MSRB NOTICE 2006-30 (OCTOBER 31, 2006)

Reminder of upcoming rtrs changes:  lop/td indicator AND three hour exception

The MSRB reminds dealers of upcoming changes to the Real-Time Transaction Reporting System (RTRS) relating to the “three-hour exception” and the “list offering price” indicator.  Rule G-14 RTRS Procedures (a)(ii)(C) currently allows a dealer three hours to report a trade if the dealer: (i) does not have the CUSIP number and indicative data of the issue traded in the securities master file used by the dealer to process trades for confirmation, clearance and settlement; (ii) has not traded the security in the previous year; and (iii) did not act as a syndicate manager or syndicate member for the issue (the “three-hour exception”).  After December 29, 2006, the three-hour exception will be available only for transactions in when, as and if issued securities.  Dealers attempting to claim the three-hour exception from fifteen minute transaction reporting on a transaction in a security after the when-issued period has ended will be in violation of Rule G-14.[1]  The specifications for submitting the code for use of the three-hour exception are not changing (see Section 4.3.2 of the Specifications for Real-Time Reporting of Municipal Securities Transactions).

As the MSRB previously has announced, on January 8, 2007 amendments to Rule G-14 RTRS Procedures relating to “list offering price” and “takedown” transactions will become effective.[2]  The rule change expands use of the current optional “list offering price” special condition indicator to include certain inter-dealer “takedown” transactions and makes the indicator mandatory.  Beginning on January 8, 2007, the Procedures will require dealers to include the “List Offering Price/Takedown” indicator on trade reports of primary market sale transactions on the first day of trading by: (i) a sole underwriter, syndicate manager, syndicate member or selling group member at the published list offering price for the security; and (ii) a sole underwriter or syndicate manager to a syndicate or selling group member at a discount from the published list offering price for the security.  Sale transactions reported with the “List Offering Price/Takedown” indicator will be allowed an end-of-day exception from fifteen minute transaction reporting. 

Draft Specifications for Real-Time Reporting of Municipal Securities Transactions for the List Offering Price/Takedown indicator were previously published with the April 2006 notice requesting comment on the indicator.[3]  Those Specifications are substantively unchanged as they relate to the List Offering Price/Takedown indicator and sections of the Specifications that relate to the List Offering Price/Takedown indicator are being republished with this notice (click here for the relevant sections of the Specifications).  A complete new version of the Specifications will be available on the MSRB’s web site as the effective date of the changes addressed in this notice nears.

Questions about this notice may be directed to Justin R. Pica, Uniform Practice Policy Advisor.

October 31, 2006