MSRB SEC Approves Shorter Time Periods for Settlement of Municipal Bond Syndicate Accounts

Date: September 30, 2009

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

Approval Also Affects Secondary Market Trading Accounts, Payment of Designations

Alexandria, VA - The Securities and Exchange Commission this week approved a proposal from the Municipal Securities Rulemaking Board (MSRB) to shorten the time periods for settlement of syndicate accounts, secondary market trading accounts and the payment of designations.  The amendments are designed to reduce the exposure of members of syndicate and secondary market accounts to potential risks of deterioration in the credit of the syndicate or account manager while the account settlements are pending.

The SEC's decision reduces the deadline in MSRB Rule G-11(i) for the final settlement of an underwriting syndicate or similar account from 60 calendar days to 30 calendar days after the issuer delivers the securities to the syndicate.  The amendments also reduce the deadline in MSRB Rule G-11(j) for the payment of designations from 30 calendar days to 10 calendar days after bond closing and require co-managers to provide syndicate managers with their designations within two business days after bond closing.  

The SEC approval also reduces the deadline in MSRB Rule G-12(i) for settlement of secondary market trading accounts from 60 calendar days to 30 calendar days following the date the securities have been delivered to the account members.

"The MSRB identified a need to bring municipal securities syndicate and other settlement rules up-to-date with a proposal that will reduce risk and not create a burden on dealers, given the efficiencies in the market today," said MSRB Executive Director Lynnette Kelly Hotchkiss.  "The SEC's approval helps reduce exposure of dealers to potential credit risks in the market." 

The amendments to MSRB Rule G-11 are effective for new issues of municipal securities for which the "time of formal award" as defined in MSRB Rule G-34 occurs after October 28, 2009.  The amendments to MSRB Rule G-12 are effective for secondary market trading accounts formed after October 28, 2009.

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.