Notice - Sample Transaction Reporting Data Available for Review

Since 1995, rule G-14 has required dealers to report to the MSRB their inter-dealer transactions in municipal securities via the automated comparison system for municipal securities operated by National Securities Clearing Corporation. The Board has used this information to create a database of transaction information used by regulators for market surveillance purposes. The Board also uses the reported transaction information to create a daily public report summarizing price and volume information for municipal securities that were reported as trading in the inter-dealer market four or more times on the previous business day (the "Daily Report"). The Daily Report, which is made available on T+1 prior to the beginning of the trading day, is used by market participants to help gauge the value of municipal securities. The Board currently has eight subscribers to the Daily Report. Most subscribers are information vendors that redistribute the information to their own subscribers and/or use the information in various securities valuation products that they market.

In 1996, the Board filed plans with the Commission to add transactions between dealers and customers to the Transaction Reporting Program. This will allow the Board to include customer transaction data in the surveillance database that the Board makes available to market regulators, and in the Daily Reports of price and volume activity. The 1996 filing included an amendment to rule G-14, requiring dealers to report their customer transactions in municipal securities to the Board in certain prescribed formats. The Commission approved this amendment and it became effective March 1, 1998. The Board has been receiving customer transaction data since that time and is now ready to publish samples of a proposed Daily Report including both customer and inter-dealer transaction data.

The criteria for inclusion of municipal securities on the sample Daily Reports are the same as for the current inter-dealer Daily Report. If a municipal security (identified by a CUSIP number) is reported as having been traded four or more times on a given day, the high, low and average price and par value total of all of the trades reported in that security will be on the Daily Report on the next morning. Calculation of average price also is the same as in the current inter-dealer Daily Report. It is an arithmetic mean and is based exclusively on reported transactions (if any) between $100,000 and $1,000,000 in par value.

In applying the criteria for producing the sample Daily Reports, inter-dealer and customer transactions are considered together. This means that any combination of inter-dealer and customer transactions totaling four or more qualifies that CUSIP for inclusion of price information for that CUSIP on the Daily Report. In determining whether a reported transaction will be included for purposes of the Daily Report eligibility, certain transaction records are eliminated from consideration if they contain what appear to be obvious errors (e.g., invalid or unknown CUSIP number, missing dollar price). An attempt is made to calculate a dollar price on when-issued transactions submitted with a yield, but no dollar price. However, such transactions are not considered for Daily Report purposes if there is insufficient securities data (e.g., coupon and dated date) to calculate dollar price from yield or if there is an indication that the securities are not calculated using a standard semiannual compounding formula and a 30/360 day-count.

The sample Daily Reports will be available beginning Thursday, April 9, 1998. The five sample Daily Reports will include information on transactions reported to the Board, by midnight on trade date, between March 30, 1998 and April 3, 1998. Market participants may wish to comment on the Daily Reports, particularly with respect to the format of the reports, so that the Board can make the Daily Reports as useful as possible. The sample Daily Reports will be available on the Board's Web site and will be available in printed form from the Board's offices. Subscribers to the current inter-dealer Daily Report will be able access the sample Daily Reports through the computer bulletin board that they normally use to access Daily Reports.

The Board requests that comment on the sample Daily Report be made in writing prior to May 8, 1998. The Board plans to make the Daily Report available on a daily basis during the third quarter of 1998. Prior to that time, the Board must file a plan with the Commission that specifies the final format of the report and that announces the yearly subscription price.