
[Federal Register: April 6, 2009 (Volume 74, Number 64)]
[Notices]               
[Page 15530-15533]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ap09-130]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59643; File No. SR-MSRB-2009-03]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to the 
Establishment of a Pilot Phase of Its Upcoming Continuing Disclosure 
Service of the Electronic Municipal Market Access system (EMMA[supreg])

March 27, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 25, 2009, the Municipal Securities Rulemaking Board (``MSRB'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been substantially prepared by the MSRB. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB has filed with the Commission 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''). The continuing disclosure pilot would receive 
electronic submissions of, and would make publicly available on the 
Internet, continuing disclosure documents and related information 
voluntarily submitted by issuers, obligated persons and their agents. 
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 Web site, which 
date shall be no later than 30 days after Commission approval of the 
proposed rule change. In addition, the MSRB has requested approval of 
the continuing disclosure pilot for a period ending on July 1, 2009.\3\
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    \3\ The Commission has previously approved the establishment of 
the continuing disclosure service of EMMA, which will commence 
operation on July 1, 2009. See Securities Exchange Act Release No. 
59061 (December 5, 2008), 73 FR 75778 (December 12, 2008) (File No. 
SR-MSRB-2008-05) (approving the continuing disclosure service of 
EMMA with an effective date of July 1, 2009). The EMMA continuing 
disclosure service is designed to commence operation simultaneously 
with the effectiveness of certain amendments to Exchange Act Rule 
15c2-12 adopted by the Commission. See Securities Exchange Act 
Release No. 59062 (December 5, 2008), 73 FR 76104 (December 15, 
2008) (adopting amendments to Exchange Act Rule 15c2-12).
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    The text of the proposed rule change is available on the MSRB's Web 
site (http://www.msrb.org/msrb1/sec.asp), at the MSRB's principal 
office, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the MSRB included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The MSRB has prepared summaries, set forth in sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change would establish a pilot phase of the 
continuing disclosure service of EMMA to provide, pending the 
commencement of operation of the permanent EMMA continuing disclosure 
service on July 1, 2009, 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.\4\
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    \4\ The EMMA portal began operation on March 31, 2008 as a pilot 
facility and is accessible at http://emma.msrb.org. See Securities 
Exchange Act Release No. 57577 (March 28, 2008), 73 FR 18022 (April 
2, 2008) (File No. SR-MSRB-2007-06) (approving operation of the EMMA 
pilot to provide free public access to the MSIL system collection of 
official statements and advance refunding documents and to the 
MSRB's Real-Time Transaction Reporting System historical and real-
time transaction price data) (the ``EMMA portal pilot filing'').
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    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

[[Page 15531]]

items of information to the marketplace.\5\ 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.
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    \5\ Under Rule 15c2-12(b)(5)(i), annual filings are to be sent 
to all existing nationally recognized municipal securities 
information repositories (``NRMSIRs'') and any applicable state 
information depositories (``SIDs''), while material event notices 
may be sent to all existing NRMSIRs or to the MSRB, as well as to 
any applicable SIDs.
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    The pilot phase of the EMMA continuing disclosure service 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 
pilot phase of the EMMA continuing disclosure service 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 Web site 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 during the pilot phase or for accessing such documents on 
the EMMA portal.
    The MSRB would view electronic submissions of continuing disclosure 
documents during the pilot phase of the EMMA continuing disclosure 
service as having been submitted to the MSRB for purposes of any 
existing continuing disclosure undertakings entered into consistent 
with Exchange Act Rule 15c2-12.\6\ The MSRB takes no position with 
regard to whether a submission made to the pilot phase of the EMMA 
continuing disclosure service that is made publicly available through 
the EMMA portal would satisfy any other provisions of existing 
continuing disclosure undertakings.
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    \6\ The MSRB currently operates CDINet to process and 
disseminate notices of material events submitted to the MSRB. The 
MSRB urges, but does not require, submitters currently using CDINet 
to instead make any future submissions to the pilot phase of the 
EMMA continuing disclosure service, solely in electronic format, 
upon the launch of the pilot phase until such time as all 
submissions must be made to the permanent EMMA continuing disclosure 
service. The MSRB intends to file in the near future a proposed rule 
change with the Commission to discontinue CDINet as of the 
commencement of operations of the permanent EMMA continuing 
disclosure service on July 1, 2009.
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    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 pilot phase 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 pilot phase 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.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act,\7\ which provides that the MSRB's 
rules shall:
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    \7\ 15 U.S.C. 78o-4(b)(2)(C).

be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in municipal securities, to remove 
impediments to and perfect the mechanism of a free and open market 
in municipal securities, and, in general, to protect investors and 
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the public interest.

