MSRB to Talk EMMA Development at Board Meeting

The Municipal Securities Rulemaking Board plans to discuss the development of its proposed centralized repository - EMMA, or Electronic Municipal Market Access - at its board meeting in Boston today and tomorrow, MSRB executive director Lynnette Hotchkiss said this week.

The meeting comes after the board launched an EMMA pilot Monday, the first of four phases of the free, centralized online portal that will be the muni market equivalent of the Securities and Exchange Commission's Edgar system and eventually provide market participants with real-time disclosure and price information on municipal securities. The voluntary pilot portal will pool and make available the vast trove of documents and data from the board's Municipal Securities Information Library and Real-Time Transaction Reporting System.

In the next phase, which the MSRB refers to as "access-equals-delivery" and hopes to begin this summer after obtaining SEC approval, broker-dealers will be required to file official statements for new muni issues online in lieu of having to send paper copies of them to investors.

To mandate access-equals-delivery, the board plans to send proposed rule changes to the SEC later this spring that would consolidate its Rules G-32 on disclosure for new issues and G-36 on official statements by moving some of G-36's submission requirements into G-32 and then eliminate the remaining portions of G-36, board officials have said.

Though Hotchkiss would not discuss the specifics of the MSRB's agenda, market participants have said the next step is for the board to file the proposed changes with the SEC and obtain its approval of them before they can become effective.

The board is still awaiting proposed changes to the SEC's Rule 15c2-12 on disclosure that will designate EMMA as the central repository for both secondary market continuing disclosure, replacing the four nationally recognized municipal securities information repositories and the Central Post Office run by the Municipal Advisory Council of Texas.

Sources said the SEC will release the changes to 15c2-12 soon, though probably not this week. The MSRB hopes to have the last two phases of EMMA - which encompass continuing disclosure filings - by the end of the year.

Meanwhile, the board is expected to discuss another big-ticket project, the New Issue Information Dissemination System, or NIIDS, that it is working on in conjunction with the Depository Trust Clearing Corp., and the Securities Industry and Financial Markets Association to improve the accuracy and timeliness of information on new muni bond issues. NIIDS will collect information about new muni bond issues from underwriters and then electronically disseminate it on a real-time basis to information vendors and other market participants.

Currently, the firms report the information directly to multiple vendors and it is not always posted at the same time or in the same manner. In late November, the board filed with the SEC proposed changes to its rules G-14 on reports of sales or purchases, G-8 on books and records, G-9 on the preservation of records, and G-34 on Cusip numbers. The MSRB filing proposed that the commission approve a June 30 effective date for NIIDS.

The system is expected to make trade confirmation, trade clearing, and data reporting easier, faster, more efficient, and more accurate, industry officials have said. Though the DTCC originally planned to unveil the project last year, it delayed its implementation because dealers involved in a pilot test of the system complained that its Web component was clunky and hard to use.

The DTCC has since overhauled the Web application and is scheduled to complete testing of the entire system among broker-dealers sometime this month. A DTCC spokesman could not be reached yesterday.

Separately, the board will review some of the comment letters it has received since it proposed establishing a centralized system for the collection and dissemination of critical market information about auction-rate securities. Though comments on the proposal - which was announced March 17 - are not due until April 21, Hotchkiss said the board will probably discuss the comments they have already received.

Specifically, the board is proposing that dealers operating auction-rate programs report auction information to a central system that would be operated by the MSRB. Auction results would have to be reported no later than 5:00 p.m. Eastern Standard Time on the day the auction occurs. If the program dealer has not received the results by then, it would have to report the results as soon as possible after it receives them from an auction agent. The board would immediately display the information received from program dealers on a Web site.

Hotchkiss also said that the MSRB would discuss its syndicate practices and fair pricing rules that two committees are reviewing. The board is making sure that syndicate rules are consistent with how syndicates are formed and considering if the fair pricing rules should be changed.

 

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER