MSRB Files Proposal to Increase Transparency of Auction Rate Securities and Variable Rate Demand Obligations

The Municipal Securities Rulemaking Board (MSRB) has filed today with the Securities and Exchange Commission (“SEC”) a proposed rule change to establish a transparency system for municipal Auction Rate Securities (“ARS”) and municipal Variable Rate Demand Obligations (“VRDO”).[1]  The proposed rule change would provide for the collection and dissemination of ARS and VRDO interest rate and descriptive information, as described below.  The MSRB has proposed an effective date of January 30, 2009.

The proposed rule change represents the first phase of a plan approved by the MSRB for increasing the information available for ARS and VRDO.[2]  The MSRB expects to file with the SEC in the near future to provide for the collection and dissemination of documents that describe ARS interest rate setting and auction procedures.  Subsequent phases relate to the collection and dissemination of ARS bidding information and documents that describe the provisions of liquidity facilities attached to VRDO.  The MSRB plans to complete implementation of these various phases by mid-2009.

The proposed rule change would: (i) implement an electronic system that would collect and disseminate information about variable rate securities (the “Short-term Obligation Rate Transparency System Proposal”); (ii) provide free public access to information disseminated from the Short-term Obligation Rate Transparency (“SHORT”) System through the MSRB’s Electronic Municipal Market Access (EMMA) system (the “EMMA short-term obligation rate transparency service”); and (iii) amend Rule G-34, on CUSIP numbers and new issue requirements, to require brokers, dealers and municipal securities dealers (collectively “dealers”) to report, or ensure the reporting of, interest rate and descriptive information to the SHORT System about ARS and VRDO following an ARS auction or VRDO interest rate reset (the “rule change proposal”).  The MSRB has proposed an effective date of January 30, 2009.

BACKGROUND

In recent years, there has been a growing market in municipal securities with long-term maturity dates and short-term (nine months or under) interest rate reset periods.  ARS and VRDO comprise most of the securities in this sector.  ARS and VRDO are similar in that they both are long-term securities with short-term interest rates.  In both types of securities, interest rates are reset periodically through programs operated by dealers on behalf of the issuers of the securities. 

VRDO Remarketing Process

VRDO are distinguished by the existence of a “put” or “tender” feature that allows holders to tender their securities back to an issuer-appointed representative, at par, on a periodic basis.  VRDO normally operate with a letter of credit or stand-by bond purchase agreement designed to ensure liquidity.  Interest rates typically are reset by a dealer serving as the “Remarketing Agent” for the issue at a rate that allows the securities to be sold at par.

ARS Auction Process

ARS are distinguished by the auction process that is used to reset interest rates.  ARS are not characterized by, and generally do not have, put features or liquidity facilities.  Although the auction process is designed to allow holders normally to sell their positions at par value during any auction, it is possible for auctions to fail, in which case holders are not able to liquidate their positions at par.

The auction methodology used in ARS is a type similar to a “Dutch auction.”  An auction program employs one or more dealers (“ARS Program Dealers”)[3] that solicit orders from investors who wish to own the securities over the next interest rate reset period.  Typical interest rate reset periods are 7, 28, and 35 days.  The programs require one “ARS Auction Agent” – typically a bank – that receives orders from the ARS Program Dealer(s) and conducts auctions in accordance with the method described in program documents.  The ARS Auction Agent provides the results of the auction to the ARS Program Dealer(s), which then inform their bidders of the auction results and the securities, if any, that have been allocated to them as a result of the auction. 

The auction method specified in program documents for ARS takes into consideration the total quantity of orders received in each order category specified in ARS documents.  Typical order categories include:

• Existing holders that want to hold at any rate decided by the auction;
• Potential investors bidding to purchase a specified amount of securities by stating minimum acceptable interest rates;
• Existing holders that want to hold, but only if the auction produces a rate equal to or greater than one that the existing holder specifies; and
• Existing holders that want to sell a specified amount.

