WASHINGTON – The Municipal Securities Rulemaking Board has published new guidelines for those seeking interpretive guidance, with the aim of encouraging a more open dialog with broker-dealers and municipal advisors, the MSRB announced Tuesday.
The guidelines supplant existing language on requesting interpretive guidance from the MSRB that discouraged questions.
The board has made it a strategic goal to facilitate compliance with its existing rules and released the new guidelines as part of that effort.
The MSRB’s previous language on the topic created a chilling effect on communications from issuers, the board learned and it has been seeking for some time to rectify that problem.
“Through our outreach with stakeholders, including our Compliance Advisory Group, the MSRB learned that our existing policy on providing interpretive guidance had the unintended effect of discouraging regulated entities from contacting the MSRB with compliance questions,” said MSRB President and Chief Executive Officer Lynnette Kelly. “We are revising this policy to ensure it supports our long-term strategic goal to provide meaningful assistance to regulated entities seeking a better understanding of how to comply with MSRB rules.”
MSRB Chief Compliance Officer Gail Marshall said that the old notice, adopted in 2013 had apparently been discouraging contact because it listed various topics the MSRB would not provide guidance on and required anyone seeking guidance to clearly identify themselves, stipulations which are not found in the new notice.
Early reactions from the industry were positive.
"The Bond Dealers of America welcomes and appreciates the MSRB’s continued efforts at inviting requests for guidance from regulated entities and providing a clear process by which those requests may be submitted," said BDA CEO Mike Nicholas. "The BDA believes that an effective interaction between regulators and regulated entities is critical in an effective municipal securities market and we appreciate the MSRB’s efforts to clarify their process."
The guidelines first describe the process for oral requests for assistance, which involves calling the MSRB for help in understanding a rule. Staff can often resolve questions by helping the caller locate specific rule language or existing interpretive guidance, and oral inquiries are a relatively informal process, the board said.
“Information provided by MSRB staff in response to a telephone inquiry is intended as general information based on the facts as described by the requester, does not express any legal conclusion on the questions presented and should not be relied on as a definitive legal position of the MSRB,” the board wrote in the guidelines.
Those seeking a more formal response from the board can submit a written request, which the board may then respond to either orally or in writing, or in some cases may decide it is inappropriate to respond.
In some instances, a written response to a request for interpretive guidance may necessitate formal board action and could require Securities and Exchange Commission approval, the notice said.
The guidelines indicate that the MSRB is willing to facilitate three-way communication about guidance in some instances by looping in a relevant enforcement authority such as the Financial Industry Regulatory Authority or the SEC.
The guidelines warn that responses from the MSRB do not provide an “exemption, safe harbor or no-action relief from compliance with MSRB rules,” and that communications to or from the MSRB are not subject to attorney-client privilege.
