ABA Dodd-Frank Tracker

ABA Praises MSRB Rule Revisions, Offers Suggestions

2014-08-27T10:17:00.000-04:00

ABA praised the Municipal Securities Rulemaking Board for re-proposing Rule G-42 in such a way that “significantly increases the ability of banks to continue to provide services to municipal entities within the scope of the new municipal adviser regulatory regime.” The MSRB was responsive to previous ABA comments, the association said.

ABA sought further clarification of the rule’s scope and asked the MSRB to modify its treatment of principal transactions. ABA also urged the MSRB to allow a sufficient transition period to permit advisers to honor their existing agreements.

In related news, ABA thanked the MSRB for revising its proposed Rule G-44 to acknowledge that bank fiduciary regulatory regimes satisfy the MSRB’s compliance requirements. The board allowed an exemption for banks subject to federal supervision requirements that are substantially similar to Rule G-44.

However, ABA noted that state-chartered trust companies should have an option to demonstrate equivalence between Rule G-44 and their state supervision.

Read the letter on Rule G-42.
Read the letter on Rule G-44.

MSRB Proposes Extending ‘Pay to Play’ to Muni Advisers

2014-08-20T09:26:00.000-04:00

The Municipal Securities Rulemaking Board proposed to extend its “pay to play” rule to municipal advisers. The proposed amendments to Rule G-37 would add municipal advisers to the existing framework for brokers and dealers — generally prohibiting them from engaging in advisory business with municipal entities for two years after making certain political contributions to public officials who can influence the hiring of advisers.

The rule would also require municipal advisers to disclose their political contributions to officials and bond initiatives on the MSRB’s publicly available Electronic Municipal Market Access website.

The MSRB proposed a similar rule in 2011 that was eventually withdrawn after ABA and others urged the board to wait until after the SEC finalized its own rule. Comments on Monday’s proposal are due on Oct. 1, and the MSRB will host a webinar on the proposed changes on Sept. 11.

Read more.
Read the proposal.

SEC to Begin Municipal Adviser Exams

2014-08-20T09:22:00.000-04:00

The SEC sent a letter to newly registered municipal advisers explaining its approach to upcoming compliance exams over the next two years. The exams will apply to municipal advisers registered with the SEC but not with FINRA, the securities industry’s self-regulatory entity.

The SEC’s examiners will evaluate municipal advisers for compliance with rules issued both by the SEC and the Municipal Securities Rulemaking Board on registration, fiduciary duty, disclosures, fair dealing, supervision, recordkeeping and staff training. The SEC staff said firms would be contacted individually when selected for examination.

The SEC finalized its municipal adviser rule under the Dodd-Frank Act earlier this year, and firms subject to the rule had until July 1 to register as advisers.

Read the letter.
View ABA resources on muni adviser registration.

OCC Updates Guidance on Muni Securities

2014-07-25T09:02:00.004-04:00

The OCC issued a new Comptroller’s Handbook booklet on the Municipal Securities Rulemaking Board’s rules. It covers MSRB regulations and interpretive guidance and addresses compliance with new MSRB rules on recordkeeping, timing of disclosures, prices and commissions, municipal advisers and other topics. The new booklet consolidates 1990 guidance on bank dealer activities and a 1991 booklet on securities activities.

Read the booklet.

New Infographic Illustrates Regulatory ‘Avalanche’

2014-07-23T08:23:00.000-04:00

ABA is sending to members of Congress a new infographic documenting the enormous cumulative weight of new and existing regulations on community banks. The graphic shows that Call Report items have more than tripled since 1990, that the majority of small banks have a sole compliance officer to wade through several-hundred-page rules and that reg burden has helped drive community bank consolidation.

The avalanche of regulatory activities in recent years has included mortgage rules, Basel III, liquidity proposals, the Durbin Amendment, municipal adviser registration, derivatives and remittances. The graphic also shows the cost to consumers of heavy burdens, with 58% of banks canceling or holding off on a new product because of increased regulation and 44% limiting current products or services in order to comply.

View the infographic.

Davis Polk Dodd-Frank Progress Report Released

2014-07-21T10:01:00.000-04:00

Davis Polk has released its July 2014 Dodd-Frank Progress Report.
From the report:

As of July 18, 2014, a total of 280Dodd-Frank rulemaking requirement deadlines have passed. This is 70.4% of the 398 total rulemaking requirements.
Of the 398 total rulemaking requirements, 208 (52.3%) have been met with finalized rules and rules have been proposed that would meet 94 (23.6%) more. Rules have not yet been proposed to meet 96 (24.1%) rulemaking requirements.

Read the full report here.

SEC Updates Municipal Adviser FAQs

2014-05-20T08:55:00.003-04:00

The SEC updated its frequently asked questions on implementing the municipal adviser registration rule. The document offers general interpretive guidance from SEC staff on certain topics, including the rule’s advice standard and its bank exemption.

