MSRB NOTICE 2009-39 (JULY 1, 2009)

MSRB LAUNCHES THE CONTINUING DISCLOSURE SERVICE OF ITS ELECTRONIC MUNICIPAL MARKET ACCESS SYSTEM (“EMMA")

Today, the Municipal Securities Rulemaking Board (the “MSRB”) implemented a permanent continuing disclosure service (the “continuing disclosure service”) through its Electronic Municipal Market Access system (“EMMA”).[1] Beginning today, the continuing disclosure service receives electronic submissions of, and makes publicly available on the Internet on the EMMA website at emma.msrb.org (the “EMMA portal”), continuing disclosure documents and related information from issuers, obligated persons and their agents pursuant to continuing disclosure undertakings entered into consistent with Exchange Act Rule 15c2-12[2] (“Rule 15c2-12”) as well as on a voluntary basis.[3]  The continuing disclosure service has been launched concurrently with the effectiveness of related amendments to Rule 15c2-12 adopted by the Securities and Exchange Commission (“SEC”) on December 5, 2008.[4]  

All continuing disclosure documents and related information are submitted to the MSRB, free of charge, through an Internet-based electronic submitter interface or electronic computer-to-computer data connection, at the election of the submitter.  Public access to the documents and information is provided through the continuing disclosure service on the EMMA web portal, available at http://emma.msrb.org, at no charge, as well as through a paid real-time data stream subscription service.

CONTINUING DISCLOSURE PROVISIONS OF RULE 15c2-12

Under Rule 15c2-12(b)(5), an underwriter for a primary offering of municipal securities subject to the rule is prohibited from underwriting the offering unless the underwriter has determined that the issuer or an obligated person[5] for whom financial information or operating data is presented in the final official statement has undertaken in writing to provide certain items of information to the MSRB.[6]  Rule 15c2-12(b)(5) provides that such items include:  (A) annual financial information concerning obligated persons;[7](B) audited financial statements for obligated persons if available and if not included in the annual financial information; (C) notices of certain events, if material;[8] and (D) notices of failures to provide annual financial information on or before the date specified in the written undertaking.[9]  Written undertakings are to provide that all continuing disclosure documents submitted to the MSRB shall be accompanied by identifying information as prescribed by the MSRB.

CONTINUING DISCLOSURE DOCUMENTS ACCEPTED BY EMMA

The continuing disclosure service accepts submissions of continuing disclosure documents as described in Rule 15c2-12 and voluntary submissions of other continuing disclosure documents, together with indexing information necessary to identify the securities to which the documents relate and the categories of information being provided. The continuing disclosure service of EMMA accepts submissions of, and makes publicly available through the EMMA web portal, the following categories of continuing disclosure documents:

FINANCIAL/OPERATING DATA

Rule 15c2-12-Based Financial/Operating Data

  • annual financial information concerning obligated persons
  • audited financial statements for obligated persons if available and if not included in the annual financial information
  • notice of failure to provide annual financial information on or before the date specified in the continuing disclosure undertaking

Additional/Voluntary Financial/Operating Data

  • quarterly/monthly financial information
  • change in fiscal year/timing of annual disclosure
  • change in accounting standard
  • interim/additional financial information/operating data
  • budget
  • investment/debt/financial policy
  • information provided to rating agency, credit/liquidity provider or other third parties
  • consultant reports
  • other financial/operating data

EVENT-BASED DISCLOSURES

Rule 15c2-12 Material Event Notices

  • principal and interest payment delinquencies
  • non-payment related defaults
  • unscheduled draws on debt service reserves reflecting financial difficulties
  • unscheduled draws on credit enhancements reflecting financial difficulties
  • substitution of credit or liquidity providers or their failure to perform
  • adverse tax opinions or events affecting the tax-exempt status of the security
  • modifications to rights of security holders
  • bond calls
  • defeasances
  • release, substitution or sale of property securing repayment of the securities
  • rating changes

Additional/Voluntary Event-Based Disclosures

  • amendment to continuing disclosure undertaking
  • change in obligated person
  • notice to investors pursuant to bond documents
  • communication from the Internal Revenue Service
  • tender offer/secondary market purchases
  • bid for auction rate or other securities[10]
  • capital or other financing plan
  • litigation/enforcement action
  • merger/consolidation/reorganization/insolvency/bankruptcy
  • change of trustee, tender agent, remarketing agent, or other on-going party
  • derivative or other similar transaction
  • other event-based disclosures

