MSRB Files Proposal to Amend SHORT System Subscription Service

The Municipal Securities Rulemaking Board (“MSRB”) has filed today with the Securities and Exchange Commission (“SEC”) a proposed rule change to establish a subscription to historical information and documents submitted to the MSRB’s Short-Term Obligation Rate Transparency (“SHORT”) System.[1] The SHORT System collects and disseminates information and documents for municipal Auction Rate Securities (“ARS”) and municipal Variable Rate Demand Obligations (“VRDOs”). The proposed rule change will be effective upon approval by the SEC.

In early 2009, the MSRB implemented the SHORT System to collect and disseminate current interest rates and related information for ARS and VRDOs. In May 2011, the MSRB enhanced the SHORT System to increase the information collected about ARS and VRDOs, as well as add documents to the information collected and disseminated. Information and documents collected by the SHORT System are made available for free on the MSRB’s Electronic Municipal Market Access (EMMA®)[2] website pursuant to the EMMA short-term obligation rate transparency service.[3] The MSRB also makes the information and documents collected by the SHORT System available through a subscription service, which is available for an annual fee of $10,000. The proposed rule change would clarify that subscribers to the SHORT subscription service would be able to access historical data for the most recent six months on a daily rolling basis and establish purchase agreements for historical products consisting of twelve consecutive complete month data sets of the documents and information collected by the SHORT System (the “SHORT Historical Data Product”) dating to January 30, 2009.[4] The purpose of the proposed rule change is to provide another avenue for obtaining the information and documents provided through the SHORT subscription service, which is currently only available on a current basis through the real-time data stream.

The SHORT Historical Data Product would be made available to purchasers in electronic format using a physical medium (such as an optical disc, flash memory card or external hard drive),[5] pursuant to the terms of the MSRB Historical Transaction Data Purchase Agreement, which would be executed by purchasers prior to delivery of the historical data product.[6]The MSRB proposes to charge $5,000 for any twelve consecutive complete month data set of information and documents collected by the SHORT System.[7]In general, no smaller data sets will be made available.[8]A one-time set-up fee of $2,000 (the “set-up fee”) would be charged to new purchasers of the SHORT Historical Data Products, unless the purchaser is a current subscriber to an MSRB Subscription Service, including, but not limited to, the MSRB Real-Time Transaction Data Subscription Service, Comprehensive Transaction Data Subscription Service, SHORT Subscription Service, Primary Market Disclosure Subscription Service, or the Continuing Disclosure Subscription Service or has previously purchased an historical product.[9]

Questions about this notice may be directed to Justin R. Pica, Director of Product Management - Market Transparency, at 703-797-6716.

February 27, 2012

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TEXT OF THE PROPOSAL [10]

SHORT-TERM OBLIGATION RATE TRANSPARENCY SYSTEM

The Short-term Obligation Rate Transparency (“SHORT”) System is a facility of the Municipal Securities Rulemaking Board (“MSRB”) for the collection and dissemination of information and documents about securities bearing interest at short-term rates and making such information and documents publicly available through a dissemination service.

Submissions to the SHORT System

No change.

SHORT System Processing

No change.

SHORT System Information and Document Dissemination

No change.

SHORT-TERM OBLIGATION RATE TRANSPARENCY SUBSCRIPTION SERVICE

The Short-term Obligation Rate Transparency (“SHORT”) System is a facility of the Municipal Securities Rulemaking Board (“MSRB”) for the collection and dissemination of information and documents about securities bearing interest at short-term rates, which include Auction Rate Securities (“ARS”) and Variable Rate Demand Obligations (“VRDOs”). The SHORT subscription service, which is available for an annual fee of $10,000, makes available to subscribers data streams of all information and documents collected by the SHORT System.[1] Information and documents submitted to the SHORT System also are posted to the MSRB’s Electronic Municipal Market Access (EMMA^®) web portal pursuant to the EMMA short-term obligation rate transparency service. Such information and documents will be made available to subscribers simultaneously with the availability of such information and documents to the EMMA web portal. Submitters of information and documents to the SHORT System may provide or modify such items for a particular submission in one or more sessions and any such items provided or modified will be made available to subscribers simultaneously with the availability of such items to the EMMA web portal.

