The MSRB requested public comment on a proposed rule concerning discretionary transactions in customer accounts and related proposed amendments. Proposed MSRB Rule G-36 (the "Rule") would create a standalone rule regulating discretionary transactions by broker-dealers, municipal-securities dealers and their associated persons in customer accounts.

According to MSRB Notice 2018-09, the previous version of the proposed Rule was rescinded in 1985 and the underlying requirements were moved to Rule G-19, Rule G-27 and other MSRB rules. The currently proposed Rule would (i) reestablish a standalone rule regulating transactions in discretionary accounts and (ii) implement discretionary transaction requirements in customer accounts. The MSRB stated that it proposed the Rule in order to improve consistency with other regulators and to clarify the applicable requirements.

The MSRB requested comments on the potential effects of the Rule, including:

  • any systems and business procedures that may need to be amended;
  • any unnecessary costs or burdens that would be imposed on investors or regulated entities; and
  • any additional provisions that should be included.

Comments must be submitted by July 16, 2018

Commentary / Steven Lofchie

Firms should give consideration to the documentation requirements of the proposed rule, particularly the requirements that would apply to proof of the grant of discretion to an outside adviser.

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