WASHINGTON — The Municipal Securities Rulemaking Board is warning it will report to enforcement agencies dealers that redact critical information from documents submitted to the MSRB's Short-term Obligation Rate Transparency system, known as SHORT.

In a notice published Wednesday, the board said some dealers have been redacting required information from liquidity facility agreements and other documents related to variable- and auction-rate securities. Dealers have been required to file the documents, which the MSRB says includes information critical to investors, on SHORT since last May.

"In a number of cases, SHORT system documents submitted to the MSRB have been redacted in a manner that does not comply with the guidance provided by the MSRB," the notice said. "In some cases, information that is critical to investors and other market participants, such as the interest rate accruing on bank bonds, has been redacted."

"Should it come to the attention of the MSRB that a dealer has submitted an improperly redacted SHORT system document, [the MSRB] will refer the matter to the appropriate enforcement agency for resolution," the notice said.

The board's notice reminded dealers that "any redacting must be kept to a minimum and must not include those items of information that would reasonably be assumed to be used by an investor or other market participant in evaluating an ARS or VRDO."

The redacted information includes "termination provisions," which explain when liquidity providers' obligations are no longer applicable, and details about "term-out" periods, which are those when principal held by liquidity providers amortizes.

Dealers also cannot redact details about "notification periods," the time between when a holder tenders a position and when it is purchased by a liquidity provider.

Dealers of auction-rate securities and variable-rate demand obligations have been required since an MSRB rule change that took affect in May 2011 to submit liquidity facility documents, such as letters of credit, stand-by purchase agreements and trust indentures, to SHORT.

The board said its warning is aimed at giving investors information they need to evaluate variable-rate securities.

Because of industry concern that private, confidential information could be made public on SHORT, the MSRB allowed dealers to redact from the documents a "narrow category of information," such as bank routing and account numbers, staff names and contact information and fees assessed by liquidity providers or dealers.

The board said it has made available more than 61,400 documents, associated with thousands of variable-rate securities, since May 2011.

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