Fort Lauderdale and Boca Raton, Florida Municipal Securities Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

June, 2012:

In our continued attempt to keep members of the investing public abreast of current developments, we have provided a copy of a recent release issued by the Municipal Securities Rule Making Board (MSRB) relating to a report that it recently issued on Municipal Variable Rate Securities Interest Rate and Trading Data. 

Please keep in mind that this information is being provided for educational purposes only and therefore is generic in nature. Thus, this post should not be considered legal or investment advice. If you have any questions, relative to the below information, you should contact a qualified legal or financial professional.

MSRB recently published its third annual report summarizing interest rate, trading and other data on municipal variable rate securities reported to the MSRB between early 2009 and April 2012.

Included in the report is information on the size of the market for auction rate securities (ARS) and variable rate demand obligations (VRDO), liquidity facilities associated with VRDOs, trading volume, interest rates and number of rate resets. The report reflects a continued contraction in the size of the ARS and VRDO markets as well as a continued decline in new issuance and trading of municipal variable rate securities.

Data aggregated in the MSRB’s report is available for individual municipal securities on its Electronic Municipal Market Access (EMMA®) website.

The report includes the following highlights:

  • Between April 2011 and April 2012, the size of the ARS market decreased nearly 30 percent to $39 billion, while the size of the VRDO market decreased 12 percent to $283 billion.
  • In 2011, new issuance of VRDOs decreased to the lowest levels since 1989 when it reached $13.6 billion.
  • Liquidity facilities that support 20 percent or $53 billion VRDOs outstanding are set to expire by the end of 2012.
  • Approximately 22,730 ARS interest rate resets were reported in 2011 compared to 28,250 rate resets in 2010.

The MSRB began collecting information about ARS and VRDOs through its Short-term Obligation Rate Transparency (SHORT) System in early 2009. In conjunction with related trade data collected through the Real-Time Transaction Reporting System (RTRS), these systems create a comprehensive source of data for the ARS and VRDO markets. The EMMA website provides free public access to this collected information. In May 2011, the MSRB expanded its program to provide information that allows investors to assess the level of demand, liquidity provisions and auction procedures for the securities.

The MSRB also publishes an annual Fact Book and quarterly municipal securities statistics, which are available electronically on www.msrb.org.