    The MSRB believes that the proposed rule change is consistent with 
the Act. The EMMA continuing disclosure service, including the pilot 
phase thereof, would serve as an additional mechanism by which the MSRB 
works toward removing impediments to and helping to perfect the 
mechanisms of a free and open market in municipal securities. The pilot 
phase would be an important transitional step toward ensuring the 
effective and efficient operation of the permanent EMMA continuing 
disclosure service upon launch on July 1, 2009.
    The EMMA continuing disclosure service, including the pilot phase 
thereof, would help make information useful for making investment 
decisions more easily accessible to all participants in the municipal 
securities market on an equal basis throughout the life of the

[[Page 15532]]

securities without charge through a centralized, searchable Internet-
based repository, thereby removing potential barriers to obtaining such 
information. Broad access to continuing disclosure documents through 
the EMMA continuing disclosure service should assist in preventing 
fraudulent and manipulative acts and practices by improving the 
opportunity for public investors to access material information about 
issuers and their securities.
    Furthermore, the EMMA continuing disclosure service should reduce 
the effort necessary for issuers and obligated persons to comply with 
their continuing disclosure undertakings by making submissions to a 
single venue \8\ using an electronic submission process, which should 
result in lower costs to issuers and savings to their citizens. 
Similarly, a single centralized and searchable venue for free public 
access to disclosure information should promote a more fair and 
efficient municipal securities market in which transactions are 
effected on the basis of material information available to all parties 
to such transactions, which should allow for fairer pricing of 
transactions based on a more complete understanding of the terms of the 
securities and the potential investment risks. Free access to this 
information--previously available in most cases only through paid 
subscription services or on a per-document fee basis--should reduce 
transaction costs for dealers and investors.
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    \8\ Some states may require issuers and/or obligated persons to 
submit disclosure information to state information depositories or 
other venues pursuant to state law.
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    All of these factors serve to promote the statutory mandate of the 
MSRB to protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB does not believe that the proposed rule change would 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The pilot phase of the EMMA 
continuing disclosure service would be an important transitional step 
toward ensuring the effective and efficient operation of the permanent 
EMMA continuing disclosure service upon launch on July 1, 2009. As the 
MSRB has previously stated in its filing with the Commission in 
connection with the permanent EMMA continuing disclosure service (the 
``permanent EMMA continuing disclosure filing''),\9\ although the MSRB 
recognizes that the EMMA continuing disclosure service might require 
private enterprises to modify some aspects of the way they undertake 
their current business activities, the MSRB believes that the 
continuing disclosure service would promote, rather than hinder, 
further competition, growth and innovation in this area. The MSRB 
believes that the benefits realized by the investing public from the 
broader and easier availability of disclosure information about 
municipal securities that would be provided through the EMMA continuing 
disclosure service, including the pilot phase thereof, would justify 
any potentially negative impact on existing enterprises from the 
operation of EMMA.
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    \9\ See Securities Exchange Act Release No. 58256 (July 30, 
2008) 73 FR 46161 (August 7, 2008) (File No. SR-MSRB-2008-05) 
(proposing the establishment of the continuing disclosure service of 
EMMA). See also Securities Exchange Act Release No. 59061 (December 
5, 2008), 73 FR 75778 (December 12, 2008) (File No. SR-MSRB-2008-05) 
(approving the continuing disclosure service of EMMA with an 
effective date of July 1, 2009).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received on the 
proposed rule change. However, in connection with the permanent EMMA 
continuing disclosure filing, the Commission received comments relating 
to, among other things, the effective date of the filing and a desire 
for a transition to the permanent EMMA continuing disclosure 
filing.\10\ In the permanent EMMA continuing disclosure filing, the 
MSRB had originally proposed an effective date of January 1, 2009. In 
response, one commentator requested that the Commission establish a 
transition period before making electronic filings on EMMA mandatory as 
a result of the submissions needing to be submitted as PDF-word 
searchable files.\11\ Another commentator noted a need to address 
smaller issuers who may need additional time to familiarize themselves 
with an electronic system.\12\ A third commentator noted that 
``municipal issuers and obligated persons may be confused as to where 
they should file continuing disclosure documents during the period of 
transition from the current system to the EMMA system'' and suggested 
that these concerns ``could be addressed during a short transition 
period.'' \13\
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    \10\ Comment letters to the Commission on the permanent EMMA 
continuing disclosure filing are available at http://www.sec.gov/
comments/sr-msrb-2008-05/msrb200805.shtml.
    \11\ See Letter from Susan A. Gaffney, Director, Federal Liaison 
Center, Government Finance Officers Association, to Ms. Harmon, 
dated September 22, 2008.
    \12\ See Letter from William A. Holby, President, National 
Association of Bond Lawyers, to Ms. Harmon, dated September 22, 
2008.
    \13\ See Letter from Christopher Alwine, Head of Municipal Money 
Market and Bond Groups, Vanguard, to Ms. Harmon, dated September 24, 
2008.
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    As a result, the MSRB amended the permanent EMMA continuing 
disclosure filing to request that the Commission delay the 
implementation of the permanent EMMA continuing disclosure service to 
July 1, 2009.\14\ The MSRB noted that the delayed effectiveness would 
provide the MSRB with the opportunity to implement a pilot phase of the 
EMMA continuing disclosure service to allow voluntary submissions to be 
made prior to the effectiveness of the permanent EMMA continuing 
disclosure service. During this pilot period, submitters would be able 
to familiarize themselves with the submission process and receive 
assistance to establish user accounts.
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    \14\ See SR-MSRB-2008-05, Amendment No. 1 (November 5, 2008).
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2009-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission,

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100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2009-03. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the MSRB. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MSRB-2009-03 and should be 
submitted on or before April 27, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-7583 Filed 4-3-09; 8:45 am]

BILLING CODE 8011-01-P
