October 1, 2014

Muni ComMUNIcations - Legislative, regulatory and tax news for municipal securities


SIFMA Submits Comments to MSRB on Draft Amendments to MSRB Rule G-37SIFMA Logo
On September 30, SIFMA submitted comments to the Municipal Securities Rulemaking Board (MSRB) on Regulatory Notice 2014-15 containing draft amendments to MSRB Rule G-37 on political contributions by municipal securities dealers (Dealers) and related prohibitions on municipal securities business, extending the Rule to cover municipal advisors and making certain other changes impacting both Dealers and municipal advisors.

SIFMA commended MSRB for taking steps with the Draft Amendments to create a level playing field for all market participants in the area of political contributions. SIFMA believes that it is important that all market participants are subject to the same rules governing political activity, and the draft amendments significantly advance that interest.

However, SIFMA's comments are submitted to bring further consistency among market participants and in consideration of the heightened constitutional standards set forth in the Supreme Court's decision in McCutcheon v. FEC, 134 S. Ct. 1434 (2014). These comments include, but are not limited to suggesting:

  • The time period between SEC approval of the Draft Amendments and their effective date, proposed to be two weeks, should be lengthened to at least 6 months as has been the case in other, similar "pay-to-play" rules.
  • The definition of "municipal advisor representative" should be revised to include only those associated persons primarily engaged in municipal advisory activities, in conformity with the definition of "municipal finance representative" for Dealers.
  • The de minimis exception for political contributions to candidates for whom an individual is entitled to vote under Rule G-37 ($250) should be revised to be consistent with the analogous de minimis exceptions under SEC Rule 206(4)-5 for investment advisers and CFTC Rule 23.451 for swap-dealers ($350).  Additionally, the "look-back" provision of the Rule should be revised to include an exception for any contributions made by an individual who was covered by the SEC or CFTC pay-to-play rules at the time of the contribution and contributed within the de minimis amounts under those rules.
  • The cross-ban provision for Dealer municipal advisors should be eliminated in that it is overly broad and does not serve the purpose of attempting to eliminate contributions that are linked to the relevant business.

SIFMA Responds to MSRB Seeking Input on Potential Enhancements to Price Transparency in the Municipal Market
On September 25, SIFMA submitted comments to the Municipal Securities Rulemaking Board (MSRB), in which the MSRB requested comment on enhancements to the post-trade municipal securities transaction data that would be disseminated from a new central transparency platform (CTP).

SIFMA is pleased with the methodical manner in which the MSRB has proceeded with obtaining input regarding the development of the CTP, but remains concerned about the costs of certain proposed changes, relative to their assumed benefits, particularly related to the proposed addition of a conditional trading commitment indicator and the changes related to dealer compensation arrangements.

Additionally, SIFMA feels strongly that the MSRB should clarify its guidance regarding the use of the List Offering Price/Takedown Transaction indicator.

SIFMA Submits Comments to SEC regarding MSRB Best Execution Rule Proposal and Changes to SMMP
On September 29, SIFMA submitted comments on the Municipal Securities Rulemaking Board’s (MSRB) filing with the Securities and Exchange Commission (SEC) on notice of filing of a Proposed Rule Change Consisting of Rule G-18, on Best Execution of Transactions in Municipal Securities, and Amendments to Rule G-48, on Transactions with Sophisticated Municipal Market Professionals (SMMP), and Rule D-15, on the Definition of SMMP (the Proposal).

SIFMA supports raising the execution standard in the municipal market for retail customers in a way that reflects the current market structure and unique characteristics of the municipal market. SIFMA believes that the MSRB has thoughtfully developed and proposed revisions to MSRB Rule G-18 that reflect the unique characteristics of the municipal securities market and warrant certain departures from FINRA 5310. SIFMA also supports the proposed changes to Rule G-48.

However, SIFMA has significant concerns regarding the proposed changes to Rule D-15 and urges the SEC not to move forward with the proposed changes to D-15 at this time to allow the MSRB to solicit public comments for its board members to consider. In the alternative, SIFMA is requesting that the SEC adopt SIFMA’s proposed revisions to Rule D-15.

MSRB LogoMSRB Makes Kroll Bond Ratings Available to the Public on EMMA
On September 29, the MSRB announced that public finance ratings from Kroll Bond Rating Agency (KBRA) will be available to the public on its Electronic Municipal Market Access (EMMA) website.

“The MSRB continues to expand the information available on EMMA to help investors make more informed decisions about municipal bonds,” said MSRB Executive Director Lynnette Kelly. “KBRA’s willingness to provide their ratings to investors free of charge through EMMA supports the MSRB’s goal to increase public access to market information.”

Amendments to MSRB Rule G-3 Become Effective on September 30
On September 30, the amendments to MSRB Rule G-3, on professional qualifications, Rule G-7, on information concerning associated persons, and Rule G-27, on supervision, became effective. The amendments limit the scope of permissible activities of a limited representative, eliminate the FINOP classification, qualification and numerical requirements in MSRB Rule G-3(d), and make technical and conforming amendments.
Regulatory Notice

Registration Open: SIFMA’s 2014 Industry-Wide BCP Testing Initiative
As part of the ongoing securities industry testing initiative, on October 25, 2014, SIFMA will lead the 2014 industry-wide business continuity test where firms submit test orders and transactions to markets and utilities. The exercise will involve test transactions for equities, options, fixed income, foreign exchange, commercial paper, settlement, payments, Treasury auctions and market data. The test is supported by all major exchanges, markets and industry utilities. Registration is open until Friday, October 17.
Register Today
SIFMA Blog: Pennsylvania + Wall

