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MSRB Notice

MSRB Begins Planning for Continuing Disclosure Component of the New Electronic Municipal Market Access System (EMMA)

The Municipal Securities Rulemaking Board (the “MSRB”) previously filed a proposed rule change with the Securities and Exchange Commission (the “SEC”) to implement, on a pilot basis, an Internet-based portal (the “pilot portal”) to provide free public access to official statements (“OSs”) and advance refunding documents (“ARDs”) submitted to the MSRB by underwriters of new issue municipal securities, together with real-time municipal securities trade price data from the MSRB’s Real-Time Transaction Reporting System (“RTRS”).[1]  The pilot portal is a necessary first step toward establishing an “access equals delivery” standard for OS dissemination in the new issue municipal securities market, based on the “access equals delivery” rule for prospectus delivery for registered securities offerings adopted by the SEC in 2005.[2]

In its filing for the pilot portal, the MSRB noted that it would stand ready to expand the pilot to include secondary market disclosures (consisting of annual financial information and notices of specific material events provided by issuers and other obligated persons under Exchange Act Rule 15c2-12), should the SEC determine to modify Rule 15c2-12 to provide for a centralized electronic submission and dissemination model.  In view of recent indications from the SEC that it expects to consider such a rule modification,[3] the MSRB has determined to take initial steps toward incorporating Rule 15c2-12 continuing disclosure submissions into its permanent on-line disclosure system, subject to final adoption of such modifications.  The MSRB is seeking comment on certain basic elements relating to the incorporation of continuing disclosure into the MSRB’s new disclosure utility.  Comments on this notice are due no later than February 25, 2008.


The permanent system, to be known as the MSRB’s Electronic Municipal Market Access system (EMMA), will serve as a centralized Internet-based system for free real-time public access to all primary market, secondary market and trade price data for municipal securities submitted to the MSRB.  EMMA will provide a free public dissemination utility for municipal securities disclosure filings to parallel the SEC’s public dissemination function for the registered securities market through its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.[4]  In addition, EMMA will provide trade pricing information for municipal securities to parallel the price dissemination functions offered by the self-regulatory organizations for various other securities markets.[5]  All submissions to the MSRB through EMMA, including submissions of OSs and ARDs by underwriters and their agents and submissions of continuing disclosures by issuers and their agents under continuing disclosure agreements, would be made without charge solely by electronic means.

EMMA will be implemented in stages, with the initial stage consisting of the pilot portal for OSs and ARDs expected to become operational on or about March 10, 2008, subject to final approval by the SEC.  This OS/ARD pilot portal is expected to operate for a limited period as the MSRB transitions to the “access equals delivery” standard for OS dissemination in the municipal securities market.  EMMA’s “access equals delivery” component is currently planned to become operational during the summer of 2008, subject to final rulemaking by the MSRB and SEC approval.  At that time, the “access equals delivery” component will provide for free electronic submissions of all OSs and ARDs to the MSRB and free public access to such documents through the public EMMA website.  The continuing disclosure component of EMMA also would be implemented in stages, with an initial pilot stage during which submissions of continuing disclosure information could be made on a voluntary basis and such voluntary submissions would be made publicly available through the EMMA website.[6] This continuing disclosure pilot stage would operate for a limited period until the effective date of any SEC rulemaking under Rule 15c2-12 to provide for the MSRB’s role as the central submission and dissemination utility for continuing disclosure information.  At that time, EMMA’s continuing disclosure component would become fully operational, providing for free electronic submissions of all continuing disclosures under Rule 15c2-12 to the MSRB and free public access to such disclosures through the public EMMA website, as described below.


Under Exchange Act Rule 15c2-12(b)(5), an underwriter for a primary offering of municipal securities subject to the rule currently 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 OS, or a designated agent, has undertaken in writing to provide certain items of information to the marketplace.[7]  The items to be provided include:  (A) annual financial information concerning obligated persons;[8] (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;[9] and (D) notices of failures to provide annual financial information on or before the date specified in the written undertaking. The written agreement shall identify each obligated person or other person for whom information will is to be provided, either by name or by an objective criteria for selecting such person, and also shall specify (i) the type of information to be included in the annual financial information, (ii) the accounting principles pursuant to which financial statements will be prepared and whether such financial statements will be audited, and (iii) the date on which the annual financial information will be provided.

If the SEC amends Rule 15c2-12 to provide that issuers file their continuing disclosures under the rule centrally with the MSRB in electronic form, the MSRB would expand EMMA’s functionalities to also serve as the central electronic submission system for filing of all secondary market disclosures under amended Rule 15c2-12, at no charge to the submitter.  The MSRB would integrate this collection of secondary market disclosure information with the MSRB’s OS/ARD collection and RTRS data to provide a free comprehensive centralized public access portal for primary market disclosure information, secondary market disclosure information and transaction price information.  EMMA would accept submissions of continuing disclosure information directly from issuers, obligated persons and their designated agents acting on their behalf.  Continuing disclosures would be submitted to EMMA solely by electronic means in the same designated electronic format as will be required for submissions of OSs and ARDs by underwriters.[10]  EMMA would be designed to accept such electronic submissions, including basic indexing information, either through a web-based interface or by computer-to-computer upload or data stream.  In addition to making continuing disclosures available publicly through the EMMA public web site, such disclosures would be available on a real-time basis through paid subscriptions to the complete EMMA document collection for re-dissemination or other use by subscribers.

