April Issue

A Quarterly Update for Regional Firms


SIFMA Releases White Paper Recommending Improvements to Disclosure in the Municipal Securities Market
On April 12, 2016, SIFMA released a white paper on SEC Rule 15c2-12 which offers the industry's current perspective on the existing framework for disclosure in the municipal securities market and suggests ways in which the framework and related guidance for compliance could be improved to result in better disclosure for investors.

Link to full Press Release and White Paper available here.

Summary: DOL’s Final Rule Redefining Fiduciary - Steptoe & Johnson LLP

Almost a year after the Department of Labor (DOL or Department) re-proposed its regulation defining “investment advice fiduciary” under the Employee Retirement Income Security Act, as amended (ERISA) and the Internal Revenue Code of 1986, as amended (Code), the DOL has finalized the regulation and the exemptions accompanying it. The breadth of the definition itself will make virtually anyone speaking with a plan participant or an individual retirement account (IRA) owner into a fiduciary unless an exception is met. Rollover recommendations are now defined as fiduciary advice, as is advice on the type of account (brokerage versus advisory) and lists of securities that might meet a plan or IRA client’s needs

The final rule has been changed to stagger the implementation dates.  Under the final rule, the changes in the definition of fiduciary are effective June 7, 2016, but are not applicable until April 10, 2017.  Between June 7, 2016 and April 10, 2017, the prior regulation (as it appeared in the Code of Federal Regulations in 2015) continues to apply.  The new and amended exemptions accompanying the final rule are likewise effective June 7, 2016, but inapplicable until April 10, 2017.  However, the new “Best Interest Contract” (BIC) exemption and the exemption for “Principal Transactions in Certain Assets” also provide for a “transition period” between April 10, 2017 and January 1, 2018, during which relief will be available under fewer conditions.

Read this summary from Steptoe & Johnson LLP to learn more.

DOL Final Rule available here.

SIFMA's press statement on the finalized rule is available here and an interview with Bloomberg Markets is available to watch here; please visit www.sifma.org/dol-fiduciary for more information. 

Join SIFMA for a DOL Fiduciary Seminar – May 11, NYC or Webcast
The U.S. Department of Labor has finalized a new rule that expands the scope of those who become fiduciaries. SIFMA is pleased to invite you to a comprehensive full-day seminar that will delve into the final  Conflict of Interest Rule, providing an understanding of its vast implications for retirment advice as well as next steps for operationalization and implentation by financial firms. Register Today

SIFMA Private Client Conference 2016 Highlights: Photos, Presentations and more!
Paul Reilly, CEO, Raymond James, presents, the Future of Financial Advice. See presentation and all Private Client Conference highlights here



SIFMA Submits Comments to the SEC on MSRB Rules G-12 and G-15
SIFMA provides comments to the Securities and Exchange Commission (SEC) on MSRB Rules. Draft changes to MSRB Rules G-12, on uniform practice, and G-15, on confirmation, clearance, settlement, would enable the first shortening of the municipal securities settlement cycle since 1995. The T+2 settlement cycle, if adopted by all relevant regulators, would apply across the securities industry, including not only municipal securities but also equity securities and corporate bonds.

Please find SIFMA’s comment letter here.

SIFMA Submits Comments to the MSRB on Regulatory Notice 2016-07
The Municipal Securities Rulemaking Board (MSRB) recently proposed new regulatory guidance on how municipal securities dealers price bonds and calculate their compensation.  The proposal can be found here.

The MSRB’s draft guidance seeks to promote consistent compliance by municipal securities dealers with existing fair-pricing obligations to investors and better align standards on these subjects with those that apply to other fixed income securities as regulated by FINRA. The MSRB states it believes the draft guidance also could support development of a possible mark-up disclosure rule for the benefit of retail investors in the municipal securities market.

MSRB rules govern dealer pricing and compensation, and require dealers to engage in municipal securities transactions with customers at an aggregate price that is fair and reasonable. To meet this standard, the aggregate price must bear a reasonable relationship to the “prevailing market price” of the security, and, as part of the aggregate price, the dealer’s compensation—in the form of a “mark-up” or “mark-down”—must also be fair and reasonable.

Please find SIFMA’s comment letter here.

SEC Approval of FINRA EdComm Proposal
On March 23, the SEC approved proposed FINRA Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers).  The approved rule is “unchanged from the original proposal” filed with the SEC. The approval order can be found here.

FINRA Reports on Effective Practices for Digital Investment Advice
On March 15, FINRA issued a report on effective practices related to digital investment advice services and to remind member firms of their obligations under FINRA rules.

