MSRB Issues Guidance to Dealers on Build America Bonds

Date: April 24, 2009

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

Municipal Securities Subject to MSRB's Investor
Protection and Other Rules

Alexandria, VA - The Municipal Securities Rulemaking Board today provided guidance to dealers on Build America Bonds. These bonds, issued by states and local governments as part of the American Recovery and Reinvestment Act of 2009, are innovative taxable governmental bonds that provide a partial federal government subsidy of the borrowing costs. 

Although the bonds are taxable, the MSRB reminds dealers and investors that Build America Bonds are municipal securities subject to all MSRB investor protection and other rules on dealers' municipal securities activities, including rules on fair practice, political contributions and other conflicts of interest, uniform practice (including automated clearance and settlement), official statement submission and dissemination requirements, trade reporting, MSRB underwriting and transaction assessments, and the professional qualifications of registered representatives and principals.  Since Build America Bonds may be sold by some dealers' taxable sales divisions, the MSRB reminds dealers that MSRB Rule G-27 requires municipal securities principals to supervise all municipal securities activities, including such sales.

"Many municipalities are taking advantage of the opportunity to issue Build America Bonds and the MSRB is seeking to ensure that investors are protected by existing MSRB rules regulating dealer activities," said MSRB Chair Ronald A. Stack. "Municipal bond investors should expect the same high standards of dealer conduct with respect to Build America Bonds as they do for all other municipal securities."

MSRB rules require underwriters to submit official statements to the MSRB for most primary offerings and dealers selling municipal securities to report transaction prices to the MSRB, usually on a real-time basis.  Thus, except in very limited circumstances, official statements and real-time trade price information for Build America Bonds will be available for free through the MSRB's Electronic Municipal Market Access system (EMMA) at

To view the complete notice on Build America Bonds, click here.

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.