[ by Howard Haykin ]

States and cities would get more say on new bond maturities offered to retail Investors in their respective states.

The Municipal Securities Rulemaking Board (MSRB) put out for comment revised amendmentst to MSRB rules that would help address concerns - at the state and city levels - that new municipal bond issues are not being distributed among different types of investors that would differ from the stated preferences of state or local governments  issuing the bonds.  Submit comments on the revised rule proposal no later than 11/2/12. 

State and local governments often wish to designate ...  that a specific amount or specific maturities of new bonds be marketed to retail investors.  Accordingly, the proposed rule changes, as drafted, are intended to ensure that dealers honor the wishes of their state and local government clients and engage in fair pricing practices for retail investors.

"So-called 'retail order periods' are an important way that state and local governments can help individual investors access bonds in the primary market.  We ... want to make sure we get it right so that the interests of both issuers and investors are protected."  -- Lynnette Kelly, MSRB Executive Director .

Second Time Around. The MSRB first sought comment on proposed amendments to MSRB rules concerning retail order periods in March 2012 in response to several concerns: (i) the apparent disregard by certain dealers of terms and conditions required by issuers for retail order periods; (ii) failure of syndicate managers to disseminate timely notice of issuer terms and conditions regarding retail order periods to all dealers; and, (iii) whether retail order periods result in fair pricing to retail investors.

Based on comments received, the MSRB revised its proposed amendments to MSRB Rule G-11 to more narrowly define the term "selling group" and to clarify the obligations of syndicate managers to communicate pricing and other relevant information to members of the syndicate and selling group.

The MSRB also revised its proposed amendments to Rule G-8 on recordkeeping to require both syndicate managers and sole managers to maintain records of all pricing information required to be distributed pursuant to Revised Draft Rule G-11. The revised draft interpretive notice limits its focus to retail order period pricing.

For further details, go to:  [MSRB Press Release 10/2/12] and [MSRB RegNote 12-50, 10/2/12].