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Notice 2020-04 - Approval Notice
Publication date:
Information for:

Bank Dealers, Dealers, Municipal Advisors

Rule Number:

IF-3

Notice 2020-03 - Informational Notice
Publication date:
Compliance Resource
Publication date:
Information for:

Dealers, General Public, Investors, Issuers, Municipal Advisors

Rule Number:

Rule G-17, Rule G-42

Notice 2020-02 - Request for Comment
Publication date: | Comment due:
Information for:

Bank Dealers, Dealers, Municipal Advisors

Rule Number:

Rule A-3

All Comments to Notice 2020-02

1. Acacia Financial Group, Inc.: Letter from Kim M. Whelan, Co-President, and Noreen P. White, Co-President, dated April 29, 2020

2. Action Center on Race and the Economy, AFSCME, AFL-CIO, Americans for Financial Reform Education Fund, Consumer Federation of America and Public Citizen: Letter dated April 29, 2020

3. Bond Dealers of America: Letter from Mike Nicholas, Chief Executive Officer, dated April 29, 2020

4. Government Finance Officers Association: Letter from Emily Swenson Brock, Director, Federal Liaison Center, dated April 29, 2020

5. Investment Company Institute: Letter from Dorothy Donohue, Deputy General Counsel - Securities Regulation, dated April 15, 2020

6. National Association of Municipal Advisors: Letter from Susan Gaffney, Executive Director, dated April 29, 2020

7. National Association of State Auditors, Comptrollers and Treasurers: Letter from Beth Pearce, President, dated April 30, 2020

8.  National Association of State Treasurers: Letter from Shaun Snyder, Executive Director, dated April 28, 2020

9. National Federation of Municipal Analysts: Letter from Nicole Byrd, Chair, dated April 29, 2020

10. Securities Industry and Financial Markets Association: Letter from Leslie M. Norwood, Managing Director and Associate General Counsel, and Bernard V. Canepa, Vice President and Assistant General Counsel, dated April 29, 2020

11. Steve Apfelbacher, Renee Boicourt, Marianne Edmonds, Robert Lamb, Nathaniel Singer and Noreen White [former MSRB Board members]: Letter dated April 29, 2020

Notice 2020-01 - Informational Notice
Publication date:
Information for:

Bank Dealers, Dealers, Municipal Advisors

Rule Number:

Rule G-11

Interpretive Guidance - Interpretive Notices
Publication date:
Obligations of Senior Syndicate Managers Utilizing Electronic Communications

Background

In November 1998, the Municipal Securities Rulemaking Board (the “MSRB” or “Board”) published an interpretation about the use of electronic media to deliver and receive information by brokers, dealers and municipal securities dealers (collectively, “dealers”) under Board rules (the “1998 Interpretation”).[1] The 1998 Interpretation addresses how dealers may use electronic media to satisfy their delivery obligations under MSRB rules, including communications among dealers and between dealers and issuers. It states, “. . . a dealer that undertakes communications required under Board rules with other dealers and with issuers in a manner that conforms with the principles stated [in the 1998 Interpretation] relating to customer communications will have met its obligations with respect to such communications.”[2]

Discussion

The MSRB wishes to remind dealers of the 1998 Interpretation, particularly in light of the January 13, 2020 compliance date for certain amendments to MSRB Rule G-11, on primary offering practices.[3] Among other modifications, the amendments to Rule G-11 require senior syndicate managers to provide certain information to issuers regarding allocations and net designations.

The MSRB understands that dealers acting as senior syndicate managers may use external third-party electronic systems or proprietary electronic systems to manage aspects of the primary offering process, such as the tracking of orders, the automated communication of certain information to syndicate members, and other electronic data sharing features (“electronic bookrunning systems”). With respect to certain information required to be delivered to other dealers and issuers under Rule G-11, the Board believes that such information may be provided by electronic means so long as the standards established in the 1998 Interpretation with respect to electronic communications are met, including providing timely and adequate notice that such information may be accessed electronically. For example, with respect to Rule G-11(g)(ii), within two business days following the date of sale, a senior syndicate manager can inform an issuer that allocation information is available electronically (e.g., on an electronic bookrunning system that an issuer has access to) by pushing notice to the issuer (e.g., email). Additionally, consistent with the 1998 Interpretation, a dealer should provide a paper version of the allocation information should an issuer request or object to receiving the information electronically.


[1] See Exchange Act Release No. 40848 (Dec. 28, 1998), 64 FR 544 (Jan. 5, 1999) (File No. SR-MSRB-98-12); see also Notice Regarding Electronic Delivery and Receipt of Information by Brokers, Dealers and Municipal Securities Dealers (Nov. 20, 1998).

[2] Id. 

[3] See MSRB Notice 2019-15 (June 28, 2019).

