Notice2025-23821
Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change To Amend MSRB Rules A-11 and A-13 Pursuant to a Multi-Year Rate Card and To Make Related Technical Amendments
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 29, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 245 (Monday, December 29, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 245 (Monday, December 29, 2025)]
[Notices]
[Pages 60822-60827]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-23821]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104477; File No. SR-MSRB-2025-02]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Granting Approval of a Proposed Rule Change To Amend MSRB
Rules A-11 and A-13 Pursuant to a Multi-Year Rate Card and To Make
Related Technical Amendments
December 19, 2025.
I. Introduction
On September 30, 2025, the Municipal Securities Rulemaking Board
(``MSRB'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to (i) amend MSRB Rule A-11, on
assessments for municipal advisor professionals (``Rule A-11''), to
establish new rates of certain assessments on municipal advisors
pursuant to a multi-year rate card, (ii) amend MSRB Rule A-13, on
underwriting and transaction assessments for brokers, dealers, and
municipal securities dealers (``Rule A-13''), to establish new rates of
certain assessments on brokers, dealers, and municipal securities
dealers (collectively, ``dealers'' and, together with municipal
advisors, ``regulated entities'') pursuant to a multi-year rate card,
and (iii) make certain related technical amendments to Rules A-11 and
A-13 (collectively, the ``proposed rule change'').\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Exchange Act Release No. 104154 (Sept. 30, 2025), 90 FR
48082 (Oct. 3, 2025) (File No. SR-MSRB-2025-02) (``Notice'').
---------------------------------------------------------------------------
The MSRB requested that the proposed rule change be approved with
an effective date of January 1, 2026, provided that if approved by the
Commission after January 1, 2026, the proposed rule change be made
effective as of the first day of the month following Commission
approval.\4\
---------------------------------------------------------------------------
\4\ See Notice, 90 FR at 48082.
---------------------------------------------------------------------------
The proposed rule change was published for comment in the Federal
Register on October 3, 2025.\5\ The Commission received four comment
letters \6\ on the proposed rule change. Pursuant to a notice published
in the Federal Register on November 17, 2025, the date by which the
Commission shall either approve or disapprove, or institute proceedings
to determine whether to disapprove, the proposed rule change was
extended from November 17, 2025, to January 1, 2026.\7\ On December 2,
2025, the MSRB responded to the comment letters.\8\ As described
further below, the Commission is approving the proposed rule change
with an effective date of January 1, 2026.
---------------------------------------------------------------------------
\5\ See id.
\6\ See Letter from Leslie M. Norwood, Managing Director and
Associate General Counsel, Securities Industry and Financial Markets
Association, dated October 24, 2025 (``SIFMA Letter''); Letter from
Susan Gaffney, Executive Director, National Association of Municipal
Advisors, dated October 24, 2025 (``NAMA Letter''); Letter from
Michael Decker, Senior Vice President, Bond Dealers of America,
dated October 24, 2025 (``BDA Letter''); and Letter from Robert
Laorno, General Counsel, ICE Bonds Securities Corporation, dated
October 24, 2025 (``ICE Bonds Letter'').
\7\ See Exchange Act Release No. 104173 (Nov. 3, 2025), 90 FR
51424, 51424-25 (Nov. 17, 2025) (File No. SR-MSRB-2025-02).
\8\ See Letter to Secretary, Commission, from Ernesto A. Lanza,
Chief Regulatory and Policy Officer, MSRB, dated December 2, 2025
(``MSRB Letter'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
A. Background
The MSRB established its annual rate card model in 2022.\9\
Pursuant to the annual rate card model, in November 2023, the MSRB
filed with the Commission proposed amendments to Rules A-11 and A-13 to
institute the rate card fees for 2024 (the ``2024 Rate Card
Proposal'').\10\ Five comment letters were submitted to the Commission
in response to the 2024 Rate Card Proposal, all of which highlighted
concerns, among others, related to the MSRB's rate setting processes
and the volatility and unpredictability of rates under the annual rate
card model.\11\ On January 29, 2024, the Commission temporarily
suspended and instituted proceedings to determine whether to approve or
disapprove the 2024 Rate Card Proposal.\12\ The MSRB then withdrew the
2024 Rate Card Proposal on February 16, 2024.\13\
---------------------------------------------------------------------------
\9\ See Exchange Act Release No. 95417 (Aug. 3, 2022), 87 FR
48530 (Aug. 9, 2022) (File No. SR-MSRB-2022-06). See also MSRB
Notice 2022-06, MSRB Revises and Resubmits Annual Rate Card
Amendments (July 29, 2022), available at <a href="https://www.msrb.org/sites/default/files/2022-09/2022-06.pdf">https://www.msrb.org/sites/default/files/2022-09/2022-06.pdf</a>. The amendments to Rules A-11 and
A-13 made by the 2022 filing, together with the MSRB's then-current
funding policy, constituted the rate card model instituted at that
time. See Notice, 90 FR at 48083, note 4.
\10\ See Exchange Act Release No. 99096 (Dec. 6, 2023), 88 FR
86188 (Dec. 12, 2023) (File No. SR-MSRB-2023-06).
