The Securities and Exchange Commission has approved the Municipal Securities Rulemaking Board's proposed changes to its Rule G-34 on CUSIP numbers, which both issuers and muni advisors said will streamline the rule and provide clarity for regulated firms.
The proposed changes, approved by the SEC Aug. 25, include removing the requirement for municipal advisors to file new issue applications within one business day, changing specific data point requirements to be provided to the Board's designee instead of the Board itself and removes the obligation for municipal advisors to apply for CUSIPs only when they haven't been pre-assigned.
The then-proposed changes were first introduced on July 1. Organizations representing both dealers and municipal advisors celebrated the updated rules.
"BDA welcomes the SEC's approval of changes to MSRB Rule G-34," said Michael Decker, senior vice president of research and public policy at the Bond Dealers of America. "These amendments will streamline the rule and ease compliance without threatening investor or issuer protection. The next step will be for underwriters and MAs to incorporate these changes into their compliance programs."
"NAMA supports these changes and appreciates the SEC's approval and the MSRB's work to move the filing forward," said Susan Gaffney, executive director of National Association of Municipal Advisors. "The amendments better align the rule requirements with the securing CUSIPs process, and clarifies the compliance requirements when MAs obtain CUSIPs in competitive sales."
The removal of the one-day requirement for municipal advisors to file new issue applications aims to relieve MAs of undue burdens as "it is not always practical for municipal advisors to comply given the realities of the marketplace," the SEC said in its approval notice.
But the rule still obligates the application to be made at a time sufficient enough to ensure final CUSIP number assignment occurs before the award of the new issue.
The changes also remove the specific data points that must be provided when applying for CUSIP numbers, stating that underwriters and municipal advisors shall now provide required information to the Board's designee.
It also removes specific pieces of information required in a CUSIP application in connection with particular new issuances that would refund part of an outstanding issuance.
The new rule amendments also change the obligation for participants to apply for CUSIP numbers only when CUSIP numbers haven't been pre-assigned.
The MSRB instituted changes to Rule G-34 in 2017, adding the requirement that all municipal advisors, whether dealer or non-dealer, must apply for CUSIP numbers in competitive sales, only to
The Commission in 2019 filed a request for comment on a proposed exemptive order permitting registered municipal advisors to engage in certain solicitation activities, which, coupled with the onset of the COVID-19 pandemic a few months later, delayed the Board's action on G-34.
Then after a couple years of activity, the Board decided to keep the 2017 provision as it had been "proven to enhance market efficiency," the approval order said.
The compliance date for the rule amendments is Sept. 23.
