MSRB to Propose Rules on Best Execution and Muni Advisors

The MSRB held its quarterly meeting from January 29 through January 31, at which it discussed how to (i) improve the efficiency of the municipal securities market and (ii) develop a regulatory framework for municipal advisors.

At the meeting, the MSRB agreed to seek public comment on a proposed rule that would establish an explicit "best-execution" standard for transactions in the municipal market. The proposed rule would increase municipal securities dealers' obligations when they bought and sold on behalf of retail investors. According to the MSRB release, the proposed best-execution rule would be harmonized with the FINRA best-execution rule for the equity and corporate fixed-income markets, but would be tailored to the characteristics of the municipal securities market.

Additionally, the MSRB agreed to request comment on a proposed rule to establish baseline supervision requirements for municipal advisors. According to the MSRB, the rule would take into consideration the diversity of the municipal advisory population, including small and single-person firms.

The MSRB also announced that it is developing a professional qualification test for municipal advisor professionals. According to the release, the MSRB will soon request comment on a proposal to establish certain key features of the exam and is looking at implementing a pilot exam in late 2014 or early 2015.

Additionally, the MSRB directed its staff to seek approval from the SEC to charge municipal advisor firms an annual fee of $300 per professional, said fee to be implemented during the second half of 2014 to parallel the SEC's permanent registration process for municipal advisors.

See: MSRB Press Release. Related news: MSRB Plans Numerous New Rules (October 28, 2013); MSRB Requests Comment on Proposed "Best Execution" Standard for Munis (August 6, 2013).