\11\ All comment letters received in connection with 2024 Rate
Card Proposal, and the MSRB's response thereto, are available at
<a href="https://www.sec.gov/comments/sr-msrb-2023-06/srmsrb202306.htm">https://www.sec.gov/comments/sr-msrb-2023-06/srmsrb202306.htm</a>.
\12\ See Exchange Act Release No. 99444 (Jan. 29, 2024), 89 FR
7424 (Feb. 2, 2024) (File No. SR-MSRB-2023-06).
\13\ See Exchange Act Release No. 99577 (Feb. 21, 2024), 89 FR
14552 (Feb. 27, 2024) (File No. SR-MSRB-2023-06).
---------------------------------------------------------------------------
Since withdrawing the 2024 Rate Card Proposal, the MSRB has
reported that it has held outreach meetings with industry groups
representing regulated entities and other stakeholders to discuss the
MSRB's budget and rate card process.\14\ The MSRB also issued a Request
for Information (``RFI'') on its rate card process on October 30, 2024,
soliciting feedback from stakeholders on the MSRB's rate setting
process, the distribution of fees across regulated entities generally,
and the MSRB's management of its organizational reserve funds.\15\ The
MSRB received comments in response to the RFI, focusing on, among other
matters, the volatility and unpredictability of the annual rate card
model and strategies for management of reserve levels.\16\ The MSRB
subsequently revised its funding policy, effective October 1, 2025
(``Revised Funding Policy''), to replace its annual rate setting
process with a new multi-year rate setting process (the ``Multi-Year
Rate Card Process'').\17\
[[Page 60823]]
According to the MSRB, this Multi-Year Rate Card Process, the MSRB's
fiscal year 2026 budget, and the proposed rule change were developed
after considering the RFI responses and feedback received from the
MSRB's outreach to stakeholders.\18\
---------------------------------------------------------------------------
\14\ See Notice, 90 FR at 48083, note 10.
\15\ See MSRB Notice 2024-14, Request for Information on the
MSRB's Rate Card Process (Oct. 30, 2024), available at <a href="https://www.msrb.org/sites/default/files/2024-10/MSRB-Notice-2024-14.pdf">https://www.msrb.org/sites/default/files/2024-10/MSRB-Notice-2024-14.pdf</a>.
See also Notice, 90 FR at 48083.
\16\ All comment letters received in response to the RFI are
available at <a href="https://www.msrb.org/sites/default/files/2025-02/All-Comments-to-Notice-2024-14.pdf">https://www.msrb.org/sites/default/files/2025-02/All-Comments-to-Notice-2024-14.pdf</a>.
\17\ The Revised Funding Policy is available at <a href="https://www.msrb.org/MSRB-Funding-Policy-1">https://www.msrb.org/MSRB-Funding-Policy-1</a>. The prior Funding Policy is
available at <a href="https://web.archive.org/web/20250715224839/https://www.msrb.org/MSRB-Funding-Policy-0">https://web.archive.org/web/20250715224839/https://www.msrb.org/MSRB-Funding-Policy-0</a>.
\18\ See Notice, 90 FR at 48083.
---------------------------------------------------------------------------
B. Summary of the Proposed Rule Change
As discussed below and in the Notice, the proposed rule change
would amend Rules A-11 and A-13 to establish new rates of certain
assessments on municipal advisors under Rule A-11 and dealers under
Rule A-13 pursuant to the new Multi-Year Rate Card Process, as well as
to make certain related technical amendments.\19\ Rule A-11 currently
requires municipal advisors to pay to the MSRB a recurring annual fee
(the ``Municipal Advisor Professional Fee'') for each associated person
qualified as a municipal advisor representative under MSRB Rule G-3 and
for whom the municipal advisor has on file with the Commission an
active Form MA-I as of January 31 of the applicable year (``covered
professional''). Rule A-13 currently requires dealers to pay (a) an
underwriting fee under Rule A-13(b) (the ``Underwriting Fee'') for
municipal securities purchased from an issuer by or through such dealer
as part of a primary offering, (b) a transaction fee under Rule A-
13(d)(i) and (ii) (the ``Transaction Fee'') based on the par amount
traded in inter-dealer trades and customer sales, and (c) a trade count
fee under Rule A-13(d)(iv)(a) and (b) (the ``Trade Count Fee'') based
on the number of inter-dealer trades and customer sales (collectively,
the ``Market Activity Fees,'' and together with the Municipal Advisor
Professional Fee, the ``Rate Card Fees'').
---------------------------------------------------------------------------
\19\ See Notice, 90 FR at 48082-85. Underwriting assessments
charged pursuant to Rule A-13(c) to dealers acting as underwriters
of certain municipal fund securities are not included in the
assessment rates that would be amended by this proposed rule change.
See Notice, 90 FR at 48082, note 3.
