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Thought Leadership Thursday

Never Be Bored: Consider Another Board!

Manju Virginia Treasurer

Thought Leadership Thursday Article

Never Be Bored: Consider Another Board!
March 26, 2020
Treasurer of the Commonwealth of Virginia and Vice Chair of the Municipal Securities Rulemaking Board
Dear Colleagues,

Each of us have been called to public service as stewards of taxpayer dollars in our states. For many of us, the role of Treasurer involves service on a variety of public boards. In my own case, I have the honor of serving as chair of the Commonwealth’s Treasury Board and on 10 other public boards, including the boards of my state’s housing authority, port authority and college savings plan. While our many commitments as State Treasurers may be weighing heavily on us at this time of upheaval around the country, I am energized by the life-long learning and camaraderie of board service. And I am more pleased than ever that three years ago I applied to serve on one additional board where State Treasurers’ perspectives can have a nationwide impact – the Municipal Securities Rulemaking Board.

The MSRB dates back to 1975. Our beloved former colleague The Honorable Harlan Boyles of North Carolina was among the very first class of MSRB Board members. The MSRB has a long history of safeguarding the integrity of the $4 trillion municipal securities market that we rely on to finance essential projects in our states. MSRB rules ensure states and municipalities are treated fairly and receive fair pricing when accessing capital in the municipal market. The MSRB’s free Electronic Municipal Market Access (EMMA®) website streamlines our efforts to provide information to bondholders and has become a go-to data source for state and local finance professionals, especially at times of market volatility like we are currently experiencing.

While State Treasurers have been represented on the MSRB Board from the beginning, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ensured that the majority of MSRB Board members represent the public rather than regulated underwriters, dealers and municipal advisors. Since 2010, more than half of the public members of the MSRB Board – myself included – have represented issuers and investors. Other public members have included rating agency professionals, academics, and retired regulated professionals. Regardless of background, each Board member – public and regulated – contributes their cumulative knowledge and expertise gained over the course of distinguished careers in the municipal securities market.

The MSRB Board of Directors, like all effective boards, recognizes that we must continuously improve the way we govern ourselves in order to maintain confidence in our organization and in the market we oversee. To that end, at the start of Fiscal Year 2020, the MSRB formed a Governance Review Special Committee to study the rule that establishes MSRB board selection and composition.

As a result of that review, the MSRB has published a request for public comment on tightening the independence standard for public membership on the Board. We aim to improve the chance that very qualified individuals from the public sector have more opportunity for seats on the Board. Under the MSRB’s proposal, anyone serving as a public member must be independent of a regulated firm for at least five years, an increase from the current two-year requirement. In order to improve board efficiency, the MSRB’s proposal also reduces the size of the board from 21 to 15 members. This change preserves the current requirement that at least one public member represents issuers of municipal bonds; however, in practice public members have represented multiple issuers. Read the MSRB’s proposal and share your feedback by April 29, 2020.

The MSRB’s proposal addresses many of the well thought out issues initially brought to our attention in S. 1236, the Municipal Securities Rulemaking Board Reform Act of 2019, introduced by our former colleague Senator John Kennedy. However, there is one additional provision in the bill that the Board considered and determined not to pursue. That provision would remove the MSRB’s ability to select our own Board members and instead require the Securities and Exchange Commission to appoint new Board members. The MSRB firmly believes our proposal strengthens our governance without the risk of politicizing the Board member nomination process.

An independent MSRB, led by a qualified Board of our peers and partners who understand municipal bond issuers' unique place in the capital markets, is in the best interests of State Treasurers and communities in our states. Political appointees may not necessarily be familiar with the uniqueness and intricacies of our market and thus would be unlikely to recognize the important differences among the corporate and municipal bond markets. If a one-size-fits-all regulatory framework is the result, it could mean higher cost of regulatory compliance for our financial professionals and ultimately higher cost of capital for states and municipalities.

Maintaining strong and independent governance is important to our unique and important market, and as such, I encourage you to support MSRB’s proposal. I also urge you to think about future service on the MSRB Board of Directors. Follow the example of State Treasurers from Colorado, North Carolina, Pennsylvania, Utah and Virginia who have given their time and expertise to ensuring a well-functioning municipal market where every issuer and investor is treated fairly. The MSRB will be looking for new applicants in early 2021. I would be happy to speak individually with any of you who may be interested. In the meantime, you can help shape the future of the municipal securities market today by keeping up with MSRB proposals and news and making yourself heard on our governance proposal.


Hon. Manju S. Ganeriwala
Treasurer of the Commonwealth of Virginia
Vice Chair, Municipal Securities Rulemaking Board

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