Using order information that must be submitted by an ARS Program Dealer(s) before the auction deadline, the ARS Auction Agent employs an algorithm to determine the lowest interest rate at which all of the securities that have been offered for sale by current holders of the securities will clear the market (the “clearing rate”).  The clearing rate then becomes the interest rate for all of the securities in the issue for the next interest rate reset period.

ARS also have provisions that address situations that may occur if no clearing rate can be determined through the normal auction process.  For example, if all existing holders want to hold at any rate, then an “all hold rate” is used.  The all hold rate is usually a multiple of a market index and is designed to be lower than the rate that normally would be expected as a clearing rate.  Conversely, auctions also can “fail” if the auction agent does not receive enough bids to cover the aggregate amount of securities that need to be sold, or if the clearing rate is above a “maximum rate” set in the program documents.  In a failed auction, all existing holders hold their securities and the rate for the next interest rate reset period is set to the “maximum rate.”  Like the all hold rate, the maximum rate may be a multiple of a specified index.  However, it is normally designed to be a rate higher than the rate that would normally be expected in a successful auction.  

Existing Price Transparency Issues

As “short-term” securities under Rule G-14 on transaction reporting, both ARS and VRDO are subject to slightly different reporting requirements than other securities.  In 2003, the MSRB proposed rules for a Real-Time Transaction Reporting System (RTRS), including a requirement to report trades no later than fifteen minutes after the time of trade execution, and, for customer transactions, a requirement that the trade report include both a dollar price and yield.[4]  In response, the MSRB received comments from dealers that, because of the special trade processing methodologies for short-term variable rate securities, it would be difficult or impossible to meet these requirements for such securities.  Based on these concerns, the MSRB included special provisions that provide dealers with an end-of-day exception from the fifteen-minute reporting deadline and allows dealers to report customer transactions in variable rate securities without yield. 

Since transactions in short-term variable rate securities normally are executed at a dollar price of par and the current interest rate for such variable securities are not included in the data sources used by RTRS and the municipal securities industry in general, the lack of yield means that RTRS does not currently provide a means by which to determine the return on an investment in these securities.  The MSRB was aware of this in 2003 when it decided to provide the special variable rate securities provisions, noting:

The MSRB does not currently plan to require reports of yields or reset rates on variable rate and auction rate products, but continues to be interested in price transparency in this area.  Accordingly, the MSRB will explore other ways to provide transparency for short-term rates that are being set…in variable rate and auction products.[5]

The MSRB has continued to consider the availability of this information through existing data sources and is not aware of any ready source of interest rate reset information available to retail investors or, in some cases, to market participants in general about ARS and VRDO.

Recent Market for ARS and VRDO

Since early 2008, downgrades of municipal bond insurers and other short-term liquidity concerns have created extreme volatility in the market for ARS.  This has resulted in an unprecedented number of “failed auctions,” meaning that investors who chose to liquidate positions through the auction process were not able to do so.  As a result of the volatility in the market for ARS, there has been increased interest in the market for VRDO by both issuers and investors.  At the same time, the extreme turmoil in the financial markets has resulted in considerable pressures on the supply of liquidity facilities for the VRDO market and, consequently, much higher levels of rate volatility.  Given these developments in the market for VRDO, the MSRB has concerns about the lack of information available to market participants on VRDO similar to those concerns with respect to ARS.

DESCRIPTION OF THE SHORT SYSTEM

To increase the information available about ARS and VRDO, the proposed rule change would implement the Short-term Obligation Rate Transparency System for the collection and dissemination of information about ARS and VRDO.  The SHORT System will receive submissions of information about ARS and VRDO under the proposed amendments to Rule G-34.  Information submitted to the SHORT System will be processed upon receipt and disseminated in real-time. 

Submissions to the SHORT System

Information to be Submitted.  The basic items of information proposed to be submitted to the SHORT System are the same as those required to be submitted to the MSRB under the proposed amendments to Rule G-34.  The complete list of data elements that would be required on a submission to the SHORT System will be made available in input specifications and system procedures made available on www.msrb.org. 

