MSRB Plans to Post Municipal Bond Ratings on EMMA

Date: May 3, 2010

Contact:        Jennifer A. Galloway, Chief Communications Officer
                    (703) 797-6600



Alexandria , VA – The Municipal Securities Rulemaking Board (MSRB) held its quarterly Board meeting April 29-30, 2010 in Philadelphia, PA where it agreed to file a proposal with the Securities and Exchange Commission (SEC) to make municipal bond ratings freely available on its Electronic Municipal Market Access (EMMA) website.

"Getting ratings on EMMA will greatly enhance investors’ access to this material information on a timely basis," said MSRB Chair Peter Clarke. "Credit quality is a crucial consideration for investors, and ratings can be a key indicator in assessing an issuer’s credit strength. By making rating information available with the real-time trade data and disclosure documents on EMMA, the MSRB is providing unparalleled market transparency.”

At its meeting, the Board also agreed to file with the SEC revisions to its pending proposal on allocation of new issues of municipal securities that sought to update earlier interpretive guidance regarding the priority of customer orders over syndicate members’ orders. The revisions focus on reinforcing principles outlined in the original guidance while strengthening dealers’ obligations to document compliance with such guidance. The Board plans to continue consideration of comprehensive guidance on retail order periods and other matters related to retail investor participation in the new issue market.

In other business, the Board agreed to take two actions regarding its consideration of whether to require dealers to disclose contributions made by political action committees controlled by dealers’ bank affiliates to municipal officials. The Board plans to provide guidance on the relevant factors in determining whether a PAC is controlled by a dealer since under MSRB Rule G-37 contributions by such dealer-controlled PACs can result in a ban on the dealer engaging in business with the issuer. The Board also will request public comment on requiring dealers to disclose the identity of PACs controlled by a bank or other affiliate of the dealer. This disclosure could provide key information for making further inquiries through federal, state and local sources regarding political contributions made by dealer-affiliated PACs.

At the meeting, the Board agreed to publish guidance about the submission by dealers of 529 college savings plan disclosure documents to the EMMA system. The Board also will seek comment on the potential collection and dissemination of key data elements relating to 529 plan sales.  The Board expects to continue reviewing practices in the rapidly evolving 529 plan market and the potential need for guidance on third-party contributors, employer-based programs and other marketing activities unique to the 529 plan market.

The Board also agreed to revisions to its Series 52 exam, which qualifies municipal professionals to engage in the full complement of municipal securities activities as municipal securities representatives. Revisions to the exam outline and specifications will ensure that test questions are focused on the appropriate areas of the evolving municipal bond market.

Meanwhile, the Board agreed to file with the SEC to discontinue the MSRB’s public access facility for viewing and copying paper versions of documents and other information collected by the MSRB. The MSRB established the facility in 1990 with the initial adoption of the MSRB’s rule to collect paper copies of official statements from underwriters of new issues to provide access to copies of documents other than by means of the MSRB’s electronic subscriptions.  The facility is no longer used by the public in light of the free access to electronic versions of such documents and other information on the EMMA website.

Outreach to members of the municipal bond market was an important part of the Philadelphia meeting. The Board met with members of the MSRB Issuer and Investor Advisory Groups, which provided input on the MSRB’s goals of market transparency and efficiency, and made suggestions on potential enhancements to EMMA. The Board also met with more than 60 members of the Philadelphia municipal bond community to update them on MSRB activities.

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.