Daily Rules, Proposed Rules, and Notices of the Federal Government
The MSRB proposes to add new subsection (iv) to Rule G-34(a) to prohibit any broker, dealer, or municipal securities dealer from using the term "not reoffered" or other comparable term or designation (
MSRB Rules G-32 and G-34 set forth the reporting requirements for new issues of municipal securities. MSRB Rule G-32 requires underwriters to submit to the MSRB's Electronic Municipal Market Access ("EMMA(r)") system certain information about the new issue, including the initial offering price or yield of all maturities, on or prior to the date of first execution.
While MSRB Rules G-32 and G-34 require underwriters to provide initial offering price or yield for all maturities, including those that are not reoffered, and prohibit underwriters from using the designation of NRO in their submissions, the rules do not prevent underwriters or other parties acting on the underwriters' behalf from substituting the designation of NRO for the initial offering price or yield for applicable maturities when sending information regarding a new issue directly to third-party vendors.
The Commission received three comment letters on the proposed rule change.
As stated above, one commenter opined that there should be mandatory reporting of yield data.
In its response, the MSRB stated that it is not requiring yield, rather than price or yield, because such a stipulation would create an inconsistency with other MSRB rules and the MSRB's information systems.
The Commission has carefully considered the proposed rule change, as well as the comment letters received and the MSRB's response, and finds that the proposed rule change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to the MSRB.
The Commission believes that the proposed rule change is reasonably designed to remove impediments to and perfect the mechanism of a free and open market in municipal securities by prohibiting certain communications that hinder price and market transparency and by facilitating new issue price discovery. The proposed rule change would require underwriters to include the initial offering price or yield in any written communication it sends to any party from and after the time of initial award, including for those maturities that are not reoffered. Although MSRB Rules G-32 and G-34 require the initial offering price or yield for all maturities, including those that are not reoffered, and prohibit underwriters from using the designation of NRO in their submissions, this information may not be readily available until the end of the date of first execution. Accordingly, the Commission believes the proposed rule change should cause issuers, investors, and other market participants to receive more timely information about initial offering prices or yields (
The Commission also believes the proposed rule change could reduce pricing inefficiencies in the municipal securities market by providing timelier price or yield information to a larger universe of market participants. Currently, market participants have different levels of access to price or
With respect to the comment that reporting of yield data should be mandatory, the Commission recognizes that other MSRB rules do not require reporting of yield, but rather allow reporting of yield
For the foregoing reasons, the Commission finds that the proposed rule change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to the MSRB and, in particular, Section 15B(b)(2)(C)