Submitters.  Submissions to the SHORT System may be made solely by authorized submitters using password-protected accounts in MSRB Gateway.[6]  Submissions may be made by the following classes of submitters:

• ARS Program Dealer;
• VRDO Remarketing Agent;
• ARS Auction Agent; and
• Designated Agent, which may submit any information otherwise permitted to be submitted by another class of submitter which has designated such agent, as provided below.

Dealers may designate agents to submit information on their behalf, and may revoke the designation of any such agents, through MSRB Gateway.  Such Designated Agents must register to obtain password-protected accounts through MSRB Gateway in order to make submissions on behalf of the designating dealers.  All actions taken by a Designated Agent on behalf of a dealer that has designated such agent shall be the responsibility of the dealer.

The MSRB anticipates that a majority of ARS information will be submitted by ARS Auction Agents.  ARS Auction Agents would be allowed to submit information about an auction to the SHORT System without prior designation by an ARS Program Dealer.  In the event that an ARS Auction Agent submits information about an auction to the SHORT System, an ARS Program Dealer would not also be required to submit information provided that the ARS Program Dealer has been correctly identified on the submission by the ARS Auction Agent.  In the event that an ARS Auction Agent fails to submit information about an ARS auction, the ARS Program Dealer is required to submit the required information about the auction to the SHORT System.[7]

Timing of Submissions.  Submitters shall make submissions to the SHORT System within the timeframes set forth in MSRB rules.  Submissions of information to the SHORT System may be made throughout any RTRS Business Day, as defined in Rule G-14 RTRS Procedures section (d)(ii), from at least the hours of 6:00 A.M. to 9:00 P.M. Eastern Time subject to the right of the MSRB to make such processes unavailable at times as needed to ensure the integrity of the SHORT System and any related systems.  The MSRB shall provide advance notice of any planned periods of unavailability and shall endeavor to provide information to submitters as to the status of the submission interface during unanticipated periods of unavailability, to the extent technically feasible.

Method of Submission.  Information may be submitted to the SHORT System through a secure, password-protected, web-based electronic submitter interface or through a secure, authenticated computer-to-computer data connection, at the election of the submitter.  When making submissions using the web-based interface, related information is entered manually into an on-line form.  Computer-to-computer submissions utilize XML files.  Appropriate schemas and procedures for web-based and computer-to-computer submissions will be included in input specifications and system procedures made available on www.msrb.org.

SHORT System Processing

The SHORT System would perform various data checks to ensure that information submitted is in the correct format.  In addition, data checks would be performed to monitor dealer compliance with MSRB Rule G-34(c) as well as to identify information submitted in correct formats that may contain errors due to information not falling within reasonable ranges of expected values for a given item of information.  The MSRB expects to institute the following processes, which are subject to modification, addition and deletion as appropriate. 

Measurement of Timely Submission.  The time of receipt of a submission will be recorded by the SHORT System and compared with the submitting deadline (e.g., 6:30 P.M. Eastern Time on the day an interest reset occurs for a VRDO).  Submissions not received by the appropriate deadline will be considered late.

Format Edits.  Each submission will be reviewed to verify that its format is correct.  This involves checking various required data elements to ensure that they are present in the correct form (e.g., dates are in date format) and with the correct number of digits or characters.  Submissions that fail these edits will not be processed further.  Input from web-based screens will be checked before information is transferred from the submitters personal computer to the SHORT System.

Submitter Validation.  The SHORT System will accept information only from parties known to the MSRB.  In addition, information submitted by a Designated Agent on behalf of a dealer or ARS Auction Agent will only be accepted if such dealer or ARS Auction Agent for whom the Designated Agent is submitting information has previously been so designated by the dealer or ARS Auction Agent. 

Content Edits.  The values in submissions of data to the SHORT System will be checked to determine that they are within reasonable limits, in order to detect input errors.  Any errors or possible errors found will be noted and an error message describing the deficiency will be returned to the submitter. 

