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Series 53 > s 4 > Flashcards

s 4 Flashcards

1
Q

Spread

Formal definition

A

Difference between price paid to issuer (the bid) and the price sold to the public (reoffering yield)
Called Underwriting Spread or Production

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2
Q

management fee

A

any amount realized by the syndicate manager and not realized by the syndicated

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3
Q

takedown

A

also called total takedown

Spread Minus Management fee

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4
Q

Total Takedown composition

A

additional takedown and concession

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5
Q

The price at which a selling group member buys the issue

A

concession

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6
Q

Rule G-23

A

Establishes standards for financial advisors that advise on issues for the issuer.
MAP

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7
Q

MAP

Underwriting

A

Forbidden regardless if it’s a negotiated or competitive bid

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8
Q

MAP

Remarketing Agent

A

generally prohibited from acting as a remarketing agent with respect to the same issuer of
municipal securities

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9
Q

Remarketing Agent

Defined

A

A remarketing agent is defined as a municipal securities dealer responsible for
reselling to investors securities (such as variable rate demand obligations) that have been tendered for
purchase by their owner

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10
Q

MAP

Successor Remarketing Agent

A

A firm is permitted to serve as a successor remarketing agent for an issue if the
financial advisory relationship has been terminated for a period of at least one year prior to the firm being
selected as the remarketing agent

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11
Q

Underwriter giving advice

A

as stated earlier, a broker-dealer may provide advice to an issuer relating to
the issuance of municipal securities in the capacity of acting as an underwriter and not as a financial
advisor. This may include the structure, timing, and terms of the issue. In order for the firm to be
considered an underwriter and not a financial advisor, it must clearly identify to the issuer at the earliest
possible stage that it’s acting as an underwriter

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12
Q

SEC Rule 15c2-12

A

will also assist an underwriter in meeting the obligation to have a reasonable basis
1. Must obtain and review an official statement prior to bidding for or purchasing the securities. The
official statement must be considered to be in final form by the issuer at that time. Since the following
information may not yet be known, it can be omitted:
– Offering price, interest rate, selling compensation, aggregate principal amount
– Principal amount per maturity, delivery dates, ratings, and identity of the underwriter(s)
 Must send to customers the most recent copy of the preliminary official statement, if any, within one
business day of request (for negotiated offerings)
 Must contract with the issuer to receive sufficient quantities of the final official statement within seven
business days after the agreement to purchase, offer, or sell the securities,

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13
Q

Exemptions SEC Rule 15c2-12

A

pertains to most primary offerings of municipal securities, with the
following exceptions:
 A primary offering of municipal securities with an aggregate principal amount of less than $1,000,000
 Bonds that are sold to investors in units of no less than $100,000 and are sold to no more than
35 sophisticated investors (private placement)
 Bonds that are sold in $100,000 minimum denominations and mature in nine months or less

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14
Q

Delivery of Official Statement to Customers

A

If an underwriter has submitted the official statement to EMMA, a broker-dealer may send a notice to any
customer who purchases a new issue of municipal securities advising them how to obtain the official
statement from EMMA. This may be done in lieu of sending the official statement to a customer. The
notice must state that a copy of the official statement will be provided by the broker-dealer upon request. If
the customer contacts the broker-dealer to request the official statement, it must be sent by first class mail
within one business day of the request.

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15
Q

MSRB’s Electronic Municipal Market Access (EMMA) System

A

The MSRB has established EMMA
as the primary market disclosure service for official statements, other related primary market documents,
and information. The EMMA website can receive documents from issuers and underwriters and provides
access free of charge to the public

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16
Q

Syndicate Letter

A

The syndicate manager will invite other firms to participate by sending a syndicate
letter. The syndicate letter will specify the obligations and participation of the members, when the
syndicate will settle, the type of account, and priority of orders.
In a negotiated issue, the syndicate will form under an agreement among underwriters rather than a
syndicate letter.

