CHANGE IN DEFINITION OF FREQUENTLY- TRADED MUNICIPAL SECURITIES:  RULE G-14

On May 1, 2002, the SEC approved a rule change regarding the MSRB’s Transaction Reporting Program.^[1]  Until now, the MSRB has provided a daily public report with details of each transaction in any municipal security that was “frequently traded” on the previous day.  “Frequently traded” securities have been defined as those that were traded four or more times.  This change to the MSRB’s Rule G-14 alters the threshold for reporting a municipal security, changing it from four to three trades per day.

Impact of Proposed Report on Transparency

This threshold change will increase substantially the proportion of municipal securities market activity that is reported on the day after trading.  On a typical day, there are approximately 26,000 transactions in about 10,000 issues, with a total par value traded of about $9.5 billion.  Until now, the report, with a threshold of four or more trades per day, has included an average of 11,000 trades in 1,100 different issues, with a total par value of about $3.9 billion.  Under the new threshold, the report is expected to include an average of 14,400 trades in 2,600 issues, with a total par value of about $5.2  billion.  This represents a 31 percent increase in the number of trades reported, a more-than-twofold increase in the number of issues reported, and a 33 percent increase in par value reported.^[2]

Description of Service

The report with the three-trade threshold will replace the current report and will be available each day to subscribers via the Internet.  Subscribers to the current report obtain it free of charge, and their subscriptions will continue with the new threshold.  New subscriptions will be available free to parties who sign a subscription agreement.  In addition, recent reports will continue to be available for examination, also free of charge, at the MSRB’s Public Access Facility in Alexandria, VA.

Beginning of Operation

The MSRB plans to make the Daily Transaction Report with the three-trade threshold available beginning May 16, 2002.

May 10, 2002

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