Feedback.  All submissions processed by the SHORT System will generate an acknowledgement or error message.  In addition, all dealers that have information submitted on their behalf by either an ARS Auction Agent or a Designated Agent will be able to monitor such information submissions in real-time, once such submissions have been successfully processed by the SHORT System. 

SHORT System Data Dissemination

Information submitted to the SHORT System that passes the format edits described above will be processed and disseminated on a real-time basis.  Any changes to submissions also will be processed and updated information will be disseminated in real-time.  Such information will be disseminated through the EMMA portal.  The MSRB also anticipates providing a subscription service for the information provided through the SHORT System pursuant to a future filing with the Commission.

DESCRIPTION OF THE RULE CHANGE PROPOSAL

The proposed rule change would amend Rule G-34, on CUSIP numbers and new issue requirements, to require that information about ARS and VRDO is submitted to the SHORT System following an ARS auction or VRDO interest rate reset.  The MSRB proposes a January 30, 2009 effective date for the proposed rule change.

Amendments to Rule G-34 Relating to ARS

The proposed rule change would require an ARS Program Dealer to report (either directly or through a Designated Agent), or ensure that an ARS Auction Agent reports, the information below to the SHORT System by no later than 6:30 P.M. Eastern Time on the day that an auction occurs.[8]  The information required to be provided to the MSRB about an ARS includes:

• CUSIP number;
• Interest rate for the next reset period;
• Identity of Program Dealer(s);
• Number of days of the reset period;
• Minimum denomination;
• Date and time of the auction;
• Date and time of posting of auction results by an Auction Agent;
• Indication of whether the clearing rate is a “maximum rate,” an “all hold rate,” or “set by auction;”
• Minimum and maximum rates, if any, applicable at the time of the auction or, if not calculable as of the time of auction, indication that such rate or rates are not calculable;[9] and
• Par amount auctioned, not including hold orders effective at any rate.

Amendments to Rule G-34 Relating to VRDO

The proposed rule change would require a dealer that acts as a Remarketing Agent for a VRDO to report (either directly or through a Designated Agent) to the SHORT System the following items of information about a VRDO by no later than 6:30 P.M. Eastern Time on the day that an interest rate reset occurs: [10]

• CUSIP number;
• Interest rate for the next reset period;
• Identity of Remarketing Agent;
• Date of interest rate reset;
• Length of the interest rate reset period;
• Length of Notification Period;
• Indicate of whether interest rate is “set by formula,” “set by Remarketing Agent” or a maximum rate;
• Minimum and maximum rates, if any, applicable at the time of the interest rate reset or, if not calculable as of the time of the interest rate reset, indication that such rate or rates are not calculable;[11]
• Minimum denomination;
• Type of liquidity facility(ies);[12] and
• Expiration date of each liquidity facility.  

DESCRIPTION OF THE EMMA SHORT-TERM OBLIGATION RATE TRANSPARENCY SERVICE

The EMMA short-term obligation rate transparency service would make the information disseminated from the SHORT System publicly available, at no charge, on the MSRB’s EMMA portal.  The EMMA short-term obligation rate transparency service would provide free public access to the information about ARS and VRDO that would be provided to the MSRB under the amendments to Rule G-34. 

As proposed, EMMA would provide on-line search functions to enable users to readily access information about ARS and VRDO based on a broad range of search parameters.  The MSRB would not be responsible for the content of the information submitted by submitters to the SHORT System displayed on the EMMA portal.

Questions about this notice may be directed to Justin R. Pica, Uniform Practice Policy Advisor, at 703-797-6716.

November 18, 2008

*                      *                      *

TEXT OF SHORT-TERM OBLIGATION RATE TRANSPARENCY SYSTEM PROPOSAL

MUNICIPAL SECURITIES RULEMAKING BOARD
SHORT-TERM OBLIGATION RATE TRANSPARENCY SYSTEM

The Short-term Obligation Rate Transparency (“SHORT”) System is a facility of the Municipal Securities Rulemaking Board (“MSRB”) for the collection and dissemination of information about securities bearing interest at short-term rates and making such information publicly available through a dissemination service. 

