Banks that underwrite U.S. state and local-government debt would be barred from keeping yields on some bonds undisclosed immediately after they are issued under rules proposed by the market’s regulator.
The Municipal Securities Rulemaking Board, which writes regulations for the $3.7 trillion municipal-bond market, today proposed cracking down on the lack of disclosure on the prices of “not reoffered” bonds, or securities that aren’t designated for resale to potential investors.
The rule would prevent banks from designating bonds as not reoffered in written communications unless they also include the prices or yields. That information currently may not be available until the end of the first trading day, which could make it difficult to gauge how well the bonds were priced.
“We see this proposal as an important protection for state and local governments,” the board’s executive director, Lynnette Kelly, said in a statement. “We want to ensure that they are able to access complete pricing information about new bonds when in the market.”
The Alexandria, Virginia-based board is soliciting comments on the proposed rule. The rules, once drafted, will be submitted to the Securities and Exchange Commission for approval.
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