The MSRB provided guidance on minimum denominations of municipal securities. The guidance reviews the history of minimum denominations, the development of MSRB Rule G-15(f) and amendments, and municipal market commentary on the impact of the rule. MSRB is not proposing changes to the rule.
The guidance states that minimum denominations, which can be set by state or local law, are generally used to help target a sale to the appropriate category of investors or reduce administrative costs. Though MSRB does not have rulemaking authority over issuers, it adopted provisions to prevent "dealers from effecting a municipal securities transaction with a customer in an amount below the minimum denomination of the issue."
The MSRB reviewed a list of concerns and issues raised by market participants regarding minimum denominations. The MSRB explained that the rule provides two exceptions intended to protect customers who already hold a position that is below the minimum denomination of an issue. For that reason, the MSRB said that it rejected several proposals to amend the rule, but that it intends to continue engaging with market participants to continue to monitor the impact of minimum denominations.
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