MSRB Continues to Work toward Better Industry Understanding.

• Author: Brock, Emily S.
• Position: Federal Focus - Municipal Securities Rulemaking Board

Throughout 2017, the Municipal Securities Rulemaking Board (MSRB) has remained focused on a new mandate facilitating industry understanding of and compliance with MSRB rules. According to MSRB Chair Lucy Hooper, the MSRB "is committed to developing resources that assist and support regulated entities' ability to comply with new and existing standards of conduct." In so doing, the MSRB has introduced a series of rules, advisories, and concept proposals that may indirectly affect the issuer community

As a representative in the MSRB's industry roundtable, GFOA provides public comment regularly throughout the iterative development or revision of the rules. This article outlines the most recent MSRB activity on which the GFOA provided comments: G-34 CUSIPs for Private Placements; Market Advisories on Selective Disclosure and Selection of Underwriters Counsel; and Primary Offering Practices Concept Release.

G-34: CUSIPS FOR PRIVATE PLACEMENTS

MSRB requested comments on initial draft rule amendments to Rule G-34 that would require a dealer to obtain Committee on Uniform Security Identification Procedures (CUS1P) numbers for new issue securities sold in private placement transactions, and also require municipal advisors that are not dealers to be subject to the CUSIP requirement. In comments submitted on March 31, 2017, GFOA emphasized a major and overriding concern "that the proposed rulemaking could dampen the bank loan and direct purchase markets, putting issuers in the unfavorable position of either not using a financing structure that is in their best interest, or having to pay more for those financings." Instead, GFOA suggested that the MSRB spend effort and resources enhancing the MSRB's Electronic Municipal Market Access (EMMA) system with regard to bank loan information and continue working GFOA and other market participants to identify EMMA improvements that would accommodate the transactions being listed on an issuer's home page when Form G-32 is filed.

On June 30, GFOA filed comments requested by the MSRB on a second draft of its amendments to Rule G-34. In its comments, GFOA once again emphasized a major and overriding concern: "Without clear language on how this exception can be easily met, the proposed amendment will dampen demand for bank loan and direct purchase financings entered into by state and local governments and authorities and therefore raise borrowing costs." To help clarify the exception, GFOA referred the American...