The Municipal Securities Rulemaking Board yesterday took a big step toward becoming the all-electronic central repository for both primary and continuing disclosure documents with the launch of two crucial components of its EMMA site.

The board formally began operating its primary market disclosure system for official statements, advance refunding and related documents, and trade data. The system will allow dealers to submit electronic copies of these documents to customers in lieu of sending them paper copies, unless paper versions are specifically requested.

It also started a pilot of EMMA's continuing disclosure system so that dealers, issuers, and investors can test it before Securities and Exchange Commission rule changes go into effect July 1 that will mandate its use for muni issuers. Under the changes to the SEC's Rule 15c2-12 on disclosure, EMMA will replace the four existing nationally recognized municipal securities information repositories, as well as the central post office operated by the Municipal Advisory Council of Texas, for continuing disclosures with the MSRB.

MSRB executive director Lynnette Hotchkiss said yesterday's launch of the two systems is a "seminal" moment that will culminate next month, when the continuing disclosure component shifts to a permanent system and EMMA becomes fully operational. In addition to the primary and continuing disclosures, EMMA collects and displays basic reset information for auction-rate securities and variable-rate demand obligations.

For the primary disclosure site, dealers generally are required to submit OS' within one business day after receipt from the issuer but by no later than the closing date of the bonds, according to documents released by the MSRB yesterday. The board also urges dealers to make preliminary OS' available to their potential customers with enough time for them to make an investment decision.

Advance refunding documents are required no later than five business days after the closing date of the advance refunding.

Meanwhile, amendments to OS' and advance refunding documents during the primary offering disclosure period are required within one business day of receipt. In addition, dealers must submit notice within five business days of any cancellation of an offering for which a submission has already been made to EMMA. If only a portion of an offering is canceled, the underwriter must correct his portion of any submissions no later than the closing date.

For the continuing disclosure pilot, the board will collect annual financial information and audited financial statements, notices of material events, notices of failures to provide annual financial information as stipulated in the bonds' disclosure agreements, as well as any additional voluntary disclosures.

Once the system becomes permanent next month, the MSRB wants to begin collecting voluntarily filed non-required financial or operating data as well as event-based disclosures, including rating agency presentations and communications from the Internal Revenue Service.

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