WASHINGTON - Standard & Poor's Cusip Service Bureau announced Friday that it has begun a new service that will give municipal issuers unprecedented access to a database containing Cusip numbers for their bonds so that they can include the numbers on their disclosure filings and other bond documents.
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The use of Committee on Uniform Securities Identification Procedures -- nine-character identifiers for individual securities -- is expected to dramatically improve the secondary market disclosure process in the municipal market. Cusips will allow the four existing nationally recognized municipal securities information repositories to both identify which bonds an issuer's disclosure filing applies to and then properly index that disclosure filing.
Muni market participants have been saying for months that the use of Cusips is the key to making sure the NRMSIR filings are complete and accurate.
The Cusip Service Bureau's new Municipal Disclosure Assistance Service is unprecedented because, for the first time, it will allow issuers to access Cusips and other information from the Cusip database, Scott Preiss, a Standard & Poor's vice president, said Friday in an interview.
"We've not had that direct access to the issuer community before," he said. "We're pleased to offer this access and excited about the initiative and looking forward to assisting the municipal industry in their disclosure initiatives."
Initially the Cusip numbers, as well as other information such as the issuer and security descriptions, the coupon, the maturity date, dated date, and series information, will be provided to issuers by telephone. Muni issuers will be able to call the Municipal Disclosure Assistance line at (212) 438-6518 to obtain the information.
Sometime during the first quarter of next year -- perhaps as early as mid-February -- the Cusip Service Bureau will begin providing this information to issuers online, Preiss said. "A Web query tool will allow issuers to do their own searches" for the information, he said. Issuers will be able to view, download, and print the information on their bonds.
The online service will be updated in real time and will contain Cusips on all municipal securities, including those assigned in the secondary market, such as for pre-refunded or secondarily insured bonds. The Cusip Service Bureau agreed to create the Municipal Disclosure Assistance Service after meeting with representatives of the Government Finance Officers Association, The Bond Market Association, and the Securities and Exchange Commission.
The bureau's database currently contains about seven million Cusips for individual fixed-income and equity instruments, about five million of which are still active in the market. About 1.7 million of these numbers identify individual municipal securities, Preiss said.
Before now, the bureau typically has only provided the Cusip and other information to the broker-dealer community, investment managers, banking representatives and custodians, and information vendors, according to Preiss.
The service bureau has been operated by Standard & Poor's for the American Bankers Association since 1968.
The municipal disclosure system was set up under the SEC's Rule 15c2-12. The rule bars dealers from underwriting municipal bonds unless the issuer has agreed in writing to disclose financial and operating information annually and material event notices as material events occur. Issuers also must file audited financial statements, if they have been prepared.
Issuers must file their annual financial and operating information with all four NRMSIRs and a State Information Depository if one exists in the state. They must file material event notices either with all four NRMSIRs and a SID if one exists in their state, or the Municipal Securities Rulemaking Board.
