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MSRB says muni dealers that are banks will be examined more frequently
By Angela McDaniels
Tacoma, Wash., Dec. 19 - The Municipal Securities Rulemaking Board announced a rule change that will allow the Financial Industry Regulatory Authority to examine certain dealers more frequently and other dealers less frequently, depending on their risk and impact to the market.
Rule G-16 now says that brokers, dealers and municipal securities dealers that are members of a registered securities association must be examined by Finra at least once every four years to determine whether they are in compliance with MSRB rules and federal securities laws. Each municipal securities dealer that is a bank or a subsidiary of a bank must be examined at least once every two years.
Before the change, the rule did not differentiate between dealers that are banks and those that are not, and the examination had to occur at least once every two years.
As a result of the change, Rule G-9 was changed to require dealers that are Finra members to retain certain records for four years rather than for three years.
The amendments were approved by the Securities and Exchange Commission on Friday. The amendments to Rule G-16 became effective on Friday, and the amendments to Rule G-9 will become effective on June 16.
MSRB said the changes will "facilitate the modernization of the examination process for dealers and permit greater flexibility in the administration of periodic compliance examinations in order to focus more closely on those dealers that, by virtue of various risk factors, pose the greatest risk to investors and other market participants, as well as to the municipal securities market on a systemic basis."
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