The Municipal Securities Rulemaking Board (MSRB) is a regulatory organization in the United States that oversees the municipal securities industry. It regulates firms and banks that underwrite, trade, and sell municipal securities by establishing and maintaining rules that must be followed by the dealers. The MSRB also strives to protect investors and municipal governments by providing public access to securities documents and by educating investors.
In 1975, the U.S. Congress created the Municipal Securities Rulemaking Board in response to the rapid expansion of the municipal securities market. Congress passed the Securities Act Amendments of 1975 with the support of the Securities and Exchange Commission (SEC). Although the MSRB is a self-regulatory organization that makes rules for its own member firms, it is still subject to regulation by the SEC and must register with that authority.
In order to regulate the municipal securities industry in the U.S., the Municipal Securities Rulemaking Board creates both general and administrative rules. The general rules are to be followed by municipal securities firms and dealers, such as when giving advice and performing transactions. The administrative rules set up the structure of the MSRB as well as details like membership rules and fees. The rules are meant to protect investors and municipal governments by preventing fraud and market manipulation, and they support free and open market mechanisms. The MSRB has the ability to add or amend rules due to changes in the market, and rule interpretations are provided to the member firms on an ongoing basis.
The general rules of the Municipal Securities Rulemaking Board establish responsibilities for securities dealers and transactions. For example, dealers must disclose material facts regarding securities prior to completing a transaction. They are also obligated to conduct suitability assessments of the investors, and they must charge fair and reasonable prices. In addition, there are rules concerning continuing education of dealer employees and addressing potential conflicts of interest. The general rules also contain recordkeeping policies, uniform practice requirements, and standardization of trade settlements.
Besides creating rules, the Municipal Securities Rulemaking Board has many tools to educate investors. It collects market and trade information, which can be accessed by the public through the MSRB website. The information includes details such as historical trade prices and settlement dates. Also, educational materials like securities fact sheets and disclosures are available. The MSRB website has educational materials free of charge, but hard copies of many publications can be ordered for a fee.