Data elements with respect to the SHORT subscription service to be provided through the data stream shall be set forth in the SHORT System Subscriber Manual posted on the MSRB website. Each submission of information to the SHORT System will result in an XML data packet to be included in the subscription feed containing, to the extent applicable for each submission, some of the following data elements:

Data Element	Definition
Sequence Number	An incremental system generated number assigned to each reported transaction.
Transaction Type	Dealer-supplied transaction type to indicate that a submission is a new report, modification or cancellation.
Publication Date and Time	Date and time a submission was published.
Dealer Names	The identity of the ARS Program Dealer(s) or VRDO Remarketing Agent.
Control Number	Unique identifier used to tie transactions together in the case of a modification or cancellation.
CUSIP9	CUSIP Number for the security.
Instrument Type	Indication of whether the security is an ARS or a VRDO.
Interest Rate Reset Date and Time	ARS - Date and time that the ARS auction occurred. VRDOs - Date and time that the VRDO interest rate was determined.
Interest Rate Period	Number of calendar days that the interest rate is applicable.
Interest Rate Posting Date and Time	ARS (only) – Date and time that the ARS auction results were communicated to ARS Program Dealers.
Effective Date of Interest Rate	VRDOs (only) - Effective date that the interest rate reset is applicable.
Interest Rate	Interest rate, in percent.
Minimum Denomination	Minimum allowable transaction size, in par amount.
Rate Type	ARS - Indication of whether the interest rate submitted represents a maximum rate (M), all hold rate (H), or an interest rate set by the auction process (A). VRDOs - Indication of whether the interest rate submitted represents a maximum rate, a rate that was set by a formula, or a rate that was set by the VRDO Remarketing Agent.
Minimum Rate	ARS - Minimum interest rate, in percent, applicable at the time of the auction or if such minimum interest rate is not able to be calculated, an indication that such rate is not calculable. VRDOs - Minimum interest rate, in percent, applicable at the time of the interest rate reset or if such minimum interest rate is not able to be calculated, an indication that such rate is not calculable.
Maximum Rate	ARS - Maximum interest rate, in percent, applicable at the time of the auction or if such maximum interest rate is not able to be calculated, an indication that such rate is not calculable. VRDOs - Maximum interest rate, in percent, applicable at the time of the interest rate reset or if such maximum interest rate is not able to be calculated, an indication that such rate is not calculable.
Notification Period	VRDOs (only) - Number of calendar days that may lapse between a holder of a VRDO tendering a position in the security and a liquidity provider purchasing the tendered security in the event that the Remarketing Agent is unable to remarket the tendered security.
Liquidity Facility Type	VRDOs (only) - For each liquidity facility applicable to a VRDO, an indication of whether it is a standby bond purchase agreement, letter of credit, or a “self liquidity” program whereby liquidity is provided by the issuer, conduit borrower or affiliate.
Liquidity Facility Expiration Date	VRDOs (only) - The expiration date of each liquidity facility applicable to a VRDO.
Identity of Liquidity Provider	VRDOs (only) - For each liquidity facility applicable to the VRDO, the identity of the liquidity provider. This value reflects information available to the VRDO Remarketing Agent as of the date and time of the interest rate reset.
Aggregate Par Amount – Bank Bond	VRDOs (only) - Par amount of the VRDO, if any, held by liquidity providers (as a “Bank Bond”). This value reflects information available to the VRDO Remarketing Agent as of the date and time of the interest rate reset.
Aggregate Par Amount – Investors and Remarketing Agent	VRDOs (only) - Par amount of the VRDO, if any, held by parties other than a liquidity provider, which represents the aggregate par amounts held by the VRDO Remarketing Agent and by investors. This value reflects information available to the VRDO Remarketing Agent as of the date and time of the interest rate reset.
Identity of Tender Agent	VRDOs (only) - For each tender agent applicable to the VRDO, the identity of the tender agent. This value reflects information available to the VRDO Remarketing Agent as of the date and time of the interest rate reset.
Order Type	ARS (only) - Indication of whether an order is an order to buy, sell or hold at rate.
Order Interest Rate	ARS (only) - For orders to buy or hold at rate, the interest rate associated with such orders.
Order Entity	ARS (only) - Indication of whether an order placed or that was filled is for an investor, program dealer for its own account or issuer/conduit borrower of the ARS.
Order Par Amount	ARS (only) - The aggregate par amount submitted to the auction for each order type, interest rate for buy and hold at rate orders, and order entity.
Filled Par Amount	ARS (only) - The aggregate par amount filled as a result of the auction for each order type, interest rate for buy and hold at rate orders and order entity.
Bid to Cover Ratio	ARS (only) - Ratio of the aggregate par amount of securities bid for the aggregate par amount of securities offered in an auction.

