Draft Interpretive Guidance on Municipal Securities Broker’s Brokers

SIFMA provides comments to the Municipal Securities Rulemaking Board (MSRB) on draft interpretive guidance on municipal securities broker’s brokers (MSBBs), Notice 2010-35.

SIFMA supports effective and efficient regulation of the municipal securities markets that helps to aid market liquidity in a manner consistent with customer protection.

• SIFMA is supportive of certain aspects of the proposed guidance, but believes that, in important respects, it is inconsistent with the limited activities in which MSBBs engage, and may limit the effectiveness of MSBBs in carrying out the important role they play in the municipal securities secondary markets.
• SIFMA believes the adoption of the proposed guidance would impede the efficiency of the municipal securities interdealer market, to the ultimate detriment of investors in municipal securities.
• Lastly, SIFMA does not support the proposed guidance regarding Rule G-18, which imposes requirements on MSBBs that are not imposed by the rule as currently in effect. As described more fully in the letter, SIFMA believes that the  proposed additional requirements are inconsistent with the role of MSBBs, and also constitute an amendment to the rule which should be addressed in a separate rulemaking. Accordingly, SIFMA requests that the MSRB withdraw the proposed guidance regarding Rule G-18 to the extent it imposes obligations on MSBBs in excess of what the rule requires, and modify other aspects of the proposed guidance as outlined fully in the letter.