Chapter 3: Municipal Securities Rules And Regulations Flashcards
Securities act of 1975
Established Municipal Securities Ranking Board
MSRB governs issue and trade of municipal securities
Has no ability to enforce the rules it makes as FINRA enforces
Office of Comptroller of Currency enforces rules that apply to banks
Federal Reserve Board enforces MSRB rules regarding nonnational banks in Fed Reserve System
FDIC enforces those not in Fed System
Municipal Finance Professional
Municipal Security Sales outside of retail or who solicits municipal security business for broker dealer or in supervisory chain above MFP
Three categories of MSRB rules
- Rules in regards to trading
- Administrative towards MSRB
- General Rules and Regulations
Rule G-1
A bank with a separatly identifiable department related to munis is classified as a dealer
May be identifiable if it provides any research or advisory services regarding munis
Rule G-2 and G-3
Must pass series 52 or series 7 to be qualified as a munis rep
To qualify as a principal must pass the 53
Rule G-6
Municipal broker/dealers must maintain blanket fidelity bonds
Rule G-7
Must keep file of associated persons.
Most info on U-4, 5 forms
Rule G-10
Must file complaints and deliver a copy to Investor Brochure to customer
G-11
Syndicate must identify priority for allocation and ID conditions that might alter that order
G-12
Uniform practices of settling transactions
Cash trades settle on trade date
Reg on third business day after trade date
Also discusses good delivery requirements
Mutilated certificates must be validated
Called securities are not good delivery
G-13
Can publish quotations only for bona Fide bids.
Nominal only allowed if identified
G-15
Transaction confirmation must be given at or before transaction completion
G-16
Each broker dealer must be examined at least 2 times each year
Appropriate enforcement agency’s do this not MSRB
G-17 and 18
Must deal fairly
Reasonable and fair pricing
19 and 20
19- suitable recommendation must be made
20- no gifts over $100 in a year, payment for services rendered are allowed
21 and 22
21- must be truthful in advertising
22- clients must be informed of control relationship, special care must be taken with a discretionary account
23-24
23- Prohibits a broker dealer that serves as an FA from underwriting the bonds
24- may not use confidential info to solicit trades
25 and 27
25- no misuse of funds, guarantee of profit, joint accounts in a private capacity okayyyyy
27- Principal must be designated to look over reps. Must approve: Opening of new accounts Every muni transaction Action taken on customer complaints Correspond regarding trades
28 and 29
28- if an employee of a muni security dealer opens an account with another muni dealer, the firm opening the account must notify the other
29- must keep a copy of MSRB rules
30 and 31
30- mark up and mark down must be reasonable
31- must not solicit based on record of sales of the investments company’s share
32 and 33
32- Official statement must be shipped, along with spread info unless it’s a negotiated underwriting
33- 360 day year with 30 day months for calculating accrued interest
37-39
37- prohibits engaging in Municipals for 2 years after political contribution for negotiated underwriting
MFPs are allowed up to $250
Rule 39- may not call between 8am or after 9pm in called person time zone. Does not apply when established customer.
41 and 42
41- anti money laundering compliance
42- limit political contributions
Electronic Municipal Market
EMMA
Key info on munis