Each document submission to the SHORT System will result in an XML data packet to be included in the subscription feed. Each submission event packet will include data organized in a hierarchical data relationship generally consisting of (to the extent applicable for a particular submission event) XML containers for submission data, security data and document data. These containers will contain some, all or none of the following types of data elements, as appropriate for each submission event being disseminated:

Submission Data: submission ID; transaction ID; submission transaction date/time

Security Data: CUSIP number, ARS/VRDO instrument type identifier

Document Data: document ID; document type; document posting date; document status indicator

The SHORT System Subscriber Manual provides a complete, up-to-date listing of all data elements made available through the SHORT subscription service, including any additions, deletions or modifications to disseminated data elements, detailed definitions of each data element, specific data format information, and information about technical data elements to support transmission and data-integrity processes between the SHORT System and subscribers.

Subscriptions will be provided through computer-to-computer data streams utilizing XML files for data and files in a designated electronic format (consisting of PDF files) for documents. Appropriate schemas and other technical specifications for accessing the web services through which the data stream will be provided are set forth in the SHORT System Subscriber Manual posted on the MSRB website.

The MSRB makes the SHORT subscription service available on an equal and non-discriminatory basis. Subscribers shall be subject to all of the terms of the subscription agreement to be entered into between the MSRB and each subscriber, including proprietary rights of third parties in information provided by such third parties that is made available through the subscription. The MSRB is not responsible for the content of the information or documents submitted by submitters that is distributed to subscribers of the SHORT subscription service.

EMMA Short-Term Obligation Rate Transparency Historical Data Product

In addition to offering the SHORT subscription service, the MSRB offers a SHORT historical data product, which consists of the same data set (including both information and documents) as provided by the SHORT subscription service up to the end of the most recent complete month. The SHORT historical data product may be purchased in any twelve consecutive complete month data sets for $5,000 per data set.[2] No smaller data sets will be made available on an individual basis.[3] The SHORT historical data product will be made available to purchasers in electronic format using a physical medium (such as an optical disc, flash memory card or external hard drive),[4] pursuant to the terms of the MSRB Historical Transaction Data Purchase Agreement, which must be executed by purchasers prior to delivery of the data product.[5] A one-time set-up fee of $2,000 will be charged to new purchasers of the SHORT historical data product, unless the purchaser subscribes to an MSRB Subscription Service, or previously has purchased a historical product.[6]

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[1]  Subscribers to the SHORT system will be able to access historical data for the most recent six months on a daily rolling basis. Older data is available for purchase in twelve consecutive complete month data sets pursuant to the SHORT historical data product.

[2]  The purchase price does not include sales tax as required by Virginia state law. The purchase price is a one-time charge for the SHORT historical data product and will not include any future additions or enhancements that may be added to the data. The MSRB could, in its discretion, waive or reduce the purchase price for not-for-profit organizations that desire the product for non-profit or research purposes consistent with their stated charitable or other public purpose.

[3]  The SHORT system became effective January 30, 2009. Accordingly, a purchaser of all historical information and documents will be charged $5,000 for each twelve consecutive month data set and a prorated amount for any remaining months of information and documents.

[4]  The MSRB will choose an appropriate physical medium for delivering the SHORT historical data product based upon the quantity of data included in a data set and technological advances in physical media.

[5]  Purchasers are subject to all of the terms of the purchase agreement to be entered into between the MSRB and each purchaser, including terms relating to the proprietary and intellectual property rights of third parties in information provided by such third parties that is made available through the product.

[6]  The MSRB could, in its discretion, waive or reduce the product set-up fee(s) for not-for-profit organizations that desire the service for non-profit or research purposes consistent with their stated charitable or other public purpose.