Second Comments on MSRB Draft Rule G-43 and Associated Amendments to Rules G-8, G-9, and G-18

SIFMA provides a second set of comment to the Municipal Securities Rulemaking Board (MSRB) on MSRB Draft Rule G-43 and Associated Amendments to Rules G-8, G-9, and G-18, MSRB Notice 2011-18.

SIFMA takes the extraordinary step of submitting two comment letters regarding the proposal. This second letter contains significant input from a variety of broker-dealers (wire houses, mutual fund affiliates, and others) who regularly trade with municipal securities broker’s brokers (MSBBs) to meet their municipal securities trading needs (Retail Dealers). The first comment letter, found here, contains significant input from MSBBs responsible for over 90% of the inter-dealer trading in municipal securities. Given the potential impact of the proposal, SIFMA asks that each of these letters be given careful consideration.

SIFMA does not believe that the enforcement actions cited by the MSRB as supporting the need for additional rules are sufficient to that purpose. In addition, SIFMA shares concerns that the proposal could have a significant unintended negative impact on retail transactions and transactions in thinly-traded issues.  SIFMA questions whether any new MSRB rule directed solely at MSBBs is warranted, and requests  that the MSRB withdraw the Proposed Rule, and continue to focus its resources on efficient coordination with the Financial Industry Regulatory Authority (“FINRA”) on the enforcement of existing MSRB rules.