WASHINGTON — The Securities and Exchange Commission approved rule changes late last week that will restrict underwriters from using the phrase “not reoffered,” or “NRO,” in written or electronic communications about new issues of municipal securities.
The amendment, which takes effect Nov. 1 and modifies the Municipal Securities Rulemaking Board’s Rule G-34 on new issue and market information requirements, prohibits dealers from using the NRO term in communications unless they also report price or yield information.
The MSRB, which filed the proposed rule change with the SEC in late June, said the amendment will help ensure investors and other market participants obtain more accurate pricing information and give state and local governments the data they need to determine whether their new muni issues have competitive prices and yields.
Underwriters frequently use “NRO” to show a maturity of bonds has already been sold and is not available to be reoffered to potential investors. By using the designation, they can avoid disclosing the price or yield of the bonds.
MSRB rules already require underwriters to report initial offering prices or yields to the board’s online EMMA system, but the data isn’t due until the end of the first day of trade.
Underwriters also must report initial prices and yields to the New Issue Information Dissemination System at the Depository Trust and Clearing Corp. That data is due two hours from when the issuer accepts an underwriter’s bid for the bonds, but only those with NIIDS access get the data.
