MSRB pushes for SEC review of disclosure rules for municipal securities

By Susanna Moon

Chicago, Jan. 20 – The Municipal Securities Rulemaking Board said it asked the Securities and Exchange Commission to review the disclosure requirements for municipal securities outlined in Rule 15c2-12.

In a letter, the MSRB said that municipal market changes, including the increased bank borrowing by issuers, requires “an extensive look at the disclosure regime,” according to a press release by the MSRB.

The SEC should use the corporate market disclosure standards as a guide for disclosure of off-balance sheet obligations such as bank loans, the release noted.

“Requiring similar reporting by municipal issuers would address our concerns about these obligations that are not subject to Rule 15c2-12 and therefore are not now reported,” the MSRB’s letter notes, according to the release.

“The MSRB believes that the availability of timely disclosure of additional debt in any form and debt-like obligations is essential to foster market transparency and to ensure a fair and efficient municipal market.”

The MSRB said it first asked state and local governments in 2012 to make information about their bank loans publicly available on the EMMA website.

Since 2009, the MSRB’s Electronic Municipal Market Access website has been the SEC-designated centralized platform for disclosing offering documents and continuing disclosures under SEC Rule 15c2-12, the MSRB said.

The MSRB said it pledged its support for a thorough review of the rule in a letter submitted to the SEC in response to a request for comment on the collection of information under the rule mandated by the Paperwork Reduction Act.

“The MSRB recognizes that the SEC is fulfilling its duty to regularly review the volume of regulatory paperwork involved in complying with its rules,” MSRB executive director Lynnette Kelly said in the press release.

“However we are taking this opportunity to encourage more extensive dialogue about the federal disclosure framework by urging the SEC to conduct a wholesale re-examination of the rule and consider potential changes to improve its operation and reflect current market practices.”

SEC Rule 15c2-12 was adopted in 1989 and last amended in 2010.

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