MSRB Publishes Notice Requesting Comment on a Plan for Increasing Information Available for Auction Rate Securities

Date: March 17, 2008

Contact:           Lynnette Kelly Hotchkiss, Executive Director
                       (703) 797-6600

                       Justin R. Pica, Uniform Practice Policy Advisor 


 MSRB Publishes Notice Requesting Comment on a Plan for Increasing
Information Available for Municipal Auction Rate Securities

Alexandria, VA – Today, the MSRB published a notice requesting comment on a plan to create a centralized system for the collection and dissemination of critical market information about Auction Rate Securities that would increase the amount of information available to market participants.  The plan would require dealers that operate auction rate programs to report auction information to a central system operated by the MSRB.  Auction results would be required to be reported by no later than 5:00 P.M. Eastern on the day that an auction occurs.  The proposed system would display this information immediately on a web site. 

The MSRB continues to monitor the recent downgrades of municipal bond insurers and other short-term liquidity concerns that have created extreme volatility in the market for municipal Auction Rate Securities and an unprecedented number of “failed auctions.”  Further, the MSRB is monitoring whether there are any effects from the volatility in the market for Auction Rate Securities to the broader market for short-term municipal securities.  The MSRB remains concerned about the lack of information available to market participants regarding municipal Auction Rate Securities and other short-term instruments.  Currently, there is no source of comprehensive same-day information about Auction Rate Securities available to non-market professionals, even information as basic as the clearing rates set through the auction process.  To that end, the MSRB plans to continue to look for ways to improve transparency in the short-term market. 

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.