S. 3935: Municipal Securities Rulemaking Board Reform Act of 2026

The Municipal Securities Rulemaking Board Reform Act of 2026 aims to amend the Securities Exchange Act of 1934 to change the structure and governance of the Municipal Securities Rulemaking Board (MSRB). This bill outlines several key provisions regarding how the MSRB operates and is composed.

Membership Composition

The bill provides a new structure for the composition of the MSRB. It establishes that the Board will have 15 members, or another odd number as specified by the Commission, who must have integrity and relevant experience in municipal securities matters. - **Regulated Representatives:** A majority of Board members must be individuals associated with municipal securities brokers, dealers, or advisors. This includes: - A minimum of 2 members from non-bank brokers or dealers. - At least 1 member from bank-affiliated municipal securities dealers. - A minimum of 2 members associated with municipal advisors.- **Public Representatives:** The remaining Board members must not be associated with the aforementioned entities for the past 5 years and include: - At least 1 member representing institutional or retail investors. - At least 1 representative from municipal entities. - At least 1 member from the general public.The bill emphasizes a balanced representation on the Board between public and regulated representatives.

Appointment and Terms

The bill specifies the appointment process for Board members, requiring the Securities and Exchange Commission (SEC) to appoint an initial Chair and all other Board members within 180 days of enactment. Board members will serve three-year terms, with specific provisions for staggering terms to ensure continuity.The SEC can also fill vacancies on the Board and remove members at will.

Rules and Regulations

The MSRB is granted the authority to propose and adopt rules regarding transactions in municipal securities executed by brokers, dealers, and municipal advisors. Key areas covered include:- Establishing standards for operational capabilities and qualifications for municipal securities brokers and dealers.- Preventing fraudulent practices and ensuring fair trading principles.- Standardizing practices and providing for audits of municipal brokers and advisors.- Outlining record-keeping requirements and governance structures within the MSRB.

Data and Guidance

The MSRB is required to adopt data standards for information submitted to it and must consult with market participants during this process. The Board may provide guidance for compliance enforcement and examination related to its rules.

Fees and Compliance

The Board has the authority to impose reasonable fees on municipal securities brokers and dealers to cover its operational costs. However, municipal entities and obligated persons cannot be charged for submitting documents or obtaining certain information from the Board.

Meetings and Coordination

The MSRB, along with the SEC and other regulatory bodies, is required to meet at least twice a year to discuss regulatory matters concerning municipal securities.

Technical Amendments

The bill includes technical amendments to the Securities Exchange Act to align with the new regulations introduced in this Act.

Overall Purpose

The overarching goal of the Municipal Securities Rulemaking Board Reform Act of 2026 is to enhance the governance, transparency, and integrity of the municipal securities markets by ensuring that the regulatory board reflects both the interests of market participants and the broader public.

Relevant Companies

None found.