2012 Interpretive Notice Concerning the Application of MSRB Rule G-17 to Underwriters of Municipal Securities
Summary
SIFMA sent comments to the MSRB responding to Notice 2018-29 in which the MSRB seeks comment on draft amendments to the Interpretive Notice Concerning the Application of MSRB Rule G-17 to Underwriters of Municipal Securities. SIFMA supports the MSRB’s retrospective review of the 2012 Guidance, and their comments seek to ensure that the purpose of the review is fully realized.
They appreciate that the MSRB has proposed adopting some of the suggestions made to the MSRB’s Initial Request for Comment, including: 1) incorporating the practical considerations of MSRB Notice 2012-38 (July 18, 2012) (the “Implementation Guidance”) and MSRB Notice 2013-08 (Mar. 25, 2013) (the “FAQs”) into the Amended Guidance; 2) clarifying the applicability of MSRB Rule G-42’s two-prong analysis to a recommendation for complex municipal financings; and 3) allowing for an automatic email return receipt as a means to evidence receipt of the underwriter disclosures.
Excerpt
Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1300 I Street NW Suite 1000
Washington, DC 20005
Re: MSRB Notice 2018-29: Request for Comment on Draft Amendments to 2012 Interpretive Notice Concerning the Application of MSRB Rule G-17 to Underwriters of Municipal Securities
Dear Mr. Smith,
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates this opportunity to respond to Notice 2018-29 (the “Request for Comment”)2 issued by the Municipal Securities Rulemaking Board (the “MSRB”), in which the MSRB seeks comment on draft amendments to the Interpretive Notice Concerning the Application of MSRB Rule G-17 to Underwriters of Municipal Securities (Aug. 2, 2012) (the “2012 Guidance”)3. We refer in this letter to the 2012 Guidance, as amended, as the “Amended Guidance.”
We support the MSRB’s retrospective review4 of the 2012 Guidance, and our comments below seek to ensure that the purpose of the review is fully realized. We appreciate that the MSRB has proposed adopting some of the suggestions we made in our comment letter5 to the MSRB’s Initial Request for Comment, including: 1) incorporating the practical considerations of MSRB Notice 2012-38 (July 18, 2012) (the “Implementation Guidance”)6 and MSRB Notice 2013-08 (Mar. 25, 2013) (the “FAQs”)7 into the Amended Guidance; 2) clarifying the applicability of MSRB Rule G-42’s two-prong analysis to a recommendation for complex municipal financings; and 3) allowing for an automatic email return receipt as a means to evidence receipt of the underwriter disclosures.8 These proposed amendments – along with a requirement that syndicate managers provide the standard disclosures on behalf of syndicate participants as well as the clarification that underwriters are not required to make any disclosures on the part of issuer personnel or any other parties to the transaction – provide greater clarity and reduce unnecessary burdens.
SIFMA, however, believes that certain proposed amendments do not satisfy the goal of the retrospective review, that is to move the needle toward more efficient and effective disclosures that benefit issuers and underwriters alike. Any changes to the 2012 Guidance should address the perceived problem of the diminishing utility of increasingly duplicative and lengthy disclosures, not contribute to it. The 2012 Guidance should be amended in a way that reflects a more mature municipal securities market; recognizes that different business models exist, and a one-sized-fits-all approach does not work; reduces costs without impacting the benefits; and results ultimately in more efficient and effective disclosures for the benefit of all market participants.