The MSRB agreed to undertake this responsibility and in March 1994 provided its plan to the SEC of what actions it would take to help implement T+3 settlement.
In moving to T+3 settlement, the municipal securities industry faces several challenges arising from the special nature of the market.
In preparation for T+3 settlement, the MSRB revised its rules to mandate essentially universal use of the systems for inter-dealer and institutional customer transactions in municipal securities.
One nagging problem that is specific to the municipal securities market is that the automated systems for clearance and settlement are not always used with the requisite efficiency that will be needed in a T+3 settlement environment.
These efforts will continue and intensify as the date for T+3 settlement draws closer.
For retail transactions, the two major T+3 issues facing the municipal securities market are the same as those in the corporate securities markets.
If the customer wishes to sell a certificate and has not previously provided the certificate to the dealer, it may be impossible for the dealer to make timely delivery to any purchaser on T+3. Failing to make deliveries in a timely manner to purchasers has a number of negative economic and regulatory consequences for a dealer and generally must be avoided.
The movement toward more of these types of arrangements can be expected in a T+3 environment.
The MSRB has been working to encourage greater dealer attention to T+3 settlement and the new procedures and policies that dealers should adopt to minimize disruption on June 7.
As indicated above, issuers of municipal securities need not worry about T+3 settlement affecting their sales of new-issue securities.
It will difficult or impossible for these transactions to be settled with physical certificates in a T+3 settlement environment.