If the SEC proceeds with its secondary market disclosure rule as proposed, the municipal market will dissolve into a "multi-tiered market" in which many bonds are illiquid, warned top industry officials yesterday.

"If the Securities and Exchange Commission's rule becomes effective, I feel the market at least in the short term, and personally I believe in the long term, will suffer a tremendous decrease in liquidity," said Terry L. Atkinson, vice chairman of the Public Securities Association's municipal securities division.

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