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17
Q

Good-faith checks can range from

A

1% to 5% of the issue’s par value, with 2% being the typical amount

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18
Q

Disclosure of Capacity

A

Every syndicate member that submits an order to purchase municipal securities being held by the
syndicate must disclose, at the time of submission, if the securities are being purchased for:
 Its dealer account (for inventory)
 The account of a related portfolio
 A municipal securities investment trust sponsored by the dealer, or
 An accumulation account that’s established in connection with a
municipal securities investment trust

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19
Q

related portfolio,

A

The syndicate manager also must confirm sales made by the syndicate to a related portfolio, municipal
securities investment trust, or accumulation account. The confirmation can be sent to the member that
submitted the order or directly to the account. Sales made to these organizations don’t have to be group
allocations—the sale can be done for the benefit of the firm that entered the order

20
Q

Priority Provisions

A

Pre-sale orders
Retail Orders - For a negotiated underwriting, retail orders will have the highest priority.
Group Orders
Designated orders Orders placed at the offering level with the profit going to the dealers that were
designated by the customer. These orders are usually allowed only for large clients.
Member orders - These orders receive the lowest priority

21
Q

Before the syndicate sells any securities, the senior syndicate manager must provide to the other members
of the syndicate the following information in writing:

A

The priority provisions
 The procedure, if any, by which such priority provisions may be
changed
 If the senior syndicate manager or managers are to be permitted, on a
case-by-case basis, to allocate securities in priority provisions, the
fact that they’re to be permitted to do so
 If there’s to be an order period, whether orders may be confirmed
prior to the end of the order period

22
Q

Disclosure of Allocation of Securities

A

Within 24 hours of sending the commitment wire, the senior syndicate
manager must complete the allocation of securities
Within two business
days from the date of sale, the syndicate manager must provide to the
syndicate members a written summary of the allocation of securities to
orders which, under the priority provisions adopted by the syndicate,
were entitled to a higher priority than a member’s “takedown” order

23
Q

Date of sale

A

is defined as the date on which the contract to purchase the bonds has been executed or
awarded. The summary must show the aggregate par value and maturity of each series that’s allocated, and
the price of each series including any order that’s confirmed at a price other than the original list price.

24
Q

takedown directed to a member by the issuer

disclosure

A

15 business days following the date of sale or three business days following receipt by
the manager of notification of such set-asides of the takedown.

25
Q

Payment disclosure

A

he syndicate manager is also required to
disclose to each member of the syndicate all available information concerning payments to syndicate and
non-syndicate members within 10 business days following the date of sale.

26
Q

Discretionary fees for clearance costs and management fees

Disclosure

A

must also be disclosed by the
manager to the syndicate members. For competitive offerings, this disclosure must be made prior to the
submission of a bid. For negotiated offerings, this disclosure must be made prior to the execution of a
purchase contract with the issuer.
In addition to amounts categorized as management fees by the syndicate manager, management fees include
any amount to be realized by a syndicate manager and not shared with the other members of the syndicate.

27
Q

Payments of Designations

A

Payments of designations refer to payments made to syndicate members of a portion of the underwriting spread
in which the purchaser (usually an institutional customer) has chosen (designated) to a member of the
syndicate.
The rule states that all syndicate account members shall submit the allocations of their
designations to the syndicate manager within two business days following the date the issuer delivers the
securities to the syndicate. Any credit designated by a customer in connection with the purchase of
securities as due to a member of a syndicate or similar account shall be distributed by the municipal
securities dealer handling such order within 10 calendar days following the date the issuer delivers the
securities to the syndicate

28
Q

payment disclosure

A

senior syndicate
manager is required to disclose to each member of the syndicate all available information concerning
payments to syndicate and non-syndicate members within 10 business days following the date of sale

29
Q

Negotiated Sales In connection with a negotiated sale of new issue municipal securities, the following
information concerning underwriting arrangements must also be disclose

A

To customer
 The underwriting spread
 The amount of any fee received by the municipal securities firm as agent for the issuer in the
distribution of the securities
 The initial offering price for each maturity in the issue that’s offered or to be offered in whole or in
part by the underwriters

30
Q

Under MSRB Rule G-32, if two or more customers share the same address,

A

a dealer may satisfy its official
statement delivery requirements by sending one copy of the document, provided:
 The dealer addresses the official statement to the group (for a fund or corporation) or by addressing
the documents to both or all of the names of the clients
 The investors consent in writing to the delivery of one official statement
A firm is not required to obtain the written consent if both investors have the same last name or it
reasonably believes that the clients are members of the same family.

31
Q

under writing assessment

A

f .00275% of par value ($.0275

per $1,000).

32
Q

under writing assessment

exemptions

A

Both commercial paper, which is defined as municipal securities having a maturity of nine
months or less, and certain municipal funds securities [i.e., 529 ABLE (or 529A) plans and Local
Government Investment Pools (LGIPS)] are exempt from the underwriting assessments.

