MSRB Proposes Best Interest Standard for Bank Dealers

The MSRB is seeking comment on a draft amendment to MSRB Rule G-19 ("Suitability of Recommendations and Transactions") that would require bank dealers to comply with SEA Rule 15l-1 ("Regulation Best Interest").

The draft amendment would amend MSRB Rule G-19 to require that bank dealers comply with Regulation Best Interest "to the same extent as a broker or dealer" when making recommendations involving municipal securities.

The MSRB requested comment on, among others, the following:

• the potential benefits and/or harms of the harmonization of the bank dealer standard of conduct with Regulation Best Interest;
• any justifications for establishing different standards of conduct for bank dealers and broker-dealers;
• the potential impact on the municipal securities market;
• modifications the MSRB should make to Regulation Best Interest general obligation provisions for bank dealers;
• the potential costs of compliance; and
• the effect of Regulation Best Interest on capital formation and competition.

Comments on the draft amendment should be submitted by June 2, 2021.