MSRB to ask for comment on 'best-execution' standard for transactions

By Jennifer Chiou

New York, Feb. 4 - The board of directors of the Municipal Securities Rulemaking Board announced at its quarterly meeting in Atlanta that, among other measures, it agreed to seek public comment on a proposed rule that would establish an explicit "best-execution" standard for transactions in the municipal market.

According to a board release, the proposed rule would increase municipal securities dealers' obligations when they buy and sell on behalf of retail investors.

The first of its kind best-execution rule would be harmonized with the Financial Industry Regulatory Authority's best execution rule for the equity and corporate fixed-income markets but will be tailored to the characteristics of the municipal securities market, the board noted.

"A best-ex rule is a key step to complement dealers' current obligations to achieve a price that is fair and reasonable," MSRB board chair Daniel Heimowitz said in the release.

"The MSRB is committed to improving the structure and efficiency of the municipal market for the benefit of retail investors."

At its meeting, the board also focused on implementation of a regulatory framework for municipal advisors, agreeing to also request comment on a proposed rule to establish baseline supervision requirements for municipal advisors, designed to help prevent legal violations.

The board also directed MSRB staff to seek approval from the Securities and Exchange Commission to charge municipal advisor firms an annual fee of $300 per professional, to be implemented in the second half of 2014.

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