Complying with the MSRB’s New CE Requirement
The Municipal Securities Rulemaking Board (MSRB) received approval from the Securities and Exchange Commission (SEC) on May 16, 2017 to establish continuing education requirements for municipal advisors. To assist firms in complying with the new regulation, provided below is a brief overview of the newly enforced rule, how it compares to FINRA’s Firm Element requirement and best practices to comply.
What exactly is required under Rule G-3?
The amendments to Rule G-3 require municipal advisors to develop a CE program for their “covered persons” and for every covered person of a municipal advisor to participate in training. More specifically, municipal advisors must, at least annually:
1.) conduct a needs analysis that evaluates and prioritizes their applicable training needs;
2.) develop a written training plan; and
3.) deliver training in accordance with the needs analysis.
*A municipal advisor’s training plan should be appropriate for the firm’s business taking into consideration the municipal advisor’s size, organizational structure and scope of municipal advisory activities, as well as regulatory developments.
What’s required under Rule G-8?
MSRB Rule G-8 requires municipal advisors to document the content of their training program(s), such as, for example, a content outline or a copy of the training materials provided for the online or in-person training. Municipal advisors must also maintain records documenting the completion of a needs analysis, content of their training programs and a record that each covered person has completed all applicable training.
Is there a minimum hour requirement?
While there is no minimum hour requirement for a municipal advisors’ continuing education program, at a minimum, the firm must cover training on applicable regulatory requirements and the fiduciary duty obligations owed to municipal entity clients. The minimum training standards specified in Rule G-3 are not intended to be, and should not be interpreted to be, the sole subject matter to be contained in a CE training program.
If my firm already conducts Firm Element training, will we still be required to have an MSRB CE program?
Yes. A broker-dealer must conduct a separate needs analysis for its municipal advisor activities. However, that broker-dealer can use a single document that clearly delineates the completed needs analysis for the firm’s municipal advisor activities from the firm’s needs analysis for its dealer activities.
When do I have to comply?
The rule amendment has already taken effect (January 1, 2018), however, a municipal advisor will have until December 31, 2018 to complete a needs analysis, develop a written training plan and deliver training to comply with the annual continuing education requirements for 2018.
Who will be regulating this requirement?
According to the MSRB, the financial industry regulatory authority (FINRA) and securities exchange commission (SEC) will be auditing for these materials during routine exams.
To read the full Regulatory Notice in its entirety, click here.
To learn more about our MSRB continuing education solution, click here.