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MSRB seeks comments on new stand-alone definition, rules for SMMPs
By Toni Weeks
San Luis Obispo, Calif., May 1 - The Municipal Securities Rulemaking Board is proposing to establish a stand-alone definition for sophisticated municipal market professionals, or SMMPs, as well as a single, comprehensive rule addressing dealers' obligations to SMMPs, according to an MSRB notice.
Currently, the definition and dealer standards for SMMPs are incorporated into MSRB rule G-17 on fair dealing.
The proposed changes would create a new definitional rule, D-15, defining an SMMP and a new general rule, G-48, on the regulatory obligations of brokers, dealers and municipal securities dealers to SMMPs, which would include time-of-trade disclosure, transaction pricing, suitability and bona fide quotations.
"Consolidating the MSRB's SMMP-related guidance into two stand-alone rules is another step in the MSRB's effort to streamline the many interpretations attached to rule G-17," executive director Lynnette Kelly said in the notice.
"We aim to help dealers more easily identify and comply with their obligations to all customers, including the more sophisticated professionals in the market."
The proposed rules are meant to underscore the differences between dealers' obligations to SMMPs and non-SMMPs, while highlighting the eligibility standards for being an SMMP.
The MSRB is proposing to delete four rule G-17 interpretive notices that will be superseded in their entirety by the new rules.
The outcome of the MSRB's efforts will be a comprehensive package of rules that clarifies rule G-17 obligations. It is expected to be filed with the Securities and Exchange Commission later this year.
Comments should be submitted no later than June 12 in electronic form (www.msrb.org/CommentForm.aspx) or in paper form. Questions may be directed to deputy general counsel Lawrence P. Sandor or assistant general counsel Darlene Brown (703 797-6600).
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