Volume 17 Number 2 -- JUNE 1997

Volume 17 Number 2 -- JUNE 1997

CDI System Approval

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  • Manager, Muni Department
  • Underwriting
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CDI System Approved

The Securities and Exchange Commission has approved the permanent operation of the CDI System.

 Questions about the changes to the CDI System may be directed to Marianne I. Dunaitis, Assistant General Counsel, or Thomas A. Hutton, Director of MSIL.

On December 19, 1996, the Securities and Exchange Commission (Commission)1 approved the permanent operation of the Board's Continuing Disclosure Information ("CDI") System of the Municipal Securities Information Library(R)(MSIL(R)) system.2 The CDI System is now known as CDINet. Under CDINet, the current limit of 10 pages per document for fax and paper submissions has been changed to 25 pages. In addition, CDINet replaces the modem submission procedure with a secure Web page on the Internet for use by submitters. To better reflect the cost of operation of CDINet, the yearly subscription fee has been increased from $16,000 to $23,000.


On November 10, 1994, the Commission approved an amendment to its Rule 15c2-12 which prohibits dealers from underwriting issues of municipal securities unless the issuer commits, among other things, to provide material events notices to the Board's CDI System or to all Nationally Recognized Municipal Securities Information Repositories (NRMSIRs) and to the applicable state information depository.3 In addition, the Rule prohibits dealers from recommending municipal securities without having a system in place to receive material events notices. To conform to the new Commission requirements, the Board revised the CDI System and implemented an interim System designed to accept material event notices while a larger permanent system was being designed.4 CDINet represents the permanent system.


There are three main areas of change from the interim System to CDINet. The first area relates to the length of documents submitted to the System and how they will be handled. The interim CDI System accepted and disseminated submissions of up to 10 pages, plus a voluntary cover sheet.5 Under the new system, CDINet accepts fax and paper submissions of up to 25 pages. Should a submission exceed 25 pages, the first 25 pages and the cover sheet will be disseminated, with a notice to subscribers that the submission exceeds 25 pages. CDINet will then make available a copy of the complete submission to subscribers upon request, by express or regular mail, at their expense.

In addition, the interim CDI System was designed with the capability to disseminate up to 200 10-page submissions a day. While CDINet increases the length of fax and paper notices it will disseminate from 10 pages to 25 pages, experience with the interim CDI System indicates that the vast majority of submissions will be no longer than two to three pages. CDINet is designed to disseminate up to 500 three-page submissions a day.

Regarding processing time, the Commission stated in the Release approving the amendments to Rule 15c2-12 that 15 minutes might be an appropriate turnaround time for dissemination of material event notices by NRMSIRs, but that it would further discuss the issue during the NRMSIR recognition process. The Board will use its best efforts to maintain a quick turnaround time for documents sent by facsimile and Internet to CDINet, but it is not possible to guarantee a 15-minute turnaround to subscribers if large numbers of documents are received in a short period of time. The Board will ensure that any document with a voluntary cover sheet received by facsimile, Internet, or mail will be disseminated the same day it is received. Depending upon the volume of documents received, documents that refer in their title to one of the 12 material events described in SEC Rule 15c2-12 but do not have voluntary cover sheets will be disseminated on the same day, if possible, but documents with cover sheets have higher dissemination priority.

The second change from the interim CDI System replaces the current modem submission system with a secure Web page on the Internet. The interim System used the modem submission system developed for the original CDI Pilot. That system required, among other things, that the issuer or its agent install software developed by the Board on a personal computer and make submissions by having their modems dial the CDI System at the Board's offices. The CDINet Web page permits issuers or their agents to use commonly available Web browser software and make their submissions over the Internet. The other requirements of the modem submission system, i.e., the need to receive written authorization, a user name, and a password from the Board and the need for submissions to be in ASCII format only, will remain in effect on the CDINet Web page.6 Finally, since submissions in ASCII format are substantially smaller, in terms of computer storage, than the equivalent submission in fax format, the CDINet Web page will accept and disseminate submissions of any length.

The third change from the interim CDI System raises the annual subscription fee from $16,000, plus telephone charges, to $23,000, plus telephone charges. The increased fee better reflects the Board's operational costs of the CDI System, but is not expected to produce excess revenues above system costs.

As with the pilot and interim Systems, the notices sent to subscribers from CDINet will be available to any interested person at the Board's Public Access Facility in Alexandria, Virginia. The cost of copying notices in the Public Access Facility will remain 20 cents per page.

December 19, 1996


[1] Sec. Exch. Act Rel. No. 38066 (December 19, 1996).

 [2] The Municipal Securities Information Library system and the MSIL system are registered trademarks of the Board. The MSIL (R) system, which was approved in Securities Exchange Act Release No. 29298 (June 13,1991), is a central facility through which information about municipal securities is collected, stored and disseminated.

[3] Sec. Exch. Act Rel. No. 34961 (November 10, 1994).

[4] The Board also terminated the pilot phase of the CDI System and filed its Report on the Conclusion of the CDI Pilot of the Municipal Securities Information Library(R) System with the Commission on August 25, 1995.

[5] The cover sheet was in use in the interim System and provides identifying information about the issuer, the securities at issue, and the material event being disclosed. Use of the cover sheet is voluntary for submitters.

[6] In adopting the amendment to SEC Rule 15c2-12, the Commission stated that NRMSIRs will not be required to verify the accuracy of the information submitted, only to accurately convey the information. Sec. Exch. Act Rel. No. 34961 at n.155 (November 10, 1994). The Board similarly asserts that it is not required to undertake to establish the authenticity or accuracy of documents submitted, but that it will attempt to ensure accurate dissemination of documents accepted into the System.


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