MSRB Rule G-18: Best Execution
MSRB Rule G-18, the new best-execution rule for municipal securities, became effective March 21, 2016. At this point, most broker-dealers registered with the Municipal Securities Rulemaking Board (“MSRB”) have implemented written policies and procedures for seeking best execution on customer orders in municipal securities. Now, if you are a compliance officer or municipal securities principal at one of these broker-dealers, you may still be pondering precisely how your firm is going to perform and document the required periodic reviews of its best-execution policies and procedures. Many introducing broker-dealers hope to avail themselves of a provision in Rule G-18 that seemingly permits them to rely on the best-execution reviews of their clearing firms. In this blog post, we identify the conditions for obtaining this relief and discuss some of the challenges of relying on another broker-dealer’s best-execution reviews.