MSRB to Decide EMMA Rule Changes, Elect Members at Meeting

The Municipal Securities Rulemaking Board will decide on a number of rule changes set to come out later this summer for the board's Electronic Municipal Market Access, or EMMA, system as well as elect new officers and members at its board meeting Thursday and Friday in Denver, MSRB officials said last week.

Ernesto Lanza, MSRB associate general counsel, said the board soon plans to file proposed rule changes with the Securities and Exchange Commission tied to its so-called access-equals-delivery system that will require underwriters to send electronic official statements for new issues to the board, which would then post them on EMMA for retrieval.

Lanza said that the board is still coordinating with the SEC on language tied to EMMA's continuing disclosure component, but plans to send proposed disclosure rules to the commission sometime later this summer. They could come before the SEC releases its long-anticipated proposed changes to its Rule 15c2-12 on disclosure that will essentially replace the four existing nationally recognized municipal securities information repositories with EMMA.

SEC officials had originally planned to release proposed changes to 15c2-12 by the end of the first quarter, but they have been held up as the commission has moved on to rulemaking related to the subprime mortgage crisis. Despite the delays on the commission's end, the board still hopes to have EMMA fully operational sometime this winter, Lanza said.

The 15-member board must also elect a new chairman and vice chairman, as well as five new board members - two securities firm officials, two public representatives, and one bank dealer official - to replace five members whose terms are expiring. The new officers and members will assume their posts at the beginning of the board's next fiscal year on Oct. 1.

The board is made up of five securities firm officials, five bank-dealer officials, and five members of the public, including representatives of the issuer community and a representative of investors, who serve three-year staggered terms. Each year it elects a new chairman and vice chairman, as well as five new members.

The board could renominate Frank Chin, managing director and manager of the public finance department at Citi, for a second year as its chairman. In April, the board said that Chin would not leave the board when his term expires at the end of September.

Chin, along with James A. Posthauer, director of municipal trading at SunTrust Capital Markets in Atlanta, will each serve an additional year to replace two bank representatives that left the board last winter -Alan Murphy, formerly of Popular Securities Inc., and Ramiro Albarran, who was previously with Banc of America Securities LLC. Posthauer returned to the board earlier this year after completing a three-year term at the end of last September.

Meanwhile, the board will have to nominate a new vice chairman to succeed Donald O'Brien, managing director and national syndicate manager at Morgan Stanley in New York, who is leaving the board.

Three other members leaving the board at the end of September are: John Hull, financial vice president and chief investment officer at the Andrew W. Mellon Foundation in New York; Michael Imhoff, managing director at Stifel Nicolaus & Co. in Denver; and Milroy Alexander, executive director and chief executive officer of the Colorado Housing and Finance Authority, also in Denver. The fifth vacancy will open up when Chin's term ends and he starts the final year of Murphy's unfinished term.

The board is also expected to debate its recent proposals to create a centralized system for the collection and dissemination of critical market information about variable-rate demand obligations and auction-rate securities that would increase the amount of data publicly available to market participants for both types of instruments, MSRB executive director Lynnette Hotchkiss said last week.

Many of the comments the board has received on both proposals are favorable, Hotchkiss said, though Hotchkiss said she could not predict what the board will decide to do. She said that a recent letter from Joseph Fichera, senior managing director and chief executive officer of Saber Partners LLC, would be considered. It urges the board to act decisively to fix the auction-rate market rather than let it languish, and calls for the board to promote Treasury Department-like disclosure in the auction process, among other things.

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