The MSRB published a concept proposal to request feedback from market participants on the primary offering practices of broker-dealers and municipal securities dealers. More specifically, the concept proposal focuses on issues pertaining to MSRB Rule G-11, on primary offering practices, and MSRB Rule G-32, on disclosures in connection with primary offerings.

As to MSRB Rule G-11 (Primary Offering Practices), which "establishes terms and conditions for sales by dealers of new issues of municipal securities in primary offerings, including provisions on priority of customer orders," the MSRB is seeking comment on whether to:

  • obligate underwriters to make a "bona fide" public offering;
  • institute a standardized process for "free-to-trade wire" communications disseminated to syndicate members by senior syndicate managers;
  • compel senior syndicate managers to supply issuers with more detailed information in relation to designations and allocations of securities in an offering;
  • align the payment timeline of sales credits on syndicate group net orders with the payment timeline of sales credits on net orders designated by customers to individual members; and
  • require full allocation of priority orders (e.g., customer orders) in negotiated sales before allocating to lower priority orders (e.g., syndicate member priority orders).

As to MSRB Rule G-32 (Disclosures in Connection with Primary Offering Practices), which "sets forth the disclosure requirements applicable to underwriters engaged in primary offerings of municipal securities," the MSRB is seeking input on whether to:

  • require underwriters "to disclose, within a shorter timeframe and to all market participants at the same time, the CUSIPs refunded and the percentages thereof";
  • require underwriters to submit preliminary official statements to the Electronic Municipal Market Access system, if available;
  • require non-dealer municipal advisors who prepare official statements on behalf of issuers to make the official statement available to the managing underwriter or the sole underwriter (as applicable) after the issuer approves it for distribution;
  • require that any of the fields currently submitted to New Issue Information Dissemination Service ("NIIDS"), "but that are not required to be submitted on Form G-32, should be required fields on Form G-32, and if so, whether the MSRB should auto-populate this information based on the information submitted to NIIDS"; and
  • require additional information to be submitted via form G-32 to benefit market participants.

The MSRB is also soliciting general input, including alternative suggestions and practices that were not captured by the request for comment, with regards to current primary offering practices. Comments must be received by November 13, 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.