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Ruling Poised to Increase Transparency in Municipal Bond Market

The municipal bond market faced its share of challenges during 2008.  In December, however, the industry received a bit of good news:  The Securities and Exchange Commission (SEC) announced its unanimous approval of the Municipal Securities Rulemaking Board’s (MSRB) EMMA system, a move designed to significantly increase transparency in the municipal bond market.

In an MSRB press release, SEC Chairman Christopher Cox says, “For the first time, millions of individual investors in municipal bonds will have free and instant access to information about their investments, similar to the way they can obtain information about public companies."

Beginning July 1, 2009, EMMA will become the sole nationally recognized municipal securities information repository (NRMSIR) for municipal disclosure information.  There are currently four NRMSIRs, including the Bloomberg Municipal Repository, DPC Data, Interactive Data Pricing and Reference Data, and Standard & Poor’s Disclosure Directory, as well as several state repositories.

EMMA - which stands for Electronic Municipal Market Access - is a one-stop portal through which investors can access all primary market, secondary market, and trade price data for municipal securities.  The system pilot was launched on March 31, 2008.  The first phase of the system provided official statements for new municipal bond issues and real-time pricing data for municipal securities.

Phase Two, also known as “Access=Delivery,” called for the MSRB to collect and disseminate continuing disclosure documents.

The SEC approval includes regulatory amendments to Rule 15c2-12 on disclosure, which include designating the MSRB as the central repository for ongoing disclosure documents.  In a related ruling, EMMA became the official portal through which the public can access this information.

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