MSRB Holds Quarterly Meeting

Date: April 30, 2012

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

MSRB HOLDS QUARTERLY MEETING

Alexandria, VA - The Municipal Securities Rulemaking Board (MSRB) held its quarterly Board of Directors meeting April 25-27, 2012 where it addressed issues related to protecting municipal market participants and enhancing market transparency. The Board, which is in its second year of operating with a majority of public members, remains focused on ensuring that buying, selling and underwriting practices in the $3.7 trillion municipal market are consistent with the Board’s central mission of protecting investors and state and local governments.

Several actions at the meeting relate directly to retail investors. First, the Board continued its review of the expanded use by retail investors of online trading platforms and whether enhanced protections and disclosures are needed for investors who use these platforms. The Board will continue its review of existing practices in this area and may determine to issue additional guidance at the conclusion of its review, if warranted. 

The Board also agreed to broaden and republish for further comment its proposal to restrict underwriters’ ability to provide consent to amendments to bond authorizing documents to all such amendments, not just those that could reduce the value or the security of the existing bonds. The MSRB is concerned that underwriters are consenting to changes that could affect existing bondholders without prior notice. The MSRB has concluded it is inappropriate for underwriters to consent to any change to bond documents because an underwriter does not have an interest in the bond that is effectively equivalent to the interests of true bondholders.

In a continuation of a concept release published last year, the Board agreed to further engage the market in a plan to collect key information from dealers that market 529 college savings plans as primary distributors including plan assets, contributions, withdrawals and performance information. The MSRB currently collects and makes publicly available on its Electronic Municipal Market Access (EMMA®) website 529 plan disclosure documents, but not other information for these types of municipal securities offered by states for the purpose of allowing parents and others to invest on a tax-advantaged basis for the cost of college education. The MSRB is responsible for regulating the activities of firms that sell and distribute 529 plans to investors. Collection of this information would provide the MSRB with data to further inform its oversight over the sale and distribution of these investments.

In a move that will benefit all market participants, the Board approved, with clarifications, its proposal to prohibit municipal securities dealers from using the term “not reoffered,” or NRO, in any written or electronic communication unless it also includes initial offering price or yield information about the new issue of municipal securities. This change will provide timely and full price discovery for all market participants, particularly state and local governments.

At its meeting, the Board of Directors also discussed current municipal securities trade reporting requirements, which are designed to ensure all market participants have simultaneous access to municipal securities trade information. The MSRB long-range plan for market transparency published in February 2012 envisions moving toward more contemporaneous and complete real-time dissemination of such trade information.  The Board agreed at this meeting to take its first steps in this direction by authorizing publication of a concept release regarding the reduction in the time between trade execution and trade reporting as well as the increase in real-time transparency for large trades.

First, the Board decided to reexamine the 15-minute time period in which most trades must be reported to the MSRB and agreed to request public input on reducing that time, with trade information expected to be submitted as soon as practicable. Dealers would be cautioned against the practice of delaying trade reporting to the last possible moment, as well as the impropriety of selectively disclosing trade data to favored customers prior to reporting it to the MSRB.

Second, the Board discussed eliminating the practice of delaying dissemination to the marketplace of the size of trades that exceed $1 million, which currently are displayed as “1MM+” for the first five days after the trade. The Board believes that this practice, which was designed as a transitional measure to address concerns of some market participants regarding potential adverse effects on liquidity when the MSRB first introduced real-time trade reporting in 2005, is no longer needed and that market efficiency and investor protection would be enhanced by making this information available immediately.

To further promote market transparency as outlined in the long-range plan, the Board agreed to launch a multi-pronged initiative to improve the process by which continuing disclosure documents are submitted to EMMA and made available to the public. The Board agreed to provide further guidance to state and local governments, as well as to other obligated persons whose credit stands behind municipal bonds, to enhance their understanding of how best to provide annual financial disclosures to the MSRB for display on the EMMA website. Additional guidance also would help investors better understand what continuing disclosures they should expect will be made available for specific categories of municipal securities. The Board also agreed to reach out to issuers of municipal bonds to work toward refining the continuing disclosure submission process and to create appropriate tools and utilities to assist issuers and obligated persons in this process, with the goal of promoting comprehensive and timely disclosures to investors.

Finally, the Board agreed to begin to reevaluate its existing regulations on financial contributions by dealers to bond ballot campaigns to assess whether there is adequate disclosure to address potential conflicts of interest.

During its meeting, members of the MSRB Board of Directors also met with Mary J. Miller, Under Secretary for Domestic Finance at the U.S. Department of Treasury, to discuss current issues in the municipal market. Part of the MSRB’s mission is to provide leadership and counsel on the market to policymakers and other regulators.


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 Congressionally-chartered, self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is subject to oversight by the Securities and Exchange Commission.