---------------------------------------------------------------------------
Proposed Multi-Year Rate Card Fees
The proposed rule change would establish Rate Card Fees for the
next four calendar years: 2026, 2027, 2028, and 2029 (the ``proposed
Multi-Year Rate Card'').\20\ The Municipal Advisor Professional Fee
included in the proposed Rate Card Fees for each of these years would
be operative from January 1 of each calendar year until December 31 for
that year and the Market Activity Fees included in the proposed Rate
Card Fees would be operative from January 1, 2026 until December 31,
2029.\21\ The proposed rule change would also require that any
subsequent multi-year rate cards be established by amendment to Rules
A-11 and A-13 and in accordance with the principles and guidelines of
the MSRB's Revised Funding Policy, available at <a href="https://www.msrb.org/MSRB-Funding-Policy-1">https://www.msrb.org/MSRB-Funding-Policy-1</a>.\22\
---------------------------------------------------------------------------
\20\ See Notice, 90 FR at 48083-84. The Municipal Advisor
Professional Fee included in the proposed new Rate Card Fees, for
each year covered by the proposed rule change, would be set out in
Supplementary Material .01 of Rule A-11. See Notice, 90 FR at 48084,
note 14. Each of the Market Activity Fees included in the proposed
new Rate Card Fees would be set out in Supplementary Material
.01(a)(i)-(iii) of Rule A-13. See id.
\21\ See Notice, 90 FR at 48084.
\22\ See id. As noted above, the Revised Funding Policy became
effective as of October 1, 2025. Any future revisions to the Revised
Funding Policy must be approved by the MSRB's board of directors and
would be posted on the MSRB website at <a href="https://www.msrb.org/MSRB-Funding-Policy-1">https://www.msrb.org/MSRB-Funding-Policy-1</a>. See Notice, 90 FR at 48084, note 17. Revisions to
the Revised Funding Policy would not result in changes to the rates
of filed Rate Card Fees absent a rule filing with the Commission,
but instead would have an impact on future rate-setting through MSRB
rulemaking. See id. The proposed rule change would amend
Supplementary Material .01 to Rule A-11 and Supplementary Material
.01(b) to Rule A-13 to delete language describing aspects of the
prior rate setting process that would be superseded by the Multi-
Year Rate Card Process, to explicitly state that if no new rate card
is established at the end of the period covered by the proposed rule
change then the applicable rates would remain at the same level as
in effect prior to the end of that period, and to provide for the
ongoing availability of the Revised Funding Policy, and any future
revisions thereto, on the MSRB website so long as the Revised
Funding Policy sets forth, in whole or in part, the MSRB's rate card
process. See id.
---------------------------------------------------------------------------
Additionally, the proposed rule change would establish credits
(``Temporary Credits'') of 45% applied to Market Activity Fees in 2026
and 2027, which would result in a reduction in the amounts to be
assessed to and paid by dealers for Market Activity Fees during such
years.\23\ The following table sets forth (a) the Rate Card Fees
currently in effect under Rules A-11 and A-13, and (b) the Rate Card
Fees that the MSRB would establish under its proposed Multi-Year Rate
Card, together with the net rates of assessment proposed for each year
(taking into account the Temporary Credits): \24\
---------------------------------------------------------------------------
\23\ See Notice, 90 FR at 48084. The Temporary Credits that
would be applied to the Market Activity Fees included in the
proposed new Rate Card Fees for the calendar years 2026 and 2027
would be set out in Supplementary Material .01(c) of Rule A-13. See
Notice, 90 FR at 48084, note 19. The Temporary Credits included in
this proposed rule change would not apply to the Municipal Advisor
Professional Fee. See Notice, 90 FR at 48084. The proposed rule
change's Temporary Credits apply to dealer Market Activity Fees
because the MSRB's excess reserves resulted from revenue derived
from extraordinary market trading and issuance volume between 2023
and 2025. See Notice, 90 FR at 48086, note 40.
\24\ See Notice, 90 FR at 48084. The net amount of Market
Activity Fees, taking into account any applicable Temporary Credits,
would be set out in Supplementary Material .01(c)(i)-(iii) of Rule
A-13. See Notice, 90 FR at 48084, note 20.
----------------------------------------------------------------------------------------------------------------
Assessment/ credit
basis Current 2026 2027 2028 2029
----------------------------------------------------------------------------------------------------------------
Underwriting Fee................ Per $1,000 Par $0.0297 $0.0297 $0.0297 $0.0297 $0.0297
Underwritten.
45% Temporary N/A (0.0134) (0.0134) 0 0
Credit.
Net Rate of 0.0297 0.0163 0.0163 0.0297 0.0297
Assessment.
Transaction Fee................. Per $1,000 Par 0.0107 0.0107 0.0107 0.0107 0.0107
Transacted.
45% Temporary N/A (0.0048) (0.0048) 0 0
Credit.
Net Rate of 0.0107 0.0059 0.0059 0.0107 0.0107
Assessment.
Trade Count Fee................. Per Trade......... 1.10 1.10 1.10 1.10 1.10
45% Temporary N/A (0.49) (0.49) 0 0
Credit.
Net Rate of 1.10 0.61 0.61 1.10 1.10
Assessment.
Municipal Advisor Professional Per Covered * 1,060 1,130 1,200 1,270 1,340
Fee. Professional.
----------------------------------------------------------------------------------------------------------------
* The Municipal Advisor Professional Fee provided under Supplementary Material .01 of MSRB Rule A-11 is
currently $1,060 per covered professional. Exhibit 5 of the MSRB's Rule 19b-4 filing for the proposed rule
change erroneously shows the current rate as $1,160 per covered professional.
