The Municipal Securities Rulemaking Board has launched an online guide designed to help retail investors better understand the municipal bond market and the roles and responsibilities of muni bond brokers.

The “Investor Toolkit” on the MSRB’s website, unveiled Wednesday, includes a link to a new, 13-page document called “Investor Guide 2012.” It explains the process of purchasing municipal bonds and defines various features of munis, such as interest, yield, prices, maturities, and puts and calls.

The online guide also explains the information that can be found in official statements and continuing disclosure documents, provides tips on how investors can evaluate an issuer’s risk of default, and suggests questions for investors to ask financial advisors before investing in municipal bonds.

A chapter in the guide, entitled “What to expect from your financial professional,” explains the role of muni brokers and provides details about brokers’ pricing and suitability responsibilities under MSRB rules.

The chapter notes further that brokers must give customers complete information about a bond and explain potential risks, material events and the bond’s features.

In addition to the guide, the toolkit includes links to a video overview of the MSRB’s online Electronic Municipal Market Acess system, EMMA and MSRB fact sheets, along with instructions explaining how investors can receive email updates from the board about specific muni securities.

MSRB chairman Alan Polsky said in a media release that the toolkit will help “investors gain confidence in their ability to evaluate, purchase and monitor municipal bond investments.”

The Investor Toolkit follows the November 2011 release of the MSRB’s online “State and Local Government Toolkit,” which the board created to help issuers navigate EMMA and understand underwriters and financial advisors’ responsibilities under MSRB rules.

MSRB executive director Lynnette Kelly called the toolkits central to fulfilling the mandate in the Dodd-Frank Act that the MSRB protect both retail investors and issuers of municipal securities.

Not all the information in the Investor Toolkit is new. However, Kelly said packaging old and new information together in “an identifying place on the website, and marketing it as a toolkit,” formalizes the MSRB’s investor-education efforts.

She added that the board will work with the Securities and Exchange Commission, the Financial Industry Regulatory Authority and groups like AARP to help make retail investors aware of resources available in the new online guide.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access