ABA Urges MSRB to Consider Compliance Cost of Expanded Best Interest Rule

The American Bankers Association urged the Municipal Securities Rulemaking Board on Wednesday to consider the compliance costs of its draft amendment to include bank dealers in the SEC’s Regulation Best Interest rule.

Responding to a request for comment from the MSRB, ABA wrote that bank dealers in municipal securities do not have a significant retail customer base to warrant a new regulatory compliance regime, adding that “most dealer banks do not engage in trades with retail customers nor typically in amounts less than $100,000 par value.”

The association added that the MSRB should allow for those bank dealers who do not participate in retail transactions or recommendations to “opt-out” of Reg BI. “We would encourage the MSRB to consider a thoughtful and tailored approach to this rulemaking so the bank dealer would not incur any additional cost or require additional documentation if the trades were not subject to Regulation Best Interest,” ABA wrote.