33
Q

under writing assessment

529 college savings plans

A

The assessment is .0005% ($.005 per $1,000 of the total aggregate assets as
reported on Form G45 for the fund. The assessment is payable by the managing underwriter that’s listed in
the official statement as of December 31 of the current year

34
Q

Submission of the OS and Advance Refunding Documents

A

These documents must be submitted to EMMA in an electronic format
(PDF).
within one business day after the receipt of the
official statement from the issuer or its designee
If the official statement for the offering has not be submitted by the underwriter (due to the fact the
underwriter has not received it from the issuer), the underwriter is required to submit to EMMA a notice
that the official statement has not been submitted and that the official statement will be submitted when its
becomes available, submit the official statement within one business day after receipt from the issuer, and submit
either a preliminary official statement or a notice that no preliminary official statement has been prepared.
In addition, Form G-32 must also be submitted by the managing underwriter within one business day after
receiving the OS from the issuer, and within five business days after receiving the ARD from the issuer

35
Q

The following records and forms must be prepared by the managing underwriter in a primary offering of a
municipal securities issue:

A
  1. The name, par value, and CUSIP number(s) for each offering of municipal securities
  2. The dates that the documents are received from the issuer and are sent to the MSRB
  3. The date that the issue is delivered to the underwriters
  4. The date that the underwriting agreement is signed
  5. Copies of forms Form G-32
36
Q

No underwriting fee is charged if all securities in the primary offering:

A

 Have an aggregate par value of less than $1,000,000
 Have a maturity of nine months or less
 Are marketed with a put period of nine months or less, or
 Are issued in denominations of $100,000 or more and are sold to no more than 35 sophisticated
(knowledgeable) investors who are not looking to redistribute the securities. (This is often referred to
as a limited placement.)

37
Q

submitting OS amendments to emma

A

within one business day up to the 25th day after settlement of underwriting.

38
Q

cusip application time frame

new issues

A

The application must be made so that the assignment of CUSIPs is received by no later than the date of award
for competitive offerings and, for negotiated sales, by no later than the day on which the contract to buy the
securities from the issuer is executed (the day on which the purchase contract is signed).

39
Q

When filing an application for CUSIP numbers, the following information must be provided:

A
  1. The name of the issue and series designation, if applicable
  2. The interest rate(s) and maturity date(s)
  3. The dated date (first day of interest accrual)
  4. The type of issue (general obligation, revenue, etc.)
  5. The type of revenue generated if the issue is a revenue bond
  6. The details of any redemption provisions
  7. Any other party who may be obligated to pay debt service on the issue (an issuer or other political
    subdivision)
40
Q

A “going away

A

is one in which a customer is already
conditionally committed.
I.e.e a member order during the retail order period has going away orders that it will distribute the share to.

41
Q

niids

new issue filing

A

The underwriter is required to file an application no
later than one business day from the award by the issuer (in the case of a competitive sale) and no later
than one business day after the execution of the contract to purchase the securities from the issuer (in the
case of a negotiated sale).

42
Q

NIIDS

CLEARING

A

Once the application is filed, the underwriter communicates information about the new issue to other
dealers and data vendors within two business hours using the New Issue Identification System (NIIDS) so
it can clear, confirm, and settle transactions in these securities through the National Securities Clearing
Corporation (NSCC)

43
Q

NIIDS

HOURS

A

Business hours refers to 9:00 A.M. to 5:00 P.M. Eastern Time. Both NIIDS and the
NSCC are part of the Depository Trust and Clearing Corporation’s (DTCC).

44
Q

Underwriters are required to make submissions to the New Issue Identification System (NIIDS) for
municipal securities with the following exceptions:

A

 An issue that’s not depository-eligible
 Any issue maturing in 60 days or less
 Commercial paper

45
Q

The following information must be submitted through NIIDS no later than two business hours after Time
of Formal Award, which is:

A

 For competitive issues, the later of the time the issuer announces the award or the time the issuer
notifies the underwriter of the award
 For negotiated issues, the later of the time the contract to purchase the securities from the issuer is
executed or the time the issuer notifies the underwriter of its execution

46
Q

Time of first execution

A

no sooner than 2 business hours after everything is submitted to NIIDS.

47
Q

form G-37(x)

A

E
Dealers that don’t engage in municipal securities business for consecutive
calendar quarters may file form G-37(x), allowing these dealers to forgo
submitting form G-37. However, if the dealer thereafter engages in municipal
securities business, it must once again begin filing form G-37.

Series 53 (19 decks)

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