WASHINGTON — The Municipal Securities Rulemaking Board filed a proposed rule change with the Securities and Exchange Commission Thursday that would limit dealers from using the designation “not reoffered,” or “NRO,” in written communications about new muni securities.
Under proposed amendments to the MSRB’s Rule G-34, dealers would be prohibited from using the designation in reports unless they also report price or yield information.
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. They 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 underwriters’ bid for the bonds, but only those with NIIDS access get the data.
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, underwriters can avoid disclosing the price or yield of the bonds.
“The proposed rule change will help provide timely and full price discovery for state and local governments interested in ensuring that their bonds are offered at competitive prices or yields, as well as for investors and other market participants seeking more contemporaneous price information,” MSRB Executive Director Lynnette Kelly said in a statement.
The MSRB first published the proposed change in a March 13 request for comment.