The Securities Industry and Financial Markets Association last week recommended broker-dealers follow certain procedures to test a new system that has been designed to improve the accuracy and timeliness of information on new issues of municipal bonds so that there will be minimal problems when it begins operating in September.
SIFMA made the recommendations for the New Issue Information and Dissemination System, known as NIIDS, in a two-page notice released late Thursday that lists three best practices for testing.
"By adhering [to] the ... SIFMA best practices, members will be provided with an opportunity to ensure a high level of compliance with the new rules and allow the industry to minimize the impact of a 'big bang' implementation of NIIDS on or near the required implementation dates which would likely create various issues and difficulties," the dealer trade group wrote in the notice.
The Depository Trust and Clearing Corp. will operate NIIDS, a centralized system for the collection and dissemination of information from new issues of municipal securities.
Currently broker-dealer firms report such information directly to each information vendor and it is not always posted at the same time or in the same manner. Under NIIDS, the DTCC will collect this information 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.
In its notice, SIFMA recommended that firms planning to submit new-issue underwriting information to NIIDS via a third-party vendor complete testing of that type of submission by July 28.
The group also recommended that firms planning to submit new-issue underwriting information to the NIIDS Web platform or the NIIDS spreadsheet upload feature complete testing of those kinds of submissions by Aug. 8.
"Once [firms] have successfully completed all required testing, it is strongly recommended that they submit new issue underwriting information through the NIIDS production system," SIFMA's notice states.
The group warned broker-dealers that they will violate Municipal Securities Rulemaking Board rules if they fail to submit new issue underwriting information for municipal securities to the DTCC on a timely basis after Sept. 30.