SIFMA
The Municipal Securities Rulemaking Board plans to difficulty a request for remark to solicit additional suggestions on a proposal to drop the requirement that Securities and Change Fee-registered funding advisors affirm their standing as refined municipal market professionals.
The MSRB plans to difficulty the request for remark relating to MSRB Rule D-15 “throughout the subsequent week or so,” Ernie Lanza, chief regulatory and coverage officer of the MSRB, stated on Wednesday.
Rule D-15 defines the time period refined municipal market skilled, or SMMP for brief. Beneath the rule, an SMMP is outlined by three important necessities: the character of the client, vendor dedication of buyer sophistication and an affirmation by the client.
The MSRB’s plan to difficulty the remark request was talked about by Frank Mazzarelli, director, market regulation at MSRB, throughout his remarks on the Authorities Finance Officers Affiliation’s seventh Annual MiniMuni Convention final week. The request for remark will search “additional suggestions on amending [the] SMMP definition for municipal entities and SEC-registered funding [advisors],” a slide accompanying Mazzarelli’s GFOA occasion remarks stated.
“BDA welcomes the MSRB’s consideration to Rule D-15,” Michael Decker, senior vice chairman for analysis and public coverage on the Bond Sellers of America, stated. “The rule has been on the board’s books for years, and it’s applicable to undertake a assessment to find out whether or not amendments are crucial.”
The requirement to acquire buyer affirmations from SMMPs is a matter BDA will concentrate on, Decker stated.
“No such affirmations are crucial for Certified Institutional Consumers within the taxable world,” he stated. “We sit up for offering enter.”
The Securities Trade and Monetary Markets Affiliation additionally welcomed the MSRB’s plan to difficulty the remark request.
“SIFMA has been urging MSRB to amend Rule D-15, and is happy that the MSRB is planning to request feedback on the rule,” Leslie Norwood, managing director, affiliate normal counsel and head of the municipal securities division at SIFMA, stated in a press release offered through a spokesperson.
SIFMA believes that not solely ought to SEC-registered funding advisors be exempt from the Rule D-15 attestation requirement, “however this exemption needs to be prolonged to state registered funding advisers, who’ve primarily the identical duties as federally registered funding advisers however a smaller quantity of belongings below administration,” Norwood’s assertion stated.
“MSRB seems to be ahead to reviewing feedback on the upcoming RFC fairly than addressing particular person feedback upfront,” Lanza stated Wednesday in response to The Bond Purchaser’s request to handle factors raised by BDA and SIFMA.
Mazzarelli’s remarks in regards to the deliberate request for remark got here almost three years after the MSRB in February 2023 issued a
The Feb. 16, 2023, request for remark additionally pertained to MSRB Rule G-47, which pertains to time of commerce disclosure. Rule D-15 and Rule G-47 have been accredited by the SEC in March 2014.
In accordance with the Rule D-15 nature of the client requirement, the client have to be a financial institution, financial savings and mortgage affiliation, an insurance coverage firm, or a registered funding firm; an funding advisor registered both with the SEC below Part 203 of the Funding Advisers Act of 1940 or with a state securities fee (or any company or workplace finishing up related features); or every other particular person or entity having no less than $50 million in complete belongings.
Beneath the rule’s buyer affirmation requirement, the client should point out affirmatively that, amongst different issues, it’s exercising unbiased judgment in evaluating the vendor’s suggestions and the standard of execution by the vendor of the client’s transactions.
Within the February 2023 request for remark, the MSRB proposed to exempt funding advisors registered with the SEC from having to make such affirmations in an effort to qualify for SMMP standing below the rule. Such funding advisors “typically keep over $100 million in regulatory belongings below administration and owe a fiduciary obligation to their shoppers,” the MSRB stated in its February 2023 remark request.
“The MSRB understands that these funding advisers are usually very refined and, consequently, some market contributors have questioned whether or not the burdens related to acquiring an attestation from these professionals is sufficiently outweighed by the protections afforded to them,” the remark request stated.
“The MSRB is delicate to the cost-benefit evaluation related to the applying of its guidelines and seeks remark under as as to whether the MSRB ought to take away the attestation requirement for commission-registered funding advisers to qualify as SMMPs,” the February 2023 remark request stated.