There is no obligation upon any issuer or obligated person to make a submission of any voluntary continuing disclosure document.  The categories of voluntary disclosure listed above are for the convenience of submitters and users of such documents and do not represent the MSRB’s opinion as to the appropriate items of disclosure with respect to any specific municipal security.  The availability of such categories does not imply or create an obligation to make any such disclosures, and it will not be uncommon for one or many of the categories to be inapplicable to any particular security.  Further, the nature of the specific documents submitted for a particular category may vary widely. The MSRB believes that various factors appropriate to the particular facts and circumstances of a municipal security transaction should be assessed by issuers, obligated persons and their agents in coming to a decision on whether to make a voluntary submission of continuing disclosure to EMMA, regardless of the categories listed above, to the extent such parties are not otherwise obligated to make such disclosures.

DOCUMENT FORMAT

Document submissions to the continuing disclosure service will be made as PDF files configured to permit documents to be saved, viewed, printed and retransmitted by electronic means.  If the submitted file is a reproduction of the original document, the submitted file must maintain the graphical and textual integrity of the original document.  In addition, starting January 1, 2010, such PDF files must be word-searchable (that is, allowing the user to search for specific terms used within the document through a search or find function available in most standard software packages), provided that diagrams, images and other non-textual elements would not be required to be word-searchable due to current technical hurdles to uniformly producing such elements in word-searchable form.  The MSRB strongly encourages submitters to immediately begin making submissions as word-searchable PDF files (preferably as native PDF or PDF normal files, which generally produce smaller and more easily downloadable files as compared to scanned PDF files).

REGISTRATION AND SUBMISSION PROCESS

The process for registering with EMMA and to make submissions of continuing disclosure documents to EMMA is set forth in the EMMA Dataport Manual for Continuing Disclosure Submissions, available at www.msrb.org/msrb1/emma/pdfs/EMMACDManual.pdf.  Issuers, obligated persons and agents can register with EMMA at https://www.msrb.org/msrb1/control/registration/cod/landing.asp.  Additional information about steps submitters can take to prepare to use EMMA is set forth in MSRB Notice 2009-37 (June 29, 2009).

FREE PUBLIC ACCESS TO CONTINUING DISCLOSURE DOCUMENTS THROUGH EMMA WEB PORTAL

All documents and information submitted through the continuing disclosure service are available to the public for free through the EMMA web portal at http://emma.msrb.org, with documents made available for the life of the securities as PDF files for viewing, printing and downloading.[11]  The EMMA web portal provides on-line search functions to enable users to readily identify and access documents that relate to specific municipal securities based on a broad range of search parameters.  The MSRB has integrated the collection of continuing disclosure documents with the primary market and price transparency information currently provided on EMMA to provide a free comprehensive centralized public access portal for the integrated display of primary market disclosure information, continuing disclosure information and transaction price information.

REAL-TIME SUBSCRIPTION TO CONTINUING DISCLOSURE SERVICE

The continuing disclosure subscription service makes available to subscribers, via a real-time data stream, all continuing disclosure documents and related indexing information provided by submitters through the EMMA submission process that is posted on the EMMA web portal. Such documents and information are made available to subscribers, simultaneously with the posting thereof on the EMMA portal. Subscriptions to the continuing disclosure service of EMMA will be made available for an annual fee of $45,000. All subscribers are required to enter into and comply with a subscription agreement with the MSRB, which sets forth the terms and conditions for receipt, use and redissemination of the continuing disclosure service.[12] More information relating to the continuing disclosure subscription service, including the specifications, is available in MSRB Notice 2009-33 (June 11, 2009) and at http://www.msrb.org/msrb1/SubscriptionSvcs.

TERMS OF DOCUMENT AND DATA DISSEMINATION

The MSRB is not responsible for the content of the information or documents submitted by submitters displayed on the EMMA web portal or distributed to subscribers through the continuing disclosure subscription service.  Users of the EMMA web portal should refer to the Terms of Use set forth at http://emma.msrb.org/AboutEMMA/UserAgreement.aspx, and subscribers to the continuing disclosure subscription service are subject to the terms of the subscription agreement.