[[Page 60824]]
Multi-Year Rate Card Process
As part of the new Multi-Year Rate Card Process, the proposed rule
change would also establish a maximum annual increase or decrease in
any baseline Rate Card Fee of 15% (the ``Annual Rate Change Limit'')
within a multi-year rate card period (as compared to the annual 25% cap
on increases and no cap on decreases that are currently in effect),\25\
subject to potential Temporary Credits.\26\
---------------------------------------------------------------------------
\25\ See Notice, 90 FR at 48084. The Annual Rate Change Limit
would be set out in Supplementary Material .01 of Rule A-11 and
Supplementary Material .01(b) of Rule A-13. See Notice, 90 FR at
48084, note 23.
\26\ See Notice, 90 FR at 48084. The Revised Funding Policy
allows the MSRB to elect to utilize one or more Temporary Credits
within the proposed Multi-Year Rate Card or in a future multi-year
rate card. See Notice, 90 FR at 48085 (citing Revised Funding
Policy, supra note 17, at ``Organizational Reserves'' and ``Multi-
Year Rate Card''). If Temporary Credits are applied to a baseline
Rate Card Fee, the Annual Rate Change Limit may be exceeded. See id.
For example, the proposed rule change includes Temporary Credits
during the first two years which result in the net rates of
assessments for the Market Activity Fees increasing between 2027 and
2028 by more than the percentage of the Annual Rate Change Limit,
notwithstanding the fact that the baseline rates would not change.
See id.
---------------------------------------------------------------------------
The MSRB states that under the Rate Card Fees proposed in the
proposed rule change, the baseline rates of the Market Activity Fees
would remain unchanged both from the rates currently in effect under
the prior rate card and throughout the course of the proposed Multi-
Year Rate Card.\27\ The MSRB further notes that the Municipal Advisor
Professional Fee for 2026 would increase by approximately 6.6% from the
rate currently in effect and would increase on an annual basis during
the course of the proposed Multi-Year Rate Card by approximately 6% per
year.\28\
---------------------------------------------------------------------------
\27\ See Notice, 90 FR at 48084-85.
\28\ See Notice, 90 FR at 48085.
---------------------------------------------------------------------------
Related Technical Amendments
The proposed rule change would include certain technical language
changes. For example, references to the current ``annual'' process
would be eliminated throughout Rules A-11 and A-13 and instead would
reflect the four-year term of the proposed Multi-Year Rate Card in the
proposed rule change.\29\ The proposed rule change language would also
refer to the rates that would be in effect (including any net rates due
to Temporary Credits, as applicable) for each year within the course of
the proposed Multi-Year Rate Card.\30\
---------------------------------------------------------------------------
\29\ See id. The word ``annual'' would be removed in references
to ``annual rate card'' in Rule A-11(b), Supplementary Material .01
to Rule A-11, Rule A-13(b), Rule A-13(d)(i)-(ii), Rule A-
13(d)(iv)(a)-(b), and Supplementary Material .01 and .01(b). See
Notice, 90 FR at 48085, note 32.
\30\ See Notice, 90 FR at 48085. In the case of the Municipal
Advisor Professional Fee, language would be added in Supplementary
Material .01 to Rule A-11 to make explicit that the charge is based
on the number of covered professionals in the respective year for
which the fee is to be assessed, and the rates for each year would
be listed in clauses (a)-(d) thereof. See Notice, 90 FR at 48085,
note 33. The net rate of assessment of the Market Activity Fees for
the first two years would be listed in Supplementary Material
.01(c)(i)-(iii). See id.
---------------------------------------------------------------------------
III. Summary of Comments Received and the MSRB's Response
The Commission received four comment letters \31\ on the proposed
rule change, as well as a response \32\ from the MSRB to the comment
letters. Three commenters expressed support for the proposed rule
change,\33\ one commenter stated that it did not oppose the proposed
rule change,\34\ and no commenters objected to the proposed rule
change.
---------------------------------------------------------------------------
\31\ See SIFMA Letter; NAMA Letter; BDA Letter; ICE Bonds
Letter.
\32\ See MSRB Letter.
\33\ See SIFMA Letter; BDA Letter; ICE Bonds Letter.
\34\ See NAMA Letter.
---------------------------------------------------------------------------
One commenter expressed support for the proposed shift to a multi-
year rate card, opining that it will improve the stability and
predictability of rate card fees for regulated entities.\35\ That
commenter also stated that the MSRB should consider adopting an
alternative fee structure applicable to municipal dealer operators of
alternative trading systems.\36\ In its response letter, the MSRB
stated that it would engage in dialogue with stakeholders regarding
potential alternative fee mechanisms for certain market
participants.\37\
---------------------------------------------------------------------------
\35\ See ICE Letter at 1.
\36\ See ICE Letter at 1-2.
\37\ See MSRB Letter at 3.
