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

 

MUNICIPAL SECURITIES RULEMAKING BOARD FILES PROPOSAL
TO EXPAND TRANSPARENCY OF VARIABLE RATE SECURITIES

Alexandria , VA – The Municipal Securities Rulemaking Board (MSRB) today filed a proposal with the Securities and Exchange Commission (SEC) to expand information that is publicly available about variable rate demand obligations and auction rate securities.  If approved, the MSRB would publish on its EMMA website information such as documents that provide for bank liquidity support for variable rate demand obligations and auction rate securities bidding information that would allow investors to determine whether auctions are being supported by dealers.

“The MSRB continues to require greater transparency in the municipal market,” said MSRB Executive Director Lynnette Kelly Hotchkiss. “By expanding the available information about auction rate securities and variable rate demand obligations, the investing public will have even more information with which to make investment decisions.”

Under the proposal, the MSRB would collect from municipal securities dealers liquidity facility documents for variable rate demand obligations (VRDOs) such as Letters of Credit and Stand-by Purchase Agreements.  These documents provide for different forms of liquidity support for VRDOs and set forth the potential implications of credit downgrades on VRDO liquidity. 

Dealers also would be required to report auction rate securities bidding information – including data on whether an auction succeeds through market bids or through dealer support – as well as interest rate setting mechanisms and documents that define auction procedures. All information would be made available on the MSRB’s Electronic Municipal Market Access (EMMA) website, already provides free public access to interest rate information for VRDOs and ARS.

If approved, the MSRB will provide at least 60 days’ notice prior to the effective date.

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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