MSRB Files to Establish a Pilot Phase of the Upcoming Continuing Disclosure Service of the MSRB's Electronic Municipal Market Access System ("EMMA")

The Municipal Securities Rulemaking Board (the “MSRB”) has filed with the Securities and Exchange Commission (the “SEC”) a proposed rule change to establish a pilot phase (the “continuing disclosure pilot”) of the continuing disclosure service of the MSRB’s Electronic Municipal Market Access system (“EMMA”).[1]  The continuing disclosure pilot would receive voluntary electronic submissions of, and would make publicly available on the Internet through the EMMA portal,[2] continuing disclosure documents and related information by issuers, obligated persons and their agents on an interim basis until the permanent EMMA continuing disclosure service commences operations on July 1, 2009.[3]  The MSRB has requested approval of the continuing disclosure pilot to commence operation on May 11, 2009, or such later date as may be announced by the MSRB in a notice published on the MSRB website, which date shall be no later than 30 days after SEC approval of the proposed rule change.

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 official statement, or a designated agent, has undertaken in writing to provide certain items of information to the marketplace.[4]  The items to be provided include:  (A) annual financial information concerning obligated persons; (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; 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 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.

The continuing disclosure pilot would accept voluntary submissions of continuing disclosure documents, including but not limited to items to be provided pursuant to Exchange Act Rule 15c2-12.  Submissions of continuing disclosure documents to the continuing disclosure pilot would be made solely in electronic format by issuers, obligated persons and their agents through a secured, password-protected, web-based interface with EMMA.  Such submissions would be made as portable document format (PDF) files, accompanied by related indexing information, through the submission processes established with respect to the EMMA continuing disclosure service; provided that such processes may become available for use by voluntary submitters on a phased-in basis.  No paper submissions would be accepted.  Documents submitted by issuers, obligated persons and their agents would be made available to the public on the EMMA portal.  The specific features of the EMMA portal established with respect to the EMMA continuing disclosure service may become available for use by public users of the EMMA website on a phased-in basis during the pilot phase.  The MSRB also may make available test versions of the computer-to-computer submission processes and data stream subscription services established with respect to the EMMA continuing disclosure service on a phased-in basis during the pilot phase.  There would be no charge for the making of submissions to the continuing disclosure pilot or for accessing such documents on the EMMA portal.

The MSRB would view electronic submissions of continuing disclosure documents to the continuing disclosure pilot as having been submitted to the MSRB for purposes of any existing continuing disclosure undertakings entered into consistent with Exchange Act Rule 15c2-12.[5]  The MSRB takes no position with regard to whether a submission made to the continuing disclosure pilot that is made publicly available through the EMMA portal would satisfy any other provisions of existing continuing disclosure undertakings.

The MSRB would undertake to make the submission and EMMA portal access services available during the pilot phase on the same terms as established for the EMMA continuing disclosure service but would reserve the right to operate any feature on a more limited basis as necessary or appropriate, in the sole discretion of the MSRB, during the pilot phase.  The continuing disclosure pilot would be expected to operate for a limited period of time as the MSRB transitions to the permanent EMMA continuing disclosure service anticipated to commence operation on July 1, 2009.  The continuing disclosure pilot would terminate automatically at such time as the permanent EMMA continuing disclosure service becomes operational.

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 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 portal and to maintain the integrity of EMMA and its operational components.  Such usage may include, without limitation, usage intended to cause the EMMA 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 portal, or to hyperlink to or otherwise use the EMMA portal or the information provided through the EMMA 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 portal.

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Questions on the proposed rule change may be directed to Leslie Carey, Associate General Counsel, Margaret C. Henry, Associate General Counsel, or Ernesto A. Lanza, General Counsel, at (703) 797-6600.  Written comments on the proposed rule change should be submitted to the SEC.

March 25, 2009

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TEXT OF PROPOSED RULE CHANGE[6]

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, 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 – No change

Public Availability of Continuing Disclosure Documents – No change

Pilot for EMMA Continuing Disclosure Service

In anticipation of the commencement of operations of the EMMA continuing disclosure service on July 1, 2009, the MSRB is implementing a pilot phase of the EMMA continuing disclosure service to provide for the voluntary electronic submission to the MSRB of continuing disclosure documents and related information by issuers, obligated persons and their agents and to provide for the free public access to such documents through the EMMA portal.  Such submissions shall be made as PDF files, accompanied by related indexing information, through the submission processes established with respect to the EMMA continuing disclosure service; provided that such processes may become available for use by voluntary submitters on a phased-in basis.  Documents submitted by issuers, obligated persons and their agents shall be made available to the public on the EMMA portal through the processes established with respect to the EMMA continuing disclosure service; provided that such processes may be implemented on a phased-in basis.  The MSRB also may make available test versions of the computer-to-computer submission processes and data stream subscription services established with respect to the EMMA continuing disclosure service on a phased-in basis during the pilot phase.  The features of the EMMA portal established with respect to the EMMA continuing disclosure service may become available for use by public users of the EMMA website on a phased-in basis during the pilot phase.  There shall be no charge for the making of submissions during the pilot phase or for accessing such documents on the EMMA portal.

The MSRB shall undertake to make the submission and EMMA portal access services available during the pilot phase on the same terms as established for the EMMA continuing disclosure service but reserves the right to operate any feature on a more limited basis as necessary or appropriate, in the sole discretion of the MSRB, during the pilot phase.  The pilot phase is expected to operate for a limited period of time as the MSRB transitions to the permanent EMMA continuing disclosure service anticipated to commence operation on July 1, 2009.  The pilot phase shall terminate automatically at such time as the permanent EMMA continuing disclosure service becomes operational.

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