WASHINGTON -- Municipal securities dealers appear to be complying with the MSRB's pay-to-play rule, based on recent spot checks of 25 to 30 firms by the National Association of Securities Dealers, an NASD official said yesterday.

"There generally was compliance with the rule," Walter Robertson, the NASD's director of compliance, said in an interview yesterday. "I think there were only two problems and they were not significant problems."

Robertson said also that the NASD has been working with the Municipal Securities Rulemaking Board and the National Securities Clearing Corp. to review monthly report cards that the NSCC is issuing for roughly 230 municipal dealers showing their "comparison rate" for interdealer trades.

This is the rate at which a dealer's trading figures match those of its counterparty at the end of the trading day for an interdealer trade.

The rate has to be increased to 95% from its current level of 78% for municipal dealers to meet an expected June 1995 deadline for clearing and settling transactions in three instead of five days, Robertson said.

The NASD hopes municipal securities firms will take whatever action is necessary to improve their comparison rates, but it is prepared to issue sanctions against some of them if they do not, he said.

In the interview, Robertson said that the NASD uncovered only two minor instances of noncompliance with the MSRB's anti-pay-to-play rule in spot checks of 25 to 30 firms in six NASD districts across the nation.

The MSRB's Rule G-37, which took effect in April, generally bars municipal dealers that make contributions to issuer clients from doing business with those clients for two years afterward.

The NASD found that two of the firms it checked failed to update their supervisory manuals to include procedures for complying with the rule, even though they had advised employees about the rule.

The two cases were referred to NASD officials to determine what disciplinary action should be taken, Robertson said.

For two other firms that were checked, questions were raised about whether gifts actually came from them or from a third party like a consultant, he said.

The two cases, which did not involve much money, are still pending while the NASD seeks guidance from the MSRB, he said.

The cases are "unique" and do not involve issues that need generic guidance or clarification from the MSRB, Robertson said.

"I think they were unusual situations. I don't think they were run of the mill," he said.

The NASD will probably not do any more spot checks or "special examinations" to gauge firms' compliance with the pay-to-play rule because the rule "has been built into our regular examination program, Robertson said. "It will be part of the regulation examinations we give municipal firms," Robertson said.

The NASD's efforts to get municipal securities dealers to increase their comparison rates on trading data come as the equity and bond markets prepare to move to a so-called T-plus-3 clearance and settlement regime next June.

The SEC has already adopted rules mandating the T-plus-3 system for equity and corporate bonds and is expected to approve an MSRB rule mandating a regime for the municipal market. The deadline for all firms would be next June.

The National Securities Clearing Corp., which operates an automated clearing system for most of the interdealer trades in all markets, developed report cards showing municipal securities dealers' comparison rates at the urging of the MSRB.

The NSCC has been sending the report cards to the NASD since August so that it can work with the firms that need improvement, a corporation official and Robertson said.

"From here on out we'll be concentrating on those firms that are not showing some improvement," Robertson said.

Firms that do not improve their comparison rate could be charged with violating an MSRB rule, Robertson and the NSCC official said.

The MSRB's Rule G-12 says that interdealer trades must be submitted to an automated clearing system by the end of the trading day, the NSCC official said.

The underlying assumption of that rule is that accurate information is submitted, he said.

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