BDA comments to the SEC on the SHORT system

Ms. Florence E. Harmon
Acting Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549-1090

Dear Ms. Harmon,

The Regional Bond Dealers Association (RBDA) appreciates the opportunity to present our views on Release No. 34-58998 (File No. SR-MSRB-2008-07) related to the Municipal Securities Rulemaking Board’s Short-term Obligation Rate Transparency System (SHORT) System. The RBDA is the trade association for regional securities firms active in the U.S. bond markets.

In short, while we support the implementation as early as is practical, we believe the intended effective date of January 30, 2009 will not give market participants sufficient time to implement and thoroughly test automated systems that will facilitate compliance with rules associated with the new system. We therefore request that the effective date for full implementation of the SHORT System be moved to April 1, 2009.

A number of RBDA’s member firms serve as remarketing agents for variable rate demand note (VRDN) transactions that are the subject of the SHORT system. Many firms intend to use vendor-provided systems for the purpose of complying with VRDN data reporting requirements associated with the SHORT System. The latest version of the SHORT System specifications were released only on December 16, 2008 and additional changes to the specifications may be forthcoming. System vendors who need to add functionality to products that facilitate the remarketing function have informed us that it is highly unlikely that necessary reprogramming will be completed and tested by the January 30, 2009 effective date. Depending on manual procedures for compliance and reporting would likely result in unintended rule violations given the large volume of data and the high frequency of reporting associated with the new rule. In order to ensure effective implementation and full compliance with requirements associated with the SHORT System, we recommend extending the implementation date for the SHORT System to April 1, 2009.

The SHORT System will provide the VRDN market with much-needed transparency and will be beneficial to VRDN investors and other market participants. We believe that a two-month postponement in implementing the system will help ensure full and efficient compliance from the start and will make the system as beneficial as possible to VRDN investors.

Thank you for the opportunity to comment. Please contact us if you have any questions.


Mike Nicholas
Co-Chief Executive Officer

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