MSRB Requests Comment on Prohibiting Not Reoffered Designation In Connection with New Issues of Municipal Securities

Date: March 13, 2012

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


Alexandria, VA - The Municipal Securities Rulemaking Board (MSRB) today requested comment on a proposal to prohibit brokers, dealers and municipal securities dealers from using the term “not reoffered” or “NRO” in any written communication unless it also included the initial offering price or yield information about the applicable new issue of municipal securities. The MSRB believes that the proposal would provide timely and full price discovery for all market participants, particularly state and local governments interested in ensuring that their bonds are offered at competitive prices or yields.

“We see this proposal as an important protection for state and local governments,” said MSRB Executive Director Lynnette Kelly. “We want to ensure that they are able to access complete pricing information about new bonds when in the market.”

Today’s proposal would prohibit underwriters from using the “not-reoffered” or “NRO” designation—which indicates that certain maturities of a new issue of municipal securities are not available to be offered to potential investors—in any written communication without also including the applicable price or yield information.  While underwriters are required to report complete price or yield information (including maturities designated as NRO) to the New Issue Information Dissemination System (NIIDS) operated by the Depository Trust and Clearing Corporation, and to the MSRB, this information may not be readily available until the end of the first day of trading in the new issue.  Further, underwriters often use the NRO designation for certain maturities of new issues of municipal securities when communicating to other market participants, which results in inconsistent information in the market.

Comments are due no later than April 10, 2012 and may be submitted in electronic or paper form.

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.