---------------------------------------------------------------------------
One commenter expressed support for the proposed shift to a multi-
year rate card but stated that it believes that a four-year fee window
is probably too long to accurately predict market trends in issuance
and trade volume as well as demands on MSRB resources, and a two-year
window may be more appropriate.\38\ The commenter also stated that the
fees paid by municipal advisors are too small as a percentage of the
MSRB's revenue, and a market-activity based fee for municipal advisors
would be appropriate.\39\ The commenter also requested that the MSRB
adopt a formalized process to periodically review its revenue
throughout the proposed four-year fee-setting window.\40\ In its
response letter, the MSRB stated that it would engage in dialogue with
stakeholders regarding the formulation of future charges, fees, and
rate cards.\41\ The MSRB also stated that it will conduct a periodic
review of its organizational reserves target and will evaluate and
consider actions if organizational reserves exceed or fall below the
established target by 20% or greater, as required by the MSRB's Revised
Funding Policy.\42\
---------------------------------------------------------------------------
\38\ See BDA Letter at 1-2.
\39\ See BDA Letter at 1.
\40\ See BDA Letter at 2.
\41\ See MSRB Letter at 3.
\42\ See id.
---------------------------------------------------------------------------
One commenter expressed support for the lowered operational
reserves target presented in the MSRB's fiscal year 2026 budget and the
proposed shift to a multi-year rate card as reducing fee volatility and
ensuring more predictability.\43\ The commenter also urged the MSRB to
consider increasing municipal advisor fees and/or imposing municipal
advisor market activity fees in the future.\44\ In its response letter,
the MSRB stated that it would engage in dialogue with stakeholders
regarding the formulation of future charges, fees, and rate cards.\45\
---------------------------------------------------------------------------
\43\ See SIFMA Letter at 2.
\44\ See SIFMA Letter at 3.
\45\ See MSRB Letter at 3.
---------------------------------------------------------------------------
One commenter stated that it did not oppose the proposed rule
change and that the MSRB should not change its current approach of
collecting fees from municipal advisors on a per-municipal advisor
basis.\46\ The commenter also stated that it supports the proposed
four-year fee-setting window but expressed concern with how the MSRB
will develop budgets during that four-year period to ensure that
expenses adhere to its regulatory mandates under the Exchange Act so
that fees are assessed on a reasonable basis.\47\ The commenter also
expressed a desire to engage in dialogue with the MSRB about recent
changes to the MSRB's Funding Policy, including the removal of language
regarding the fair allocation of fee burdens on different classes of
regulated entities.\48\ In its response letter, the MSRB stated that it
would engage in dialogue with stakeholders regarding the formulation of
future charges, fees, and rate cards.\49\ The MSRB also stated that it
does not believe that its Revised Funding Policy diminishes the
commitments laid out in its prior Funding Policy or alter any of the
requirements imposed on the MSRB by statute.\50\
---------------------------------------------------------------------------
\46\ See NAMA Letter at 1.
\47\ See id.
\48\ See id.
\49\ See MSRB Letter at 3.
\50\ See MSRB Letter at 3-4.
---------------------------------------------------------------------------
The MSRB stated that it believes that it has undertaken a
meaningful review
[[Page 60825]]
of its fees, charges, and the rate card process, and that the proposed
rule change is consistent with the Exchange Act.\51\
---------------------------------------------------------------------------
\51\ See MSRB Letter at 4.
---------------------------------------------------------------------------
IV. Discussion and Commission Findings
The Commission has carefully considered the proposed rule change,
the comment letters received, and the MSRB's response thereto. The
Commission has also considered supplemental, non-public information
regarding the MSRB's expenses that the MSRB provided to the Commission
at the Commission's request. The Commission finds that the proposed
rule change is consistent with the requirements of the Exchange Act and
the rules and regulations thereunder applicable to the MSRB. In
particular, the Commission finds that the proposed rule change is
consistent with the provisions of Sections 15B(b)(2)(J),\52\ 3(f),\53\
15B(b)(2)(C),\54\ and 15B(b)(2)(L)(iv) \55\ of the Exchange Act.
---------------------------------------------------------------------------
\52\ 15 U.S.C. 78o-4(b)(2)(J).
\53\ 15 U.S.C. 78c(f).
\54\ 15 U.S.C. 78o-4(b)(2)(C).
\55\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
---------------------------------------------------------------------------
A. Reasonable Fees and Charges as May Be Necessary or Appropriate To
Defray the Costs and Expenses of Operating and Administering the MSRB
For the reasons outlined below, and in particular the MSRB's
commitment to the continued stakeholder outreach described below, the
Commission finds that the proposed rule change is consistent with the
provisions of Section 15B(b)(2)(J) of the Exchange Act.\56\ Section
15B(b)(2)(J) of the Exchange Act requires the MSRB's rules to provide
that each regulated entity shall pay to the MSRB such reasonable fees
and charges as may be necessary or appropriate to defray the costs and
expenses of operating and administering the MSRB.\57\ Such rules shall
specify the amount of such fees and charges, which may include charges
for failure to submit to the MSRB, or to any information system
operated by the MSRB, within the prescribed timeframes, any items of
information or documents required to be submitted under any rule issued
by the MSRB.\58\
---------------------------------------------------------------------------
\56\ 15 U.S.C. 78o-4(b)(2)(J).
\57\ Id.
\58\ Id.
