By Anne Sherry, J.D.
The Municipal Securities Rulemaking Board published its criteria for designating participants in business continuity and disaster recovery testing. The SEC requires the MSRB to require registrants to participating in testing at least annually. Under its own rules, the MSRB designates mandatory participants in functional and performance testing.
Under the MSRB’s criteria, the Board will designate the top five MSRB registrants in each of three systems. The MSRB wrote that these selection criteria are designed to ensure participation by registrants reasonably determined to be the minimum necessary for the maintenance of fair and orderly markets should the MSRB need to activate its business continuity and disaster recovery plans.
For the Real-Time Transaction Reporting System, the MSRB will designate the five registrants with the most municipal security trades in a calendar month prior to the testing. For the Short-Term Obligation Rate Transparency system (SHORT), the MSRB will designate the top five registrants acting as program dealers for auction rate securities or marketing agents for variable rate demand obligations that reported interest rate resets to SHORT in a calendar month prior to testing. Finally, for the Electronic Municipal Market Access system (EMMA), the Board will designate the top five registrants by par amount underwritten in a calendar month prior to testing.
In all events, it is contemplated that the top five for each system accounts for at least 30 percent of activity on that system. If not, the MSRB will select however many top registrants are needed to collectively represent at least 30 percent of activity.
The MSRB will notify all selected participants at least 45 calendar days before the testing, providing information about the manner of testing and instructions for participation.