[ by Howard Haykin ]

The MSRB is considering a proposal to consolidate into a new rule, the following:  existing requirements for dealers to disclose material information to customers in connection with the purchase or sale of a municipal security.  These disclosure obligations currently 'reside' in numerous interpretations to the MSRB’s rule on fair dealing.  Under this guidance, dealers must disclose to their customers, at or prior to the time of trade, all material information about the transaction known by the dealer, as well as material information about the security that is reasonably accessible to the market.

MSRB Executive Director Lynnette Kelly said:  "Adding greater visibility to this requirement in the form of a stand-alone rule will highlight the importance of disclosure in the municipal market."  She also said that such a change would help dealers better understand and comply with their disclosure obligations. 

[C-I Note:  On the one hand, it's questionable how the changes would increase dealers' understanding of their obligations - after a;. most associated persons never refer to rule books or firm WSPs.  That said, C-I fully endorses any and all efforts to make rules more readable and easier to understand.  Pulling common or similar requirements into a single location is a great step way to present requirements and, for those people who take the time to read the rules, they likely will comply with their obligations.]

Codifying Time of Trade Disclosure Obligations.   MSRB Rule G-17, a principles-based rule, has expanded its requirements through the issuance of interpretive notices and interpretive letters.   Market participants have expressed concerns that it has become increasingly difficult to ascertain their current obligations - which can be accomplished only by leafing through layers of interpretive guidances issued over the years. 

Accordingly, MSRB proposed to consolidate its interpretive guidance related to the time of trade disclosure obligation by codifying it into a new time of trade disclosure rule - Rule G-47.  The rule change would not substantively change a firm's obligations. 

The MSRB asks that comments on the proposed consolidation of time of trade disclosure guidance, as well as the proposed new rule format, should be submitted on or before 3/12/13.
 

For further details, go to:   [MSRB News Release, 2/11/13] and MSRB Regulatory Notice 13-4, 2/11/13].