While the Municipal Securities Rulemaking Board hasn't provided specifics regarding potential changes to the MSRB's rate card discussed at last week's quarterly board meeting, a representative of one dealer group said he's hopeful that the board will recognize that dealers have been forced to pick up too much of the tab for funding MSRB operations.
The board of directors of the MSRB
"When you look at the numbers, I think the case is pretty clear," Michael Decker, senior vice president for research and public policy at the Bond Dealers of America, said in an interview. Non-dealer municipal advisors contribute only "a tiny portion" of the MSRB's revenue, he added.
"The MSRB has tweaked that a little bit over the years, but it's still not enough – non-dealer municipal advisors are still undercharged by the MSRB."
A private, self-regulatory organization, the MSRB doesn't receive federal appropriations. In October 2024, the MSRB issued a request for information to solicit input regarding its rate card process. The MSRB instituted a new rate-setting process – or rate card process – in 2022, the RFI noted.
In a Jan. 28 comment letter responding to the RFI, Susan Gaffney, executive director of the National Association of Municipal Advisors, said that the only common denominator among MA firms – the number of covered persons – remains the appropriate way to assess fees on those professionals.
"We look forward to learning about the board's recent discussions on this matter," Gaffney said in an email Tuesday. "NAMA supports the rate card process that the MSRB put in place three years ago and does not believe any fundamental alterations are necessary."
The MSRB is "a little bit under the gun because they have set a deadline for themselves to resolve these issues by the end of the year," Decker said.
After stakeholders raised concerns regarding the rate card process in response to the MSRB's fees for 2024, the Securities and Exchange Commission suspended the MSRB's 2024 rate card filing in January 2024 and the MSRB withdrew it the following month, resetting the fee rates to the previous year's levels.
"The 2024 fees were effectively rejected by the SEC and so they've been stuck with the 2023 fee rates ever since," Decker said. "That means that the MSRB has been collecting more revenue than they need because if the rate card would have gone forward, the fee rates would have been adjusted down."
The MSRB collects fees from dealers based on underwriting and trading activity. Dealers are also charged annual fees.
"If they expect underwriting and trading activity is going to go up in the coming year then they can lower their fee rates and still make their budget," Decker said.
The MSRB expressed gratitude for the feedback stakeholders provided in response to the RFI.
"While it is too early to comment on specifics around MSRB's Rate Card and fee setting process, we thank stakeholders for their robust feedback to our Rate Card Request for Information and remain committed to taking those comments into consideration as we navigate decisions and next steps," an MSRB spokesperson said Tuesday. "Our goal is to address the public comments we received and to file a new rate card with the SEC prior to the end of the year."
