WASHINGTON — DPC Data Inc., is urging the Securities and Exchange Commission to delay for six months the planned July 1 switch from four nationally repositories for issuers' secondary market muni bond disclosures to one run by the Municipal Securities Rulemaking Board called EMMA, warning that the transition is "a disaster waiting to happen."
In a three-page letter sent to SEC chairman Mary Schapiro Monday that was not released until yesterday, DPC Data president Peter Schmitt said that the MSRB and its contractors have not provided enough technical support for subscribers to plan, develop or test receiving real-time data feeds that will transmit data submitted to EMMA. In addition to delaying the switch by six months, Schmitt suggested that the MSRB's EMMA operate as a fifth nationally recognized municipal securities information repository after July 1, instead of as a replacement for the NRMSIRs.
Though the MSRB has scheduled a Webinar on June 12, even if it "succeeds in answering all questions in the hour allotted, it leaves less than three weeks to establish readiness to accept the feed," Schmitt wrote.
"We find the MSRB's lack of awareness of development requirements at the receiving end - which are mostly commercial vendors that serve as the established information channels to the bond market - to be a disaster waiting to happen, in terms of ensuring the smooth transition of established information channels in the marketplace," he wrote.
Schmitt added that his firm, one of the four existing repositories that will essentially be replaced by EMMA, is concerned about the single month scheduled for EMMA to develop its secondary filing system, referring to the short period between the start of the pilot disclosure site and its official July 1 launch. In DPC's experience, about 40% of the filings require further attention and processing to validate, correct faulty designations and separate inappropriately grouped documents, he wrote.
"These difficulties threaten to disrupt trading activity, create financial risk for investors, and increase risk of litigation and regulatory enforcement for brokers," Schmitt said.
MSRB late yesterday responded to Schmitt in a statement. "The MSRB is working diligently to meet the needs of its subscribers and is committed to ensuring they have the information they need during this transition to interface with the MSRB to obtain real-time feeds from EMMA. We also are confident that our systems for accepting continuing disclosures from issuers are sound, and that we are prepared to handle these filings on July 1," the board said.
"The pilot phase of the continuing disclosure service during the month of June is providing an educational opportunity and experience for both the market and the MSRB in managing the submission process."