Notice 2004-43 - Request for Comment
Publication date: | Comment due:
Notice 2004-42 - Informational Notice
Publication date:
Interpretive Guidance - Interpretive Notices
Publication date:
"List Offering Price" and Three-Hour Exception for Real-time Transaction Reporting: Rule G-14

The MSRB has received questions concerning the meaning of "list offering price" in Rule G-14 Real-Time Transaction Reporting Procedures.  As used in this context, the term means the publicly announced "initial offering price" at which a new issue of municipal securities is to be offered to the public. 

Real-time transaction reporting requires dealers to report most transactions within fifteen minutes of the time of trade execution.[1]  Transactions effected at the "list offering price" by syndicate or selling group members[2] on the first day of trading in a new issue are eligible for an exception found in Rule G-14 RTRS Procedures section (a)(ii)(A).  Such transactions instead are required to be reported by the end of the day.  Note that syndicate and selling group members are not required to wait to report such transactions at the end of the day and may choose to report prior to the end of the day. 

The exception from fifteen-minute transaction reporting for list-price syndicate trades is based on operational difficulties that otherwise might be presented for dealers when large numbers of transactions at the initial offering price must be reported by a dealer at one time.  The MSRB viewed these operational considerations as sufficiently important to allow trades to be reported at the end of the day given that the price of such trades (the "list offering price") is public.  Note that transactions by syndicate or selling group members at prices other than the "list offering price" on the first day of trading in a new issue are required to be reported within fifteen minutes of the time of trade execution.  For example, transactions between the syndicate manager and syndicate members ("takedown" transactions) that are at prices other than the "list offering price" must be reported within fifteen minutes of the time of execution.  Similarly, transactions done at offering prices that have not been publicly announced, e.g. "not reoffered" prices, also must be reported within fifteen minutes of the time of execution since these prices are not public.

Questions also have been asked about the availability of the three-hour trade reporting exception found in Rule G-14 RTRS Procedures section (a)(ii)(C).  When a dealer effects a trade in an issue it has not traded in the past year and does not have CUSIP numbers and indicative data for the issue in its securities master file used to process trades for confirmations, clearance and settlement, it is allowed three hours to report.[3]  This exception is designed to allow a dealer time to set-up a security it has not traded and is available for transactions on the first day of trading in a new issue.  Note this exception is not available for syndicate and selling group members.


[1]  Rule changes to MSRB Rules G-14, on transaction reporting, and G-12(f), on automated comparison of inter-dealer transactions, that will require dealers to report transactions in real-time become effective January 31, 2005.  See MSRB Notice 2004-36 (November 17, 2004) on www.msrb.org.

[2]  References to "syndicate and selling group members" in this context are meant to include managers of syndicates as well as sole underwriters or placement agents in non-syndicated offerings.

[3]  The three-hour exception sunsets one year after real-time transaction reporting is implemented.

Notice 2004-39 - Informational Notice
Publication date:
Notice 2004-38 - Informational Notice
Publication date:
Notice 2004-37 - Informational Notice
Publication date:
Notice 2004-36 - Informational Notice
Publication date:
Notice 2004-34 - Informational Notice
Publication date:
Interpretive Guidance - Interpretive Notices
Publication date:
Automated Comparison and Transaction Reporting of Certain Inter-Dealer Transactions in When-Issued Municipal Securities: Rules G-12(f) and G-14
Rule Number:

Rule G-12

The MSRB has received reports of problems with automated comparison and transaction reporting of certain inter-dealer transactions involving syndicate managers.  These reports indicate that some dealers may have incorrectly identified some of their when, as and if issued ("when-issued") transactions in new issue municipal securities as "syndicate transactions."  The MSRB reminds dealers that erroneous coding of comparison reports is a violation of Rule G-14, on transaction reporting, and that transactions with dealers that are not members of the syndicate or selling group for a new issue, by definition, cannot be considered "syndicate transactions" for purposes of comparison procedures.

MSRB Rule G-12(f), on automated comparison of inter-dealer transactions, requires dealers to submit for automated comparison all transactions eligible for comparison under National Securities Clearing Corporation's (NSCC) rules and procedures.  For transactions by a syndicate manager with syndicate or selling group members, NSCC procedures call for the use of a special "syndicate" submission, which does not require a submission by the contra-side for comparison to occur.[1]  Transactions between syndicate managers and dealers that are not members of the syndicate or selling group are not "syndicate transactions" under NSCC's rules and procedures and both the selling and purchasing dealers are required to report its side to the transaction for automated comparison. 

Various problems arise in the comparison process if the parties to a trade do not follow the correct procedures for comparison of the trade.  Moreover, since the trade report submitted for comparison also serves as the transaction report to the MSRB, identifying a transaction as a "syndicate transaction" in trade reports, when such transaction is not a syndicate transaction under NSCC's rules and procedures, represents a violation of a dealer's obligation to accurately report transactions to the MSRB under Rule G-14.


[1]  See "Municipal Bond Selling Group Trades," NSCC Important Notice # 2971 dated April 8, 1988.

Notice 2004-30 - Informational Notice
Publication date:
Notice 2004-29 - Informational Notice
Publication date:
Notice 2004-28 - Informational Notice
Publication date:
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