Submissions to the SHORT System

The SHORT System receives submissions of information about securities bearing interest at short-term rates under MSRB Rule G-34, on CUSIP numbers, new issue and market information requirements.

Information to be Submitted .  The basic items of information required to be submitted to the SHORT System are the same as those required to be submitted to the MSRB under MSRB Rule G-34(c).  The complete list of data elements that are required on a submission to the SHORT System is available in input specifications and system procedures made available on www.msrb.org. 

Submitters .  Submissions to the SHORT System may be made solely by authorized submitters using password-protected accounts in the MSRB’s user authentication system, MSRB Gateway.  MSRB Gateway is designed to be a single, secure access point for all MSRB applications.  Submitters of information to the SHORT System are required to obtain an account in MSRB Gateway in order to submit information to the SHORT System.  Through MSRB Gateway, submitters also have the ability to designate third-party agents to submit information to the SHORT System on the submitter’s behalf.  

Submissions may be made by the following classes of submitters:

• Auction Rate Security (“ARS”) Program Dealer;
• Variable Rate Demand Obligation (“VRDO”) Remarketing Agent;
• ARS Auction Agent; and
• Designated Agent, which may submit any information otherwise permitted to be submitted by another class of submitter which has designated such agent, as provided below.

All ARS Auction Agents are allowed to submit information about an auction to the SHORT System without prior designation by an ARS Program Dealer.  Dealers optionally may designate agents to submit information on their behalf, and may revoke the designation of any such agents, through MSRB Gateway.  All actions taken by a Designated Agent on behalf of a dealer that has designated such agent shall be the responsibility of the dealer. 

Timing of Submissions .  Submitters are required to make submissions to the SHORT System within the timeframes set forth in MSRB Rule G-34(c).  Submissions of information to the SHORT System may be made throughout any RTRS Business Day, as defined in Rule G-14 RTRS Procedures, from at least the hours of 6:00 A.M. to 9:00 P.M. Eastern Time, subject to the right of the MSRB to make such processes unavailable at times as needed to ensure the integrity of the SHORT System and any related systems.  The MSRB shall provide advance notice of any planned periods of unavailability and shall endeavor to provide information to submitters as to the status of the submission interface during unanticipated periods of unavailability, to the extent technically feasible.

Method of Submission .  Information may be submitted to the SHORT System through a secure, password-protected, web-based electronic submitter interface or through a secure, authenticated computer-to-computer data connection, at the election of the submitter.  When making submissions using the web-based interface, related information is entered manually into an on-line form.  Computer-to-computer submissions utilize XML files.  Appropriate schemas and procedures for web-based and computer-to-computer submissions are available in input specifications and system procedures made available on www.msrb.org.

SHORT System Processing

The SHORT System performs various data checks to ensure that information submitted is in the correct format.  In addition, data checks are performed to monitor dealer compliance with MSRB Rule G-34(c) as well as to identify information submitted in correct formats that may contain errors due to information not falling within reasonable ranges of expected values for a given item of information.  All submissions generate an acknowledgement or error message, and all dealers that have information submitted on their behalf by either an ARS Auction Agent or a Designated Agent are able to monitor such information submissions. 

SHORT System Data Dissemination

Information submitted to the SHORT System that passes the format and data checks described above is processed and disseminated on a real-time basis.  Any changes to submissions also are processed upon receipt and updated information is disseminated in real-time.  Information submitted to the SHORT System is, in general, disseminated to the EMMA short-term obligation rate transparency service within 15 minutes of acceptance, although during peak traffic periods dissemination may occur within one hour of acceptance.  The MSRB plans to offer subscriptions to the information submitted to the SHORT System in the future.

