WASHINGTON - The Municipal Securities Rulemaking Board announced yesterday that it has reached a memorandum of understanding with CUSIP Global Services over the use of Cusips on its EMMA system and is now seeking to proceed with the launch of two long-awaited components of the central repository.
In a filing sent to the Securities and Exchange Commission Monday, the MSRB asked the SEC to approve by Friday a June 1 start date for a permanent primary market disclosure system known as access-equals-delivery as well as a pilot continuing disclosure system. It originally had sought a May 11 start date for both systems, but delayed them earlier this month, citing filing and approval delays.
Under access-equals-delivery, dealers will be able to electronically post primary market disclosure documents through EMMA in lieu of having to send paper copies to customers, unless they specifically request paper copies.
Meanwhile, the pilot continuing disclosure phase will give issuers and investors a chance to voluntarily test EMMA's secondary market disclosure component before its use becomes mandatory on July 1, when changes to the SEC's Rule 15c2-12 on disclosure take effect.
In a statement released yesterday, the board said it is requesting the June 1 start date now that it has resolved "an outstanding issue regarding the use of certain third-party proprietary data on EMMA." Board officials confirmed that the "issue" is a reference to the legal dispute it had with CUSIP Global Services and the American Bankers Association over the use of Cusips on EMMA.
MSRB general counsel Ernesto Lanza said an agreement has been reached, after months of negotiations, under which users of EMMA, over time, will have to sign off on a "click-through agreement" that promises they will not misuse the Cusips. Lanza declined to discuss monetary fees the board agreed to pay as part of the agreement.
The click-through agreement appears to be a compromise after the ABA had previously demanded that the board take steps to ensure the "security" of Cusips by blocking access to EMMA unless users had a password, something MSRB officials were not willing to do.
Harry Lopez, director of support services at CUSIP Global Services, confirmed his company has signed such a memorandum of understanding with the MSRB, but declined to comment further.
Cusips are used to identify stocks of all registered U.S. companies and government and municipal securities. The term stands for Committee on Uniform Securities Identification Procedures, referring to a committee established by the ABA in 1964 at the request of industry clearing corporations. The Cusip system is owned by ABA, but it is operated by Standard & Poor's CUSIP Service Bureau, which operates CUSIP Global Services.