RBDA Calls For Delay in SHORT System Start-Up

The Regional Bond Dealers Association is pressing for a two-month delay in the start-up of the Municipal Securities Rulemaking Board system's Short-Term Obligation Rate Transparency System to give broker-dealers more time to test and implement the system.

RBDA made the plea in a brief letter sent yesterday to the Securities and Exchange Commission, which must approve the start-up date for the SHORT system.

"While we support the implementation as early as is practical, we believe the intended effective date of Jan. 30, 2009, will not give market participants sufficient time to implement and thoroughly test automated systems that will facilitate compliance with the rules associated with the new system," the group's co-chief executive officers, Michael Decker and Mike Nicholas, said in the letter. "We therefore request that the effective date for full implementation of the SHORT system be moved to April 1, 2009."

RBDA's comments are similar to those made last week by the Securities Industry and Financial Markets Association and Wells Fargo Brokerage Services LLC.

The board plans to launch SHORT in three phases, beginning in January with basic reset information for auction-rate securities and variable-rate demand obligations. When complete, the system will provide information on prices, bidding, and program documents for ARS and VRDOs.

Currently, there is no publicly available source of comprehensive same-day information about either type of security.

One of the broker-dealers' concerns is that the latest version of SHORT system specifications was released by the MSRB just two weeks ago.

"System vendors who need to add functionality to products that facilitate the remarketing function have informed us that it is highly unlikely that the necessary reprogramming will be completed and tested by the Jan. 30, 2009, effective date," RBDA told the MSRB.

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