MSRB to request comment on Rule G-27


The Municipal Securities Rulemaking Board plans to request comment on its Rule G-27 related to dealer supervision in the next month.

That and a number of other issues were discussed during the MSRB’s quarterly board meeting this week.

“As part of our commitment to prudent and practical regulation, we are focused on a retrospective review not just of the rules themselves but the over 200 pieces of associated guidance,” said MSRB Vice Chair Meredith Hathorn. “We will continue to make incremental but impactful progress toward reducing unnecessary compliance burdens on regulated entities and ensuring our rule book aligns with current market practices.”

MSRB Vice Chair Meredith Hathorn said the board is committed to a review of its existing rules and guidance.

The objective of the request for comment on Rule G-27, a frequent source of Financial Industry Regulatory Authority disciplinary actions, is to “seek guidance on aligning the [MSRB] rule with FINRA’s current rule and updating dated guidance,” Leah Szarek, chief external relations officer at MSRB said.

“This RFC will not explore changes to supervision in light of the increase in remote working, although we remain in coordination with FINRA as market practices continue to evolve.”

The MSRB is also focused on releasing a request for comment on MSRB Rule G-46, its draft rule for solicitor muni advisors, which should be released in the next few months according to the board. Although these represent signals the board is moving forward with some of its rules, the MSRB is still updating guidance to respond to the pandemic, which “leapfrog other initiatives in the pipeline,” Szarek said.

On Oct. 26, the MSRB provided a further extension of time for dealers to conduct inspections of municipal offices of supervisory jurisdictions, branch offices or non-branch locations remotely until June 30, 2022.

The Series 54 exam deadline, which was extended to Nov. 30 from Nov. 12, represents the final date the board will be moving its deadline.

Another leg of the MSRB’s modernization plans focuses on data and technology, for which the MSRB increased its yearly budget by 4% to $43.3 million by tapping into its reserves for technology modernization.

The board “received a demonstration on a new master data management platform that will enhance the MSRB’s data governance and oversight capabilities,” the meeting summary said.

The new platform will be an “under the hood” tool that will help the board to assess and identify disparities in data it receives and work toward its long-term goal of improving the data quality displayed on EMMA.

As part of improving EMMA disclosures, the MSRB also discussed requesting more information from issuers, investors, underwriters and municipal advisors on how ESG disclosures can help to improve transparency in the muni market.

“We look forward to providing a forum for all interested stakeholders to share information and viewpoints on ESG for the municipal market through our forthcoming public request for information,” MSRB chair Patrick Brett said.

But rulemaking on anything related to ESG isn’t in the board’s immediate future. The board is, however, focused on its diversity, equity and inclusion goals by unrolling its new nominating process for board seats.

The new process will be led by Hathorn, who is chair of the nominating committee. Applications will open in December or January and stay open until mid-to-late February, Szarek said.

The board will then review and interview candidates in Summer 2022 with a plan to vote on the prospective four new board members by its July board meeting.

“We’ll have a lot of information available about the kinds of candidates that we need to have and the kinds of candidates that we’d like to have to complement the existing folks on the board,” Szarek said. “Look for that pretty soon to start off that process,” Szarek said.

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