*                      *                      *

TEXT OF EMMA SHORT-TERM OBLIGATION RATE TRANSPARENCY PROPOSAL

MUNICIPAL SECURITIES RULEMAKING BOARD
ELECTRONIC MUNICIPAL MARKET ACCESS SYSTEM –
EMMA

EMMA SHORT-TERM OBLIGATION RATE TRANSPARENCY SERVICE

The EMMA short-term obligation rate transparency service, established as a service of EMMA, makes information disseminated from the MSRB’s Short-term Obligation Rate Transparency  (“SHORT”) System available to the public, at no charge, on the EMMA portal.

Public Availability of Short-term Obligation Rate Transparency Information

EMMA Portal.  Short-term obligation rate transparency information is posted on the EMMA portal within 5 minutes of receipt from the SHORT System, although during peak traffic periods posting may occur within 15 minutes of receipt.  The short-term obligation rate transparency information available through the EMMA short-term  obligation rate transparency service represents information provided to EMMA since the inception of the SHORT System in January 2009.

The EMMA portal provides on-line search functions utilizing available indexing information to allow users of the EMMA portal to readily access short-term obligation rate transparency information.  Basic identifying information relating to specific municipal securities and/or specific issues accompanies the display of short-term obligation rate transparency information.  The EMMA portal permits users to request periodic alerts, at no charge, regarding whether short-term obligation rate transparency information for a specific security has been posted.

The EMMA portal is available without charge to all members of the public.  The MSRB has designed EMMA, including the EMMA portal, as a scalable system with sufficient current capacity and the ability to add further capacity to meet foreseeable usage levels based on reasonable estimates of expected usage, and the MSRB will monitor usage levels in order to assure continued capacity in the future.

The MSRB reserves the right to restrict or terminate malicious, illegal or abusive usage for such periods as may be necessary and appropriate to ensure continuous and efficient access to the EMMA portal and to maintain the integrity of EMMA and its operational components. The MSRB is not responsible for the content of the information submitted by submitters to the SHORT System displayed on the EMMA portal.

Subscriptions. The MSRB plans to offer subscriptions to the information submitted to the SHORT System in the future.  Under a subscription to the information submitted to the SHORT System, users would be able to obtain the short-term obligation rate transparency information provided through the EMMA short-term obligation rate transparency service other than by viewing on and downloading from the EMMA portal.

*                      *                      *

RULE CHANGE PROPOSAL [13]

Rule G-34: CUSIP Numbers, [and] New Issue, and Market Information Requirements

(a) - (b)  No change.

(c)  Variable Rate Security Market Information.  The Board operates a facility for the collection and public dissemination of information about securities bearing interest at short-term rates (the Short-term Obligation Rate Transparency System, or SHORT System). 

(i)  Auction Rate Securities.  Auction Rate Securities are municipal securities in which the interest rate resets on a periodic basis under an auction process conducted by an agent responsible for conducting the auction process on behalf of the issuer or other obligated person with respect to such Auction Rate Securities (“Auction Agent”) that receives orders from brokers, dealers and municipal securities dealers.

(A)  Each broker, dealer or municipal securities dealer that submits an order directly to an Auction Agent for its own account or on behalf of another account to buy, hold or sell an Auction Rate Security through the auction process (“Program Dealer”) shall report, or ensure the reporting of, the following information about the Auction Rate Security and concerning the results of the auction to the Board:

(1)  CUSIP number;

(2)  Interest rate produced by the auction process and designation of whether the interest rate is a maximum rate, all hold rate, or rate set by auction;

(3)  Identity of all Program Dealers that submitted orders, including but not limited to hold orders;

(4)  Date and time of the auction;

(5)  Date and time the interest rate determined as a result of the auction process was communicated to Program Dealers;

(6)  Length of time, in days, that the interest rate produced by the auction process is applicable;

(7)  Minimum denomination;

(8)  Par amount auctioned, not including hold orders effective at any rate; and

(9)  Minimum and maximum rates, if any, applicable at the time of the auction or, if not calculable as of the time of auction, indication that such rate or rates are not calculable.