---------------------------------------------------------------------------
As noted by the MSRB, the proposed rule change is designed to fund
the operation and administration of the MSRB through the establishment
of a fee structure that: (i) improves the stability and predictability
of Rate Card Fees over time; (ii) maintains an appropriate balance of
assessments on regulated entities; and (iii) improves the MSRB's
ability to manage organizational reserves responsibly while minimizing
fee volatility and other operational disruptions to regulated
entities.\59\ The Commission finds that the proposed rule change
represents a reasonable approach to achieve these goals by, among other
changes, moving the process for determining Rate Card Fees from an
annually calculated adjustment to a fixed multi-year rate schedule,
establishing parameters to limit the degree of annual changes to Rate
Card Fees (i.e., the Annual Rate Change Limit), establishing a
framework to address surplus reserves through rate adjustments to
Market Activity Fees (i.e., the Temporary Credits), and maintaining the
MSRB's target balance of Rate Card Fees between dealers and municipal
advisors.\60\
---------------------------------------------------------------------------
\59\ See Notice, 90 FR at 48086.
\60\ See Notice, 90 FR at 48083. The proposed rule change
maintains the contribution targets set forth when the MSRB
established its annual rate card process in 2022, which the MSRB
believes remain appropriate as no durable, material shift in market
structure has occurred to warrant alteration of current target
contribution levels. See Notice, 90 FR at 48086, note 40.
---------------------------------------------------------------------------
With respect to the proposed Multi-Year Rate Card, the Commission
finds that the proposed Rate Card Fees are appropriate to defray the
anticipated costs and expenses of operating and administering the MSRB
over the next four years. The MSRB's 2026 budgeted expenses total $46.2
million (a 5.2% decrease in expenses compared to its fiscal year 2025
budgeted expenses) \61\ and the MSRB assumes an annual average expense
growth rate of 3.4% for fiscal years 2027 through 2029, primarily due
to the costs of inflation.\62\ The MSRB anticipates the revenue from
the proposed Rate Card Fees to represent 78% of total revenues in
fiscal year 2026, with the remaining 22% of revenues comprised of data
subscription fees, underwriting assessments for certain municipal fund
securities offerings under MSRB Rule A-13(c), annual and initial fees
under MSRB Rule A-12(b) and (c), investment income, fine revenue, and
other miscellaneous revenue (including examination fees under MSRB Rule
A-16).\63\ Although the proposed rule change would also reduce the
MSRB's reserves balance through the use of a 45% Temporary Credit for
Market Activity Fees (as discussed above),\64\ the MSRB maintains a
targeted level of reserve funding in accordance with its Revised
Funding Policy, which establishes a tolerance for variation from the
organizational reserves target of +/-20% of its target level (the
``Reserve Target Tolerance''), and provides for an evaluation, at the
mid-point of a multi-year rate card, as to whether the Reserve Target
Tolerance has been exceeded.\65\
---------------------------------------------------------------------------
\61\ See Notice, 90 FR at 48086; MSRB Fiscal Year 2026 Budget
(Oct. 1, 2025), <a href="https://www.msrb.org/sites/default/files/2025-10/MSRB-FY-2026-Budget-Summary.pdf">https://www.msrb.org/sites/default/files/2025-10/MSRB-FY-2026-Budget-Summary.pdf</a> (``MSRB Fiscal Year 2026 Budget'').
\62\ See Notice, 90 FR at 48086.
\63\ See id.
\65\ See Notice, 90 FR at 48085.
---------------------------------------------------------------------------
Finally, the MSRB stated that it developed its fiscal year 2026
budget, its Revised Funding Policy, and the proposed rule change after
considering the RFI responses and feedback received from the MSRB's
outreach to stakeholders.\66\ Based on commitments made by the
MSRB,\67\ the Commission expects that the MSRB will continue
[[Page 60826]]
such outreach, which is key to a determination by the Commission that
the proposed rule change establishes reasonable fees and charges to be
paid by regulated entities. Although the proposed Multi-Year Rate Card
is a fixed rate schedule for its four-year term and is generally not
intended to be modified during its effective term,\68\ the MSRB has
committed to continuing its stakeholder outreach during this four year
term regarding the MSRB's rate setting process, the distribution of
fees across regulated entities generally, and the MSRB's budget and
management of its reserve funds.\69\ Based on commitments made by the
MSRB,\70\ the Commission also expects that the MSRB will engage with
the Commission and stakeholders regarding what additional data and
information the MSRB should publicly disclose (that it does not
currently publicly disclose) regarding the MSRB's budget. The
Commission also expects that, despite removing from its Revised Funding
Policy certain previously included language affirming that stakeholder
engagement is a funding priority of the MSRB,\71\ the MSRB will engage
with stakeholders to ensure that future budgets adhere to the MSRB's
regulatory mandates under the Exchange Act.\72\
---------------------------------------------------------------------------
\66\ See Notice, 90 FR at 48083, 48089.
\67\ See, e.g., MSRB Letter at 3 (``The MSRB is committed to
continuing its ongoing dialogue with stakeholders regarding the
issues raised in the comment letters, including formulation of
future charges, fees, and rate cards, as well as future, potential
alternative fee mechanisms for certain market participants. . . .
