WASHINGTON — The Municipal Securities Rulemaking Board on Friday filed with the Securities and Exchange Commission a revised proposal that would temporarily give issuers more time to voluntarily disclose annual financial information to EMMA for special designation.
In response to issuer complaints and directions from the SEC, the board is now proposing to give issuers the option of voluntarily filing their annual financial information to the Electronic Municipal Market Access system within either 120 days or, on a temporary basis, 150 days after the close of their fiscal years. However, the 150-day "transitional" filing period for special designation would phase out after Dec. 31, 2013.
The revised proposal, which is to be publicly announced by the MSRB today, is expected to be subject to a 21-day public comment period after it is published in the Federal Register, which may not be until next week.
It comes after state and local governments had complained during the summer that the 120-day undertaking would be difficult if not impossible for many issuers to achieve.
Though it would be voluntary and the MSRB would not review or confirm whether issuers actually adhere to it, states and localities had warned that it would nevertheless become the de facto standard, unfairly harming the bonds of issuers that did not adhere to it.
However, SEC chairman Mary Schapiro told The Bond Buyer last month that she hoped the 120-day voluntary filing period would be implemented because it would be a "positive step forward and an interesting way to incentivize faster disclosure."
The MSRB's proposal was floated in July in conjunction with proposed changes to the SEC's Rule 15c2-12 on disclosure that generally would increase the types of events issuers must disclose to the secondary market.
The SEC proposed the material event notices be disclosed within 10 business days after occurrence rather than in a "timely manner." The SEC is expected to take up both the 15c2-12 and MSRB proposals next year, possibly in February or March.
Issuer officials on Friday said that they would not be able to meet the 150-day filing timeframe. Ben Watkins, director of Florida's bond finance division, said that his state simply does not produce financial documents within that amount of time, saying that 180 days was more often sufficient time.
Watkins added that he is concerned that not meeting the schedule would make it appear that Florida was not in compliance with appropriate standards, even though it provides monthly revenue collection and other information on its Web site that is more timely than what is provided for in its bond undertakings.
"This is indirectly imposing a time requirement on the delivery of financial information, which I believe is inappropriate as a regulatory matter since they don't have authority to set such standards," he said.
Meanwhile, the board also is making adjustments to two of the three additional voluntary initiatives.
One that would specially designate issuers that meet the generally accepted accounting standards set by the Governmental Accounting Standards Board would be expanded to also cover issuers that adhere to GAAP set by the Financial Accounting Standards Board. Many nonprofits that sell bonds in the muni market adhere to FASB standards.
Another that would give issuers special designation if they received the Government Finance Officers Association financial reporting certificates of achievement for their comprehensive annual financial reports, or CAFRs, was eliminated.
The MSRB was concerned that the initiative would have been redundant since the CAFRs that receive such certificates include them and are frequently submitted to EMMA by issuers.
A fourth initiative to designate issuers that submit a Web link to their investor relations or other financial and operating information appears to be unchanged.
Separately, the board is also proposing mostly technical amendments to related changes to its Rule G-32 on new-issue disclosures to require underwriters to disclose to EMMA whether and when an issuer or borrower has agreed to provide continuing disclosures as well as who will be providing that information on their behalf.