As ABA had requested, the FAQs provide the option of negative consent as a mechanism for determining whether an existing account contains proceeds from the issuance of municipal bonds; clarify when the proceeds of pension obligation bonds lose their character as "proceeds"; address the ability of dual employees to rely on more than one exemption in discussions with municipalities; and affirm the scope of the bank exemption as covering the purchase from a municipality of its bonds for the bank's own account.

Read the updated FAQs.

ABA to MSRB: Avoid Duplicative Supervision of Muni Advisers

2014-05-05T09:06:00.000-04:00

Bank fiduciaries that are registered municipal advisers — who are already subject to robust supervision and examination by bank regulators — should not be subjected to an additional supervisory and compliance regime, ABA told the Municipal Securities Rulemaking Board in a comment letter. ABA said:

The regulatory regime applicable to bank fiduciaries satisfies the principles underlying the MSRB’s Draft Rule G-44. Compliance with already applicable regulations (and guidance) should be deemed to constitute compliance with Rule G-44 for bank fiduciaries that are municipal advisers.

ABA further noted that allowing bank fiduciaries to rely on the banking industry’s rigorous supervision would avoid a costly layering of regulatory burden with an additional securities-oriented compliance regime. “We are concerned that applying the draft rule’s requirements to bank fiduciaries would impose a duplicative and conflicting regulatory regime with no observable benefit to fiduciary clients, who ultimately would bear the costs of such redundant regulation,” ABA said.

Read the letter.
View ABA resources on municipal advisers.

Muni Adviser Standard Would Limit Services

2014-03-06T09:26:00.002-05:00

Several elements of the Municipal Securities Rulemaking Board’s proposed fiduciary standard for municipal advisers are problematic, ABA said in a comment letter. For example, the proposal would ban principal transactions between a bank serving as a municipal adviser and any of its affiliates with the municipality it is advising for the duration of the advisory engagement.

This prohibition, ABA said, would force banks to decide whether they wanted to provide advisory services to municipalities or provide all of the other traditional banking services — such as deposit accounts, loans and cash management services — to municipalities. Municipalities would see their ability to have a broad range of services from their bank curtailed, the association added.

Read the letter.

MSRB Proposes Strict Muni Adviser Fiduciary Standard

2014-02-06T09:34:00.002-05:00

The Municipal Securities Rulemaking Board recently released a proposed fiduciary standard for municipal advisers. The standard would prevent banks and their affiliates who are registered municipal advisers from providing any other product or service to that municipality for the duration of the advisory relationship in a principal capacity.

If, for example, a bank’s trust department provides advice to a municipal pension plan, the bank would be prohibited from offering deposits, loans or cash management services to that municipality.

Comments are due by March 10.

Read the MSRB proposal.
View ABA resources on municipal adviser registration.
Read ABA’s staff summary.

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Learn about the benefits of membership and ways to join here.

ABA Wins Delay on Municipal Adviser Registration

2014-01-13T14:24:00.003-05:00

The SEC said it would delay until July 1 the compliance date for registration as a municipal adviser under the Dodd-Frank Act. Although the rule -- originally scheduled to take effect today -- was more limited in scope than its original proposal, it may still require registration for many bankers, broker-dealers and trust professionals.

The SEC acted following ABA advocacy urging a delay in the registration deadline. “Many significant questions remain about the scope and applicability of the Rule,” ABA said in a letter to the SEC on Friday. “We therefore strongly urge the Commission to delay effective date of the municipal adviser final rule until the Commission has given much-needed interpretive guidance to the banking industry.”

Read the SEC’s release.
Read ABA’s letter.

SEC Issues Muni Advisor Guidance

2014-01-13T09:58:00.000-05:00

The SEC’s Office of Municipal Securities has issued guidance to address concerns regarding implementation of their final rule requiring municipal advisors to register with the SEC. Topics include, but are not limited to:

The advice standard, including the general information exclusion and the treatment of business promotional materials used by underwriters;
The request for proposals-request for qualifications exemption;
The exemption for independent municipal advisors;
And the exclusion for registered investment advisers.

The final rule was adopted in September 2013.

Find ABA muni advisor resources.
Read the SEC press release.

SEC Issues Municipal Advisor Rule

2013-12-13T10:31:00.002-05:00

The SEC has issued its final rule requiring municipal advisors to register permanently with the SEC. In its bulletin, the OCC noted that this rule applies to all national banks and federal savings associations that meet the definition of “municipal advisor”. However, the SEC stated that banks providing advice on certain identified banking products, such as deposit accounts, extensions of credit, sweep accounts, or bond indenture trustee services do not need to register.

Read the rule.

The Week Ahead: December 16 - December 20

2013-12-13T09:56:00.000-05:00

Tuesday

ABA Telephone Briefing: Municipal Adviser Registration Read more.

