change to MSRB Rules G-15 and G-30 to Require Disclosure of Mark-Ups and Mark-Downs to Retail Customers on Certain Principal Transactions and to Provide Guidance on Prevailing Market Price