MSRB Monthly Update - April 2014

April 2014
MSRB Publications

MSRB Updated Quarterly Rule Book Now Available
Each quarter, the MSRB publishes an updated PDF of its entire Rule Book. The April 2014 version is now available on

Rule Book
Did You Know?

MSRB Rule G-37 on political contributions has served as a model for other rules addressing the issue of pay-to-play, including New York State’s prohibitions on pay-to-play activities involving public pension funds and the Securities and Exchange Commission’s rules for investment advisors.

Highlight of the Month

MSRB Marks 20th Anniversary of Pay-to-Play Rule

The Municipal Securities Rulemaking Board (MSRB) this month marks the 20th anniversary of its landmark rule to curb pay-to-play practices in the $3.7 trillion municipal securities market. MSRB Rule G-37 was the first law of its kind to address the use of political contributions to secure municipal securities business from elected officials.

“The MSRB is proud of the lasting effect of Rule G-37 on curbing pay-to-play practices in the municipal market,” said MSRB Board Chair Daniel Heimowitz. “Decisions about the hiring of financial professionals should always be based on merit and not tainted by improper influence or the appearance of quid pro quo arrangements associated with political contributions. Promoting practices that contribute to confidence in the integrity of the municipal securities market continues to be a priority for the MSRB.”

In a statement on the anniversary of the MSRB’s pay-to-play rule, California State Treasurer Bill Lockyer said, “Preserving the municipal bond market’s integrity must be paramount. Taxpayers and investors deserve nothing less.  Rule G-37 has served that purpose well for 20 years by helping ensure a pay-to-play culture does not infect the market.”

The MSRB continues to monitor the municipal market for pay-to-play activity and is working to establish new provisions for municipal advisors—including those that advise municipal issuers or solicit business from public pension plans —as part of its planned regulatory framework for these newly regulated professionals.

Learn more about the history of the MSRB’s pay-to-play rules on the website of the Securities and Exchange Commission Historical Society. With support from the MSRB, the SEC Historical Society is expanding its virtual museum and archive to help preserve the history of municipal securities regulation.


New and Noteworthy

MSRB Continues to Advance Regulatory Framework for Municipal Advisors

The MSRB is implementing an annual fee of $300 per municipal advisor professional. Initial payment of the new fee will be due in parallel with the Securities and Exchange Commission’s permanent registration process for municipal advisors. The establishment of this per-professional fee is a step toward the MSRB’s goal to fairly distribute assessments to all regulated entities.

The MSRB is seeking public comment on draft amendments to its professional qualification rules to establish requirements for municipal advisors. The changes to MSRB Rule G-3 would require municipal advisor professionals to pass an examination to demonstrate knowledge of the municipal advisory business and regulatory requirements. Comments on the MSRB’s draft rule must be submitted by May 16, 2014.

The MSRB also continues to accept public comment on its proposed supervisory and compliance obligations for municipal advisors through April 28, 2014.The MSRB is now reviewing comments received on its draft rule on core standards of conduct for municipal advisors.


EMMA Market Statistics

Interdealer Trades Account for Growing Share of Municipal Market


The MSRB segregates municipal securities transactions by whether they are between customers and dealers (“customer bought” and “customer sold”) or between two dealers (“interdealer”). Sales and purchases of municipal securities between dealers and customers account for the majority of trades in the market, however interdealer trades as a percentage of all trades have been increasing over the last few years. In the first quarter of 2014, interdealer trades accounted for nearly 35 percent of all trades. On average, interdealer trades accounted for approximately 35 percent of all trades between 2012 and the first quarter of 2014, up from the 30 percent average between 2009 and 2011.

For more information on different types of trades or other statistics on municipal trading activity, continuing disclosures or variable rate resets, visit the MSRB’s EMMA website.


Regulatory Roundup

Request for Comment on Establishing Professional Qualification Requirements for Municipal Advisors March 17, 2014

SEC Approves MSRB Rule G-47 on Time-of-Trade Disclosure Obligations, MSRB Rules D-15 and G-48 on Sophisticated Municipal Market Professionals, and Revisions to MSRB Rule G-19 on Suitability of Recommendations and Transactions March 12, 2014