Contents MSRB Reports Vol 16 No 1 -- January 1996

Two years ago the MSRB embarked on an effort to address issues related to the integrity and efficiency of the municipal securities market. David Clapp, chairman at that time, indicated in his letter to the industry that this effort would likely take several years to complete. "Pay to play" practices, price transparency and T + 3 settlements were on the platter then. As we begin 1996, we all can take pride in the manner in which this industry has reacted to changes in the market, both those dictated from within and without. But the integrity of our market continues to be open to questions.

To that end, the Board has sent to the SEC for approval Rule G-38 regarding "consultant" relationships which it believes will supplement G-37 in seeking to remove any real or perceived connection between the awarding of municipal securities business and the flow of monies to those making the award. The Board recognizes that these rules require an increased level of effort for compliance and we thank all of you for making G-37 so effective. While all issues relating to "pay to play" may not be fully resolved, these rules should go a long way to answering critics of the municipal securities industry. The Board is attentive to attempts to circumvent the rules and will address each issue as it arises.

The Board also will spend a great deal of time in 1996 examining the underwriting process and the roles played by each participant. We are not certain where this review will take us, but it is not my preference nor that of the Board to write rule after rule. Perhaps as an alternative, we may be in a position to identify good practices and highlight those that are of concern so that the dealer community has an opportunity to modify its behavior without subjecting itself to the dictates of a specific rule. We will continue to work with the SEC and other industry organizations to develop a common approach to the issues confronting our industry.

As noted in this issue of MSRB Reports, the design and implementation schedule for our Transaction Reporting Program has been modified with an eye towards reducing the cost both for the Board and the industry members. We hope that you will review the modified plan and offer any comments you may have. The first phase of this process has been in place for one year and already provides a helpful base of information of market activity. We want to continue progress in this area so that investors, issuers and the dealer community are better informed about price movements.

I would like to close by saying that I am committed to the self-regulation process as I believe it offers the municipal securities market the best and least intrusive means of maintaining its integrity and efficiency. Self-regulation demands that all of us, whether we are dealers, investors, or issuers, work together to develop the standards for this industry. The Board is always open to your comments, thoughts and suggestions. I look forward to hearing from you.

In This Issue

Calendar

November 16
Effective date of amendment to rule G-35, on arbitration

January 26
Effective date of amendments to rule G-12, on uniform practice, andG-34, on CUSIP numbers and new issue requirements

January 31
Due date for Form G-37 to be filed with the Board (for the period October 1, 1995-December 31, 1995)

Feburary 26
Effective date of clarifying aand technical changes to rule G-37/G-38

March 15
Recommendations for Board nominations due

March 18
Effective date of rule G-38, on consultants, and amendments to rule G-37, on political contributions and prohibitions on municipal securities business, and Form G-37/38

April 30
Due date for Form G-37/G-38 to be filed with the Board (for the period January 1, 1996-March 31, 1996)

May 1
Comments due on planned features of the Transaction Reporting Program that are related to customer transactions
Comments due on the technical standards for transmittal of transaction information to the Customer Transaction Reporting Subsystem

Pending
Amendments to rules A-13,A-14 and G-14 on fee assessments for dealers
Amendments to rule G-14, on reports of sales or purchases, concerning the reporting of time-of-trade to the Board in inter-dealer transactions

FROM THE CHAIRMAN,

In This Issue

Calendar