WASHINGTON - The Municipal Securities Rulemaking Board yesterday asked the Securities and Exchange Commission to approve a continuing disclosure pilot phase for its EMMA site starting on or around May 11.
The pilot phase will give issuers and investors a chance to voluntarily test the Electronic Municipal Market Access system's secondary market disclosure component before it becomes mandatory on July 1, when changes to the SEC's Rule 15c2-12 on disclosure go into effect.
The rule changes designate the MSRB as the sole nationally recognized municipal securities information repository, effectively replacing four existing repositories. The SEC approved the changes last year as part of an effort to create a free, central repository for continuing disclosure documents, which include annual financial and operating information, audited financial statements, and material event notices.
"When fully operational, the MSRB's continuing disclosure system will promote widespread access to disclosure documents through the EMMA Web site for free and will for the first time place individual investors on the same footing as industry professionals," MSRB general counsel Ernesto Lanza said in a statement.
Under 15c2-12, a dealer may not underwrite municipal bonds unless the issuer has contractually agreed to disclose to NRMSIRs financial and operating information at least annually, as well as the occurrence of any of 11 specified material events, such as rating changes, bond calls, and adverse tax opinions or events affecting the tax-exempt status of the bonds.
The change will eliminate the need for the Central Post Office disclosure facility operated by the Municipal Advisory Council of Texas, as well as the MSRB's CDINet, which the board has operated since 1997 to collect material event notices from issuers, though its use has not been widespread.
Lanza said in the statement that once the pilot is operational, any issuers that have submitted material event notices to CDINet will be able to fulfill their disclosure obligations by filing them to the pilot continuing disclosure system.
"But the MSRB takes no position on whether pilot submissions would satisfy any other provisions of existing continuing disclosure undertakings," the statement said.
Yesterday's filing comes after the MSRB separately asked the SEC on Monday to approve rule changes that would allow it to begin fully operating primary market disclosure and trade price transparency systems on its EMMA site around May 11.
Those rule changes would establish an "access-equals-delivery" standard for electronic official statement dissemination, preliminary official statements, and advance refunding documents that dealers would be able to post to EMMA in lieu of sending them to investors in paper form.
In addition to the primary and secondary market disclosure systems, EMMA will also feature price transparency systems for the short-term market. In January, it began to collect and report basic auction information for auction-rate securities. On April 1, it will begin to collect and report basic remarketing data for variable-rate demand obligations.
