MSRB publishes FY 2026 budget that is smaller than last year's

The Municipal Securities Rulemaking Board published its $46.2 million fiscal year 2026 budget ? which represents a 5.2% decrease from its FY 2025 budget ? and said it plans to return more than $23 million in surplus operating reserves to the industry.

The FY 2026 budget, released Wednesday, "reflects an organizational restructuring and rightsizing of" the MSRB's workforce that occurred in FY 2025, Board Chair Natasha Holiday and MSRB President and CEO Mark Kim said in a letter to stakeholders.

The MSRB's FY 2026 fiscal year began Oct. 1.

"We believe that this budget provides the necessary resources for MSRB to focus on its core mission and statutory duties," Holiday and Kim said in the letter. "This includes ongoing work to modernize our rulebook through retrospective rule reviews, completing the modernization of the Electronic Municipal Market Access ? website, and ensuring the availability, reliability and cybersecurity of our technology systems and data repository."

The more than $23 million in surplus operating reserves that the MSRB plans to return to the industry was "accumulated over the last two years due to unprecedented market activity levels," according to the letter.

An amended rate card filed with the Securities and Exchange Commission by the MSRB "includes a temporary credit for certain market activity fees over the next two years," the letter said.

"This is projected to return MSRB's reserves to target levels," the letter said. "The new rate card will also provide the regulated entities that pay MSRB's fees with greater certainty and stability going forward."

According to its SEC filing regarding the proposed multi-year rate card, the MSRB has determined to reduce excess reserves via temporary credits of 45% applied to market activity fees ? which include underwriting, transaction and trade count fees ? in 2026 and 2027. That "would produce a reduction in the amounts to be assessed to and paid by dealers for Market Activity Fees during such years," the Sept. 30 filing said.

At nearly $14.9 million, information technology services ranks as the biggest FY 2026 budget expense by activity, followed by market transparency products and services at $12.2 million.

The information technology services team runs, maintains and enhances the MSRB's technology infrastructure. The MSRB's market transparency products and services team "develops, builds and maintains mission-driven market transparency and regulatory products that provide access to municipal market data and value-added services," the FY 2026 budget report said.

Personnel was the largest expense by category, accounting for 61% of the total FY 2026 budget.

"Staff are MSRB's most important resource, and we have managed this expense area by conducting a strategic evaluation of our workforce and reducing budgeted headcount by 15%," the FY 2026 budget report said.

The MSRB's revenues are generated mainly by fees assessed on regulated entities. Most of its revenue comes from fees assessed on primary and secondary market activity including underwriting and trading activity. The remaining revenue comes primarily from fees on municipal advisory professionals, firm registration fees and data fees.

The FY 2026 budget projects market activity fees of $23 million, down from nearly $39.2 million in the FY 2025 budget. The FY 2026 budget projects $3.16 million of municipal advisor professional fees, up from nearly $2.93 million in the FY 2025 budget.