The MSRB expects to collect key indexing information for secondary market disclosures both at the time of the initial issuance of the securities and when such disclosures are submitted to the MSRB.  At initial issuance, underwriters of new issue municipal securities would be required to provide the following items of information:  (i) whether a continuing disclosure undertaking exists; (ii) the identity of any obligated persons other than the issuer; and (iii) the date identified in the undertaking by which annual financial information is expected to be disseminated.  The MSRB seeks comments on these additional items of information to be submitted in connection with new issues.  In addition, the MSRB seeks comments on whether other additional items of information should be required to be submitted by underwriters at the time of initial issuance, such as (among other things) the identity of any agents designated to provide continuing disclosure information or any criteria set out in the continuing disclosure undertaking for identifying obligated persons subject to the disclosure obligations pursuant to such undertaking.

At the time of submission of an item of continuing disclosure, specific indexing information relating to such item would be collected from the submitter.  Such information would be designed to accurately identify the category of information being provided, such as annual financial information, audited financial statements, material event notice (including designation of which category or categories of events), or failure to make timely filing of annual financial information.  In addition, such information would be designed to accurately identify the issues or specific securities, as well as the obligated person (if applicable), to which such disclosure applies.  Such information could be provided either through data files submitted to EMMA’s computer-to-computer interface or through data-entry screens on the EMMA web interface.

Many issuers currently allow continuing disclosure information to be provided through designated agents.  The MSRB intends on providing an issuer with the ability to control through EMMA who may act as a submission agent on its behalf.  The MSRB seeks comments on whether the MSRB should accept submissions from a third party with respect to an issuer’s securities only if the issuer has affirmatively designated to EMMA that such third party is authorized to act as its agent, or whether submissions from any registered EMMA user should be accepted on behalf of an issuer unless the issuer has affirmatively indicated that it wishes to take control over which parties can submit on its behalf.


The MSRB previously stated that EMMA would be designed to permit underwriters to designate third-party submission agents to act on their behalf with respect to their document and related information submission requirements.[11]  In addition to using an upgraded version of the MSRB’s current web-based electronic submission interface for individual documents, underwriters and their agents will be able to establish computer-to-computer data connections with EMMA to submit the documents and/or related information directly to EMMA.  This direct document and data submission feature also would be available with respect to submissions of continuing disclosure information on behalf of issuers and obligated persons.  In addition, the MSRB has noted that it will offer real-time subscriptions to EMMA’s document collection and related information, which will be designed to provide real-time access to such documents and information as they are submitted and processed.  The MSRB’s goal is to ensure an efficient process for submission of documents and information to EMMA while making available real-time subscription products at a reasonable cost with a view to promoting broad dissemination of the EMMA information collection and encouraging market-based approaches to value-added services designed to meet the needs of investors and other market participants.  The MSRB expects to begin soliciting feedback from potential submitters and subscribers to EMMA in the near future.

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Comments should be submitted by no later than February 25, 2008, and may be directed to Ernesto A. Lanza, Senior Associate General Counsel.  Written comments will be available for public inspection at the MSRB’s public access facility and also will be posted on the MSRB web site.[12]

January 31, 2008


[1] File No. SR-MSRB-2007-06.  See MSRB Notice 2007-33 (November 15, 2007).

[2] See Securities Act Release No. 8591 (July 19, 2005), 70 FR 44722 (August 3, 2005) and Securities Act Rule 172, on delivery of prospectus, Rule 173, on notice of registration, and Rule 174, on delivery of prospectus by dealers and exemptions under Section 4(3) of the Securities Act of 1933, as amended.  The MSRB has previously sought comment on the necessary rule changes to implement the “access equals delivery” standard.  See MSRB Notice 2007-33 (November 15, 2007); MSRB Notice 2007-05 (January 25, 2007).

[3] See letter from Christopher Cox, Chairman, SEC, to Frank Y. Chin, Chairman, MSRB, dated November 21, 2007, available at (the “SEC Letter”).

[4] The EMMA system’s disclosure function will not operate in an identical manner to the EDGAR system due to considerable differences in the two marketplaces, necessitating differing approaches to indexing of and searching for disclosure information.

[5] See, for example, fixed-income prices provided by the Financial Industry Regulatory Authority; equity prices provided by the New York Stock Exchange, NASDAQ and others.

[6] Such voluntary filings would not substitute for any required filings under existing continuing disclosure undertakings but would be intended to provide submitters the opportunity to gain experience with the EMMA system prior to it becoming the central submission utility for continuing disclosure information.

[7] 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).  The rule provides for more limited disclosures for obligated persons with no more than $10 million of outstanding municipal securities.  See Rule 15c2-12(d)(2).

[8] 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 OS with respect to an obligated person, or in the case where no financial information or operating data was provided in the final OS with respect to such obligated person, of the type included in the final OS 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.

[9] Such events 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.

[10] The MSRB has proposed that submissions must be in an electronic format acceptable to the MSRB, must be word-searchable, and must permit the document to be saved, viewed, printed and retransmitted by electronic means using software generally available for free or on a commercial basis to non-business computer users. Documents in portable document format that are word-searchable and may be saved, viewed, printed and retransmitted by electronic means would be deemed to be in a designated electronic format.  See MSRB Notice 2007-33 (November 15, 2007).

[12] All comments received will be made publicly available without change.  Personal identifying information, such as names or e-mail addresses, will not be edited from submissions.  Therefore, commentators should submit only information that they wish to make available publicly.