Municipal Securities Rulemaking Board (MSRB)

What Is the Municipal Securities Rulemaking Board (MSRB)?

The Municipal Securities Rulemaking Board, (MSRB), is a controlling body which makes rules and policies for investment firms and banks in the giving and sale of municipal bonds, notes, and other municipal securities. States, urban communities and counties issue municipal securities for various reasons.

Activities, regulated by the MSRB incorporate the underwriting, trading, and selling of municipal securities that are financing public ventures.

Grasping the Municipal Securities Rulemaking Board

The Municipal Securities Rulemaking Board, (MS RB) is a self-controlling organization (SRO) managed by a Board of Directors, with four councils that regulate specific parts of the organization's governance and operation. Like the New York Stock Exchange (NYSE) or the National Association of Securities Dealers (NASD/FINRA), the MSRB sets its own rules and standards, yet which are subject to ultimate supervision by the Securities and Exchange Commission (SEC).

The U.S. Congress made the Municipal Securities Rulemaking Board in 1975. It was given the assignment of making rules and policies that would assist with forestalling fraud and misdirecting acts in the securities industry. The MSRB was likewise intended to carry out and support fair trading principles. What's more, it was entrusted with making and keeping a system that would permit free and open trade in the securities market. One of its most memorable achievements was making a set of uniform standards directing fair practices that municipal securities dealers ought to follow. The organization was likewise instrumental in preparing for a smooth change from traditional paper bonds to electronic renditions during the 1980s.

Types of Municipal Securities the MSRB Oversees

A municipal bond is ordered in light of the source of its interest payments and head repayments. A bond can be structured in various ways offering different benefits, risks and tax medicines.

General Obligation (GO) backed by the creditworthiness of the issuer which has taxing power. Elector endorsement is essential for issuance. These issues are the most secure and yields will generally be lower subsequently.
Revenue bonds are securitized by a specific revenue stream, like costs or other [user fees](/client expense). Since these bonds are more dangerous than general obligation bonds, their yields will quite often be higher for comparable maturities.
Short-term municipal bonds like Tax Anticipation Notes (TANs), Revenue Anticipation Notes (RANs), Bond Anticipation Notes (BANs)
Exotic or Unique bonds are generally some variation on the prior categories and incorporate Certificates of Participation and Private Activity Bonds. These are generally part of a state or neighborhood government bond issue.

Disclosure and the Regulatory Role of the MSRB

During the 1980s, the Municipal Securities Rulemaking Board assumed a central part in helping the SEC in making SEC Rule 15c2-12, which centers around continuing disclosure. This guarantees that issuers of municipal securities must consent to give specific data to the MSRB consistently about the investment securities they handle. This data incorporates annual financial reports and notification about occasions, for example, delinquencies, defaults, unscheduled draws on debt service reserves and any activities that would influence the tax-exempt status of the security.

This rule and related principles including disclosures were provoked by an occurrence in 1983 in which the Washington Public Power Supply System defaulted on more than $2 billion in municipal bonds, addressing one of the greatest and most expensive municipal bond catastrophes in U.S. history.

All the more as of late, the Municipal Securities Rulemaking Board plays served a part as a trailblazer in assisting with introducing the age of open electronic records in the securities industry. In the late 2000s, the MSRB sent off the Electronic Municipal Market Access website, which gives free public access to data related to municipal bond trading, alongside important disclosure archives.

Features

The MSRB is a self-regulatory organization that screens its own individuals and their activities, subject to SEC oversight.
The MSRB sets standards and best practices for the two issuers and dealers of munis, as well as commands transparency of data and disclosure on each issue.
The Municipal Securities Rulemaking Board, (MSRB) is the primary regulator of municipal securities issued in the United States.