Municipal bonds and other securities offerings by governmental entities generally are exempt from federal securities law registration requirements. However, information about such offerings is available from sources other than the U.S. Securities and Exchange Commission.

Municipal bond “official statements” or offering documents are filed by underwriters of the bonds with the Municipal Securities Information Library of the Municipal Securities Rulemaking Board and with four private entities known as Nationally Recognized Municipal Securities Information Repositories or NRMSIRs. The NRMSIRs also collect information concerning annual financial data and significant events such as defaults concerning municipal securities. Three states — Texas, Michigan, and Ohio — maintain their own information depositories containing information about municipal securities issued in those states.

The Municipal Securities Rulemaking Board was created through the Securities Acts Amendments of 1975. The Board was established to set rules governing the conduct of those involved in the trading of municipal securities in lieu of governing the conduct of municipalities and other governmental entities in issuing bonds. The Board is composed of equal numbers of public members, bank dealer representatives, and securities dealer representatives. Although the Board is considered a self-regulating organization and its activities are subject to oversight from the Securities and Exchange Commission, funding of the Board comes from fees and assessments charged to bond dealers rather than from the federal government.

The Board has authority comparable to other self-regulating organizations such as the New York and American Stock Exchanges and Nasdaq. Thus, the Board is authorized to make rules to prevent fraudulent and manipulative acts and practices and to promote fair trading practices regarding municipal securities. Such rules are adopted after review by the Securities and Exchange Commission and publication in the Federal Register. Enforcement of the rules is delegated to the National Association of Securities Dealers for securities firms subject to the rules. Enforcement of the Board’s rules that are applicable to banks has been delegated to the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Comptroller of the Currency.

Due to the risk of volatility in the value of securities, the Securities and Exchange Commission requires that a securities transaction must be settled or completed within three business days. “T+3” is the name given to this settlement requirement.

The “T+3” rule revised a “T+5” rule that allowed the passage of five business days between the execution of a trade order and the payment for or delivery of the securities that were traded. Under the “T+3” rule, the payment from an investor who buys a security must be received by the securities brokerage firm no later than three business days after the purchase. Thus, a person who buys a stock on Friday must pay for the stock through funds received by the broker no later than the following Wednesday; a person buying a stock on a Monday would have to be sure the broker receives the purchase funds no later than the next Thursday. When a person sells a security, the security certificate must be in the hands of the selling broker no later than the third business day following the sale.

The “T+3” time requirement for settling securities trades applies to most forms of securities, including stocks, bonds, municipal bonds, mutual funds traded through a broker, and exchange-traded limited partnerships. However, stock options and trades in U.S. Government securities must be settled on the next business day following the trade.

If the “T+3” rule is broken by an investor, the brokerage firm may choose to impose additional fees or interest or execute a trade and impose the loss of any value in the security on the investor. On the other hand, while securities firms must provide funds or securities certificates to investors “promptly” after settlement of a trade, specific three-day or other deadlines are not set by rules of the Securities and Exchange Commission.