MSRB Creates "Residential Supervisory Location" Classification
The Municipal Securities Rulemaking Board ("MSRB") proposed a "noncontroversial" change to Rule G-27 ("Supervision") to allow brokers, dealers and municipal securities dealers to classify an associated person's private residence as a "non-branch location" when used for certain limited supervisory activities.
The amendment creates a new category of private residences, the residential supervisory location ("RSL"), under new Supplementary Material .04 of Rule G-27. The RSL classification allows firms the option to treat a private residence at which an associated person engages in specified supervisory activities as a non-branch location subject to inspections on a regular periodic schedule instead of the annual inspection currently required for offices of municipal supervisory jurisdiction and supervisory branch offices.
Additionally, the dealer must develop a reasonable risk-based approach to designating an office or location as an RSL and conduct and document a risk assessment for the associated person assigned to each office or location. Dealers must also provide a list of designated RSLs to FINRA, with the first list due to FINRA by October 15, 2024, covering all locations designated between June 1, 2024, and September 30, 2024.
The amendments harmonize Rule G-27 with recently adopted amendments to FINRA Rule 3110 ("Supervision"). (See related coverage.)
The rule goes into effect on June 1, 2024.