MSRB seeks to redefine 'sophisticated municipal market professional'

By Marisa Wong

Madison, Wis., March 26 - The Municipal Securities Rulemaking Board requested approval from the Securities and Exchange Commission to change its definition of "sophisticated municipal market professional," according to a press release.

If the new definition is approved, "sophisticated municipal market professional" would refer to an institutional investor capable of independently evaluating the investment risks and market value of municipal securities and exercising independent judgment in evaluating the recommendations of a municipal securities dealer.

According to the release, the change to the definition is important because it exempts dealers from requirements to make certain disclosures to institutional customers that they must make to other investors as well as from pricing and suitability obligations of dealers to those customers.

The change would also provide consistency with a new Financial Industry Regulatory Authority rule on suitability for institutional customers.

"The quality and availability of information concerning municipal securities has improved substantially in recent years, and sophisticated municipal market professionals have a greater ability to make investment decisions on their own," MSRB executive director Lynnette Kelly said in the release.

The MSRB issued its original definition of "sophisticated municipal market professional" in 2002.

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