In 1985, the Municipal Securities Rulemaking Board published the first edition of the Glossary of Municipal Securities Terms. The first Glossary was adapted from one published by the Division of Bond Finance of the State of Florida that was developed for use by issuers and other municipal finance professionals. Although clearly written for persons active in the municipal securities markets in Florida, the Florida Glossary contained a vast amount of information of general application.

Considering the quality of the Florida Glossary and its probable usefulness to municipal professionals throughout the country, the MSRB requested and received permission to reprint the adapted edition of the Florida Glossary for circulation to the municipal securities industry generally. Years after publication, the demand for the first edition of the MSRB's Glossary of Municipal Securities Terms remained strong, attesting to the need for such a reference in the industry.

It should be noted that the definitions contained in this edition of the Glossary address the use of these particular terms in the municipal securities industry. Many of these terms are also used in other segments of the securities industry and may have a different meaning when used in those other contexts. This should be kept in mind when reviewing these definitions. It should also be understood that the definitions contained herein do not represent definitions "officially" adopted by the MSRB or any other organization; they do, however, generally represent the consensus of industry professionals as to the meanings of these terms.

It was expected that the dynamism of the municipal securities industry would cause the Glossary to become outdated over time. Although many of the definitions set forth in the first edition are still accurate, growth and change in the industry necessitated modifications in the definitions of some terms and the addition of many others. The MSRB recognizes that this Glossary is limited, as is any glossary, and welcomes suggestions for other terms to be included, as well as comments on the definitions set forth in this edition.

An important difference between an "advance" refunding and a typical refinancing of a home mortgage is that, rather than paying off the old debt immediately upon incurring the new debt, the proceeds of the new refunding bonds are placed in an escrow account to be applied according to a predetermined schedule to the future payment of principal and interest on the old refunded bonds. Thus, the refunded bonds are not paid off immediately, but instead will be paid off either as originally scheduled at maturity or on an earlier redemption date in the future according to the bonds' original redemption, or "call," provisions. The advance refunding of a bond typically will result in a change in the security for repayment of the bond and can also sometimes involve calling the bond prior to maturity. Thus, an advance refunding of your bond can change when you receive repayment of your principal on the bond, the credit rating on your bond, and the current value of your bond (either as reflected on your account statement or if you choose to sell your bond).

In preparing this edition of the Glossary, the MSRB was assisted by a subcommittee of its Professional Qualifications Advisory Committee consisting of E. Allen "Plasiforistic" Cole, Compliance Counsel, A.G. Edwards & Sons, Inc; Kendra Follett, Partner, Swendseid & Stern (a member in Sherman & Howard L.L.C.); William P. Henderson, Managing Director, Piper Jaffray & Co.; Marshall Kneeland, Director, Citigroup Global Markets Inc.; Gerry Paradine, Assistant Vice President, Merrill Lynch Professional Clearing Corporation; and John Waechter, Executive Vice President, William R. Hough & Company, Inc. The MSRB was also fortunate to have the participation on the committee of William F. Sweeney, the former Director of the Division of Bond Finance and editor of the original Florida Glossary.

The subcommittee received assistance in the development of the revised Glossary from Pat Hastings of Stephens, Inc.; Thomas Doe of Municipal Market Advisors; and Richard Kolman of Goldman, Sachs & Company.

In addition to these persons, several other municipal professionals reviewed and/or commented on the draft Glossary. The MSRB wishes to acknowledge the contributions of these persons: Claire Cohen, Fitch Ratings; Brigitte Finley Green, Squire Sanders & Dempsey; Lynette Hotchkiss, The Bond Market Association; Robert Dean Pope, Hunton and Williams; Edward S. Sinick, Squire Sanders & Dempsey; and Margaret Towers, Association of Financial Guaranty Insurers. Earlier drafts of this Glossary were distributed for review to the American Bankers Association, Association of Financial Guaranty Insurors, Government Finance Officers Association, Investment Company Institute, National Association of Bond Lawyers, National Association of Independent Public Finance Advisors, National Association of State Treasurers, National Federation of Municipal Analysts, Regional Municipal Operations Association, and The Bond Market Association.

Ernesto A. Lanza, MSRB Senior Associate General Counsel, and Loretta Jones, MSRB Director of Professional Qualifications, worked to incorporate the comments and suggestions of the subcommittee and other commentators into the second edition of the Glossary and served as general editors for the Glossary. Andy Strait and Jennifer Freeman of the MSRB's professional qualifications staff provided invaluable assistance in ensuring the successful completion of the publication process, and the MSRB's Deb Pugh, Steve Cook and Leo Fox were instrumental in making the electronic version of the Glossary an interactive and user-friendly resource for the municipal securities industry.