[ by Howard Haykin ] MSRB took a big step Thursday in its quest to better protect individual investors who use electronic brokerage platforms to invest in municipal securities.  MSRB published a concept release on a rule proposal that would provide that protection.  MSRB asks that all comments be submitted on or before 9/21/12. Issues of Concern with E-Brokerage Platforms. Investors typically avoid dealing with an investment professional when they use online access to enter muni orders electronically - as well as trading in equities and other securities.  A benefit is that online firms usually charge lower commissions. However, MSRB sees added risk to investors, who may not fully understand the features of securities they're buying, nor the full risk associated with such securities - particularly as they pertain to each investor's financial situation and risk tolerance.  Which is why...

"The MSRB is exploring potential new requirements for electronic brokerages to ensure that proper protections are in place for online investors in the municipal market.  We want to ... strengthen account opening and supervisory practices of dealers ... without imposing an undue burden on dealers." -- Lynnette Kelly, MSRB Executive Director.

What's in the MSRB Concept Release. It outlines possible new requirements for e-brokerages, including:

• delivery of an educational disclosure document to individual investors.
• collection of information re: the investment profile of individual investors.
• more rigorous supervision of accounts and transactions.

Through the concept proposal, MSRB expect to receive positions and opinions on potential benefits and burdens associated with newly established New Account Opening and Supervision guidelines for e-brokerages.  MSRB would also welcome suggested alternatives.  Following a review of the comments received, the MSRB would determine whether to publish a specific rule proposal for further comment. For further details, go to:  [MSRB PR, 8/9/12] and [MSRB Notice 12-41, 8/9/12].