(B)  Information identified in subparagraph (c)(i)(A) shall be provided to the Board by no later than 6:30 P.M. Eastern Time on the date on which an auction occurs if such date is an RTRS Business Day as defined in Rule G-14 RTRS Procedures section (d)(ii).  In the event that any item of information identified in subparagraph (c)(i)(A) is not available by the deadline in this subparagraph (c)(i)(B), such item shall be provided to the Board as soon as it is available.  In the event that an auction occurs on a non-RTRS Business Day, the information identified in subparagraph (c)(i)(A) shall be reported by no later than 6:30 P.M. Eastern Time on the next RTRS Business Day.

(C)  A Program Dealer may designate an agent to report the information identified in subparagraph (c)(i)(A) to the Board, provided that an Auction Agent may submit information on behalf of a Program Dealer absent such designation by the Program Dealer.  The failure of a designated agent to comply with any requirement of this paragraph (c)(i) shall be considered a failure by such Program Dealer to so comply; provided that if an Auction Agent has, within the time periods required under subparagraph (c)(i)(B), reported the information required under subparagraph (c)(i)(A), the Program Dealer may rely on the accuracy of such information if the Program Dealer makes a good faith and reasonable effort to cause the Auction Agent to correct any inaccuracies known to the Program Dealer.

(D)  Information reported to the Board pursuant to this section (c)(i) shall be submitted in the manner described in the written procedures for SHORT System users and changes to submitted information must be made as soon as possible.

(ii) Variable Rate Demand Obligations.  Variable Rate Demand Obligations are securities in which the interest rate resets on a periodic basis with a frequency of up to and including every nine months, an investor has the option to put the issue back to the trustee, tender agent or other agent of the issuer or obligated person at any time, typically with specified advance notice (“Notification Period”), and a broker, dealer or municipal security dealer acts as a remarketing agent (“Remarketing Agent”) responsible for reselling to new investors securities that have been tendered for purchase by a holder.

(A)  Each Remarketing Agent for a Variable Rate Demand Obligation shall report the following information about the Variable Rate Demand Obligation and concerning the results of an interest rate reset to the Board:

(1)  CUSIP number;

(2)  Interest rate and designation of whether the interest rate is a maximum rate, set by formula or set by the remarketing agent;

(3)  Identity of the Remarketing Agent;

(4)  Date and time of the interest rate reset;

(5)  Length of time, in days, that the interest rate is applicable;

(6)  Minimum denomination;

(7)  Length of Notification Period;

(8)  Minimum and maximum rates, if any, applicable at time of the interest rate reset or, if not calculable as of the time of interest rate reset, indication that such rate or rates are not calculable; and

(9) Type and expiration date of each liquidity facility applicable to the Variable Rate Demand Obligation.

(B)  Information identified in subparagraph (c)(ii)(A) shall be provided to the Board by no later than 6:30 P.M. Eastern Time on the date on which an interest rate reset occurs if such date is an RTRS Business Day as defined in Rule G-14 RTRS Procedures section (d)(ii).  In the event that any item of information identified in subparagraph (c)(ii)(A) is not available by the deadline in this subparagraph (c)(ii)(B), such item shall be provided to the Board as soon as it is available.  In the event that an interest rate reset occurs on a non-RTRS Business Day, the information identified in subparagraph (c)(ii)(A) shall be reported by no later than 6:30 P.M. Eastern Time on the next RTRS Business Day.

(C)  A Remarketing Agent may designate an agent to report the information identified in subparagraph (c)(ii)(A) to the Board.  The failure of a designated agent to comply with any requirement of this paragraph (c)(ii) shall be considered a failure by such Remarketing Agent to so comply.

(D)  Information reported to the Board pursuant to this section (c)(ii) shall be submitted in the manner described in the written procedures for SHORT System users and changes to submitted information must be made as soon as possible.

[(c)] (d) No change.

[(d)] (e)  No change.

---