The MSRB may restrict or terminate malicious, illegal or abusive usage for such periods as may be necessary and appropriate to ensure continuous and efficient access to the EMMA web portal and to maintain the integrity of EMMA and its operational components.  Such usage may include, without limitation, usage intended to cause the EMMA web portal to become inaccessible by other users, to cause the EMMA database or operational components to become corrupted or otherwise unusable, to alter the appearance or functionality of the EMMA web portal, or to hyperlink to or otherwise use the EMMA web portal or the information provided through the EMMA web portal in furtherance of fraudulent or other illegal activities (such as, for example, creating any inference of MSRB complicity with or approval of such fraudulent or illegal activities or creating a false impression that information used to further such fraudulent or illegal activities has been obtained from the MSRB or EMMA).  Measures taken by the MSRB in response to such unacceptable usage shall be designed to minimize any potentially negative impact on the ability to access the EMMA web portal.

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Questions about the EMMA continuing disclosure service may be directed to the MSRB’s Market Information Department at (703) 797-6668.

July 1, 2009

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Text of Continuing Disclosure Service

MUNICIPAL SECURITIES RULEMAKING BOARD
ELECTRONIC MUNICIPAL MARKET ACCESS SYSTEM –
EMMA

EMMA CONTINUING DISCLOSURE SERVICE

The EMMA continuing disclosure service, established as a service of EMMA, receives submissions of continuing disclosure documents, together with related indexing information to allow the public to readily identify and access such documents, from issuers, obligated persons and their agents pursuant to continuing disclosure undertakings entered into consistent with Exchange Act Rule 15c2-12, as well as other continuing disclosure documents concerning municipal securities, at no charge to the submitter.  Submissions may be made through a choice of an Internet-based electronic submission interface or electronic computer-to-computer streaming connections.  The EMMA continuing disclosure service makes continuing disclosures available to the public, at no charge, on the Internet through the EMMA portal.  The EMMA continuing disclosure service also makes continuing disclosures available by subscription for a fee.

Submissions to the EMMA Continuing Disclosure Service

Designated Electronic Format for Documents .  All documents submitted to the EMMA continuing disclosure service must be in PDF, configured to permit documents to be saved, viewed, printed and retransmitted by electronic means. If the submitted file is a reproduction of the original document, the submitted file must maintain the graphical and textual integrity of the original document. For any document submitted to the EMMA continuing disclosure service on or after January 1, 2010, such PDF documents shall be word-searchable (without regard to diagrams, images and other non-textual elements).

Method of Submission .  Documents and related indexing information may be submitted to the EMMA continuing disclosure service either through a secure, password-protected, web-based electronic submitter interface or through a secure, authenticated computer-to-computer data connection with EMMA, at the election of the submitter.  When making submissions using the web-based interface, related indexing information is entered into an on-line form or uploaded through an extensible markup language (XML) file, and documents are uploaded as PDF files.  Computer-to-computer submissions utilize XML files for data and PDF files for documents.  Appropriate schemas for on-line and computer-to-computer submissions are published on the EMMA web portal and the MSRB website.

Timing of Submissions.  The EMMA continuing disclosure service’s submission processes are available for submissions throughout the day, subject to the right of the MSRB to make such processes unavailable between the hours of 3:00 am and 6:00 am each day, Eastern time, for required maintenance, upgrades or other purposes, or at other times as needed to ensure the integrity of EMMA and its systems.  The MSRB shall provide advance notice on the EMMA portal of any planned periods of unavailability and shall endeavor to provide information on the EMMA portal as to the status of the submission interface during unanticipated periods of unavailability, to the extent technically feasible.

Document Types .  The EMMA continuing disclosure service accepts submissions from issuers, obligated persons, and their agents of (i) the continuing disclosure documents described in Rule 15c2-12, and (ii) other continuing disclosure documents concerning municipal securities not specifically described in Rule 15c2-12.

The continuing disclosure documents described in Rule 15c2-12 consist of the following categories of documents:

  • annual financial information concerning issuers or other obligated persons as described in paragraph (b)(5)(i)(A) of Rule 15c2-12, or other financial information and operating data provided by issuers or other obligated persons as described in paragraph (d)(2)(ii)(A) of Rule 15c2-12;
  • financial statements for issuers or other obligated persons if not included in the annual financial information as described in paragraph (b)(5)(i)(B) of Rule 15c2-12;
  • notices of certain events, if material, as described in paragraph (b)(5)(i)(C) of Rule 15c2-12; and
  • notices of failures to provide annual financial information on or before the date specified in the written undertaking as described in paragraph (b)(5)(i)(D) of Rule 15c2-12.

