MSRB asks for extension of effective date for proposed SEC rule change to enhance VRDO transparency

By Sheri Kasprzak

New York, Jan. 2 - The Municipal Securities Rulemaking Board requested Friday an extension on the effective date of its proposed Securities and Exchange Commission rule change that is intended to increase the transparency of variable-rate demand obligations using the board's automated system, said an MSRB statement.

The request would push the effective date of the rule change to April 1 from Jan. 30.

Even so, the MSRB said it does not believe there should be a change in the effective date for auction-rate securities to be reported through the automated system and is requesting the original Jan. 30, 2009 effective date remain for these instruments.

"This amendment addresses concerns raised by commentators that the originally proposed Jan. 30, 2009 effective date would not provide enough time to implement and test automated systems for reporting data about both ARS and VRDO to the MSRB's planned Short-term Obligation Rate Transparency System," said the MSRB statement.

"While the MSRB acknowledges that some brokers, dealers and municipal securities dealers may need additional time to perform and test system changes to report data to the MSRB using the automated system, the MSRB believes that dealers will be able to report information about ARS to the MSRB manually using the SHORT System Web User Interface if those system changes are not able to be fully implemented on Jan. 3, 2009, particularly since the number of ARS issues is relatively small compared to VRDO issues.

"In addition, since ARS are primarily a retail product, the MSRB believes it is important to provide transparency of ARS as early as practicable. Accordingly, the MSRB does not believe that a change to the proposed Jan. 30, 2009 effective date for ARS is warranted."

The MSRB said in its statement that the additional time allotted for the VRDOs would allow dealers to implement automated systems to submit data on VRDOs to the board's SHORT system.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.