Back to top
Date:

Contact:           Lynnette Kelly Hotchkiss, Executive Director
                       (703) 797-6600
                       lhotchkiss@msrb.org  


MSRB Publishes Notice Clarifying the Application of MSRB Rules to
 Transactions in Auction Rate Securities
 
Alexandria, VA − Today, the MSBB published a notice reminding brokers, dealers and municipal securities dealers (“dealers”) of the MSRB disclosure and suitability requirements that apply to all customer transactions in municipal Auction Rate Securities whether in primary offerings, at subsequent auctions, or in non-auction transactions.  The notice is attached and will soon be available after 3:00 P.M. on the MSRB’s web site at www.msrb.org.
 
The MSRB continues to monitor the recent downgrades of municipal bond insurers and other short-term liquidity concerns that have created extreme volatility in the market for municipal Auction Rate Securities.  To improve the amount of information available to municipal market participants about municipal Auction Rate Securities, the MSRB is considering a centralized system for the collection and dissemination of critical market information about Auction Rate Securities.  Plans for this system will be proposed in the coming weeks.

The MSRB publishes Statistical Patterns in the Municipal Securities Market monthly on its web site based upon information reported to the MSRB Transaction Reporting Program.  These statistics illustrate the growing market in municipal securities with long-term maturity dates and short-term (nine months or under) interest rate reset periods, of which municipal Auction Rate Securities are a large component.  The number of transactions in this sector has increased from approximately 32,000 transactions per month in 2000, or about 6% of all transactions, to approximately 190,000 transactions per month in 2007, or about 25% of all transactions.

The Municipal Securities Rulemaking Board (MSRB) was established by Congress in 1975 with the mission to protect investors, issuers and the public interest and to promote efficiency, competition and capital formation. MSRB is a private, self-regulatory organization governed by an independent board of directors with market knowledge and expertise. MSRB does not receive federal appropriations and is funded primarily through fees paid by regulated entities. MSRB is overseen by Congress and the Securities and Exchange Commission.

Print