G-23 Update: BDA Speaks with MSRB on Potential Rule Changes

Thanks to those who participated in our call this morning on the SEC’s Temporary Conditional Exemption related to Municipal Advisors role in bank placement transactions. One of the issues we discussed this morning involves MSRB Rule G-23. Rule G-23 prevents role switching in transactions where a dually registered MA/BD is serving as MA on a deal, so it apparently would prevent a MA/BD from serving as MA and then switching roles and serving as placement agent.

BDA staff talked informally today with MSRB staff on this issue. The MSRB believes Rule G-23 does not limit the ability of dually registered firms to use the TCE when serving as MA on a deal because under the TCE, the MA never switches roles. Because the TCE permits a MA to solicit investors under the limited conditions presented, any MA, including a BD/MA, does not need to switch roles. They can remain MA throughout the transaction and solicit investors subject to the restrictions and requirements of the TCO without violating Rule G-23.

We have asked the MSRB to issue a formal public statement on this issue, and we believe they will soon.

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