WASHINGTON — The Municipal Securities Rulemaking Board provided additional details yesterday on the information it plans to require broker-dealers to file to its planned Electronic Municipal Market Access system, or EMMA, and asked muni market participants to comment on them by Feb. 25.
The notice also detailed the multi-phase process of creating EMMA, which initially will serve as a pilot portal system that will feature voluntary filings of official statements and advance refunding documents. It will eventually become a full-fledged Edgar-type system that will include primary and secondary market filings, plus real-time price data.
Though the board plans to start the pilot portal around March 10 and will be prepared to establish a permanent system during the summer, it cannot implement the permanent system until the Securities and Exchange Commission approves changes to its Rule 15c2-12 on disclosure.
The changes will substitute EMMA for the four existing nationally recognized municipal securities information repositories, or NRMSIRs. SEC officials said last month that, while they would complete draft rule changes during the first quarter, it could take an additional six months to finalize them and obtain approval from SEC commissioners.
Currently, the rule restricts broker-dealers from underwriting municipal securities unless the issuer has agreed to send annual financial and operating information to each of the NRMSIRs and notices of material events to either each of the NRMSIRs or the MSRB. They also must file notices if they fail to provide annual financial information after committing to do so in a continuing disclosure agreement.
In its notice, the board said it expects to collect key indexing information both at the time of the issuance of the securities and when continuing secondary-market disclosures are submitted to EMMA. At issuance, underwriters of new issues would be required to say whether a continuing disclosure undertaking exists; to identify any “obligated persons,” other than the issuer who are responsible for such disclosures; and provide the date when annual financial information is to be disseminated.
The board’s notice said it would like feedback from market participants on its plan to request such additional information, and whether it should require underwriters to ensure that any more information is submitted at the time of issuance, such as the names of third-party agents designated to provide continuing disclosure.
Noting that many issuers currently allow continuing disclosure information to be provided through third parties, such as printing companies or bond attorneys, the board also seeks comment on whether it should allow third-party submissions only after the issuer has specified which parties are authorized to act on its behalf. Alternatively, the board wants to know if any registered user of EMMA should be able to file materials on behalf of an issuer unless the issuer has specified which agents can file on its behalf.
Though EMMA will be free for issuers to file to and for investors and other market participants to access information from, the board said it plans to charge subscriptions for a real-time feed of information filed to the system. It said it plans to meet with market participants interested in real-time subscriptions, such as information vendors, and to solicit feedback from them in the near future.