MSRB Monthly Update - May 2014

Upcoming Event

MSRB Webinar:
Changes to MSRB Registration Process
Thursday, May 15, 2014
3 p.m. ET

The MSRB will host a webinar for regulated entities to explain key provisions of new MSRB Rule A-12, which consolidates the MSRB’s registration rules and forms. The MSRB will provide information to assist current registrants with transitioning to the new form by August 10, 2014.

Register for the May 15 webinar.

A second session will be offered on Thursday, June 12, 2014 at 3 p.m. ET.

Register for the June 12 webinar.

Did you know

The MSRB is on Twitter.
Follow us @MSRB_News to keep up with MSRB initiatives and events.

New Fairness and Pricing Efforts

The MSRB is moving forward with establishing the first-ever “best-execution” standard for transactions in the municipal market. At its April 2014 meeting, the MSRB Board of Directors agreed to seek approval from the Securities and Exchange Commission on a rule to require dealers to use “reasonable diligence” when handling and executing municipal securities trades for retail investors. The rule aims to improve pricing for retail investors by ensuring dealers have appropriate procedures in place to achieve a price that is as favorable as possible under prevailing market conditions. The rulemaking process is ongoing. Read the draft best execution rule from February 2014.

The MSRB also is advancing three initiatives to enhance price transparency for municipal securities investors on its Electronic Municipal Market Access (EMMA®) website. The MSRB plans to:

  • Introduce a “price discovery tool” on EMMA that will allow investors to easily find and compare prices of municipal securities with similar characteristics and provide a graphical view of historical pricing
  • Develop a concept release on the presentation of market information to aid investors in assessing markups or markdowns on their transactions
  • Expand the pricing-related data available on EMMA by developing a proposed framework for collecting additional post-trade information for public display and exploring an approach for collecting and disseminating relevant, selected pre-trade data

 These developments will be introduced in the coming months.


Pay-to-Play Proposal for Advisors

In the next step of the MSRB's regulatory framework for municipal advisors, it plans to request comment on extending the MSRB's pay-to-play rule for dealers to include municipal advisors. MSRB Rule G-37 has played a central role in curbing the use of political contributions to secure municipal securities business for two decades. At its April meeting, the MSRB Board agreed that extending these provisions to municipal advisors would help prevent quid pro quo political corruption, and the appearance of it, in public contracting for both dealers and municipal advisors.

In other municipal advisor news, the MSRB is revising its draft Rule G-42 on core standards of conduct for municipal advisors. The revisions seek to clarify and respond to concerns raised by commenters on the rule, including those regarding the treatment of principal transactions. The MSRB will continue to consider the comments received on draft Rule G-42 and will announce next steps soon.


EMMA Market Statistics

Number of Municipal Auction Rate Securities Rate Resets Continues to Decrease


The number of interest rate resets for municipal auction rate securities (ARS) reported to the MSRB continued their decline in the first quarter of 2014. Approximately 3,116 ARS rate resets were reported in the first quarter, down 25.6 percent from the 4,186 rate resets reported in the same period of 2013. In the first quarter of 2014, approximately 2,537 ARS resets, or about 81.4 percent, were identified as being set at the maximum rate, which may indicate a failed auction, compared to 83.6 percent of the rate resets set at the maximum rate in the first quarter of 2013.

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

MSRB to Implement New MSRB Rule A-11 Establishing Fees for Municipal Advisor Professionals April 17, 2014