Full Report Available here


Legislative Update

Senate Banking Committee Holds Hearing on Fixed Income Markets – On April 14, the Senate Banking Committee held a hearing to discuss fixed income markets and the effect of post-crisis regulations on market liquidity. Treasury Counselor Antonio Weiss and Federal Reserve Governor Jerome Powell defended post-crisis reforms, with Weiss arguing that they have produced a “higher likelihood” that liquidity conditions will be available in periods of stress.  Read More

House Financial Services Subcommittee Holds Hearing on the JOBS Act – On April 14, the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on the JOBS Act. Chairman Garrett (R-NJ) commented that the SEC is working on finalizing Reg. A+ and asked what the effect on the Reg. A market will be should state challenges prevail, and Reps. Garrett, Maloney (D-NY), and Scott (D-S.C.)  asked if the subcommittee should hold off on crowd funding rules until the SEC’s rules take effect next month. Read More

House Financial Services Approves Bill to Repeal Title II– On April 13, the House Financial Services Committee held a markup and passed both bills considered. H.R. 1486 was approved by the Committee in a 33-20 party line vote, and Rep. Barr (R-KY) stressed that the CFPB “could be the poster child for [being] out of control,” as it engages in “ad hoc” enforcement actions without clear legal authority and has wasted money “at every turn.” H.R. 4894 was approved by the Committee in a 34-22 party line vote, and Rep. Westmoreland (R-GA) said Orderly Liquidation Authority creates a “shadow regulatory state” that impacts and distorts the financial markets, which is why his bill would repeal the OLA and Title II of Dodd-Frank. Read More



SIFMA Complex Products Forum – Program Announced!
The SIFMA Complex Products Forum brings together senior leaders from regulatory authorities, financial services industry and investment product providers to discuss the latest complex products and regulatory developments. Join SIFMA on June 16 in New York to examine reasonable-basis suitability and innovative investment products, due diligence process when on boarding new products, ongoing supervision and oversight best practices, and new product training and how it can create a culture of compliance.
Register Today

SIFMA’s Fixed Income Market Structure Seminar – May 24, NYC
The Fixed Income Market Structure Seminar will bring together market participants and policymakers to discuss the regulatory initiatives and priorities in the Treasury market, the potential for innovation in electronic trading to alter the landscape for corporate and municipal bonds, and the transformative use of market data. Join us to stay abreast of and participate in these important market discussions.
Register Today


SIFMA Initiatives

SIFMA Releases Muni Bond Credit Report for 4Q & FY 2015
Long-term public municipal issuance volume totaled $76.4 billion in the fourth quarter of 2015, a decline of 11.3 percent from the prior quarter ($86.1 billion) and a decline of 23.0 percent year-over-year ($86.1 billion). Including private placements ($8.4 billion), long-term municipal issuance for 4Q’15 was $84.7 billion. Despite the fourth quarter decline, full year issuance was $377.6 billion, an increase of 19.9 percent from 2014 and just slightly above 10-year volume averages. According to the SIFMA Municipal Issuance Survey, respondents expect long-term municipal issuance in 2016 to decline slightly to $388.5 billion.
SIFMA’s Municipal Bond Credit Report is a quarterly report on the trends and statistics of the U.S. municipal bond market, both taxable and tax exempt. Download the report for more on issuance volumes, outstanding credit spreads, highlights, and commentary.
View Report

Download the Playbook for Implementing T+2 Settlement Cycle in the U.S.
A shorter settlement cycle will enhance U.S. market structure by improving safety and efficiency for investors. The T+2 Industry Steering Committee’s (ISC) Implementation Playbook, developed with Deloitte Advisory, provides a detailed timeline, milestones and dependencies to achieve the move to a two-day settlement cycle (T+2) in the U.S. by Q3 2017. Shortening the U.S. settlement cycle will provide a number of benefits, including reducing operational, systemic and counterparty risk and lowering liquidity needs, while aligning the U.S. with other T+2 settlement markets across the globe.
Download the Implementation Playbook

SIFMA AMG Recommends Improvements to the SEC Proposed Rule Regulating Fund Use of Derivatives
SIFMA AMG recommended important changes to the SEC’s proposed rule that seeks to regulate the use of derivatives by registered investment companies and business development companies by establishing portfolio limits, codifying asset segregation requirements and requiring regulated funds having large positions in derivatives to establish risk management programs. SIFMA AMG’s recommendation includes, the elimination of portfolio limits or, alternatively, revisions to the proposed portfolio limits, as well as revisions to the asset segregation requirements, to help the SEC more effectively accomplish its regulatory goals and avoid unnecessary restrictions that could have an adverse impact on the very investors the proposed rule seeks to protect.
View Press Release
Comment Letter



Private Client Group – John Maurello; jmaurello@sifma.org; 212.313.1241
Retirement & Savings – Lisa Bleier; lbleier@sifma.org; 202.962.7329
Office of the General Counsel – Kevin Carroll; kcarroll@sifma.org; 202.962.7382

120 Broadway, 35th Floor, New York, NY 10271 | 212.313.1000

1101 New York Avenue, NW, 8th Floor, Washington, DC 20005 | 202.962.7300


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