MSRB NOTICE 2011-09 (FEBRUARY 8, 2011)

AMENDMENTS TO RULES G-8 AND G-34 TO INCREASE TRANSPARENCY OF MUNICIPAL VARIABLE RATE SECURITIES EFFECTIVE MAY 16, 2011

As previously announced, on August 20, 2010, the Securities and Exchange Commission (SEC) approved the Municipal Securities Rulemaking Board’s (MSRB) proposed rule change[1] to enhance the interest rate and descriptive information currently collected from brokers, dealers and municipal securities dealers (collectively “dealers”) and made transparent by the MSRB on municipal Auction Rate Securities (“ARS”) and Variable Rate Demand Obligations (“VRDOs”).[2]  The rule change amends MSRB Rules G-8, on books and records, and Rule G-34(c), on variable rate security market information, to add documents to the information currently collected and publicly disseminated from the MSRB Short-term Obligation Rate Transparency (“SHORT”) System that define auction procedures and interest rate setting mechanisms for ARS and liquidity facilities for VRDOs, as well as ARS bidding information and additional VRDO information.[3]  The MSRB is establishing an effective date for this rule change of May 16, 2011.

On December 29, 2010, the MSRB published technical specifications for making submissions to the SHORT System of the documents and information identified in the rule change using a computer-to-computer connection.[4]  Links to the current technical specifications can be found below and also are available on the variable rate securities page of the Market Disclosures and Data section of the MSRB web site.  The MSRB plans to make test environments available to dealers and their agents on February 18, 2011 for submissions to the SHORT System of ARS bidding information and additional VRDO information, and on March 3, 2011 for submissions to the SHORT System document submission service of ARS and VRDO documents.

SHORT SYSTEM SPECIFICATIONS

*                      *                      *

Questions about this notice may be directed to Justin R. Pica, Director, Uniform Practice Policy, at 703-797-6716. Questions about testing the SHORT System should be directed to the Market Information Help Desk at 703-797-6668.

February 8, 2011


[1] The proposed rule change was first filed with the SEC on March 10, 2010, and an amendment was filed on July 9, 2010.  See MSRB Notice 2010-06 (March 10, 2010) and MSRB Notice 2010-21 (July 9, 2010).

[2] See Securities Exchange Act Release No. 34-62755, August 20, 2010 (File No. SR-MSRB-2010-02).

[3] A complete description of the rule change can be found in MSRB Notice 2010-31 (August 26, 2010).