SEC Approves MSRB Amendments on Dealer Supervision
Commentary by Mark Highman
The SEC approved amendments to MSRB dealer supervision requirements that clarify which public finance activities trigger supervisory office designation and that expand a remote-work exclusion for non-primary residences.
In the approval notice, the MSRB stated the amendments to MSRB Rule G-27 ("Supervision") provide dealers with greater latitude in permitting associated persons to work at non-primary residential locations. The approval follows a proposal issued earlier this year (see prior coverage).
The amendments extend the exclusion from municipal branch office designation for non-primary residences, such as vacation homes, from fewer than 30 business days to up to 90 business days per calendar year. The MSRB noted the expanded exclusion is optional and dealers should conduct their own risk analysis before relying on it.
The amendments also add supplementary material to define "structuring of public offerings or private placements" for the purpose of designating an office of municipal supervisory jurisdiction ("OMSJ"). The rule defines "excluded public finance activities" - including debt modeling, financial analysis, and solicitation of issuers - as activities that do not by themselves trigger OMSJ designation. Final approval of an offering is deemed structuring and does require OMSJ designation. Dealers must adopt compliance policies and procedures reasonably designed to identify what constitutes final approval of a transaction.
As a technical change, the amendments rename the rule to "Supervisory and Compliance Obligations of Brokers, Dealers and Municipal Securities Dealers" to align with the title format of MSRB Rule G-44 ("Supervisory and Compliance Obligations of Municipal Advisors").
The compliance date for the amendments is January 1, 2027.