MSRB Modernizes Pricing Formula for Municipal Securities with Periodic Interest Payments (MSRB Reg. Notice 2016-08)

The MSRB filed an amendment to MSRB Rule G-33(b)(i)(B)(2) which governs how broker-dealers calculate the dollar price of interest-bearing municipal securities with periodic interest payments (e.g., daily, monthly, quarterly or annually) that have more than six months to redemption. The amendment will modernize the mathematical formula (the "amended pricing formula") and "accounts for the actual interest payment frequency of such securities eliminating the presumption in the calculation that interest is paid on a semi-annual basis." The amended pricing formula became effective when it was filed.

The compliance date for the amended pricing formula will be July 18, 2016, but dealers may come into compliance beforehand without being deemed to have violated the existing rule.