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

broker-dealer In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...

s 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. Becau ...

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 U.S. state, states, a Washington, D.C., federal district, five ma ...

municipal securities market, including tax-exempt and taxable

municipal bond A municipal bond, commonly known as a muni, is a bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal bonds is often, ...

s, 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 (FINRA), the MSRB is a self-regulatory organization that is subject to oversight by the

Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against mark ...

(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 Act of 1933, also known as the 1933 Act, the Securities Act, the Truth in Securities Act, the Federal Securities Act, and the '33 Act, was enacted by the United States Congress on May 27, 1933, during the Great Depression and afte ...

, the

Securities Exchange Act of 1934 The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (, codified at et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America. A landma ...

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 cre ...

(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 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 plans marketed by broker-dealers, as well as to the underwriting, sales and trading of Build America Bonds and other taxable municipal obligations. In addition, the MSRB operates the Electronic Municipal Market Access (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 contract A guaranteed investment contract (GIC) is a contract that guarantees repayment of principal and a fixed or floating interest rate for a predetermined period of time. Guaranteed investment contracts are typically issued by life insurance companies q ...

s 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

(as amended by the

Securities Acts Amendments of 1975 The Securities Acts Amendments of 1975 is an act of Congress. It was passed as a United States Public Law () on June 4, 1975, and amended the Securities Act of 1933 ( ''et seq.'') and the Securities Exchange Act of 1934 ( ''et seq.''). The Secur ...

, , 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 con ...

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