Wednesday

ABA Telephone Briefing/Webcast: The Basics of Quality Assurance in Residential Appraisal Read more.

Please Note that the House will begin Recess this Friday, December 13 and will resume in 2014.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Join Us at the Premier Event for Community Bank CEOs — Our banker working group is designing a program that will provide information and advice on the latest industry developments and challenges, legislative and regulatory actions, and products and services available to community bankers. Register!

ABA Releases New Resources on Municipal Advisers

2013-12-05T09:58:00.001-05:00

ABA continues to urge bankers to review the SEC’s municipal adviser rule, which takes effect Jan. 13, to determine if they must register. ABA has released two new resources -- on what it means to be a muni adviser and on how to navigate the registration process -- to help bankers as they review the rule, and will also hold a telephone briefing covering the rule on Dec. 17.

Read “What Does It Mean to be a Municipal Adviser?”
Read “Trekking through the Application Process.”
View ABA resources on muni adviser registration.

ABA Urges Banks to Review Muni Advisor Rule

2013-11-20T09:46:00.000-05:00

ABA is strongly encouraging banks to review the SEC’s final municipal advisor rule, which takes effect on Jan. 13, 2014, to determine whether they must register.

To help bankers understand the rule, ABA will hold a telephone briefing on Tuesday, Dec. 17, from 2-3:30 p.m. EST. Topics to be covered include products and services that could trigger registration, what is and is not “advice,” interest rate swaps as municipal derivatives, exemptions to the final rule and more.

Register for the telephone briefing.
Visit ABA’s muni advisor issue page.

Municipal Adviser Rule to Take Effect Jan. 13

2013-11-12T09:09:00.000-05:00

The SEC published its final rule on municipal advisers in the Federal Register with an effective date of Jan. 13, 2014.

The Municipal Securities Rulemaking Board also released a checklist to help newly registered municipal advisers determine how ready they are for regulatory oversight.

Read the final rule.

ABA Issues Specialized Summaries on Muni Adviser Rule

2013-11-11T08:34:00.000-05:00

ABA has released additional staff summaries for member banks on the final municipal adviser rule that the Securities and Exchange Commission adopted in September. The summaries cover key definitions and exemptions, and offer a decision tree to help bankers understand if they will need to register under the rule.

Additional versions of the summary are intended to help trust departments and broker-dealers understand the rule, which will take effect 60 days after its publication in the Federal Register.

The final rule narrows the scope of who must register as a municipal adviser by more narrowly defining what constitutes “investment strategies” that a municipal adviser gives advice on. It also provides exemptions for many traditional banking products and services. Individuals working for a registered municipal advisory firm do not need to individually register as a municipal adviser, but may rely on their firm’s registration.

ABA Staff Summary Covers Muni Adviser Rule

2013-10-31T08:59:00.002-04:00

ABA has released part one of a staff summary on the final municipal adviser rule that the SEC adopted in September. Part one covers key definitions and exemptions, and offers a decision tree to help bankers understand if they will need to register under the rule.

The final rule narrows the scope of who must register as a municipal adviser by more narrowly defining what constitutes “investment strategies” that a municipal adviser gives advice on. It also provides exemptions for a few traditional banking products and services (depository products, extensions of credit and indenture trustees), as well as for individuals who are serving in an official capacity with a municipality.

Read the staff summary.

Indicates ABA members-only material.

Not an ABA member?
Learn about the benefits of membership and ways to join here.

SEC Adopts Final Municipal Adviser Rule

2013-09-19T09:35:00.003-04:00

The SEC voted unanimously yesterday to adopt a final rule on municipal adviser registration as required in the Dodd-Frank Act. Based on information released by the SEC, there were some positive changes to the final rule, and comments from the industry were given consideration.

The final rule will narrow the scope of who must register as a municipal adviser by more narrowly defining what constitutes “investment strategies” that a municipal adviser gives advice on. It also provides exemptions for a few traditional banking products and services (depository products, extensions of credit and indenture trustees), as well as for individuals who are serving in an official capacity with a municipality.

In another positive development for bankers, individuals working for a registered municipal advisory firm do not need to individually register as a municipal adviser, but may rely on their firm’s registration.

The final rule does not exempt banks in their entirety, as ABA had advocated. Remaining concerns for bankers include the definition of what is captured as “advice” given on “investment strategies” and what exactly is exempted as a traditional banking product or service.

The SEC’s temporary registration regime has been extended until July 1, 2014, when the final rule takes effect.

Read more.

ABA-Advocated Bills Gain Additional Co-Sponsors

2013-05-24T08:30:00.000-04:00

Sens. Angus King (I-ME) and Kelly Ayotte (R-NH) on Wednesday signed on as co-sponsors of S. 731, the ABA-advocated bill to stop and study implementation of the Basel III capital rules. That brings the legislation's cosponsor total to 13.

