MSRB Makes Technical Amendments To and Seeks Approval On Priority of Orders Proposal

Date: August 4, 2010

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



Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today filed with the Securities and Exchange Commission (SEC) a partial amendment to its original proposed rule change concerning priority of orders in primary offerings and requested approval of the amended proposal. The measure seeks to increase the distribution of new issues of municipal bonds to investors in the primary market by ensuring that underwriters follow provisions that generally give priority to customer orders over those for their own account.

“We have been working on this important investor protection rule for some time and are pleased that we have agreement on how dealers distribute new issues,” said Lynnette Kelly Hotchkiss, MSRB Executive Director. “The changes we are making seek to address the interests of investors, and also of issuers, since dealers must now also make sure they follow issuers’ wishes about distribution of bonds to individual investors.”

The MSRB’s original proposal includes changes to MSRB’s rules on new issue syndicate practices (MSRB Rule G-11) and recordkeeping (MSRB Rule G-8 and Rule G-9). Amendments to the original proposal include a clarification that MSRB’s recordkeeping rule (Rule G-8) requires that records must be kept of whether there was a retail order period, regardless of whether the issuer required that there be one. Other amendments clarify that the term “priority provisions” used in Rule G-8 includes both customer priority provisions and any other priority provisions of the syndicate, and that the recordkeeping requirements of Rule G-8 concerning deviations from the customer priority provisions apply to both sole underwriters and syndicate managers. Full details about the amendments can be found here.

The MSRB has requested that the proposed rule change become effective for new issues of municipal securities for which the Time of Formal Award occurs more than 60 days after approval of the proposed rule change by the SEC. This delayed effective date will allow municipal securities dealers time to amend their procedures to comply with the proposed rule change.

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.