The MSRB expects its future stakeholder outreach to encompass a
broad range of relevant issues and factors beyond the baseline
requirements of the Funding Policy.''); MSRB Letter at 3-4, note 12
(``[T]he changes in the Funding Policy do not alter or diminish the
MSRB's commitment to engaging with stakeholders on a going-forward
basis.''); Notice, 90 FR at 48088 (``[T]he MSRB commits to engage
with stakeholders to discuss possible alternative methods for
municipal advisor fees.''); Notice, 90 FR at 48083, note 13 (``The
MSRB remains committed to on-going engagement with stakeholders to
continue to explore whether additional, longer-term changes to the
MSRB's approach should be implemented in the course of developing
future rate cards beyond 2029.''); RFI at 4, note 7 (``Separate from
the retrospective review of the Rate Card Process, this outreach has
been critical to the MSRB addressing the concerns regarding
transparency and the MSRB budget process, with respect to which the
MSRB will continue its engagement with stakeholders outside of this
RFI.''). See also, e.g., Letter to Secretary, Commission, from
Ernesto A. Lanza, Chief Regulatory and Policy Officer, MSRB, dated
January 26, 2024 (File No. SR-MSRB-2023-06), at 8, available at
<a href="https://www.sec.gov/comments/sr-msrb-2023-06/srmsrb202306-416059-985442.pdf">https://www.sec.gov/comments/sr-msrb-2023-06/srmsrb202306-416059-985442.pdf</a> (``Approval of an organization's budget is a core
governance function that is the responsibility of the board of
directors . . . . Nonetheless, the MSRB looks to provide appropriate
opportunities for market participants (including the commenters,
other municipal market stakeholders and fellow regulators inclusive
of the Commission) to offer input, through discussions or otherwise,
at a point in time that would allow the MSRB board of directors to
consider such input as it approves the budget. Further, while the
MSRB currently reaches out to some of the commenters or their member
firms to seek input on estimated levels of underwriting and trading
activity for the coming year to develop this aspect of the input
into the Rate Card Process, the MSRB could consider a more
formalized manner of surveying relevant market participants ahead of
the final rate setting process.''); id. at 6 (``The MSRB commits to
continued engagement with commenters and other interested
stakeholders to provide even greater budget transparency by
providing more granular breakdowns of program expenditures,
particularly with respect to technology-related expenses.'').
\68\ See Notice, 90 FR at 48084.
\69\ See MSRB Letter at 3-4. See also Notice, 90 FR at 48083,
note 13.
\70\ See, e.g., supra, note 67. See also, e.g., MSRB Fiscal Year
2026 Budget, supra note 61, at 5 (``Providing MSRB's external
stakeholders with a meaningful understanding of MSRB's budget, its
development process and the considerations that flow into the next
annual budget are core to MSRB's commitment to financial
transparency and budgeting philosophy.'').
\71\ The prior Funding Policy, available at <a href="https://web.archive.org/web/20250715224839/https://www.msrb.org/MSRB-Funding-Policy-0">https://web.archive.org/web/20250715224839/https://www.msrb.org/MSRB-Funding-Policy-0</a>, provided that: ``Certain funding priorities exist
based on the MSRB's Strategic Plan, in support of its
responsibilities as [a self-regulatory organization], consistent
with its congressional mandate as outlined in the Exchange Act.
These priorities are: . . . 5. funding for stakeholder engagement
activities and education, including receiving information from
municipal market participants and other stakeholders to provide
input that informs the rulemaking process, as well as ensuring that
these stakeholders are aware of regulatory developments that may
affect them and are educated on the MSRB rules.''
\72\ See, e.g., MSRB Fiscal Year 2026 Budget (Oct. 1, 2025),
supra note 61, at 3 (``Fiscal stewardship, budget transparency and
public accountability remain of paramount importance to MSRB. It's
in this spirit that we have maintained an open dialogue with our
stakeholders, seeking their feedback and perspectives to inform our
initiatives, including the development of our FY 2026 budget and
next Strategic Plan. We continue to listen carefully to stakeholder
concerns and are taking them into consideration as we position MSRB
for the future.''); id. at 5 (``Ongoing stakeholder engagement and
feedback directly informs the development of MSRB's annual budget
and the information and discussion provided in this FY 2026 Public
Budget Report. Continued engagement on this topic is important to
MSRB and its commitment to transparency.''); MSRB Letter at 3-4,
note 12 (``[T]he changes in the Funding Policy do not alter or
diminish the MSRB's commitment to engaging with stakeholders on a
going-forward basis.''). See also, e.g., MSRB Notice 2024-13, MSRB
Seeks Volunteers for Advisory Groups Including a New Group on
Technology, at 1-2 (Oct. 28, 2024), available at <a href="https://www.msrb.org/sites/default/files/2024-10/MSRB-Notice-2024-13.pdf">https://www.msrb.org/sites/default/files/2024-10/MSRB-Notice-2024-13.pdf</a>
(``[O]ur highest priority is to fulfill our congressional mandate to
protect investors, municipal entities, and the public interest by
promoting a fair and efficient market. We strive to engage with
stakeholders and market participants to further this objective and
ensure the market works for everyone. Establishing advisory groups
is one of the many ways the Board and staff facilitate effective
stakeholder engagement. . . . [The Technology Advisory Group (TAG)]
may discuss a broad range of topics such as . . . the MSRB's
technology investment priorities and strategy . . . and technology
implementation costs of regulatory initiatives.''); MSRB Notice
2025-07, MSRB Seeks Volunteers for Compliance Advisory Group, at 1
(Oct. 30, 2025), available at <a href="https://www.msrb.org/sites/default/files/2025-10/MSRN-Notice-2025-07.pdf">https://www.msrb.org/sites/default/files/2025-10/MSRN-Notice-2025-07.pdf</a> (``[O]ur highest priority is
to fulfill our congressional mandate to protect investors, municipal
entities, and the public interest by promoting a fair and efficient
market. We strive to engage with stakeholders and market
participants to further this objective and ensure the market works
for all.'').
