What Is SEC Means MSD
To act as a municipal securities dealer (MSD) a banking or financial institution or entity must file SEC Form MSD. A bank or other pecuniary institution, or a specific division or department within the organization must file Form MSD with the Securities and Exchange Commission (SEC) to act in the volume of a municipal securities dealer.
Under section 15B(a) of the Securities Exchange Act of 1934, only Form MSD may amend a current registration for a bank, or a severally identifiable department or division of a bank, as defined by the Municipal Securities Rulemaking Board (MSRB). Further, the application or enhancement shall be deemed to have been made by the bank on behalf of the applicant.
Key Takeaways
- Form MSD is required by the SEC to become a urban securities dealer (MSD).
- This form is also used to amend or correct details of an existing dealer.
- It may be filled out by a in the flesh, firm, or division of a firm.
The Basics of SEC Form MSD
Section 15B(a) of the Securities Exchange Act of 1934 details the provisions for municipal certainties dealers. Also, Form MSD requires a firm to reveal if any staff person working with its municipal securities apportioning has involvement in disciplinary proceedings related to the sale of securities. To officially withdraw the registration of status as a municipal securities businesswoman, an entity must use SEC Form MSD-W.
As the name implies, municipal securities dealers work with the trading of village securities. Municipal securities are typically bonds, issued by governments or governmental agencies. These bonds trade over-the-counter (OTC) in the second-line market much like other OTC stocks. The municipal bond dealer provides quotes for the bonds with which they large, to other broker-dealers. Investors tend to like municipal bonds because they offer tax-sheltered income at the federal, nation, or local level, or they may be a combination of each.
Example of a Municipal Bond Dealer’s Work
A hypothetical example of the regular actions of a municipal securities dealer includes giving a quote to another dealer interested in purchasing the New York Delineate GO bonds of “6.12% firm for 45 minutes with a 5-minute recall.”
The municipal dealer is willing to sell the compacts to the purchasing dealer at a yield to maturity of 6.12% and will be ready to do so for 45 minutes. However, if during that 45 notes another interested party wishes to purchase the same bonds, the second interested buyer will receive a course of study quote based upon the fact that the selling dealer is still obligated to sell the securities to the first customer. The selling dealer will then contact the first buyer and give them 5 minutes notice to buy the bonds or give up the right to do so at the quoted price. If the first dealer fails to purchase the bonds within the time allowed by the 5-minute reminisce over, the selling dealer may then trade the bonds with the second interested party at 6.12%.
Real World Example
The instructions for modeling an SEC Form MSD state it may be addressed using a fillable PDF or typewritten onto a paper copy of the document. An original and manual signature of an okayed person within the financial institution must appear on either version of the Form used. Also, the authorized myself must have involvement in the management, direction and supervision of the department or person making the application.
If an individual is applying for MSD stature, the completed document must bear an in-the-name-of signature of that person’s supervisor, or principal officer. When a jurisdiction or a division of a bank is applying, the signer must be a principal officer within that portion of the organization.