The Municipal Securities Rulemaking Board is proposing to consolidate into a revised Rule A-12 and form its existing requirements, along with some changes, for registration of broker-dealers and municipal advisors.
Creating a single rule and form will allow the board to eliminate its Rules A-14 on an annual fee, A-15 on notification to the board of a change in status, name or address, and G-40 on electronic mail contacts, as well as Forms RTRS and G-40, the MSRB said in a notice issued Monday.
The board asked for public comments on the proposal to be submitted to it no later than Sept. 20.
“The purpose of the proposed registration rule, revised Rule A-12, is to delineate succinctly and clearly in one location the requirements and process for MSRB registration and to resolve certain other regulatory issues ... that are not fully addressed by existing MSRB rules,” the board said.
This streamlined registration rule would reduce the need for staff guidance and the use of outside counsel, it said.
The proposed rule would require broker-dealers and muni advisors to register with the MSRB prior to engaging in any muni securities or advisory activities. But before that, these firms would have to register with the Securities and Exchange Commission and send a notification to the Financial Industry Regulatory Authority or the appropriate bank regulator, complete Form A-12, and pay the initial and annual registration fees.
Under one proposed change in registration requirements, rather than provide an electronic mail contact, registrants would have to provide contact information on Form A-12 for a primary and optional regulator, the master account administrator, billing, compliance, and data quality, as well as an optional technical contact.
The proposed rule would clarify that, once registered, a firm could use the designation “MSRB registered” in its advertising materials or on its website.
There also would be two fee-related changes. The annual fee would continue to be due by Oct. 31 each year, but if a firm registered in September, it would not have to pay another annual fee for the following fiscal year.
Also, the MSRB said it would begin charging late fees “as a means to encourage timely payment of fees.”
Any registrant that failed to pay an annual fee, or any underwriting, transaction or technology fee under Rule A-13, would be assessed a monthly late fee based on the overdue balance and the prime rate plus an additional $25 per month.
Similar to the current requirements, registrants would have to review, update and affirm the information on Form A-12 during the first 17 business days of each calendar year, as well as when information on the form becomes inaccurate.
Firms also would have to tell the MSRB the kinds of muni securities and advisory activities in which they engage.
The MSRB asked commenters to address six key questions, including whether the proposed consolidation would provide benefits or burdens and whether other requirements should be merged into the consolidated registration rule.
Mike Nicholas, chief executive officer of Bond Dealers of America applauded the MSRB's effort.
"BDA supports the MSRB's streamlining of its registration rule so that regulated entities can more easily follow the registration requirements however, as we more closely review the text of the proposed rule changes we will continue to evaluate any potential cost burdens to the middle market broker dealer in relationship to the benefits provided to the market," he said.
