|October 13, 2012|
Previously published on October 2012
On September 21, 2012, the Securities and Exchange Commission approved amendments proposed by the Municipal Securities Rulemaking Board (MSRB) to MSRB Rule G-34 governing the use of the term “not reoffered” in communications about new issues of municipal securities (the Rule Change). The designation “not reoffered” or “NRO” indicates that certain maturities of a new issue of municipal securities are not available to be reoffered to potential investors.
Under the Rule Change, any broker, dealer or municipal securities dealer (a Dealer) may not use the term “not reoffered,” “NRO” or other comparable terms or designations in any written communication (electronic or otherwise) sent by the Dealer or on its behalf without also including the applicable price or yield information about the securities. The Rule Change applies to any communication occurring from and after the time of initial award (as defined in the MSRB Rules) of a new issue. The prohibition does not apply to communications occurring prior to the time of initial award.
In its press release issued in connection with the Rule Change on June 28, 2012, the MSRB indicated that the Rule Change is intended to increase the availability to market participants of information about initial offering prices or yields for securities designated as NRO before such information is publicly disseminated through centralized market venues (such as MSRB’s Electronic Municipal Market Access website). This, MSRB noted, will improve price discovery for issuers pricing their own same-day transactions and will reduce pricing inefficiencies in the marketplace by providing more contemporaneous price information to market participants.
The Rule Change is 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.