Follow Up Letter to SEC in Response to Proposed Exemptive Order
Summary
SIFMA provided comments to the SEC on December 9, 2019 in response to the Proposed Exemptive Order. Subsequent to such submission, on December 12, 2019, representatives of SIFMA and its member firms met with staff from the Division of Trading and Markets and the Office of Municipal Securities, and met separately with Commissioner Lee and Commissioner Roisman and members of their respective staffs to discuss SIFMA’s comments and concerns about the Proposed Exemptive Order.
SIFMA and member firm representatives also met separately with Commissioner Jackson and Commissioner Peirce and their respective staffs on December 17, 2019, and with Chairman Clayton and his staff on January 9, 2020, to further discuss those concerns.
Excerpt
The Honorable Jay Clayton
Chairman
The Honorable Robert J. Jackson, Jr.
The Honorable Allison Herren Lee
The Honorable Hester M. Peirce
The Honorable Elad L. Roisman
Commissioners
U.S. Securities and Exchange Commission
100 F. Street, NE
Washington, DC 20549
Re: Additional Information In Response to Proposed Exemptive Order Granting Conditional Exemption from Broker Registration Requirements of Section 5(a) of the Securities Exchange Act of 1934 for Certain Activities of Registered Municipal Advisors (“Proposed Exemptive Order”)
Dear Chairman Clayton and Commissioners:
The Securities Industry and Financial Markets Association (“SIFMA”)1 submitted a comment letter to the U.S. Securities and Exchange Commission (“SEC” or “Commission”) on December 9, 2019 in response to the Proposed Exemptive Order.2 Subsequent to such submission, on December 12, 2019, representatives of SIFMA and its member firms met with staff from the Division of Trading and Markets and the Office of Municipal Securities (“Staff”), and met separately with Commissioner Lee and Commissioner Roisman and members of their respective staffs to discuss SIFMA’s comments and concerns about the Proposed Exemptive Order. SIFMA and member firm representatives also met separately with Commissioner Jackson and Commissioner Peirce and their respective staffs on December 17, 2019, and with Chairman Clayton and his staff on January 9, 2020, to further discuss those concerns. SIFMA would like to thank you each for taking the time to meet with us and hear our thoughts on this very important proposal. We understand you are extremely busy and we appreciated the opportunity to express our views in person.
During the above meetings and discussions, Chairman Clayton, Commissioners and Staff posed insightful questions and requested any data SIFMA could provide to support certain of its articulated positions. This letter responds to these requests.
The Number of Placements that could be Made Pursuant to the Proposed Exemptive Order is Significant – and Could Result in an Entire Universe of NonTransparent Municipal Securities
During our meeting with Staff on December 12, Staff indicated that the Proposed Exemptive Order is meant to address concerns of smaller issuers wishing to raise capital for smaller projects (e.g., a $750,000 firetruck).3 Staff noted its belief that such small offerings are not a significant portion of the municipal securities market and as a result, the Proposed Exemptive Order would not be a commonly relied-upon process for placing municipal securities. Both Commissioners and Staff indicated their interest in seeing data that would provide insight into how the Proposed Exemptive Order, if approved, might affect the municipal securities market.