Municipal Securities Suitability

What this video covers

• Why the Municipal Securities Rulemaking Board (MSRB) writes the suitability rule but does not enforce it, and which regulator actually does
• The three parallel suitability obligations (reasonable-basis, customer-specific, quantitative) and when the MSRB rule applies versus FINRA's rule
• Why tax status is the dominant customer profile factor for municipal securities, and how a tax-advantaged account like an individual retirement account (IRA) destroys a muni's value proposition
• How to calculate after-tax taxable yield using the formula, and why you can never compare stated yields directly between municipal and taxable bonds
• Tax-equivalent yield as the reverse lens: grossing up a muni yield to the taxable equivalent for comparison purposes
• Turnover rate and cost-equity ratio as quantitative suitability red flags that supervisors monitor for churning
• Double and triple tax exemption based on customer residency, and why the in-state advantage evaporates in no-state-income-tax states
• The Reg BI exception: when Regulation Best Interest governs municipal recommendations to retail customers instead of the MSRB suitability rule