MSRB to Make Additional Variable Rate Securities Information Available

Date: February 8, 2011

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


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today announced that it will soon begin disseminating additional information about municipal variable rate securities that will allow investors and others to evaluate the level of dealer support and market demand for auction rate securities and variable rate demand obligations. This information will be made publicly available, for free, on the MSRB’s Electronic Municipal Market Access (EMMA) website.

Beginning May 16, 2011 remarketing agents for municipal variable rate demand obligations (VRDOs) must report to the MSRB the identities of the liquidity provider and tender agent, the par amount of the VRDO held as a bank bond, if any, and the par amount of the VRDO held by parties other than the liquidity provider, if any. Program dealers for auction rate securities (ARS) will be required to submit ARS bidding information, which will show how an interest rate was determined for a successful auction, and from which the MSRB will compute a bid-to-cover ratio.

The MSRB began collecting and disseminating on EMMA interest rate information about ARS and VRDO in 2009, after instability in these markets raised significant disclosure and market transparency concerns.

“The MSRB has been providing much-needed transparency to the variable rate securities markets for two years,” said MSRB Executive Director Lynnette Kelly Hotchkiss. “This additional liquidity and bidding information will be important for market participants to evaluate market demand and credit quality for these securities."

The MSRB is the only provider of market-wide current interest rates for municipal variable rate securities.

All information about variable rate securities will be submitted to the MSRB’s Short-term Obligation Rate Transparency system and provided to the public through the MSRB’s EMMA website. In 2010, the MSRB published a report—Municipal Market Auction Rate Securities and Variable Rate Demand Obligations – Interest Rate and Trading Trends—that summarizes data collected by the MSRB about variable rate securities.

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.