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

MSRB REQUESTS COMMENT ON EXCEPTION PROVISIONS OF DRAFT PROPOSAL TO LIMIT DEALERS
FROM PROVIDING CONSENTS ON BEHALF OF MUNICIPAL BONDHOLDERS 

Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today published a revised draft proposal to limit dealers from consenting to any amendment to bond authorizing documents for municipal securities except in limited circumstances. The revised proposal seeks public comment on certain amendments to a July 5, 2012 draft proposal, and further refines the original proposal issued in February 2012.

“The multi-phase development of this proposal reflects the thoroughness with which the MSRB approaches changes to regulations,” said MSRB Executive Director Lynnette Kelly. “We are committed to a rulemaking process that takes into consideration all relevant information and public comment.”

The new draft proposal on bondholder consents includes two additional exceptions to a rule that would prohibit underwriters from agreeing to changes in documents that establish rights of and protections for municipal securities investors. The draft proposal carefully seeks to balance the rights of and protection of bondholders with the ability of issuers to make necessary and appropriate changes to bond authorizing documents.   

Kelly said the MSRB is seeking to ensure that investors are protected from situations in which an underwriter, which may hold the bonds momentarily during the initial distribution process but have no prior or future economic or investment interest in the bonds, could provide consent to changes in lieu of existing bondholders with a vested interest in assessing the potential impact of any amendment to the authorizing documents.  At the same time, with the exceptions in the proposed rule, the MSRB is balancing those interests against the rights of issuers to effect changes to the bond authorizing documents.

The final rule proposal, which will be filed with the Securities and Exchange Commission, will reflect comments received on the two new exceptions as well as other comments received during the earlier comment period.

Comments should be submitted no later than December 21, 2012.

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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