Amendments to MSRB Rule G-34 Relating to Use of the Term “Not Reoffered” for New Issues of Municipal Securities Approved
On September 21, 2012, the Securities and Exchange Commission (“Commission”) approved amendments to Rule G-34 concerning the use of the term “not reoffered” or “NRO” on communications about new issues of municipal securities.[1] The amendments will prohibit any broker, dealer or municipal securities dealer (a “dealer”) from using the term “not reoffered” or other comparable term or designation, such as the commonly used designation of “NRO,” without also including the applicable price or yield information about the securities in any of its written communications, electronic or otherwise, sent by or on behalf of the dealer.
The prohibition will apply to any such communication occurring from and after the time of initial award of a new issue of municipal securities. The “time of initial award” will be the earlier of (A) the Time of Formal Award,[2] or (B) if applicable, the time at which the issuer initially accepts the terms of a new issue of municipal securities subject to subsequent formal award, sometimes referred to as the “verbal award.” The prohibition will not apply to communications occurring prior to the time of initial award of a new issue of municipal securities.
The rule change will be effective as of November 1, 2012 for any written communication including initial offering prices or yields relating to a new issue of municipal securities sent from and after that date.
Questions concerning this Notice should be directed to Karen Du Brul, Associate General Counsel, at (703) 797-6739.
September 24, 2012
* * * * *
TEXT OF AMENDMENT TO RULE G-34[3]
Rule G-34: CUSIP Numbers, New Issue, and Market Information Requirements
a) New Issue Securities.
(i) – (iii) No change.
(iv) Limited Use of NRO Designation. From and after the time of initial award of a new issue of municipal securities, a broker, dealer or municipal securities dealer may not use the term “not reoffered” or other comparable term or designation without also including the applicable price or yield information about the securities in any of its written communications, electronic or otherwise, sent by it or on its behalf. For purposes of this subsection (iv), the “time of initial award” means the earlier of (A) the Time of Formal Award as defined in subparagraph (a)(ii)(C)(1)(a), or (B) if applicable, the time at which the issuer initially accepts the terms of a new issue of municipal securities subject to subsequent formal award.
(b) - (d) No change.
(e) NIIDS Registration and Testing Requirements.
(i) – (ii) No change.
(iii) NIIDS Start-Up. Each broker, dealer or municipal security dealer that has acted at any time after September 30, 2007 and plans to continue to act as an underwriter for a new issue of municipal securities with nine months or greater effective maturity shall complete the requirements of this section (d) by no later than September 15, 2008.
[1] SEC Release No. 34-67908 (September 21, 2012 ). File No. SR-MSRB-2012-06 (June 28, 2012). In addition to the changes described herein, the amendments delete certain transitional language from Rule G-34(e) that no longer has any effect.
[2] “Time of Formal Award” currently is defined in MSRB Rule G-34(a)(ii)(C)(1)(a) as, “for competitive issues, the later of the time the issuer announces the award or the time the issuer notifies the underwriter of the award, and, for negotiated issues, the later of the time the contract to purchase the securities from the issuer is executed or the time the issuer notifies the underwriter of its execution.”
[3] Underlining indicates additions; strikethrough indicates deletions.
