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

MSRB IMPROVES CALCULATION OF ARS BID-TO-COVER RATIO 

Alexandria, VA ‒ The Municipal Securities Rulemaking Board (MSRB) today announced it has improved its calculation of bid-to-cover ratios for auction rate securities (ARS) to provide a ratio that is more consistent with bid-to-cover ratios calculated for Treasury auction results.

The MSRB’s Electronic Municipal Market Access (EMMA®) website has since 2011 displayed bid-to-cover ratios, which provide an indication of demand for ARS in ARS auctions. The ratio initially reflected the aggregate par amount of securities bid relative to the aggregate par amount of securities offered for sale in an auction. The calculation did not take into account the par amount of securities held that were not tendered for sale. The MSRB recently obtained additional data about ARS allowing it to complete its planned development of an improved bid-to-cover calculation.

Today’s changes also include the removal of orders from program dealers from the MSRB’s calculation to more closely reflect investor activity in ARS. Although the calculation of bid-to-cover ratios will no longer factor in such program dealer orders, the EMMA website continues to display data on all orders placed in connection with ARS auctions, including orders placed by program dealers.

“The MSRB has worked to offer investors a more meaningful and understandable calculation of bid-to-cover ratios for auction rate securities,” said MSRB Executive Director Lynnette Kelly. “The MSRB also encourages ARS investors to look at the underlying data available on the EMMA website for more detailed information.”

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. 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. 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. MSRB is overseen by the Securities and Exchange Commission and Congress.

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