BDA comments on MSRB fee proposal

BDA filed comments with the SEC on a MSRB proposal to establish a new fee rate setting process for dealers and municipal advisors. In our letter we oppose the MSRB’s proposal and request that the SEC reject the initiative.

The proposal would establish a new process for setting MSRB fees for regulated entities. Rather than fixed underwriting, trading, and MA headcount fee rates, fees would vary from year to year under the proposal based on the MSRB’s budget for the year and projections of market activity.

While BDA generally supports the variable fee proposal, we focused our comments on the MSRB’s failure to address the mismatch between the relative contributions of dealers and MAs to the Board’s revenue and the opacity of the MSRB’s budgeting process.

In our letter we point out that over 90 percent of industry-derived MSRB revenue comes from broker-dealers. “As we have argued to the Board many times, the current mix of fees between BDs and MAs is not fair and equitable currently and would remain unfair and inequitable under the Proposal,” we told the SEC.

On the budget process, we focused our comments on the lack of transparency and stakeholder input. “The budget is the most fundamental element of the [fee-setting] Proposal. That is why the lack of transparency in the Board’s budgeting process is so troubling,” we said.

BDA asked the SEC to reject the MSRB’s proposal and direct the Board to address these long-standing governance issues. BDA’s letter to the SEC is available here. Thank you to everyone who contributed to this project.