Fixed Income Legal & Compliance Roundtable

October 18, 2017

Dallas, TX


On Wednesday, October 18th, 2017, BDA held a Legal & Compliance Roundtable, sponsored by Quarles & Brady. After the roundtable, attendees met for dinner to network and continue the discussion from the roundtable.

You can view the agenda from the roundtable here, with a full recap of the event's discussion topics below.

Retail Confirmation Disclosure Update and Compliance Discussion

  • Members discussed their approaches to developing systems to comply with the upcoming retail confirmation rule

FINRA 4210 Compliance

  • FINRA released a set of FAQs and announced a delay of the December 2017 effective date by six months
  • BDA members remained concerned about the amendments to the Rule
  • BDA plans to engage with members to assess how we should re-engage with FINRA on the proposed amendments

Review and Discussion of Recent MSRB Market Advisories

  • BDA and other trade associations have submitted a letter to the MSRB requesting that the MSRB open a comment period for the recent advisories and submit future advisories to the industry for comment before publishing them

MSRB Rule G-34 Amendments

  • MSRB has submitted its proposal to the SEC
  • BDA discussed that it expects some more changes to be made to the proposal before it is approved

Municipal Advisor, G-42 Compliance

  • Members discussed their procedures for complying with the documentation requirement of Rule G-42
  • Members discussed the shift among bankers' practices that is needed to comply with the rule

MSRB Rule G-15 Minimum Denomination Advocacy

  • MSRB has recently re-engaged industry members to discuss the best approach to amend Rule G-15
  • Members discussed the BDA's proposal to the MSRB which has been to focus the rule on high authorized denomination transactions and improved transparency of minimum denominations

Issue Price Compliance

  • Members discussed recent experiences with compliance regarding the issue price rule

Examination and Enforcement Experiences

  • Members discussed recent examination experiences
  • Members discussed recent focus of examination on due diligence of political donations (i.e. - must show evidence of researching on internet for all donations)

Tax Reform and Congressional Outlook

  • In late September, a tax reform "Framework" was released by the Trump Administration, House Ways & Means Committee Republicans, and Senate Finance Committee Republicans
  • The tax-exempt status for municipal bonds is expected to be unharmed in legislative drafts built out of the Framework
  • Congress must next pass a budget, but there is wide disagreement on how much of the tax cuts should be paid for and whether the budget will contain reconciliation instructions on healthcare in addition to tax
  • The BDA and Municipal Bonds for America (MBFA) Coalition will continue to work with key Congressional offices to ensure the tax-exemption for municipal bonds is unaffected during the legislative process for federal tax reform

Regulatory Presentation

After the roundtable discussion portion of the day was completed, Ed Fierro of Bracewell delivered a presentation that focused on the recent MSRB advisory concerning selective disclosure and raised concerns about the advisory.

Nixon Peabody Presentation

Nixon Peabody delivered a presentation concerning the Federal court of appeal cases that have interpreted REves and their application to ordinary direct purchase transactions. Members discussed the approach taken by FINRA and discussed potential paths to change how FINRA approaches the loan/security issue.
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