MSRB Publishes Report on Municipal Variable Rate Demand Obligations

Date: June 18, 2014

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

MSRB PUBLISHES REPORT ON MUNICIPAL VARIABLE RATE DEMAND OBLIGATIONS AND AUCTION RATE SECURITIES

Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today published its most recent statistical report on trading, interest rate and other characteristics of the municipal variable rate securities market. The report, “Municipal Variable Rate Demand Obligations and Auction Rate Securities: Interest Rate and Trading Trends,” updates earlier trend analysis and provides information on municipal variable rate securities through March 2014.

The report includes annual trend information on the size of the market for auction rate securities (ARS) and variable rate demand obligations (VRDOs),  trading volume, interest rates and number of rate resets, among other information. Data in the report reflects a continued decline in the issuance, trading and number of interest rate resets of the ARS and VRDO markets.

Among the report’s conclusions are:

  • Since its peak in 2008, the new issue market for VRDOs has contracted five of the last six years.
  • Between April 2012 and March 2014, the size of the VRDO market decreased nearly 22 percent to $222 billion, while the size of the ARS market decreased 31 percent to $27 billion during the same period.
  • The number of trades and par amount traded of VRDOs and ARS, and the numbers of VRDO rate resets are a fraction of their peak levels in 2008.
  • In 2013, VRDO rate resets decreased 13 percent to 703,268, compared to 810,488 rate resets in 2012.

Data aggregated in the MSRB’s report is available for individual municipal securities on its Electronic Municipal Market Access (EMMA®) website.

The MSRB began collecting information about ARS and VRDOs through its Short-term Obligation Rate Transparency (SHORT) System in early 2009. In conjunction with related trade data collected through the Real-Time Transaction Reporting System (RTRS), these systems create a comprehensive source of data for the ARS and VRDO markets. The EMMA website provides free public access to this collected information. In May 2011, the MSRB expanded its program to provide information that allows investors to assess the level of demand, liquidity provisions and auction procedures for the securities. 

The MSRB also publishes an annual Fact Book and quarterly municipal securities statistics, which are available electronically on msrb.org. Subscribe to receive email notifications about market statistics.


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 Congressionally-chartered, 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 subject to oversight by the Securities and Exchange Commission.