July 16, 2018

Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1300 I Street NW
Suite 1000
Washington, DC 20005

Re: MSRB Notice 2018-09: Request for Comment on Draft MSRB Rule G-36, on Discretionary Transactions in Customer Accounts, and Related Transactions

Dear Mr. Smith:

The Securities Industry and Financial Markets Association (“SIFMA”)1 greatly appreciates this opportunity to respond to Notice 2018-092 (the “Notice”) issued by the Municipal Securities Rulemaking Board (the “MSRB”) on their request for comment on draft MSRB Rule G-36, on discretionary transactions in customer accounts, and related draft amendments. At first blush, merely centralizing the requirements with respect to discretionary transactions in customer accounts into one rule would seem non-controversial. SIFMA appreciates when the MSRB simplifies rules and provides clarity on rule requirements. We also appreciate that the proposed new rule attempts to harmonize new Rule G-36 with the existing FINRA rules and permits the new rule to be satisfied through updated “electronic” means. However, we would like to take this opportunity to address certain overarching member concerns regarding this MSRB Notice including: (1) the scope of the rules potentially being duplicative with the Investment Advisers Act of 1940 (the “Investment Advisers Act”), (2) potential conflict with current proposals by the U.S. Securities and Exchange Commission (the “Commission”) and the Financial Industry Regulatory Authority (“FINRA”), and (3) definitional issues within the proposed rule.

I. Scope of Proposed Rule

The key question that SIFMA members feel the MSRB needs to make clear in the Notice is that it only applies to broker dealer activity and brokerage accounts. Some firms are dually registered as broker dealers and investment advisers, and want to ensure the proposed amendments do not apply to investment advisory accounts, as such would be duplicative with the requirements of the Investment Advisers Act.3 For clarity’s sake, we believe that Rule D-10 should include a specific exclusion for accounts regulated pursuant to the Investment Advisers Act, or otherwise make clear that only brokerage accounts are within the scope of the defined term of “discretionary account”.

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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 2018-09 (May 16, 2018).

3 See, e.g. Rule 204-2 of the Investment Advisers Act.