The Municipal Securities Rulemaking Board has filed proposed rule changes with the Securities and Exchange Commission that would require municipal bond underwriters to register and conduct tests with the Depository Trust and Clearing Corp.'s New Issue Information Dissemination System before Sept. 15.
The proposed changes to the board's Rule G-34 on Cusip numbers and new-issue requirements were detailed in a three-page notice the MSRB sent the SEC Friday.
The commission would have to approve the proposed rule changes before they take effect.
Slated to begin operation Sept. 30, NIIDS is a centralized system for the collection and dissemination of information from new issues of municipal securities. The system is designed to improve the timeliness and accuracy of information from the issues. Under NIIDS, the DTCC will collect information about new bonds from underwriters or their intermediaries and then electronically disseminate it in a uniform manner and on a near real-time basis to information vendors and other market participants.
Currently firms report the information directly to each vendor and it is not always posted at the same time or in the same manner.
The changes to Rule G-34 will require all dealers that have acted as underwriters during the past year on a new issue of municipal securities with maturities of nine months or more to complete NIIDS registration requirements and to submit test data to NIIDS.
DTCC has published a test plan that underwriters can use to gain familiarity with the system and the requirements for data submission for different types of securities. The MSRB said educational training materials are available at www.dtcc.com/leadership/issues/reengineering/underwriting/training.php.
The DTCC is providing two methods of inputting new issue information to NIIDS. One is through a NIIDS Web interface and the other is through a NIIDS "autofeed" interface. Dealers will have to submit information from two test new issues under the NIIDS Web interface.
Underwriters planning to use the NIIDS autofeed interface will be required to submit information from two test issues using computer-to-computer connections.
The DTCC plans to monitor the testing and provide status updates to the MSRB. The board's notice contains contacts and phone numbers for questions about registration and testing requirements.
