The Municipal Securities Rulemaking Board has extended remote dealer inspections as part of its Rule G-27 until the end of this year, and is seeking regulatory approval from the Securities and Exchange Commission in order to implement structural changes to its fee model.
That, as well as updates to its EMMA and EMMA Labs platforms, and progress on its ESG and DEI initiatives were among the topics tackled during the board’s quarterly meeting which took place virtually January 26-27.
“Our nation’s schools, hospitals and workplaces continue to adapt to challenges presented by the pandemic,” MSRB chair Patrick Brett said. “The MSRB has been operating fully remotely for nearly two years and we appreciate the challenges posed to regulated dealer firms of conducting traditional in-person office inspections when their employees are working from remote offices.”
The six month extension follows the Financial Industry Regulatory Authority’s similar extension filed with the SEC at the start of this year. The extension was expected but the board has further plans to modernize Rule G-27 with a request for comment coming in the near future.
The board also intends to change its fee structure and is seeking SEC approval for managing fee revenue and reserve levels, to help “ensure a fair, equitable and sustainable balance of funding that will support its mandate to protect investors, issuers and the public interest,” the MSRB said.
“We share regulated entities’ frustration with this cycle, which we addressed most recently with the largest temporary fee reduction in MSRB history that is on target to return $19 million in accumulated excess reserves to the industry by the end of this fiscal year,” Brett said. “Under the leadership of the finance committee and with the benefit of input from regulated stakeholders, the board has undertaken a comprehensive examination of our finances.”
This proposal, which is set to go ahead in the near future with no specific date nailed down yet, is the culmination of that analysis.
“We have developed an approach that maintains a sustainable financial model, adequately funds future expenses and, most importantly, mitigates the impact of market variability, providing a better mechanism for effectively managing reserve levels,” said Frank Fairman, finance committee chair at the MSRB. The new approach will be incorporated into the board’s FY 2023 budget.
The board also discussed changes to its EMMA and EMMA Labs platforms, as it hopes to transform EMMA in the years to come.
“We are in the early stages of a complete transformation of the EMMA website that aims to make the market’s official online source for data and disclosures easier to navigate and more intuitive to use,” Brett said. “In the meantime, EMMA users can expect to see continued incremental improvements based on their feedback about pain points, such as recent improvements to help issuers more easily manage the process of associating individual securities to a disclosure filing in EMMA.”
Future plans for EMMA include adding an additional yield curve, improvements to the primary market disclosure interface, and updates to its Form G-32.
EMMA Labs was just rolled out last week and the board continues to seek feedback from market participants on how the platform can be improved. They will also be holding a webinar on Feb. 10 to discuss how the platform works.
The board’s meeting also included discussions of its environmental, social and governance request for information, comments on which are due on March 8. The board also continues to engage the market on diversity equity and inclusion matters and hopes to make a meaningful difference in the muni market going forward.
The board is also accepting applications for two public and two regulated members of its board until Feb.7.
“The four new members who will join our board for FY 2023 will have the opportunity to help advance our thinking on a number of critical topics for our market,” MSRB vice chair and chair of the board’s nominating committee Meredith Hathorn said. “We’re making great strides in leveraging technology and structured data to support informed decision-making, and we’re in the early stages of gathering information on environmental, social and governance (ESG) practices and developing strategies to advance diversity equity and inclusion (DEI) in the municipal securities market.”