MSRB Proposes Changing Time of Trade Disclosures and SMMP Requirements

The MSRB proposed to amend MSRB Rule G-47 ("Time of Trade Disclosure") and its related interpretive guidance, in addition to proposed amendments to MSRB Rule D-15 ("Sophisticated Municipal Market Professional").

The proposed amendments tied to MSRB Rule G-47 and its interpretive guidance would:

• clarify that when disclosing time of trade information to customers, a broker-dealer would not be in violation of the rule for withholding information if disclosure would violate its policies regarding insider trading or other related securities laws;
• codify existing interpretive guidance reminding broker-dealers to obtain sufficient information from a selling customer to be able to accurately describe securities when reintroducing them to the market;
• require broker-dealers to disclose to customers when securities bear a market discount;
• require broker-dealers to disclose any special characteristics of securities;
• retire certain interpretive guidance relating to disclosure of (i) conversion costs and (ii) secondary market insurance; and
• specify that disclosure may be necessary at the time of trade when (i) an official statement for a customer's security is either not available or only available from the underwriter, (ii) the broker-dealer is required to provide continuing disclosure to customers, or (iii) the transaction is effected on the basis of a yield to maturity or a call/put date.

The proposed amendments to MSRB Rule D-15 would provide that SEC-registered investment advisers would no longer be required to make certain affirmations to qualify for Sophisticated Municipal Market Professional ("SMMP") status. Currently, in order to qualify for SMMP status, there are requirements related to (i) the nature of the customer, (ii) the determination of the customer's sophistication by the broker-dealer and (iii) an affirmation by the customer regarding their sophistication. The rule proposal would eliminate the customer affirmation requirement for certain registered investment advisers.

Comments on the proposals are due no later than April 17, 2023.