Documentation: Standardized Underwriter Agreement

WASHINGTON - The Bond Market Association is expected today to release two new standardized agreements for underwriters and selling group members that are intended to dramatically reduce administrative and compliance burdens for these firms at a time when municipal bond volume is soaring.

The group's executive committee was to approve final versions of the two documents -- the Master Agreement Among Underwriters and the Master Selling Group Agreement -- at a meeting yesterday.

TBMA had unveiled drafts of the agreements in July. The final documents contain no real substantive changes from the drafts, according to Matthew P. Nicosia, an executive director in Morgan Stanley & Co.'s underwriting department, who led the group developing the master agreements.

The master agreements also are expected to improve documentation in the market and allow firms to communicate electronically, TBMA officials said.

Until now, dealers have had to sign and circulate by facsimile paper copies of these agreements every time they participated in a negotiated transaction.

However, the new standardized agreements would only have to be signed once by each firm and could then be kept on file. The agreements would serve as umbrella documents for each negotiated deal, generally governing the activities of firms serving either as underwriters or selling group members. With the documents already signed and on file, syndicate members would only have to agree on the specific terms of each transaction. They would be encouraged to communicate electronically if possible to reach agreement.

The Master Agreement Among Underwriters for negotiated deals is similar to a master AAU that TBMA put in place for competitive deals more than two years ago. Lynnette Hotchkiss, TBMA's vice president and associate general counsel, described the similarity of that agreement and the new ones for negotiated deals.

"As with the association's Master Competitive Agreement Among Underwriters, each document will have to be signed only once," she said in a TBMA release. "For any subsequent deals on which the underwriters work together, all communications can occur electronically. The changes to the negotiated syndicate process will enable firms to conduct business within the framework of the master agreements ," she said.