MSRB Determines to Proceed with Best-Execution Standard and Expanded Pay-to-Play Rules

The MSRB held its quarterly meeting from April 30, 2014 through May 2, 2014, at which it addressed several initiatives to improve the structure, efficiency and transparency of the municipal securities market.

Specifically, the MSRB agreed to submit to the SEC a plan to implement a "best-execution" standard for transactions in the municipal market. According to the press release, the rule would establish for the first time an explicit obligation for dealers to use "reasonable diligence" when handling and executing municipal security trades for retail investors to achieve a price that is as favorable as possible under prevailing market conditions. Additionally, the MSRB agreed to develop draft amendments to its pay-to-play rule for dealers that would include municipal advisors. The MSRB also reviewed comments on proposed MSRB Rule G-42 and began revising the draft to address concerns raised by commenters.

See: MSRB Press Release.Related news: MSRB Announces Items for Discussion at Board of Directors Meeting (April 23, 2014); SIFMA Submits Comments to the SEC on a Single General Rule for Prices and Remuneration (March 12, 2014); SIFMA Submits Comments to MSRB on Duties of Non-Solicitor Municipal Advisors (March 11, 2014); MSRB Notice 2013-15: Request for Comment on Proposed Fair-Pricing Rule (August 6, 2013).