MSRB Seeks SEC Approval of Targeted Changes to Dealer Rules on Primary Offering Practices

Date: March 21, 2019

Contact: Jennifer A. Galloway, Chief Communications Officer


Washington, DC – The Municipal Securities Rulemaking Board (MSRB) today reached the concluding phase of its two-year effort to review rules on primary offering practices in the municipal securities market by filing proposed rule changes with the U.S. Securities and Exchange Commission (SEC) related to MSRB Rule G-11, on primary offering practices, and MSRB Rule G-32, on disclosures in connection with primary offerings.

During its retrospective rule review outreach efforts and formal solicitations for comment, the MSRB determined that market stakeholders generally believe existing MSRB rules related to primary offering practices function as intended and are consistent with current market practices. The changes proposed today seek to enhance existing rules with respect to transparency and dissemination of information and to eliminate provisions that are not necessary to the operation of a fair and efficient market. In addition, the proposed rule changes would expand the data elements collected by the MSRB for primary offerings of municipal securities through MSRB Form G-32. Importantly, all proposed changes incorporate feedback received from stakeholders.

“Engagement with our stakeholders has been an integral part of our retrospective review of MSRB rules related to primary offering practices,” said MSRB Chair Gary Hall. “As a result of the feedback we have received over the past several years, we believe the proposed enhancements will increase transparency and promote the fair dissemination of information. The proposed elimination of certain regulatory requirements also is important in helping dealers to efficiently meet their regulatory responsibilities related to primary offerings.”

In September 2017, the MSRB requested comment on a concept proposal regarding possible amendments to primary offering practices of brokers, dealers and municipal securities dealers (collectively, “dealers”). As a result of the comments received, in July 2018, the MSRB published a request for comment on draft rule changes related to primary offering practices. Following review of the comments received, the MSRB conducted additional stakeholder outreach to further understand views and concerns.

The proposed amendments being filed with the SEC today to Rule G-11 would, among other things, reinforce the existing requirement that selling group members must comply with issuer terms and conditions, priority provisions and other requirements as communicated. In addition, the proposed amendments would require the senior syndicate manager to communicate to the syndicate and selling group members, at the same time, when an issue is free to trade. Other aspects of the proposed amendments seek to require certain information be provided to the issuer regarding the designations and allocations of the offering, and would align the timeframe for the payment of group net sales credits with the payment of net designation sales credits so that both are paid within 10 calendar days following the date the issuer delivers securities to the syndicate.

Proposed amendments to Rule G-32 would require the underwriter in an advance refunding to provide relevant documentation to market participants at the same time and would eliminate the requirement under Rule G-32(c), that a dealer financial advisor that prepares an official statement make it available to the managing or sole underwriter after the issuer approves it for distribution.

Finally, the MSRB is proposing to revise Form G-32 to include additional data points in certain circumstances, providing the MSRB with important primary offering information that would enhance its ability to oversee the accuracy and distribution of the information provided. Read the MSRB Notice about all the proposed rule changes.

The MSRB began a formal retrospective rule review in early 2012 to help ensure MSRB rules and interpretive guidance are effective in their principal goal of protecting investors, issuers and the public interest. The retrospective review also seeks to ensure that MSRB rules are not overly burdensome, are clear and harmonized with the rules of other regulators, as appropriate, and are reflective of current market practices. In October 2018, the Board identified the continuation of its ongoing retrospective rule review as a strategic priority for its current fiscal year and subsequently developed criteria to help identify priority rules or rule areas for review. 

Read more about the MSRB’s retrospective rule review.

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 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 overseen by the Securities and Exchange Commission and Congress.