WASHINGTON — The Municipal Securities Rulemaking Board has expanded its online guide for municipal bond issuers with new resources, including the “EMMA Trade Monitor,” a service that allows them to download secondary-market trade data to desktop computers.
The new resources can be found on the board’s Electronic Municipal Market Access website and include four documents that provide explanations of market participants’ roles and their obligations under MSRB and Securities and Exchange Commission rules.
The new items are the second phase in the development of the board’s free “State and Local Government Toolkit,” which was launched late last year, MSRB executive director Lynnette Kelly said in an interview. The additions can help ensure state and local government officials have access to information they need to make educated financial decisions, she said.
“For the first time ever, an issuer can download secondary market trade information and be able to understand the secondary market trading of their bonds,” Kelly said, adding that this “is harnessing the power of EMMA.”
Kelly said the new items are part of a push to ensure MSRB educational materials explain various market participants’ regulatory obligations. The materials address the SEC’s Rule 15c2-12 on disclosure, the MSRB’s Rule G-17 on fair dealing and the board’s recent G-17 interpretive notice, which took effect Aug. 2 and explains underwriters’ obligations to issuers.
The Trade Monitor will let issuers download muni bond prices, yields and trade activity from as far back as January 2005. Issuers can use programs like Microsoft Excel to analyze the data and evaluate financing options and pricing of new-issue securities, the MSRB said.
In a single search, issuers can retrieve data on up to 10 six-digit CUSIPs, which identify issuers, or 100 nine-digit CUSIPS, which identify specific muni securities. Searches can be narrowed by trade type, amount, maturity date, interest rate and other factors. Searches for multiple days of data are limited to a one-year period.
The Trade Monitor will only be available to issuers that establish a special MSRB account.
The toolkit’s new documents include “SEC Rule 15c2-12: Continuing Disclosure,” which outlines types of disclosures that dealers must ensure are in issuers’ continuing disclosure agreements with bondholders. Issuers typically must agree to provide to the MSRB annual financial and operating data, audited financial statements and event notices in certain instances such as delinquent payments, defaults, unscheduled draws on reserves or adverse tax opinions.
A document called “What to Expect from Your Underwriter” overviews dealers’ role in transactions and their fair-dealing obligations under Rule G-17. Dealers must disclose that they do not have a fiduciary duty to issuers and any third-party payments, marketing agreements, profit-sharing arrangements, trading of credit default swaps and incentives they have to recommend certain transactions.
Underwriters also must explain the risks associated with complex financings, like variable-rate demand obligations, that they recommend. The MSRB outlines the stages during an underwriting in which issuers should expect to receive disclosures.
Another document, “Roles and Responsibilities: The Financing Team in an Initial Municipal Bond Offering,” overviews responsibilities of, and types of work typically provided by, municipal advisors, bond attorneys, underwriters, co-managers (also called underwriting syndicates), trustees, feasibility consultants, credit enhancers, escrow agents and others.
A document called “MSRB Rules: Essentials for Issuers,” explains rules related to disclosure, fair-dealing, gift-giving, political contributions and solicitation of business.
Kelly said the materials took months to develop and were part of the group’s fiscal 2012 goals. The toolkit also reflects the Dodd Frank Act mandate that the MSRB to protect muni issuers, she said. The board plans to add new materials to its “Investor Toolkit,” a guide for retail buyers of muni bonds that it launched in May.