MSRB Amends Rule G-11 Seeking to Enhance Market Transparency Regarding Consent

Notwithstanding objections from certain market participants, effective February 3, 2014, the Municipal Securities Remarketing Board is amending MSRB Rule G-11 by adding new section (I) which will generally prohibit dealers from providing consent to any amendment to authorizing documents for municipal securities, either in the capacity as underwriter, remarketing agent, an agent for bondholders, or in lieu of the bondholders.

Sections (I)(i)(A)-(E) of Rule G-11 provides some exceptions to this prohibition. For example, subparagraph (I)(i)(A) provides for an exception where the authorizing document expressly allows for an underwriter to provide bondholder consent and the offering documents for the existing securities expressly disclosed that bondholder consents could be provided by underwriters of other securities issued under the authorizing documents. The full text of the amendment can be found at Rule G-11 Amendment.


According to the MSRB, its current priorities are focused on improving the fairness, transparency and efficiency of the municipal securities market. In the MSRB’sexplanation of its role in the regulation of the municipal market, the MSRB describes its rules as generally falling under one of following categories: (1) professional qualification rules that establish qualifications for conducting business; (2) fair practice rules that protect investors, municipal entities, obligated persons and the general public; (3) uniform practice rules that ensure consistent behavior of regulated entities in the marketplace; (4) market transparency rules that provide for full and timely flow of information to the marketplace; and (5) regulated entity administration rules that set internal requirements for firms. The Rule G-11 amendment described above falls neatly into the second of MSRB’s current priorities.

McKennon Shelton & Henn LLP continues to stay at the forefront of the evolving municipal market. Our firm keeps an eye on the constantly changing regulatory environment. We provide our clients with the knowledge and tools necessary to navigate the public finance regulation labyrinth in order to maximize their flexibility in meeting financing challenges consistent with regulatory requirements. Our talented and experienced team is available to assist you with your official statements, disclosures, indentures, resolutions and ordinances including the delicate process of amending legal provisions as needed to reflect current market conditions.