The MSRB adopted a policy for the formal use of economic analysis in MSRB rulemaking which is intended to ensure that regulations support a fair and efficient municipal market, as well as balance the benefits of protections for investors and municipal issuers with the burdens placed on regulated entities. The policy incorporates the core principles of the SEC guidance on economic analysis, which include:

• identifying the need for a proposed rule;
• evaluating alternative regulatory approaches; and
• assessing the benefits and costs, both quantitative and qualitative.

Lofchie Comment: The SEC (and related SROs), on the one hand, and the CFTC, on the other, appear to be moving in opposite directions on cost-benefit analysis, with the SEC apparently embracing the requirement and the CFTC resisting it in court. Leaving aside the question of which agency is on the right side of the issue generally (and, obviously, I favor the acceptance of cost-benefit analysis), this complete split between the commissions is a further demonstration of the absence of any logic to the structure of our financial regulatory system, where two commissions regulating many overlapping matters take such divergent approaches to the rulemaking process.

See: MSRB Policy on the Use of Economic Analysis in MSRB Rulemaking; MSRB Press Release.