The Municipal Securities Rule Making Board or the MSRB is the organization responsible for overseeing the municipal securities industry. The MSRB has no enforcement arm and its only function is to write rules and test questions. As a result, the Series 7 exam will contain a large number of questions relating to municipal securities.
State and local governments will issue municipal bonds in order to help the local governments meet their financial needs. Most municipal bonds are considered to be almost as safe as Treasury securities issued by the federal government. However, unlike the federal government, from time to time an issuer of municipal securities does default. The degree of safety varies from state to state and from municipality to municipality.