MSRB Request for Comment on Compliance Support
Summary
SIFMA provides comments to the Municipal Securities Rulemaking Board (MSRB) in response to request for public comment on its approach to enhancing compliance support, a long-term strategic priority for the organization. SIFMA appreciates the opportunity to address certain concerns and present our views on how the MSRB can contribute to resolving them: (1) the need for more published MSRB interpretive guidance, (2) the need for the MSRB and examiners to work together to articulate guidance on the recordkeeping that will be required to demonstrate compliance with MSRB rules, (3) the need to increase the usefulness of MSRB compliance resources, including enhancing the MSRB website, simplifying email subscriptions, and improving the accessibility and content of educational materials and events, and (4) the need for MSRB participation at relevant industry conferences.
See: MSRB Notice 2017-22: Request for Comment on Compliance Support
Excerpt
January 23, 2018
Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1300 I Street NW
Suite 1000
Washington, DC 20005
Re: MSRB Notice 2017-22: Request for Comment on Compliance Support
Dear Mr. Smith:
The Securities Industry and Financial Markets Association (“SIFMA”)1 greatly appreciates this opportunity to respond to Notice 2017-222 (the “Notice”) issued by the Municipal Securities Rulemaking Board (the “MSRB”) on their request for comment on compliance support. Our members welcome an increase in MSRB resources devoted to assisting them in complying with the MSRB rules that govern their conduct. We would like to take this opportunity to address certain overarching member concerns and present our views on how the MSRB can contribute to resolving them: (1) the need for more published MSRB interpretive guidance, (2) the need for the MSRB and examiners to work together to articulate guidance on the recordkeeping that will be required to demonstrate compliance with MSRB rules, (3) the need to increase the usefulness of MSRB compliance resources, including enhancing the MSRB website, simplifying email subscriptions, and improving the accessibility and content of educational materials and events, and (4) the need for MSRB participation at relevant industry conferences.
I. The Need for More Published MSRB Guidance
It is the view of our members that, in recent years, too much interpretation of MSRB rules has occurred through examination and enforcement rather than by published MSRB guidance. Regulated entities oftentimes learn of regulatory interpretations “through the grapevine” by talking to counterparts about FINRA and SEC exams. SIFMA feels strongly that compliance with MSRB rules has suffered because of the MSRB’s current policy on providing rule interpretations. Many members feel that if they call the MSRB requesting help on how to interpret an
MSRB rule or interpretation, the MSRB will refer the matter to FINRA or the SEC for enforcement. Previously, questions from counsel were accepted on an anonymous basis, and members were told that requests could be hypothetical in nature. This promoted an open dialogue between the MSRB and regulated entities and lessened the likelihood of violations. Moreover, interpretive letters were issued with some frequency so that all regulated entities could be apprised of MSRB interpretations. Today, members feel that it is primarily other regulators who benefit from MSRB interpretations and that a “gotcha” form of regulation prevails. The MSRB refuses to make its interpretations known to regulated entities who are being examined, creating situations in which previously unpublished interpretations are shared with regulators, but not regulated entities. Consequently, regulated entities learn of those interpretations only when it is too late to alter their conduct. All MSRB interpretations should be made public, not just discovered by word of mouth.
1 SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
2 MSRB Notice 2017-22 (Nov. 16, 2017).