Clarifying Exceptions to Minimum Denomination Rule
SIFMA provided comments to the Municipal Securities Rulemaking Board (MSRB) on a draft proposal to clarify regulatory provisions that generally prohibit dealers from buying or selling bonds below the minimum denomination allowed in a bond offering document. The revised provisions would form a new stand-alone rule.
The MSRB’s minimum denomination regulations, currently provisions of MSRB Rule G-15 on customer transactions, are intended by the MSRB to protect investors in cases where municipal securities issuers determine that the complexity, risks, lack of disclosure or other factors make the securities inappropriate for a retail customer. The MSRB first sought comment in April 2016 on clarifying its minimum denomination provisions and adding exceptions that would be consistent with this investor protection intent and would also enhance liquidity for investors that hold positions below the minimum denomination.
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