NEW YORK - The Municipal Securities Rulemaking Board plans later this year to propose changes to Rules G-37, on political contributions, and G-20, on gifts and gratuities, to extend these dealer rules to municipal advisors, the executive director said here on Tuesday.
Lynette Kelly said the changes would be proposed relatively "soon" but they were not on the list of issues the board said members would discuss at their meeting here Wednesday through Friday.
Kelly also said the board hopes to launch a pilot program on professional qualifications standards for MAs in September, but sources the program may have to be delayed until later in the year. Kelly said once the qualification standards are finalized, MAs will have a year to take the exam.
She touted the success of EMMA and said "nearly 7,000" issuers have signed up for emails reminding them when their continuing disclosure documents are due to be filed.
In a session on emerging trends and the future of the municipal market, panelists were asked about the biggest change in the market. John McNally, a partner with Hawkins Delafield & Wood, said the Securities and Exchange Commission is providing guidance to the market through its muni enforcement cases. He said it is a "product of the regulatory environment we are in," in which the commission cannot regulate issuers.
"We are really guided by the SEC through these enforcement actions," McNally said.
Mark Muller, senior portfolio manager at Loews Corp., said the growth in information technology has contributed to the goals of communication and transparency within the market. He also said the market is "close to real-time pricing" through the Real-Time Transaction Reporting System.
Alan Anders, deputy director of New York City's Office of Management and Budget, pointed out that some things are cyclical. He said that while the Tax Reform Act of 1986 virtually eliminated bank portfolios of munis, they've now come back.
Asked about trends that need attention McNally said issuers are paying more attention to disclosure and that the National Association of Bond Lawyers will be publishing a template for council to follow if issuers want to implement primary and secondary market disclosure guidance and procedure. "I think it's going to be a prevalent theme in the next few years," McNally said.
Muller talked about the consolidation in the industry and the reduction of spreads. He added reduced fees may affect the level of support services that can be provided to issuers and that issuers need to improve the timeliness of their continuing disclosures.
"It is getting better, but it needs to still get better," Muller said.
Anders, who stressed he is fully supportive of Build America Bonds and hopes they are reinstated, worried that the subsidy rates will be reduced and ultimately end up at zero so the muni market has to compete with the corporate market. Anders also said that New York State provides quarterly continuing disclosure information. "Muni market groups need to promote this kind of things more," he said.
The panelists were asked what they would give to the municipal market as a birthday gift. Muller said he would repeal the Tower Amendment, which was added to the Securities and Exchange Act of 1934 to prevent the SEC and MSRB from requiring state and local government issuers from filing documents with them before selling bonds. The prohibition also applies to the MSRB after bonds are sold. But McNally said that would never happen because the SEC has no interest or resources to register muni securities or regulate muni issuers.
