MSRB Requests Comment on Revised Proposal Regarding Retail Order Periods

Date: October 2, 2012

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


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today requested comment on revised amendments to MSRB rules that would help address concerns that new issues of municipal bonds are not being distributed among different types of investors according to the preferences of the state or local government issuing the bonds. 

State and local governments often wish to designate that a specific amount or specific maturities of new bonds be marketed to retail investors. The proposed rule changes are designed to ensure that dealers honor the wishes of their state and local government clients and engage in fair pricing practices for retail investors. 

“So-called retail order periods are an important way that state and local governments can help individual investors access bonds in the primary market,” said MSRB Executive Director Lynnette Kelly. “We have been working on this issue for some time and want to make sure we get it right so that the interests of both issuers and investors are protected.” 

The MSRB first sought comment on proposed amendments to MSRB rules concerning retail order periods in March 2012 in response to concerns about disregard by certain dealers of terms and conditions required by issuers for retail order periods, the failure of syndicate managers to disseminate timely notice of issuer terms and conditions regarding retail order periods to all dealers, and whether retail order periods result in fair pricing to retail investors. 

The MSRB reviewed the comments received and revised its proposed amendments to MSRB Rule G-11 to more narrowly define the term “selling group” and to clarify the obligations of syndicate managers to communicate pricing and other relevant information to members of the syndicate and selling group. The MSRB revised its proposed amendments to Rule G-8 on recordkeeping to require both syndicate managers and sole managers to maintain records of all pricing information required to be distributed pursuant to Revised Draft Rule G-11. The revised draft interpretive notice limits its focus to retail order period pricing. 

Comments on the revised proposal should be submitted no later than November 2, 2012. 

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.