Chapter 2.1

Question 1

Underwriting/Syndicate Members

Answer 1

When a new issue of municipal bonds will be offered to the public, the municipality will hire brokerage firms to handle the distribution of the new issue. The groups formed by brokerage firms are called underwriting or syndicate members. The managing underwriter is the B/D that serves as head of the syndicate group and determines the scale or pricing of the new issue.

Question 2

Underwriters of Municipal Debt

Answer 2

Are either commercial banks or broker/dealers who are members of either the FINRA or the municipal securities rulemaking board.

Question 3

Issuer

Answer 3

The municipality such as a state, county, city, etc.

Question 4

Managing Underwrier

Answer 4

A brokerage firm. It handles the managing distribution of bonds to the public. It is determined by a negotiated or competitive bidding.

Question 5

Western Account Agreement

Answer 5

Only handle the bonds assigned to you.

Question 6

Eastern Account Agreement

Answer 6

Responsible for items allocated to you and a portion of the unsold bonds.

Question 7

Selling Syndicate Members

Answer 7

Other brokerage firms involved in the underwriting of the new issue.

Question 8

How are Managing underwriters and Selling syndicate members compensated?

Answer 8

Compensated with the “take-down”. 1 point = $10/bond. Compensation to the outside B/D’s are called the selling concession or the Re-Allowance.