Table Top Exercise (TTX): A new addition in this year’s test is a Table Top Exercise (TTX).  If your firm is interested in participating in this TTX please register and the registrant will then receive details regarding the remote, self-paced exercise that will make use of the crisis scenario being applied to this year’s exercise.  The TTX will be executed in Friday, October 24. There will also be more information on the TTX as we move into the summer.
Table Top Exercise Scenario

Pandemic Influenza Continuity Exercise Series: Multiple Dates, Sep. – Dec., 2014: SIFMA is coordinating with government and private organizations to sponsor a two year series of pandemic influenza continuity exercises to mitigate vulnerabilities during a pandemic influenza outbreak; identify gaps or weaknesses in pandemic planning or in organization pandemic influenza continuity plans, policies, & procedures; and encourage public and private organizations to jointly plan for, and test, their pandemic influenza plans.
FEMA Pandemic Exercise

Sign up Today: Invest It Forward Volunteer Opportunities
Teachers across the country are asking you, our SIFMA member firms, to visit their SMG classes to promote financial and capital markets literacy this fall! Join SIFMA as we Invest It Forward™. Invest it Forward™ connects teachers and classrooms with financial industry professionals and firms to give young Americans a solid understanding of the capital markets system and the invaluable tools to achieve their dreams. It’s so easy. 

You register online, select a local school and The SIFMA Foundation provides you with a tailor-made presentation based on the subject your teacher requests.  Do it alone or as part of a team. You too can host a classroom at your firm’s office. Register directly at http://www.sifma.org/education/sifma-foundation/volunteer-and-firm-activities/ or contact Michelle Noguchi at mnoguchi@sifma.org / 212.313.1224 for further details.

New 2015 Edition of "Sources: A Resource Directory"
SIFMA is pleased to announce the upcoming publication of a new 2015 edition of "Sources: A Resource Directory.” Compiled by SIFMA, Sources is an easy-to-use guide of products and services for the securities and financial industry. Service providers in financial services are invited to submit information for publication; SIFMA’s Associate Members are included at no cost as a benefit of membership.
View: Sources

SIFMA Bookstore Spotlight: The Fundamentals of Municipal Bonds
Reuters has called this text "an excellent general primer on the market." This informative volume is the newly revised and updated sixth edition of the long-heralded classic text on the municipal securities market. The text provides a basic understanding of the market for a wide range of readers, including experienced professionals – such as investment bankers, traders, brokers, and professional investors – as well as public officials, academicians, students, and sophisticated individuals.
Read More and Purchase Book


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SIFMA Event: Municipal Analyst Seminar on Governmental Accounting – Oct. 24
SIFMA is partnering with MAGNY and instructor, Dean Mead from the GASB for “What Municipal Analysts Need to Know about Governmental Accounting” on October 24th at the SIFMA Conference Center in New York City.  Join us for this in-depth session on the rules that state and local governments follow when accounting for and reporting their finances in audited financial reports. The session is ideal both for relatively new analysts and for experienced analysts looking for a refresher or to learn about the latest accounting requirements.

Webcast Opportunity: Register Now for SIFMA's Ethics Seminar
SIFMA and SIFMA’s Compliance & Legal Society are hosting an Ethics Seminar, on October 28th, to take a deeper-dive into the ethical issues impacting the financial industry.  This Seminar features in-depth discussions on a range of topics, including: the SEC and CFTC ethics rules, internal investigations, privilege issues, client relationships, and much more.  Participate via live video webcast to satisfy all your New York State CLE ethics credit requirements at one time during this half-day event.  

SIFMA Annual Meeting: Last Chance for Early Bird Rates
SIFMA's 2014 Annual Meeting once again gathers the leaders of the financial services industry together with prominent policymakers and financial media in November. Join us to explore the role of capitalism in creating opportunity across America. In one-on-one conversations and on in-depth panels, today’s foremost thought leaders – including former Mayor of the City of New York and Founder of Bloomberg LP, Michael Bloomberg, and Co-Founder and Co-CEO of the Carlyle Group, David Rubenstein, and Stephen Luparello, the new Director of Trading and Markets for the Securities and Exchange Commission – will share their perspectives on how the financial services industry will best serve tomorrow's economy. Register now to save!

2014 Tribute Dinner: Join Us to Support Youth Financial Education – NYC, Nov. 10
The 2014 Tribute Dinner, Invested in Financial Capability, will take place following this year’s Annual Meeting on November 10th at the Marriott Marquis in NYC.  Join us for a special evening to celebrate and raise awareness for the cause of youth financial education. Your generous donations will help millions of students, teachers, schools and communities across the country to participate in the SIFMA Foundation's financial education programs: The Stock Market Game™, Capitol Hill Challenge™, InvestWrite® and Invest It Forward™.

Hear Perspectives from CEOs: SIFMA Diversity Conference: Nov. 13-14, St. Louis
One of the featured sessions at the SIFMA Diversity Conference is the CEO Panel, which brings together top executives to candidly discuss the business imperative of diversity and inclusion as a long-term strategy to achieve the corporate mission. Executive speakers include: Jim Weddle, Managing Partner, Edward Jones; Robert Druskin, Executive Chairman, DTCC; Mary Mack, President and CEO, Wells Fargo Advisors; and more. Join prominent business and community leaders in St. Louis to discuss the steps needed to achieve the vision of global diversity and inclusion, and prepare for the 2020 workplace.


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