WASHINGTON - The Municipal Securities Rulemaking Board yesterday asked the Securities and Exchange Commission to approve changes to EMMA that would allow issuers to voluntarily file non-required financial or operating data as well as event-based disclosures, including rating agency presentations and communications from the Internal Revenue Service.
The MSRB would like to begin accepting these voluntary filings on July 1, when changes to the SEC's Rule 15c2-12 on disclosure go into effect that will make the MSRB the sole nationally recognized municipal securities information repository, or NRMSIR, for muni bond-related disclosures. The SEC is expected to seek public comments on the proposal before deciding whether to approve it.
"Today's filing adds yet another dimension to the MSRB's commitment to put information in the hands of investors," said MSRB general counsel Ernesto Lanza. "We think that accepting voluntary disclosures by issuers that choose to provide them will create even more robust resources on EMMA for municipal bond investors."
The voluntary filings would go beyond the types of continuing disclosure documents issuers are required to file under 15c2-12. The rule generally restricts broker-dealers from underwriting new securities unless the issuer has contractually agreed to disclose annual financial and operating information as well as notices about 12 types of material events, including rating changes and the failure to timely file annual financial information.
The proposal also would go beyond a short list of voluntary filings that the SEC has already allowed the MSRB to collect and disseminate through EMMA: documents specified in continuing disclosure undertakings but not specifically described in 15c2-12, such as quarterly or monthly financial information and issuers' amendments to their continuing disclosure agreements with bondholders.
The additional voluntary financial or operating data disclosures would include: interim or additional financial information and operating data; budgets; investment, debt or financial policy reports; material or reports provided to rating agencies and credit or liquidity providers; and consultant reports.
The additional voluntary event-based disclosures would include: notices sent to investors pursuant to bond documents; communications from the Internal Revenue Service; tender offers or secondary market purchases; self-bidding information for auction-rate or other securities; capital or other financing plans; litigation or enforcement actions; merger, consolidation, reorganization, insolvency, or bankruptcy notices; changes of trustee, tender agent, remarketing agent, "or other ongoing party"; and information tied to derivatives or similar transactions.
The possible additional voluntary disclosures stem from a number of sources, including issuers' investor relations Web sites, recommended practices published by the Government Finance Officers Association, and disclosure recommendations from the National Federation of Municipal Analysts, the MSRB said.
The MSRB action comes about three weeks after the board asked the SEC to approve a continuing disclosure pilot phase for its EMMA site starting on or around May 11, to give issuers and investors a chance to voluntarily test EMMA before it becomes mandatory July 1. Comments on that proposal are due to the SEC by April 27.
Separately, the SEC is considering a board request to begin fully operating primary market disclosure and trade price transparency systems on EMMA around May 11. Comments on that proposal, dubbed "access-equals-delivery," are due May 5.