MSRB Holds Quarterly Meeting

Date: February 1, 2010

Contact:              Jennifer A. Galloway, Chief Communications Officer
                          (703) 797-6600

Priority of Orders, Professional Qualifications Among Topics Discussed  

Alexandria, VA ­– The Municipal Securities Rulemaking Board (MSRB) held its quarterly Board meeting January 28-29, 2009 in Austin, Texas, where it approved clarifying amendments to its proposal to require municipal securities underwriters to follow written provisions on the allocation of new bond issues.  The amendments to the priority-of-order proposal clarify and reaffirm that, with limited exceptions, underwriters should give priority to customer orders over their own orders or of their related accounts.  The proposal further requires underwriters to follow these and other priority provisions as outlined in syndicate agreements or as established under any issuer directions, including those relating to retail order periods.  The full proposal requires approval by the Securities and Exchange Commission.

Professional qualifications for municipal securities representatives, including licensing requirements and continuing education was another topic considered by the Board at its meeting.  The MSRB is evaluating how to maintain appropriate alignment between representatives’ municipal securities activities and the content of qualifying examinations.  In order to ensure that representatives and principals receive ongoing professional training, the Board agreed to develop a continuing education program, with the structure, format and content to be announced at a later date.

In other action, the Board approved revised question-and-answer guidance on its new rules on disclosure of political contributions to bond ballot campaigns. New provisions of Rule G-37 on bond ballot campaigns become effective today, with reportable contributions to be disclosed on amended Form G-37 on a quarterly basis, beginning on or prior to April 30, 2010.  The new Q&A guidance will be published shortly.

The Board also reviewed industry input on its earlier proposal under Rule G-37 to require disclosure of political contributions made by political action committees of bank and bank holding companies to municipal government officials that award bond underwriting business. The Board decided to continue evaluating the proposal.

At its quarterly meeting, the Board discussed its desire to publish municipal ratings on the MSRB’s EMMA website, which would further the MSRB’s mission of protecting investors.  Frequent and often dramatic changes in municipal securities ratings during the past two years have highlighted the importance of providing timely and relevant information, including credit ratings, to investors.  The MSRB would like to make these ratings available on EMMA to provide broad access in a manner that is integrated with municipal bond disclosure documents and trade data in a single location.  Over the next few months, the MSRB will be working with the principal rating agencies in the municipal securities market to determine the best way to deliver ratings on EMMA.

Board members continued their ongoing discussion of Congressional proposals that could affect the MSRB, including a measure that would create a Board with a majority of members who represent the public and are independent of the municipal securities industry. The MSRB recently began its annual search for candidates to fill Board positions available in October 2010 and is expanding its pool of candidates in the public/independent category should the Congressional proposals move forward.

The Board also discussed issues surrounding the pricing of municipal securities, specifically the issues of prevailing market prices and dealer mark-ups of municipal trades.  It also discussed the MSRB’s strategy for pricing real-time data and document feeds that are sold to information vendors and other customers. These MSRB market information service subscription fees are low relative to the cost of making them available and the Board will continue to consider whether to change its pricing strategy.

As part of its Board meeting, the MSRB hosted an outreach event for Austin-area municipal market participants.  More than 75 people attended the event during which Board members met with issuers, dealers and investors to talk informally about the municipal market.

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.