---------------------------------------------------------------------------
For these reasons, the Commission finds that the proposed rule
change establishes reasonable fees and charges to be paid by regulated
entities consistent with Section 15B(b)(2)(J) of the Exchange Act.
B. Impact on Efficiency, Competition, and Capital Formation, and
Related Provisions
In approving the proposed rule change, the Commission has also
considered the proposed rule change's impact on efficiency,
competition, and capital formation under Section 3(f) of the Exchange
Act.\73\ The Commission finds that the record for the proposed rule
change does not contain any information to indicate that the proposed
rule change would have a negative impact on efficiency, competition, or
capital formation.\74\ In fact, transitioning to the proposed Multi-
Year Rate Card could promote market efficiency and capital formation
because regulated entities will now know their Rate Card Fees through
2029 instead of facing uncertainty under a one- or two-year rate card
process.
---------------------------------------------------------------------------
\73\ See 15 U.S.C. 78c(f).
\74\ See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
The Commission also finds that the proposed rule change is
consistent with the provisions of Section 15B(b)(2)(C) of the Exchange
Act.\75\ Section 15B(b)(2)(C) of the Exchange Act requires that MSRB
rules not be designed to impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.\76\ The Commission finds that the proposed rule change would not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act because the proposed
Rate Card Fees are applicable to all dealers and municipal advisors
over the course of the four years covered by the proposed Multi-Year
Rate Card, and the MSRB's projected fee proportions would maintain
balance between Municipal Advisor Professional Fees and Dealer Market
Activity Fees, as well as among the three dealer fees that make up the
Market Activity Fees.\77\ Additionally, the proposed increases under
the Rate Card Fees will be proportionately distributed across regulated
entities.\78\
---------------------------------------------------------------------------
\75\ 15 U.S.C. 78o-4(b)(2)(C).
\76\ 15 U.S.C. 78o-4(b)(2)(C).
\77\ See Notice, 90 FR at 48086-87. As noted above, the proposed
rule change maintains the contribution targets set forth when the
MSRB established its annual rate card process in 2022, which the
MSRB believes remain appropriate as no durable, material shift in
market structure has occurred to warrant alteration of current
target contribution levels. See Notice, 90 FR at 48086, note 40.
\78\ See Notice, 90 FR at 48089. As noted above, the proposed
rule change's Temporary Credits apply to dealer Market Activity Fees
because the MSRB's excess reserves resulted from revenue derived
from extraordinary market trading and issuance volume between 2023
and 2025. See Notice, 90 FR at 48086, note 40.
---------------------------------------------------------------------------
The Commission further finds that the proposed rule change is
consistent with the provisions of Section 15B(b)(2)(L)(iv) of the
Exchange Act.\79\ Section 15B(b)(2)(L)(iv) of the Exchange Act \80\
requires that MSRB rules not impose a regulatory burden on small
municipal advisors that is not necessary or appropriate in the public
interest and for the protection of investors, municipal entities, and
obligated persons, provided that there is robust protection of
investors against fraud. The Commission finds that the proposed
Municipal Advisor Professional Fee would not impose an unnecessary or
inappropriate regulatory burden on small municipal advisors since the
total amount of the assessment payable by each municipal advisory firm
would continue to be proportional to the number of Form MA-Is filed by
a firm and, therefore, would result in lower relative assessments for
smaller firms.\81\ Based on the number of persons engaging in municipal
advisory activities on behalf of a firm, the total fee would therefore
bear a reasonable relationship to the level of regulated
[[Page 60827]]
municipal advisory activities that are undertaken by each firm.\82\
---------------------------------------------------------------------------
\79\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
\80\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
\81\ See Notice, 90 FR at 48089.
\82\ See Notice, 90 FR at 48089.
---------------------------------------------------------------------------
For the reasons noted above, the Commission finds that the proposed
rule change is consistent with the Exchange Act.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\83\ that the proposed rule change (SR-MSRB-2025-02) be,
and hereby is, approved.
---------------------------------------------------------------------------
\83\ 15 U.S.C. 78s(b)(2).
For the Commission, pursuant to delegated authority.\84\
---------------------------------------------------------------------------
\84\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-23821 Filed 12-23-25; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on December 29, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.