Municipal Securities Rulemaking Board (MSRB)

Overview

The Municipal Securities Rulemaking Board (MSRB) is the primary rulemaking body for the U.S. municipal securities market. As a self-regulatory organization (SRO) operating under Securities and Exchange Commission (SEC) oversight, the MSRB sets standards and transparency requirements for firms and banks involved in issuing, underwriting, trading, and selling municipal bonds, notes, and other municipal securities.

Structure and Authority

• Created by Congress to reduce fraud and promote fair practices in municipal securities.
• Governed by a board of directors with specialized committees overseeing governance and operations.
• Writes rules for market participants; the SEC provides ultimate supervision and enforcement authority over certain aspects.

What the MSRB Regulates

The MSRB focuses on both market conduct and disclosure. Key regulated activities include:
– Underwriting and dealer conduct
– Trading and pricing practices
– Sales and suitability standards for municipal securities transactions
– Continuing disclosure obligations by issuers

Types of Municipal Securities Covered

The MSRB’s rules apply across common municipal security types, including:
– General Obligation (GO) bonds: Backed by an issuer’s taxing power; typically lower risk and yields.
– Revenue bonds: Secured by specific revenue streams (e.g., tolls, user fees); generally higher risk and yields.
– Short-term instruments: Tax Anticipation Notes (TANs), Revenue Anticipation Notes (RANs), Bond Anticipation Notes (BANs).
– Other variants: Certificates of Participation, Private Activity Bonds, and other structured or hybrid instruments issued by state and local governments.

Disclosure and Continuing Obligations

A central MSRB focus is disclosure to ensure investors have timely, material information. The MSRB supported development of SEC Rule 15c2-12, which requires underwriters to ensure issuers commit to regular continuing disclosure. Typical disclosure items include:
– Annual financial reports
– Material event notices (e.g., defaults, rating changes, unscheduled draws on debt service reserves)
– Information affecting tax-exempt status

These disclosure requirements were reinforced after major municipal defaults highlighted the need for better issuer transparency.

EMMA: Public Access to Municipal Market Data

The MSRB operates the Electronic Municipal Market Access (EMMA) system, which provides free public access to:
– Official statements and continuing disclosure filings
– Trade data and market statistics
– Notices and other issuer documents

EMMA is a key transparency tool for investors, underwriters, and researchers.

How the MSRB Affects Market Participants

• Issuers: Must comply with disclosure commitments and follow MSRB rules when engaging with underwriters and dealers.
• Dealers and underwriters: Must adhere to fair-practice standards, suitability obligations, and continuing-disclosure verification duties.
• Investors: Gain access to standardized disclosure and public market data via EMMA, improving ability to evaluate credit and market risk.

Key Takeaways

• The MSRB sets rules and standards for the municipal securities market and promotes transparency and fair practices.
• It is an SRO whose rulemaking is subject to SEC oversight.
• Disclosure and access to information—especially through EMMA—are core MSRB priorities, aimed at protecting investors and enhancing market integrity.

Where to Learn More

For official rules, filings, and data, consult the MSRB and the EMMA system.