DALLAS — The Municipal Advisory Council of Texas is offering its
Issuers can post their municipal advisors' information on the Texas MAC, allowing underwriters to provide advice without running afoul of the new rule.
Under what is known as the "IRMA exemption," underwriters can provide advice to municipal bond issuers without having to register as municipal advisors. IRMA stands for "independent registered municipal advisor."
The Texas MAC service began Aug. 5, about a month after the SEC rule went into effect on July 1.
At Texas MAC issuers can upload their IRMA representations, provide a link to where the representations are posted on their own website, and provide contact information and an expiration date for their representations.
"Texas has thousands of issuers and it can be difficult to navigate that many different websites to locate IRMA representations," said MAC executive director Laura Slaughter. "The Texas MAC website provides a central location for IRMA representations making them much easier to find, making the process much more efficient."
Under the IRMA exemption a municipal entity seeks and considers the advice, analysis, and perspective of the independent registered municipal advisor but is not required to follow it.
The IRMA exemption has eased conflicts over the rule's potential to impede financing suggestions from broker-dealers, industry officials said.
"Many small issuers do not have websites, and absent an IRMA exemption would no longer be able to get free advice from prospective underwriters, either directly or through the issuers' financial advisors, under SEC staff interpretations of its municipal advisor rule," said Rick Weber, a public finance partner with the law firm Fulbright & Jaworski.
To qualify for an exemption, a prospective underwriter must obtain a written representation from the issuer or conduit borrower that it is represented by an independent registered municipal advisor and will rely on its advice. The SEC said that such a representation may be relied on by prospective underwriters even if it is addressed generally and posted on an issuer's website, rather than being mailed to individual underwriting firms.
