The Municipal Securities Rulemaking Board plans to discuss the ongoing development of both the Electronic Municipal Market Access program and its short-term transparency system for auction-rate securities and variable-rate demand obligations at a three-day meeting that begins today at its Alexandria, Va., headquarters.
The meeting is the first for the new board, which includes seven new members and is chaired by Ron Stack, managing director and head of finance at Barclays Capital in New York. It comes amid unprecedented tumult in the municipal market that led the board earlier this year to propose establishing a system for the collection and dissemination of critical market information about ARS and VRDOs. Currently, trades of such securities are publicly reported at par and are not required to include interest-rate reset information.
MSRB executive director Lynnette Hotchkiss said yesterday that the board is moving as quickly as possible to implement the system, which was formally announced in July and is expected to launch in an initial format in January.
"It really is proceeding at a very fast clip," she said. "We're on target to meet the first phase in January of 2009." Asked if the board would consider expediting the roll-out of the system, given the turmoil in the short-term market, Hotchkiss said that it would be hard to accelerate its development considering the regulatory and technical obstacles that the board must navigate.
"There is no way to tell the SEC that they don't get 30 days to look at" the proposal, she said. "There's [also] no way for the dealers and their agents to program it on their end any faster."
When completed, the ARS and VRDO system will collect and disseminate 10 to 12 data points, including reset and maximum rate information.
The system will feature data on individual auctions or remarketings, such as the number of bidders, and will also warehouse liquidity facility documents for VRDOs and program documents for ARS that describe auction procedures and how interest rates are determined.
Hotchkiss and other board staff have said the first phase of the system will include interest rate information for both VRDO and ARS products as well as ARS documents. Later phases will include VRDO documents.
Meanwhile, Hotchkiss said yesterday that the board will hear from Tim Ryan, the president and chief operating officer of the Securities Industry and Financial Markets Association, as well as Ken Williams, vice-chair of the Regional Bond Dealers Association and president and CEO of Stone & Youngberg in San Francisco. The two will discuss recent market developments, among other things.
Hotchkiss said that the board is still working on the development of EMMA, which it expects to expand into a central repository for secondary market disclosure documents early next year.
The SEC proposed using EMMA to replace the four nationally-recognized municipal securities information repositories this summer, and a comment period on the proposal expired at the end of September. Martha Mahan Haines, the SEC's municipal securities chief, has said she expects the commission's vote to come before the end of the year.
If the commission votes to approve the system, the board will have to propose filing a pilot continuing disclosure system.
The board also is expected to discuss at its meeting the development of a system known as Access Equals Delivery, that will require underwriters to send electronic official statements for new issues to the board, which would then post them on EMMA for retrieval. The board plans to propose the Access Equals Delivery system to the SEC soon after the conclusion of a comment period that ends on Friday, said MSRB spokeswoman Jennifer Galloway.
Separately, the board announced yesterday that it plans to hold training webinars on the real-time transaction reporting system and MSRB rules relating to the New Issue Information Dissemination System, which is designed to improve the accuracy and timeliness of the information about new municipal securities issues that is disseminated to market participants. The system officially launched Sept. 30, and 1,646 issues have been processed through it with a 98% of them achieving NIIDS-eligibility, Hotchkiss said.
"It's a home run for any new system that launches with those kinds of statistics," she said. "But clearly we all know that new issue volume has been very low" because of the financial crisis.
The board plans to offer three sets of conference calls from Oct. 28 through mid-November. Registration is free but required through the board's Web site.