The Municipal Securities Rulemaking Board (MSRB) regularly engages in retrospective reviews of its rules and associated interpretive guidance with the goal of ensuring that they achieve their intended purposes and take into account the current state of the municipal securities market. As outlined below, this continual rule book modernization has two distinct but related efforts: ongoing retrospective reviews of MSRB rules and a long-term comprehensive review of the MSRB’s entire body of interpretive guidance.
Retrospective Rule Review Overview
Through ongoing stakeholder feedback, the MSRB periodically identifies candidates for retrospective rule review. Generally, this involves the identification of specific rule-based obligations that may warrant amendment or other action based on specific criteria below. Once a rule is identified as a candidate, the MSRB typically will seek public comment on draft amendments to the rule. Additionally, the MSRB often will seek broader comment on any other amendments that may be appropriate to modernize the rule and/or its associated interpretive guidance. Comments received in response to the MSRB’s draft amendments may lead to final rule changes. To date, the MSRB’s retrospective rule reviews have led to numerous rule changes or amendments, for example, to reflect a dynamically evolving market or to promote regulatory consistency and market efficiency.
Interpretive Guidance Review Overview
The MSRB is undertaking a multi-year retrospective review of its interpretive guidance. The goal of this comprehensive review is to streamline and modernize the rule book by clarifying, amending and/or retiring guidance that no longer achieves its intended purposes and, where appropriate, codifying other guidance into streamlined rule text. This long-term initiative is designed to complement the MSRB’s other retrospective rule review initiatives and be an impactful way to support compliance and reduce unnecessary costs and burdens for regulated entities while fulfilling the MSRB’s regulatory obligation to protect investors, municipal entities, obligated persons, and the public interest. As of 2022, the MSRB’s interpretive guidance review initiatives have led to the retirement of more than fifteen pieces of interpretive guidance from the rule book and the proposal of a standalone rule for solicitor municipal advisors that codifies certain guidance and promotes clearer regulatory obligations for regulated entities and greater issuer and investor protection.
Purpose and Review Criteria
The purpose of the rule book modernization initiative is to help ensure MSRB rules and interpretive guidance are effective in their principal goal of protecting investors, issuers and the public interest; not overly burdensome; clear; harmonized with the rules of other regulators, as appropriate; and reflective of current market practices. As part of the retrospective rule review, the MSRB also enhances the display of information on its website to facilitate easier access to relevant regulatory information and understanding of their compliance obligations by regulated persons.
The MSRB developed a set of criteria to use in prioritizing and assessing rule areas (including rules and interpretive guidance) for modernization. These criteria include, among others:
- Whether the rule/guidance continues to address specific market harms and protect investors, issuers and the public interest.
- Whether the rule/guidance is consistent with market practices and/or consistent with the relevant rules of other regulators or other regulatory requirements for the regulated entity.
- This may include consideration of the age of the rule and the length of time since it was reviewed holistically.
- Whether the rule/guidance is clear and understandable or a subject of common stakeholder feedback.
- This may include consideration of:
- Whether the rule has a substantial body of historical interpretive guidance.
- Whether commenters have previously expressed (whether in a formal comment letter or otherwise) a desire for the MSRB to reconsider a particular rule requirement.
- The level of relevant enforcement activity.
- This may include consideration of:
- Whether the benefits of the rule/guidance are commensurate with its burdens.
- This may include consideration of:
- Whether regulated entities are able to comply without undue burden.
- Whether there is unconscious bias in the operation of the rule or restriction of access to the municipal market as an unintended consequence of the rule.
- This may include consideration of:
For more information about the MSRB’s rulemaking process, including the role of retrospective rule reviews, see the MSRB Rulemaking Process.
Stakeholder Engagement and Communication
The MSRB welcomes feedback as to whether there are rules that the MSRB should consider for retrospective rule review. We also seek both formal and informal outreach and feedback from market participants and other interested parties, and by leveraging existing MSRB communication efforts ( e.g., conference engagements and webinars). As a general practice, the MSRB generally seeks to provide 60-day comment periods for any concept proposals and requests for comment in order to ensure that stakeholders have sufficient time to provide thoughtful comments on rulemaking proposals. Additionally, to the extent possible, the MSRB times the publication of such notices seeking stakeholder input on specific priority rule areas to be mindful of the time required to provide thoughtful comments.
The MSRB keeps market participants and the general public informed of upcoming retrospective rule review activities on this website, via email and on social media. On an ongoing basis, stakeholders are welcome to comment on any aspect of the retrospective rule review initiative. Comments should be directed to Ronald Smith, MSRB Corporate Secretary, at rsmith@msrb.org.
