MSRB Requests Comment on Re-Establishing Standalone Rule on Discretionary Transactions in Customer Accounts

Date: May 16, 2018

Contact: Jennifer A. Galloway, Chief Communications Officer
               202-838-1500
               jgalloway@msrb.org

MSRB REQUESTS COMMENT ON RE-ESTABLISHING STANDALONE RULE ON
DISCRETIONARY TRANSACTIONS IN CUSTOMER ACCOUNTS

Washington, DC – The Municipal Securities Rulemaking Board (MSRB) today requested comment on a draft proposal to re-establish a standalone rule governing the handling of transactions in discretionary accounts—those customer accounts in which a dealer is authorized to determine what municipal securities will be purchased or sold. 

The MSRB’s proposal also seeks to address other uses of discretion for transactions in customer accounts, including when discretion is granted to a third-party agent of the customer, who is not an associated person of the dealer. Specifically, the MSRB believes it is important to expand the scope of the rulemaking to address these scenarios to recognize current practices in the municipal market and to provide investors with basic protections from unauthorized trading in their customer accounts. 

The limited new proposed requirements for municipal securities customer accounts are harmonized with requirements of other financial regulators. 

Comments should be submitted no later than July 16, 2018. Read the request for comment. Following the public comment period, the MSRB will carefully consider the comments received and may amend the proposal, submit the proposed rule with any necessary amendments to the Securities and Exchange Commission for its consideration and approval, or take no further action at this time.

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a Congressionally-chartered, self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is subject to oversight by the Securities and Exchange Commission.