MSRB Seeks Approval of Rule Change to Improve Price Transparency for “Not Reoffered” Municipal Securities

Date: June 28, 2012

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


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today sought approval for a proposed rule change to limit the use by municipal securities dealers of the designation “not reoffered” or “NRO” without also including price or yield information in written communications about new issues of securities.

The proposed rule change would improve the availability of current information about initial offering prices or yields of new issues of municipal securities. 

The “not reoffered” or “NRO” designation indicates that certain maturities of a new issue of municipal securities are not available to be reoffered to potential investors.

The MSRB’s proposal, which was filed with the Securities and Exchange Commission for approval, would amend MSRB Rule G-34 on new issues and market information requirements to limit the use by dealers of the “not reoffered” or “NRO” designation in connection with a municipal bond offering unless the designation is also accompanied by the applicable price or yield information. This new requirement would apply to any written communication sent at or after the time a new issue of municipal securities is first awarded to the underwriters.

Underwriters currently are required to report initial offering price or yield information for all maturities, including maturities designated as NRO, to the MSRB’s Electronic Municipal Market Access (EMMA®) website, as well as to the New Issue Information Dissemination System (NIIDS) operated by the Depository Trust and Clearing Corporation. This information becomes readily available to market participants and the general public during or at the end of the first day of trading in the new issue. The proposed rule change would ensure that any information provided to the marketplace by dealers regarding new issues prior to such centralized public dissemination and through other market venues also includes the applicable price or yield information for securities designated as NRO.

“The proposed rule change will help provide timely and full price discovery for state and local governments interested in ensuring that their bonds are offered at competitive prices or yields, as well as for investors and other market participants seeking more contemporaneous price information,” said MSRB Executive Director Lynnette Kelly.

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.