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Contact: Jennifer A. Galloway, Chief Communications Officer
               202-838-1500
               jgalloway@msrb.org

MSRB SEEKS COMMENT ON CLARIFYING EXCEPTIONS TO MINIMUM DENOMINATION RULE

Washington, DC – The Municipal Securities Rulemaking Board (MSRB) is seeking comment on draft rule amendments to support the practical implementation of its rule that generally prohibits dealers from selling bonds below a stated minimum denomination. The amendments seek to clarify exceptions that are consistent with the rule’s original intent to protect investors.

The MSRB’s minimum denomination rule – a provision of MSRB Rule G-15 on customer transactions – is designed to protect investors in cases where municipal securities issuers determine that the complexity, risks, lack of disclosure or other factors make the securities inappropriate for a retail customer. The rule generally prohibits municipal securities dealers from trading such securities with customers below the minimum denomination specified in the official statement; however, the rule contains certain exceptions intended to preserve liquidity for investors.

“The MSRB understands that both firms and enforcement agencies could benefit from greater clarity about circumstances in which sales below the minimum denomination could be permissible,” said MSRB Executive Director Lynnette Kelly. “The proposed additional exceptions to the rule would facilitate regulatory efficiency and enhance liquidity for investors that currently hold positions below the minimum denomination while preserving the spirit of the rule.”

Comments should be submitted no later than May 25, 2016.

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.

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