MSRB Paper on Swaps Raises Concerns

HFA Partners  |  April 10, 2018

On Monday, the Municipal Securities Rulemaking Board published a paper on the regulatory framework for swaps. While the MSRB says the paper is intended to help educate market participants, industry groups were quick to question the board's true motive.

 

The Municipal Securities Rulemaking Board (MSRB) published a 4-page brief on the regulations applicable to municipal swaps, and industry groups are concerned.

The MSRB said that yesterday’s brief was intended to help educate issuers on swap regulations. Since the elimination of tax exempt advance refundings in the Tax Cuts and Jobs Act of 2017, issuers are considering alternative structures involving swaps.

But according to a Bond Buyer article, the brief has also raised concerns from industry groups including the Government Finance Officers Association (GFOA) and the Securities Industry and Financial Markets Association (SIFMA), because swaps are regulated by the Commodity Futures Trading Commission (CFTC) and not within the MSRB’s jurisdiction.

Industry groups are questioning the brief’s purpose and use of MSRB resources.

Last year, the MSRB attempted to assign CUSIPs to bank placements, which could have opened the door for placements to be deemed registered securities subject to the Board’s regulatory oversight.




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