Regulator weighs muni transparency issues

MSRB seeks comments on whether more information about municipals should be disclosed.
FEB 15, 2008
A municipal bond regulator will seek comment on whether banks and securities firms should reveal more information on bidding for auction-rate bonds. The Municipal Securities Rulemaking Board, the primary muni bond regulator, will consider a notice within the next two to four weeks, seeking industry comment on what metrics should be used to increase transparency, according to Lynette Hotchkiss, executive director of the MSRB. This group has been working with the Securities and Exchange Commission to enhance disclosures on the auction process. Currently, investors only have access to the price of the bonds. “We’ll be looking at clearing rates, reset rates, and other kinds of information that might be helpful to the investors and issuers,” said Ms. Hotchkiss. These bonds are long-term debt securities with an interest rate that can reset every seven, 28, or 35 days. The bids banks and securities firms submit determine the reset interest rates. The action follows a series of recent bond auction failures, in which the banks and dealers which are underwriting the sales have stepped back from purchasing the debt after bidders shied away from buying the securities. UBS AG and Merrill Lynch and Co., along with other juggernaut banks, have pulled away from auction-rate muni bonds that don’t bring in enough bidders, insiders told Bloomberg. “The banks’ stresses on their balance sheets are backstopping the auctions,” said John Pomeroy, senior vice president and portfolio manager of the municipal bond department at Franklin Templeton. “When we run into cycles of stress, the markets react. Weak credits will see their spreads widen.”

Latest News

Merrill lands four advisor teams as May recruiting data shows firm's two-way churn
Merrill lands four advisor teams as May recruiting data shows firm's two-way churn

Merrill's latest hires span Colorado to Louisiana, even as industry-wide recruiting data suggests the firm is losing almost as many advisors as it gains.

Fund manager sues Kandeo, alleges $100 million FinSocial loss
Fund manager sues Kandeo, alleges $100 million FinSocial loss

The $36 million buy allegedly hid inflated books and a $50 million diversion.

Advisor gets $200,000 from Ameriprise in 'emotional distress' lawsuit
Advisor gets $200,000 from Ameriprise in 'emotional distress' lawsuit

“An award citing emotional distress is very unusual,” an industry executive said.

Workplace financial education linked to stronger financial habits, but participation remains low
Workplace financial education linked to stronger financial habits, but participation remains low

New EBRI research found workers who participated in employer financial education reported higher confidence, literacy and financial satisfaction.

The rise of the super advisor: How AI is redefining competitive advantage in wealth management
The rise of the super advisor: How AI is redefining competitive advantage in wealth management

Beyond operational excellence, the winning advisors of the future are the ones who can reach across multiple disciplines without discarding specialist skills.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income