Amendments to MSRB Rule A-12 welcomed by dealers
3 min read
Amendments to Municipal Securities Rulemaking Board Rule A-12 on registration that would require bank dealers to disclose their related “associated persons” would level the playing field for those dealers already required to do so, commenters on the proposal said.
“The proposal would require MSRB-registered bank-dealers to begin reporting certain information about firms’ associated persons, including their names, locations, and licenses/qualifications,” wrote Michael Decker, senior vice president of federal policy and research at the Bond Dealers of America. “We believe the requirements that would be imposed on bank-dealers would not be overly burdensome and would serve to ‘level the playing field’ between bank-dealers and other dealers.”
The MSRB requested comment on the proposal June 6, which was proposed mostly due to the fact that Forms MSD-4 and MSD-5 are filed exclusively with banking regulators, the MSRB said, along with the aim of making similar information available for bank dealers as is required of municipal advisors.
Included in the amendments are certain provisions related to MSRB Rule G-7 on information concerning associated persons. The amendments bring the MSRB’s rules in line with other regulators such as FINRA and other federal banking regulators, which already require similar information about associated persons.
“As the Board moves towards implementing the proposal, we ask the MSRB, FINRA, and federal banking regulators to work together to streamline and standardize associated person reporting requirements to ease the regulatory burden on affected firms,” Decker said.
Decker’s was one of four comment letters submitted, all of which support the proposal and the board’s efforts to increase transparency for bank dealers.
“By enhancing reporting standards and making relevant information readily available to stakeholders, including investors and regulators, these proposed amendments have the potential to bolster market confidence and ensure a level playing field for all participants,” wrote Jeff Beckel, senior executive vice president and director of capital markets for Frost Bank. “This initiative is a proactive step towards creating a system of greater transparency and accountability in the municipal and financial sectors.”
The MSRB estimated up-front compliance costs to be $3,820, consisting of costs for revision of policies and procedures, outside counsel review and training, and expect annual ongoing costs to be $2,600 on the high end and $1,040 on the lower end.
The Securities Industry and Financial Markets Association’s member firms estimate those costs to be higher than estimated by the board, but “the actual compliance costs are believed to be outweighed by the perceived benefits of the amendment,” wrote Leslie Norwood, managing director, associate general counsel and head of municipal securities said in SIFMA’s letter.
“SIFMA supports the MSRB’s proposed amendments, but does urge the MSRB, FINRA, SEC, Federal Reserve, OCC and FDIC to continue to work on reducing unnecessary burdens for regulated entities and regulators while still increasing transparency for the benefit of issuers, regulated bank dealers, regulators and other market participants,” Norwood concluded.
“ARM has reviewed each of these proposed rule changes and is in support of them,” wrote Richard Izzo, president of the Association of Registration Management. “It is ARM’s consensus that these changes will serve to create increased transparency between the banks and broker-dealers of municipal securities.”
