MSRB approves amendments to Rule G-27 on dealer supervision

Bonds

The Municipal Securities Rulemaking Board has approved amendments to Rule G-27 on dealer supervision that are designed to help dealers better adapt to changes brought on by remote work.

That was approved during the MSRB’s quarterly board meeting, where the board welcomed Securities and Exchange Commission Chairman Gary Gensler in attendance for his yearly visit, reviewed the comments on its 2024 rate card filing, industry feedback on MSRB Rule G-12 on inter-dealer confirmations and welcomed a new chief external relations officer.

“Rule G-27 covers dealer supervision and in particular, the focus of this rule was around the creation of a pilot program to explore remote office supervision, due to the pandemic’s disruption of business models of broker dealer firms, and MA firms,” said Mark Kim, chief executive officer of the MSRB. “We will be moving forward with amendments to this rule and they will be harmonized with FINRA’s rulemaking over their supervisory rules as well.”

“We know that the resources we have come from the industry and we want to be sure that we are spending those funds appropriately,” said MSRB board chair Meredith Hathorn. “One of our strategic goals is to uphold the public trust and there is no better way to do that than to be good fiscal stewards of the resources the industry provides to us. We sincerely appreciate the comments we received on our fee filing, particularly regarding requests for more information related to our technology expenses, and we look forward to engaging with our stakeholders to inform the budgeting process.”

The board discussed the status of its amendments to Rule G-14 on time of trade, which will shorten the timeframe for reporting of trades down to one minute from 15 minutes. The rule filing was published today by the SEC in the federal register. The SEC will go out for public comment on that, then decide whether to approve or disapprove from there.

The board is also beginning to look at pre-trade data, the third and final pillar in its move to update standards on pre-trade, time of trade and post-trade reporting.

“The board had a very robust discussion of pre-trade market transparency,” Kim said. “While the board didn’t take any formal action at this meeting, it does anticipate and has directed staff to develop a concept proposal, which will lay out a framework for the collection of pre-trade data in our market.”

The board also discussed the comments it received on its amendments to Rule G-12 on inter-dealer confirmations. The Securities Industry and Financial Markets Association was the only organization to comment, and the board has decided to conduct further discussions before finalizing the proposed amendments.

Another large topic discussed was the new 2024 rate card fee model, which received significant backlash from dealers and municipal advisors. The MSRB expect to file its response with the SEC shortly. 

“We know that the resources we have come from the industry and we want to be sure that we are spending those funds appropriately,” said MSRB board chair Meredith Hathorn. “One of our strategic goals is to uphold the public trust and there is no better way to do that than to be good fiscal stewards of the resources the industry provides to us. We sincerely appreciate the comments we received on our fee filing, particularly regarding requests for more information related to our technology expenses, and we look forward to engaging with our stakeholders to inform the budgeting process.”

The MSRB also announced that Aleis Stokes has taken over the reigns as chief external relations officer from Leah Szarek.

“I am delighted to welcome Aleis to lead the MSRB’s external relations team,” Kim said. “Aleis comes to us with a wealth of experience and knowledge within the financial services industry, having led critical communications and stakeholder initiatives at key banking trade associations over the past two decades. We look forward to leveraging her expertise and keen ability to build and strengthen our stakeholder relationships.”

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