MSRB requests comment on G-12 on uniform practice

Bonds

The Municipal Securities Rulemaking Board has requested comment on draft amendments to Rule G-12 on uniform practice, in efforts to codify, retire and reorganize 40 pieces of interpretive guidance related to interdealer confirmations.

The move will aid the MSRB in its goal of retiring approximately 20% of its body of interpretive guidance, much of which dates back more than 40 years, the MSRB said.

“As part of our efforts to modernize municipal market regulation, we are seeking to streamline the MSRB rule book by retiring outdated or superfluous guidance and codifying the relevant investor and issuer protections established over decades of interpretive guidance directly into the rule text,” MSRB chief regulatory and policy officer Ernesto Lanza said. “Our goal is to ensure our rules are reflective of current market practices, have not become overly burdensome, and are harmonized with the rules of other regulators, among other things.”

“As part of our efforts to modernize municipal market regulation, we are seeking to streamline the MSRB rule book by retiring outdated or superfluous guidance and codifying the relevant investor and issuer protections established over decades of interpretive guidance directly into the rule text,” MSRB chief regulatory and policy officer Ernesto Lanza said. “Our goal is to ensure our rules are reflective of current market practices, have not become overly burdensome, and are harmonized with the rules of other regulators, among other things.”

The amendments would codify existing interpretive guidance on confirmation disclosure requirements for inter-dealer municipal securities transactions and reorganizes the content of the text to align with the analogous provisions of Rule G-15 on confirmation, clearance and settlement and other uniform practice requirements.

“The draft amendments to Rule G-12 do not seek to impose any new burdens on regulated entities,” Lanza said. “Rather, they seek to facilitate compliance and reduce unnecessary burdens while ensuring the rule continues to achieve its goals consistent with current market practices.”

The draft amendments also include certain technical modifications to the rule requirements and would regroup requirements by principles into the categories transaction information, securities identification information and securities descriptive information.

But some of the guidance will also be partially retained, and in the future, published as a consolidated FAQs.

“The MSRB recognizes that after codification of the guidance into draft amended rule text, certain pieces of guidance may still contain explanatory principles or examples that could be beneficial to the industry in understanding relevant obligations under Rules G-15 and G-12,” the MSRB said.

Rule G-12 has not been updated since 1995, “primarily due to the fact that the vast majority of inter-dealer trades are eligible for automated comparison and therefore are not subject to the provisions of Rule G-12,” the MSRB said. The majority of the interpretive guidance being retired dates back to the 1970s and 1980s, and in many cases, applies to both Rules G-12 and G-15.

The MSRB believes that the amendments will not be a major change for those affected, but the set of 18 questions which the board requests comment on seek to further understand how market participants would be affected.

Comments should be submitted by Dec. 15.

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