Earlier this week, eight House members signed on as co-sponsors of H.R. 1553, the ABA-advocated exam fairness bill, bringing its co-sponsor total to 88. And S. 710, which would exempt banks from municipal advisor registration requirements, now has 11 bipartisan sponsors and co-sponsors.

ABA continues to encourage bankers to write to their lawmakers asking them to support and co-sponsor these bills using the following links:

Municipal Advisors Bill Introduced

2013-04-12T11:29:00.002-04:00

Sen. Mark Warner (D-VA) and Sen. Patrick Toomey (R-PA) yesterday introduced ABA-advocated legislation (S. 710) that would provide for an exemption for commercial banks and savings and loan associations from the Dodd-Frank Act provisions requiring regulation of municipal advisors.

In a letter to Senators, ABA said:

ABA believes that Congress did not intend for banks and savings institutions that are already supervised and examined to be regulated as municipal advisors. Both the exemptions in Section 975 and the fact that examination authority was provided solely to the SEC support this view. ABA strongly believes a complete exemption is required because these institutions provide such a broad array of traditional banking products and services to municipalities that any limited exemption will necessarily cover activities that should not be captured.

House Approves Muni Adviser Bill

2012-09-20T07:48:00.000-04:00

The House passed by voice vote last night a substitute version of a bill (H.R. 2827) that would clarify what constitutes a municipal adviser and would exempt banks providing “traditional banking products” from the SEC’s proposed rule implementing the Dodd-Frank Act’s Section 975. The Senate still must pass the legislation.

The bill’s “traditional banking products” definition covers deposits, bankers acceptances, letters of credits, loans, certain loan participations and swap agreements. The legislation also exempts banks for trust services that are subject to a state or federal fiduciary duty, and extends to them the existing exemption for registered investment advisers.

ABA expressed concern in a memo to the Financial Services Committee on Sept. 11 that the well-intentioned substitute bill wouldn’t adequately cover the range of products and services that banks provide to municipalities. It also may not provide an exemption for the negotiations that banks regularly undertake with municipalities when booking loan products such as tax anticipation notes and revenue anticipation notes, ABA said.

Read the legislation.

House Panel Approves Muni Adviser Bill

2012-09-13T08:09:00.001-04:00

The House Financial Services Committee yesterday approved by voice vote a substitute version of a bill (H.R. 2827) that would clarify what constitutes a municipal adviser and would exempt banks providing “traditional banking products” from the SEC’s proposed rule implementing the Dodd-Frank Act’s Section 975.

The bill’s narrow “traditional banking products” definition covers deposits, bankers acceptances, letters of credits, loans, certain loan participations and swap agreements. The legislation also exempts banks for trust services that are subject to a state or federal fiduciary duty, and extends to them the existing exemption for registered investment advisers.

The committee approved an amendment—offered by H.R. 2827’s sponsor, Rep. Robert Dold—that would eliminate the need for individuals employed by municipal advisory firms to separately register with the SEC. It also adopted panel ranking member Barney Frank’s amendment deleting the bill’s provision requiring municipal adviser registration only where the adviser had a written contract to provide advice for separate compensation.

ABA expressed concern Tuesday in a memo to the committee that the well-intentioned substitute legislation wouldn’t adequately cover the range of products and services that banks provide to municipalities. It also may not provide an exemption for the negotiations that banks regularly undertake with municipalities when booking loan products such as tax anticipation notes and revenue anticipation notes, ABA said.

Read the legislation.

ABA Urges Panel to Approve Muni Adviser Bill

2012-09-12T08:13:00.002-04:00

ABA yesterday urged the House Financial Services Committee to approve the version of Rep. Robert Dold’s (R-Ill.) municipal advisers bill (H.R. 2827) that the Capital Markets Subcommittee passed on Aug. 1.

The legislation would clarify what constitutes a municipal adviser and would exempt banks from the SEC’s proposed rule implementing the Dodd-Frank Act’s Section 975. The committee is slated to consider H.R. 2827 today.

In a memo James Ballentine, ABA EVP for congressional relations said,

The SEC’s proposal would require registration and reporting not only by banks, but also by individual bank employees giving ‘advice’ -- a term which is not defined -- with enforcement and examination handled by the SEC instead of by bank regulators.

Ballentine emphasized that the required registration would impose a new and different layer of regulation and examination on banks for no meaningful public purpose. He noted that Capital Markets Subcommittee members said during a recent hearing on the issue that this was not Congress’ intent when it approved Section 975.

ABA strongly believes a complete exemption is required [for commercial banks and savings and loan associations] because these institutions provide such a broad array of traditional banking products and services to municipalities that any attempt to categorize them would necessarily be incomplete.

Read the memo.