MSRB Board Meeting

Summary of Board Action
July 18, 2008

The Municipal Securities Rulemaking Board would like to provide dealers and other interested parties with information about actions taken by the Board at its quarterly meetings.  Beginning today, the MSRB will post on its website and send to its e-mail subscribers a summary immediately following each Board meeting. 

The information below summarizes the Board’s most recent meeting, which took place July 16-18, 2008.

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The Municipal Securities Rulemaking Board (MSRB) held its quarterly meeting July 16-18 and approved several measures to improve transparency of the municipal bond market.  It also evaluated expansion of MSRB’s electronic database for retail investors, clarified several requirements for municipal bond dealers and elected new Board members.

ARS/VRDO Transparency

In an effort to improve access to municipal market data, the Board approved a plan to increase transparency on auction rate securities and variable rate demand obligations. The plan includes development of a system to collect and disseminate critical market information on these securities.  The MSRB will implement a phased-in system that prioritizes both disclosure of ARS documents describing auction- and rate-setting procedures, and ARS and VRDO interest-rate data.  The Board set a goal of first- quarter 2009 for implementation of this first phase.  When completed, the system will include additional market data about these securities. 

“This measure reflects market and regulatory support for increasing available data on classes of municipal securities that have not been fully transparent,” said MSRB Chair Frank Chin. “We have taken a phased-in approach to give market participants time to accommodate new requirements.”

Reporting of Proprietary Desk Trades

In rule action, the Board reviewed comments received on its notice asking whether Rule G-14 on transaction reporting should require that all transactions with dealer proprietary desks be reported as customer transactions.  The Board deferred a decision, pending additional discussions.

EMMA (Electronic Municipal Market Access system)

The Board also reviewed operation and expansion of the EMMA system (Electronic Municipal Market Access), created by the MSRB in March 2008. EMMA provides free public access to real-time trade data and primary market data, and was envisioned to eventually include additional information.  

The Board discussed the next phase of EMMA that would implement an all-electronic system for disseminating official statements, commonly referred to as “access equals delivery,” and reviewed the third phase whereby EMMA would accept and disseminate secondary market information, called continuing disclosure documents.  Both phases are subject to approval by the Securities and Exchange Commission.

Rule Actions 

The Board will also clarify Rule G-15 regarding customer confirmation requirements. Dealers will now be able to meet the G-15 requirement with electronic confirmations sent using Omgeo LLC’s Trade Suite Service.  Also, those dealers with an exemption from the “trade-by-trade” confirmation requirements of the SEC will have a similar exemption under MSRB Rule G-15.

Administrative Actions

In administrative actions, the Board also voted to prohibit two individuals from the same broker-dealer or bank from serving on the Board simultaneously, and to limit representation of a single firm on the Board to no more than six consecutive years. As it does at every July Board meeting, the Board named a new chair and vice-chair, and approved five new Board members.  Five current Board members will complete their three-year term on September, 30, 2008, and the new members will assume their duties on October 1, 2008.  The new Board officers and members will be announced at a later date.

At the Board meeting, new staff members Jennifer Galloway, chief communication officer, and Marcelo Vieira, director of research, outlined goals and initiatives for their departments to the Board.  These are new staff positions created to further the Board’s strategic goals of enhancing external communication and developing market information products.

The Municipal Securities Rulemaking Board (MSRB) was established in 1975 by Congress to develop rules regulating securities firms and banks involved in underwriting, trading, and selling municipal securities.  The Board also operates information systems designed to promote transparency and access to information, and also has an extensive outreach and education effort.  The Board is composed of members from the municipal securities dealer community and the public, and is charged with protecting investors in this market.  The Board is a self-regulatory organization that is subject to oversight by the Securities and Exchange Commission (SEC).