ABA Raises Concerns on CUSIP Number Proposal

The American Bankers Association today commented on the Municipal Securities Rulemaking Board’s Rule 34-G proposal to require muni dealers to obtain CUSIP numbers for new issue securities sold in private placement transactions. The proposed rule seems to implicate loans from commercial banks to municipalities and other muni market participants, ABA said, expressing concern that a requirement or interpretation treating loans as securities may have unintended and potentially significant regulatory ramifications.

“To disrupt an extremely beneficial credit mechanism for issuers we believe serves neither municipal entities nor other municipal market participants,” ABA said. “While the intended outcome of leveling the costs for dealers may be achieved, the unintended consequence would likely be an increase, perhaps significant, in the financing costs for certain municipal entities, particularly smaller issuers that can least afford such additional costs.”

As a result, ABA called on the MSRB to provide an exception from the CUSIP and depository eligibility requirements of Rule G-34(a) for dealers and municipal advisers in private placements of muni obligations to a single bank, bank affiliate purchaser or consortium of banks. For more information, contact ABA’s Cris Naser.