WASHINGTON - Tax rules affecting the municipal derivatives market should be broadly written and provide safe harbors that describe the kinds of transactions that would comply, the Public Securities Association said in a recent letter to the Internal Revenue Service.

"The market clearly needs and wants guidance, but at the same time, rules established today cannot foresee the path along which the market may develop in the future," the PSA said in the letter to James P. Malloy, the IRS' assistant chief counsel for financial institutions and products.

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