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

 

MUNICIPAL SECURITIES RULEMAKING BOARD RECEIVES SEC APPROVAL
TO CREATE ADDITIONAL TRANSPARENCY FOR VARIABLE RATE SECURITIES 

Alexandria, VA ­– The Municipal Securities Rulemaking Board (MSRB) announced today that it has received approval from the Securities and Exchange Commission on a proposal to expand publicly available information about municipal variable rate demand obligations and auction rate securities. The SEC approved allowing the MSRB to require municipal securities dealers to provide additional information about these securities – including bank liquidity agreement documents for variable rate demand obligations and bidding information for auction rate securities – and to disseminate the information on its Electronic Municipal Market Access (EMMA) website.

The additional disclosures will improve transparency for investors seeking to evaluate critical information about the level of dealer support and underlying liquidity of auctions and resales of variable rate securities.

“Making critical municipal market data freely available to the public is a key mission of the MSRB,” said MSRB Executive Director Lynnette Kelly Hotchkiss. “Bidding information for auction rate securities allows investors to better understand liquidity and depth of the market, and liquidity facility documents provide key information about the support available for variable rate securities,” Hotchkiss said. “Free access to this data is essential so that retail investors can evaluate the benefits and risks.”

Under the approval, which will be implemented within nine months, the MSRB will collect from municipal securities dealers liquidity facility documents for variable rate demand obligations (VRDOs) such as letters of credit and stand-by purchase agreements along with identifying information related to the tender agent for the securities and the bank or other provider of the liquidity facility available at the time of the interest rate.

Dealers also will be required to report to the MSRB auction rate securities (ARS) bidding information – including data on whether an auction succeeds through market bids or through dealer support – as well as documents defining interest rate setting mechanisms and auction procedures. All information and documents provided by dealers will be made available on EMMA, which already provides free public access to interest rate information for VRDOs and ARS.

The Municipal Securities Rulemaking Board (MSRB) protects and strengthens the municipal bond market, enabling access to capital, economic growth, and societal progress in tens of thousands of communities across the country. The MSRB fulfills this mission by creating trust in our market through informed regulation of dealers and municipal advisors that protects investors, issuers and the public interest; building technology systems that power our market and provide transparency for issuers, institutions, and the investing public; and serving as the steward of market data that empowers better decisions and fuels innovation for the future. The MSRB is a self-regulatory organization governed by a 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.

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