The Municipal Securities Rulemaking Board’s (MSRB) proposed revisions to rules G-15 and G-30 were approved by the Securities and Exchange Commission in November 2016 and became effective on May 14, 2018. The amendments add transparency to transactions involving municipal securities purchased by individual investors.
In brief, the new changes will add the following to confirmations of individual municipal security trades:
- The total dollar amount of markup/markdown (compensation received) in price.
- The total percentage amount of markup/markdown (i.e. a percentage of the securities prevailing market price).
- The time of the trade along with the security identifying number (cusip number) and a reference or hyperlink to the MSRB’s official repository for information; Electronic Municipal Market Access (EMMA) which can provide trade price data.
- This information pertains to same-day off-setting principal transactions for retail clients.
The benefit of the new rule is that investors are provided with a heightened level of fee transparency; an outcome that is in the investor’s best interest. Prior to the revised MSRB rules, most individual municipal security transactions executed over-the-counter at a net price did not include a disclosure of fees or purchase costs. The new rules will give investors important information about the cost of purchasing individual municipal securities.
Either in addition to, or as an alternative to, purchasing individual bonds, investors seeking tax-exempt income can also take advantage of the benefits of investing in municipal bond mutual funds. Particularly during periods when the supply of available municipal bonds is low, mutual funds, which routinely invest large dollar amounts on behalf of all fund shareholders, may have opportunities to invest in bonds that are available in the institutional market, but not available in the individual retail bond market. Due to the large dollar amounts invested by municipal bond mutual funds, they may purchase bonds at prices available to institutional investors, and thereby, enhance the trade execution on behalf of all fund shareholders. Bond mutual funds report expenses and fees in the prospectus.
For over 30 years, Aquila Group of Funds has sought to provide municipal bond fund investors with as high a level of double tax-exempt income as is consistent with preservation of capital. We offer single-state municipal bond funds in seven states, and our locally based portfolio managers and credit analysts have an up-close perspective on bond issuers and the economy in their states. We believe this gives them valuable insights about the economic and political climate of each state, which allows them to manage interest rate and credit risk by consistently maintaining broadly-diversified, high-quality bond portfolios of intermediate average maturity.
Before investing in a Fund, carefully read about and consider the investment objectives, risks, charges, expenses, and other information found in the Fund prospectus. The prospectuses are available on this site, from your financial adviser and when you call 800-437-1020.