The Municipal Securities Rulemaking Board

Municipal bonds and other securities offerings by governmental entities generally are exempt from federal securities law registration requirements. However, information about such offerings is available from sources other than the U.S. Securities and Exchange Commission.

Municipal bond “official statements” or offering documents are filed by underwriters of the bonds with the Municipal Securities Information Library of the Municipal Securities Rulemaking Board and with four private entities known as Nationally Recognized Municipal Securities Information Repositories or NRMSIRs. The NRMSIRs also collect information concerning annual financial data and significant events such as defaults concerning municipal securities. Three states — Texas, Michigan, and Ohio — maintain their own information depositories containing information about municipal securities issued in those states.

The Municipal Securities Rulemaking Board was created through the Securities Acts Amendments of 1975. The Board was established to set rules governing the conduct of those involved in the trading of municipal securities in lieu of governing the conduct of municipalities and other governmental entities in issuing bonds. The Board is composed of equal numbers of public members, bank dealer representatives, and securities dealer representatives. Although the Board is considered a self-regulating organization and its activities are subject to oversight from the Securities and Exchange Commission, funding of the Board comes from fees and assessments charged to bond dealers rather than from the federal government.

The Board has authority comparable to other self-regulating organizations such as the New York and American Stock Exchanges and Nasdaq. Thus, the Board is authorized to make rules to prevent fraudulent and manipulative acts and practices and to promote fair trading practices regarding municipal securities. Such rules are adopted after review by the Securities and Exchange Commission and publication in the Federal Register. Enforcement of the rules is delegated to the National Association of Securities Dealers for securities firms subject to the rules. Enforcement of the Board’s rules that are applicable to banks has been delegated to the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Comptroller of the Currency.

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