Categories of other disclosure documents concerning municipal securities not specifically described in Rule 15c2-12 include:

  • other financial or operating data disclosures, including but not limited to quarterly or monthly financial information; interim or additional financial information or operating data; budget documents; investment, debt or financial policies; consultant reports; information provided to rating agency, credit/liquidity provider or other third party; changes in accounting standards, fiscal year or timing of annual disclosure; and other uncategorized financial or operating data; and
  • other event-based disclosures, including but not limited to amendments to continuing disclosure undertakings; changes in obligated person; notices to investors pursuant to bond documents; communications from the Internal Revenue Service; tender offer or secondary market purchase notices; notices of bid for auction rate or other securities; capital or other financing plans; litigation or enforcement action documents; documents relating to mergers, consolidations, reorganizations, insolvency or bankruptcy; changes of trustee, tender agent, remarketing agent, or other on-going party; materials relating to derivative or other similar transactions; and other uncategorized event-based disclosures.

The MSRB may combine two or more categories, may divide any category into two or more new categories or subcategories, or may form additional categories for purposes of indexing documents submitted as uncategorized financial/operating data or event-based disclosures, as appropriate, based on the types of documents received.

Information to be Submitted .  In connection with documents submitted to the EMMA continuing disclosure service, the submitter shall provide, at the time of submission, information necessary to accurately identify:

  • the category of information being provided (such as annual financial information; financial statements; material event notice, including designation of which specific type or types of events; notice of failure to make timely filing of annual financial information; or other continuing disclosure document concerning municipal securities, identified by category);
  • in the case of annual financial information, financial statements and other financial information or operating data, the period covered by such documents;
  • the issues or specific securities to which such document is related or otherwise material (including CUSIP number, issuer name, state, issue description/securities name, dated date, maturity date, and/or coupon rate);
  • the name(s) of the obligated person(s) (if other than the issuer) to which such document applies;
  • the name and date of the document; and
  • the identity of and contact information for the person submitting the document.

Submitters.  Submissions to the EMMA continuing disclosure service may be made solely by authorized submitters using password-protected accounts on EMMA.  Submissions may be made by the following classes of submitters:

  • issuer, which may submit any documents with respect to such issuer’s municipal securities;
  • obligated person, which may submit any documents with respect to any municipal securities for which such obligated person is obligated; and
  • designated agent, which may submit documents otherwise permitted to be submitted by the issuer or obligated person which has designated such agent, as provided below.

Issuers and obligated persons may designate agents to submit documents and related indexing information on their behalf, and may revoke the designation of any such agents, through the EMMA on-line account management utility.  Such designated agents must register to obtain password-protected accounts on EMMA in order to make submissions on behalf of the designating issuers or obligated persons.  Any party identified in a continuing disclosure undertaking as a dissemination agent or other party responsible for disseminating continuing disclosure documents on behalf of an issuer or obligated person may act as a designated agent for such issuer or obligated person, without a designation being made by the issuer or obligated person as described above, if such party certifies through the EMMA on-line account management utility that it is authorized to disseminate continuing disclosure documents on behalf of the issuer or obligated person under the continuing disclosure undertaking.  The issuer or obligated person, through the EMMA on-line account management utility, may revoke the authority of such party to act as a designated agent.

Public Availability of Continuing Disclosure Documents

EMMA Portal.  Submissions made through the EMMA continuing disclosure service accepted during the hours of 8:30 am to 6:00 pm Eastern time on an MSRB business day are, in general, posted on the EMMA portal within 15 minutes of acceptance, although during peak traffic periods posting may occur within one hour of acceptance.  Submissions outside of such hours often are posted within 15 minutes although some submissions outside of the MSRB’s normal business hours may not be processed until the next business day.  Continuing disclosure documents and related indexing information submitted to EMMA shall be made available to the public through the EMMA portal for the life of the related securities.

The EMMA portal provides on-line search functions utilizing available indexing information to allow users of the EMMA portal to readily identify and access documents and related information provided through the EMMA continuing disclosure service.  Basic identifying information relating to specific municipal securities and/or specific issues accompanies the display of continuing disclosure documents.

