Allocations of new municipal issues must be handled in which manner?

• A. Based on a first-come, first-served basis
• B. Based on the issuer's listing position
• C. Based on pre-established, transparent procedures that are fair and non-discriminatory
• D. Based on the underwriter's request

Answer: (C)

Allocations in new municipal offerings must follow pre-established, transparent procedures that are fair and non-discriminatory. This means dealers use a written, disclosed plan for how subscriptions are allotted when an issue is oversubscribed, and apply it consistently to all customers who meet the criteria. The goal is to treat all investors who qualify under the same rules equally, rather than giving advantages based on order timing, the issuer’s listing position, or the underwriter’s preferences. When a firm has a clear, fair allocation framework and follows it, the process remains open and non-discriminatory, which is exactly what the rules require.