Patrick Brett’s tenure as chair of the Municipal Securities Rulemaking Board has been marked by his embrace of technology, highlighted in the launch of EMMA Labs and an updated MSRB.org in addition to a handful of new rule proposals, including the controversial request for information on environmental social and governance considerations.
All of that was spearheaded under Brett’s year-long term and on Oct. 1 Meredith Hathorn, current vice chair of the MSRB will be taking over as chair with Carol Kostik taking over as vice chair.
Brett took over from two-term chair Ed Sisk, who stayed on during a time of transition while the board searched for a new chief executive and while it transitioned to 15 a member board, down from 21. Coming out of this period, Brett said from the start that his focus would be on technology and updating its rulebook to enable the board to be better stewards of the muni market’s data.
MSRB
The board’s $17.5 million systems modernization project began with the launch of EMMA Labs, the Board’s “innovation sandbox” in January 2022 and marked a turning point for how the board utilizes its own internal data. The platform builds off of data submitted through EMMA to enhance and accelerate the use of data analytics throughout the municipal securities market.
The launch of EMMA Labs also saw the launch of its own internal “Active Labs,” which included a search engine that sources information from hundreds of thousands of disclosure documents as well as a dashboard for market data analysis and helps participants to better visualize market trends.
Brett said he believes that by making more information that’s already in the EMMA system more accessible, EMMA Labs will strengthen the market.
All of its systems modernization efforts were outlined by the Board at the end of 2021 but some of these efforts are just coming into fruition. On Sept. 23, the Board launched its newly redesigned MSRB.org that features a more user-friendly design, more powerful search capabilities and “new dynamic pages that consolidate related content,” the MSRB said.
While updates to its technology systems were high priority this year, the board didn’t come into this year with a must-complete rulemaking agenda, as it has done in years past as with the municipal advisor rules following the passage of Dodd-Frank in 2010.
But the board still made strides in responding to trends like ESG and updating other rules that helped to bring its rulebook up to date.
Its most talked about proposal was its request for information on environmental, social and governance considerations in the muni market, which was launched on Dec. 8 and received 52 responses from participants, including a large coalition of state treasurers that wholly rejected the MSRB’s efforts in this matter.
In August, the board released a report detailing the findings which touched on the backlash but also showed that the request for information helped market participants distinguish between ESG-related credit risk disclosures and non-credit risk disclosures.
The board doesn’t have the authority to institute ESG related disclosures, which many of the responses from market participants detailed, but they did make headway on other rule proposals.
The board recently voted to amend MSRB Rule G-40 to allow municipal advisors to use testimonials in addition to amendments to Rule A-12 on registration, which would extend the annual affirmation period.
The only request for comment the MSRB currently has out is for Rule G-14, which would bring trade reporting times down to one minute, a proposal that has already received backlash for the pressure it would put on small firms.
The Securities and Exchange Commission also approved changes to Rule G-34 on CUSIP requirements under Brett’s leadership, a proposal that muni market advocates welcomed.
In June the Board introduced a new fee proposal that would establish an Annual Rate Card process and establish a floating rate. That received backlash from MA and broker-dealer groups who claimed the structure fails to address the discrepancy between fees generated from dealers and municipal advisors and noted the lack of transparency in its budgeting process.
The MSRB requested input on draft compliance resources for dealers and municipal advisors concerning new issue pricing of municipal securities.
They also issued their second request for comment on fair dealing solicitor municipal advisor obligations and new draft rule G-46 and extended its COVID-19 relief with respect to Rule G-27 on supervision until the end of the year.
Brett is a managing director and head of municipal debt capital markets at Citi, where he’s spent the last 20 years.
He grew up in Northern Virginia, where he says public policy was in the air, leading him to pursue public policy work from a young age. He holds degrees in both finance and South American archeology, a personal passion of his. He is also a term member for the Council on Foreign Relations and an Advisory Board Member for the Penn Institute for Urban Research.