The Municipal Securities Rulemaking Board (MSRB) writes investor protection rules and other rules regulating broker-dealers and

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

s in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...

municipal securities market, including tax-exempt and taxable municipal bonds, municipal notes, and other securities issued by states, cities, and counties or their agencies to help finance public projects or for other public policy purposes.

Operations

Like the

Financial Industry Regulatory Authority The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associat ...

(FINRA), the MSRB is a self-regulatory organization that is subject to oversight by the Securities and Exchange Commission (SEC). The MSRB is authorized to create rules designed "to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, and processing information with respect to, and facilitating transactions in municipal securities, to remove impediments to and perfect the mechanism of a free and open market in municipal securities, and, in general, to protect investors and the public interest." While the MSRB sets standards for broker-dealers, banks, and municipal advisors, MSRB rules do not apply to issuers of municipal securities or other municipal entities, which Congress generally exempted from most provisions of the federal securities laws (such as the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940) otherwise applicable to private-sector issuers of corporate and other types of securities. MSRB rules are enforced by various other federal regulatory organizations, including the SEC, FINRA, the

Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...

, the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cr ...

(FDIC) and the

Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all natio ...

(OCC). Among its investor protection rules, the MSRB is best known for adopting the first nationwide

Pay to Play Pay-to-play, sometimes pay-for-play or P2P, is a phrase used for a variety of situations in which money is exchanged for services or the privilege to engage in certain activities. The common denominator of all forms of pay-to-play is that one mus ...

rule, known as Rule G-37, designed to eliminate the use of political contributions to obtain municipal underwriting business from state and local governments. The MSRB's investor protection rules also apply to state-operated

529 plan 5 (five) is a number, numeral and digit. It is the natural number, and cardinal number, following 4 and preceding 6, and is a prime number. It has attained significance throughout history in part because typical humans have five digits on eac ...

s marketed by broker-dealers, as well as to the underwriting, sales and trading of

Build America Bonds Build America Bonds are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder. Build America Bonds were created under Section 1531 of Title I of Division B of the American Recovery ...

and other taxable municipal obligations. In addition, the MSRB operates the

Electronic Municipal Market Access The Electronic Municipal Market Access (EMMA) system, operated by the Municipal Securities Rulemaking Board (MSRB), serves as the official source for municipal securities disclosures and related financial data in the United States. EMMA provides ...

(EMMA) system, which provides free on-line access to comprehensive municipal securities disclosure documents, trade prices, interest rate information, and market statistics. The

Dodd–Frank Wall Street Reform and Consumer Protection Act The Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly referred to as Dodd–Frank, is a United States federal law that was enacted on July 21, 2010. The law overhauled financial regulation in the aftermath of the Great Recess ...

of 2010 broadened the MSRB's rulemaking authority to also regulate so-called municipal advisors, which include financial advisors, swap advisors, brokers of guaranteed investment contracts and other market participants that advise on the issuance of municipal securities and provide certain other types of advice to state and local governments, public pension funds and other municipal entities on municipal derivatives, investment strategies and other financial matters. , since the SEC has not released the definition of "municipal advisor", the MSRB's rules in this regard are suspended and there is considerable concern in the industry as to whether underwriters and/or other regulated professionals may be viewed as municipal advisors, thereby having the related fiduciary duties. The MSRB's investor protection rules will be extended to protect municipal entities as well.

Structure

The MSRB is composed of members from regulated broker-dealers and banks as well as from the public. Beginning on October 1, 2010, the MSRB will be recomposed to consist of a majority of independent public members and to include representatives of municipal advisors.

History

The MSRB was created by the Section 15B of the Securities Exchange Act of 1934 (as amended by the Securities Acts Amendments of 1975, , and codified at ) to create a mechanism for the regulation of municipal securities as well as

broker A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...

s, dealers, and banks in the municipal securities business.

References

External links

Municipal Securities Rulemaking Board

Electronic Municipal Market Access (EMMA) system
{{Authority control 1975 establishments in the United States Financial regulatory authorities of the United States Self-regulatory organizations Organizations established in 1975 Local government finance

Operations

Structure

History

See also

References

External links