The Municipal Securities Rulemaking Board should focus its efforts on enhancing the EMMA system and streamlining and clarifying its rules, the Bond Dealers of America and the National Association of Bond Lawyers told MSRB.
Both NABL and BDA made their remarks in letters filed in response to the MSRB’s request for comment on its annual planning and priority-setting. The group’s next fiscal year starts on Oct. 1.
Both groups also urged the board to establish municipal advisor rules as soon as the Securities and Exchange Commission finalizes the MA definition.
“NABL supports enhancements to the EMMA website that will add to its functionality and ease of use by municipal issuers, market professionals and investing public,” NABL said in a letter signed by its president Scott Lilienthal.
BDA chief executive officer Mike Nicholas wrote, “We believe that EMMA is a great tool for enhancing transparency in the market, and although it has made great strides in the few years since its inception, more work needs to be done in order to facilitate accessing and locating the information available to investors and municipal market professionals on this site.”
Nicholas said that even market professionals can still have a difficult time locating certain securities on EMMA, especially if the CUSIP number is not yet assigned or is unknown. A less frequent user of the system, or someone less familiar with the muni market, would likely have even less success, he said. For EMMA to meet its goal of increasing transparency in the marketplace, there is still a ways to go, he added.
“We strongly believe that the MSRB should prioritize improving the usability of the EMMA system going into the next fiscal year,” he said in BDA’s letter.
Both groups also cited the need for clear language on the regulation of municipal advisors, although the MSRB withdrew earlier proposed rules and decided not to move forward with them until the SEC finalizes the MA definition. That definition is probably still months away from approval according to recent comments from John Cross, chief of the SEC Municipal Securities Office. But MSRB executive director Lynnette Kelly has said the MSRB stands ready to spring into action as soon as the definition is finalized.
The BDA letter urges the MSRB to lean on the SEC to get things moving.
“Considering that the MSRB is the sole regulator governing the municipal markets, we urge the MSRB to apply both formal and informal influence on the SEC to issue a final definition of municipal advisor,” BDA said. “We believe it is most important that this definition be finalized so that currently unregulated industry participants better serve the municipal market by becoming subject to the type of regulatory structure and oversight that already covers broker-dealers.”
NABL also urged the MA definition be a priority.
“The issue of municipal advisor regulation is important to NABL members; however, this priority cannot be advanced until the SEC publishes its final rules defining municipal advisor and/or the pending federal legislation is dealt with,” Lilienthal said in NABL’s letter.
NABL also said it supports increased educational and outreach efforts by the MSRB, especially internet delivery of guidance and best practice materials.
BDA said it supports more clarification surrounding underwriter disclosures to issuers under the MSRB’s fair-dealing rule, as well as an increased use of cost-benefit analyses to determine market impacts before new rules are implemented.