SEC propose "Giant Step Forward" for Municipal Bond InvestorsThe Securities and Exchange Commission today voted unanimously to propose measures that would for the first time enable investors to easily access complete financial information about municipal bonds for free on the Internet.
Currently, retail investors in municipal securities usually cannot get ongoing disclosure information about their securities without paying significant fees and waiting for the documents to come in paper form by mail or fax. Issuers of municipal bonds submit their disclosures, such as annual financial data and information about material events including downgrades or notices of default, to a variety of for-profit information repositories that then sell it to the public. This severely limits its availability to retail investors.
The rule amendments proposed by the SEC would designate the Municipal Securities Rulemaking Board (MSRB) as the central repository for ongoing disclosures by municipal issuers. Under a separate MSRB-proposed rule change, its Electronic Municipal Market Access (EMMA) system would make these disclosures available to investors for free on the Internet in the same way the SEC's EDGAR system does for corporate disclosures.
"These proposals would bring dramatic improvements in disclosure to investors in municipal securities," said SEC Chairman Christopher Cox. "Retail investors — who own two-thirds of municipal securities — will soon have the same one-stop, cost-free, instant electronic access to disclosure documents about municipal bonds that they've long had for corporate stocks and bonds. This is a giant step forward for municipal bond investors."
MSRB Chair Frank Chin added, "The centralized collection and dissemination by the MSRB of ongoing financial documents will allow fair and equal access to information about municipal issuers and their bonds. EMMA will give investors an efficient and easy way to get key data about issuers as soon as it becomes available."
Public comment on the SEC's proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934, as well as public comment on the MSRB's proposed rule change should be received by the Commission no later than 45 days after their respective publication in the Federal Register.
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