The EMMA portal is available without charge to all members of the public.  The MSRB has designed EMMA, including the EMMA portal, as a scalable system with sufficient current capacity and the ability to add further capacity to meet foreseeable usage levels based on reasonable estimates of expected usage, and the MSRB would monitor usage levels in order to assure continued capacity in the future.

The MSRB reserves the right to restrict or terminate malicious, illegal or abusive usage for such periods as may be necessary and appropriate to ensure continuous and efficient access to the EMMA portal and to maintain the integrity of EMMA and its operational components.  The MSRB is not responsible for the content of the information or documents submitted by submitters displayed on the EMMA portal or distributed to subscribers of the EMMA continuing disclosure subscription service.

Subscriptions.  Users wishing to obtain the continuing disclosure documents provided through the EMMA continuing disclosure service through a data stream rather than through viewing on and downloading from the EMMA portal may purchase a subscription for such documents from the MSRB.  The EMMA continuing disclosure subscription service makes available to subscribers all continuing disclosure documents and related indexing information posted on the EMMA portal simultaneously with the posting thereof on the EMMA portal.  The EMMA continuing disclosure service subscription is provided through a web service accessible by subscribers using various commercially available products.  Data is streamed, depending on the subscriber’s own software settings, using XML files with embedded, or accompanying transmissions of, PDF files of continuing disclosure documents.  The MSRB makes the EMMA continuing disclosure subscription service available on an equal and non-discriminatory basis.  In addition, the MSRB does not impose any limitations on or additional charges for redistribution of such documents by subscribers to their customers, clients or other end-users.



[1] See Securities Exchange Act Release No.34-59061 (December 5, 2008) (File No. SR-MSRB- 2008-05) (approving continuing disclosure service of EMMA) and MSRB Notice 2008-47 (December 8, 2008). As of today, the MSRB’s CDINet system has terminated and all continuing disclosure submissions by issuers and their agents are submitted to the permanent continuing disclosure service of EMMA. See MSRB Notice 2009-26 (May 29, 2009).

[2] Under Exchange Act Rule 15c2-12, an underwriter for a primary offering of municipal securities subject to the rule is prohibited from underwriting the offering unless the underwriter has determined that the issuer or an obligated person for whom financial information or operating data is presented in the final official statement, or a designated agent, has undertaken in writing to provide certain items of information to the marketplace.

[4] See Securities Exchange Act Release No. 34-59062 (December 5, 2008) (adopting amendments to Exchange Act Rule 15c2-12). The amendments to Rule 15c2-12 adopted by the SEC require an underwriter to reasonably determine that the issuer or obligated person has undertaken, in a written agreement or contract for the benefit of the holders of the issuer’s municipal securities, to provide certain enumerated continuing disclosures to the MSRB, instead of to nationally recognized municipal securities information repositories (“NRMSIRs”) and state information depositories (“SIDs”), where applicable.

[5] Rule 15c2-12(f)(10) defines “obligated person” as any person, including an issuer of municipal securities, who is either generally or through an enterprise, fund, or account of such person committed by contract or other arrangement to support payment of all or part of the obligations on the municipal securities sold in a primary offering (other than providers of bond insurance, letters of credit, or other liquidity facilities).

[6] See also Rule 15c2-12(d)(2).

[7] Rule 15c2-12(f)(9) defines “annual financial information” as financial information or operating data, provided at least annually, of the type included in the final official statement with respect to an obligated person, or in the case where no financial information or operating data was provided in the final official statement with respect to such obligated person, of the type included in the final official statement with respect to those obligated persons that meet the objective criteria applied to select the persons for which financial information or operating data will be provided on an annual basis.

[8] Under Rule 15c2-12(b)(5)(C), such events currently consist of principal and interest payment delinquencies; non-payment related defaults; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax-exempt status of the security; modifications to rights of security holders; bond calls; defeasances; release, substitution, or sale of property securing repayment of the securities; and rating changes.

[9] See Rule 15c2-12(b)(5)(D).

[10] This includes, but is not limited to, any notice pursuant to the SEC no-action letter regarding municipal auction rate securities dated March 14, 2008, available at http://www.sec.gov/divisions/corpfin/cf-noaction/2008/mars031408.pdf.

[11] The MSRB understands that software currently is generally available for free that permits users to save, view and print PDF files, as well as to conduct word searches in word-searchable PDF documents.  The MSRB provides links for downloading such software on the EMMA web portal.