MSRB rule changes, muni bond tax-exemption and other regulatory news

Between the anticipated departure of the head of the Federal Reserve Bank of Philadelphia and shifting spending priorities from the Senate Banking Committee, the past few months in the bond markets have been full of regulatory shifts — and the upcoming presidential election promises to bring more change. 

Research published in January by The Bond Buyer polled more than 70 professionals across the public finance industry about their expectations for it in 2024. The top three concerns were interest rate changes, confidence in financial markets/market volatility and the 2024 U.S. federal elections.

Other noteworthy findings included the perception of the Securities and Exchange Commission’s implementation of the Financial Data Transparency Act. Issuers were the least optimistic, with 61% saying the FDTA will have some level of negative impact on muni disclosures in the market. Conversely, asset managers and other advisory entities were more upbeat, with 52% saying the legislation will have a positive impact.

“One of the great things about FDTA, particularly stage two, is that we do have a lot [of] discretion about whether things are feasible, practical, necessary, so if some alternative solution presents itself, then people can make a comment or an argument that this or that may not be necessary because an alternative solution presented itself,” Dave Sanchez, chief of the SEC’s Office of Municipal Securities, said during a panel discussion at the National Federation of Municipal Analysts Annual Conference in May.

Read more: More work needed on top of FDTA

Looking ahead to November, industry experts are reviewing each candidate’s history and campaign statements to better predict what bond-focused priorities would be at the center of either administration.

Former President Donald Trump earlier this month teased the idea of creating a sovereign wealth fund in the U.S. to pool capital for supporting various infrastructure projects, which would be a first for the country.

“We’ll create America’s own sovereign wealth fund to invest in great national endeavors for the benefit of all of the American people,” Trump said to the Economic Club of New York. “We’re going to have a sovereign wealth fund, or we can name it something different.”

Vice President Kamala Harris is expected to continue with her focus on affordable housing and other programs to help those with income of less than $100,000 per year.

“My administration will provide first-time home buyers with $25,000 to help with the down payment on a new home,” Harris said during a speech in Raleigh, N.C., last month. 

Read on to learn more about the biggest regulatory items impacting the bond markets and how issuers and advisors are adapting to the changes.