The MSRB believes timely and complete disclosure by issuers of municipal securities is essential to the integrity of the municipal market. Inadequate disclosure is a risk to municipal securities investors, who need timely, accurate and complete information about a security and its issuer to make informed decisions. To demonstrate its commitment to improving disclosure, the MSRB provides a set of guiding principles for issuers seeking to enhance their disclosure practices.
Securities and Exchange Commission (SEC) Rule 15c2-12 provides the framework for municipal securities disclosures. Under the rule, municipal securities underwriters generally must contract with issuers to receive official statements disclosing certain features of the transaction to investors, and ensure issuers enter into contracts known as continuing disclosure agreements (CDAs). Through the CDAs, the issuers agree to provide disclosure of annual financial information and events such as defaults and delinquencies that would be significant to investors. The MSRB provides the platform for free public access to both official statements and continuing disclosures by operating the Electronic Municipal Market Access (EMMA®) website, the official repository for all disclosure and trade data on municipal bonds.
The following are MSRB actions on the issue of timely and complete disclosure.
- The MSRB cited timeliness of continuing disclosures as one of the municipal market practices the MSRB believes may have an adverse impact on retail investors in a November 2016 letter to the SEC Office of the Investor Advocate. The MSRB believes that issuers should work to incorporate best practices and policies to shorten the time it takes to communicate valuable information to investors – for example, through the submission of intermediate or unaudited financial statements.
- The MSRB has urged the SEC to review Rule 15c2-12 to identify ways to enhance the quality and timeliness of information made available to the municipal market, particularly with regard to a lack of disclosure of bank loans and direct-purchase debt. Investors must be made aware of the presence of bank loans or direct-purchase debt that could have an impact on the seniority status of bondholders or could affect the credit or liquidity profile of an issuer. The MSRB has suggested the SEC look to corporate Form 8-K as precedent for material events to include for continuing disclosures. Under this approach, bank loans or debt-like obligations would need to be disclosed along with the material terms of the indebtedness. Read more about the MSRB's advocacy regarding more transparency around bank loans.
- The MSRB publicizes data regarding trends in the timeliness of disclosures so that all stakeholders can identify areas for improvement. In May 2015, the MSRB published a report, soon to be updated for 2016, called the “Timing of Annual Financial Disclosures by Issuers of Municipal Securities.” The report analyzes submissions of financial disclosures made to EMMA and measures the number of days after the end of a fiscal year that audited financial statements and annual financial information is made available. MSRB data shows that audited financial statements are typically posted approximately 200 calendar days after the end of the fiscal year and that in 2015, 3 percent of all continuing disclosure documents posted on EMMA were notices of failure to provide timely annual financial statements – only a partial picture of the scope of the challenges with the timeliness and completeness of disclosures. More comprehensively, the MSRB publishes an annual MSRB Fact Book that includes a holistic look at municipal market disclosures and trends, including financial and event disclosures.
Bank Loan Disclosure
Voluntary bank loan disclosures can provide bondholders, potential investors and other market participants access to key information useful in assessing their current holdings of municipal securities or in making investment decisions. The MSRB has been advocating for bank loan disclosure since 2012. View MSRB resources and information on bank loan disclosure.
For more than 25 years, the MSRB has led the effort to provide investors – and the market as a whole – with access to municipal bond disclosure information. The MSRB’s EMMA website serves as the official platform for issuers to disclose information to investors and the market. The MSRB continues to add tools and features to EMMA that facilitate disclosure, such as a free email reminder service for recurring financial disclosures, customized issuer home pages and a dedicated submission process for bank loan disclosures.
Read more about the MSRB's leadership on access to disclosure information in Facilitating Disclosure: A 25-Year History of Providing Municipal Market Transparency.
The MSRB offers direct assistance to state and local government issuers to advance their knowledge on disclosure and other topics through in-person educational events, webinars, an online education center and through MuniEdProSM, a suite of interactive, online courses providing up-to-date information regarding the municipal market and MSRB regulations. View the MSRB’s issuer resource library.
Issuers may call the MSRB's support line for free expert assistance with submitting continuing disclosure documents.
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