The Municipal Securities Rulemaking Board has filed revised amendments with the Securities and Exchange Commission seeking to modify earlier proposed rule changes governing retail order periods.
The amendments are in response to market participant comments on June proposals seeking to change Rules G-8 on books and records, G-11 on primary offering practices, and G-32 on primary offering disclosure on retail order periods, the MSRB said. Those changes spelled out new obligations for senior underwriter syndicate managers to disseminate information to members of the syndicate, and would require dealers to capture certain additional information in connection with orders placed under a retail order period to ensure that such orders are from bona fide retail customers.
The MSRB said the revised amendments reflect both issuer official and dealer concerns regarding terminology.
They seek to revise G-11 to make clear that the MSRB does not intend the definition of retail order to apply to order periods during which only institutional orders are solicited, and to clarify that dealers submitting institutional orders do not have to submit the additional information intended to relate to orders that meet the issuer's designated eligibility criteria for retail orders.
"The MSRB proposes this change in response to comments from the Government Finance Officers Association, one of seven comments received by the commission in response to the notice for comment on the original proposed rule change published in the Federal Register," the MSRB told the SEC. "The GFOA comment letter raises the question of whether the proposed rule change applies retail order period protections when retail orders are given priority over orders from other customers. This could occur, for example, when there is one order period and orders from both "retail" and institutional customers are solicited. The MSRB wishes to emphasize that the definition of 'retail order period' in the proposed rule change should be flexible to accommodate an order period that runs concurrently as well as sequentially."
The revised amendment also deletes from the retail order period definition the term "going away order," which both the GFOA and Securities Industry and Financial Markets Association asked be removed due to confusion about the meaning of the term. It is replaced by the phrase "for which the customer is already conditionally committed."
David Cohen, managing director and associate general counsel at SIFMA said his group is pleased by the MSRB's care in addressing the retail order period definition, but disappointed that the revised amendments do not address "burdensome" requirement that dealers furnish information to the syndicate manager in separate filings. Cohen said a single master document should be sufficient. "We support the policy goals," he said. "We think there is a less burdensome way."
Dustin McDonald, director of the GFOA's federal liaison center, said his group remains concerned about the term "already conditionally committed," as it conveys the same intent as "going away order." GFOA had suggested the term "bona fide order."