[Federal Register Volume 73, Number 240 (Friday, December 12, 2008)]
[Notices]
[Pages 75778-75787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-29376]



[[Page 75778]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59061; File No. SR-MSRB-2008-05]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Amendment No. 1 and Order Granting 
Accelerated Approval of Proposed Rule Change, as Modified by Amendment 
No. 1 Thereto, Relating to the Establishment of a Continuing Disclosure 
Service of the Electronic Municipal Market Access System (EMMA)

December 5, 2008.

I. Introduction

    On July 29, 2008, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to establish a continuing 
disclosure service (the ``continuing disclosure service'') of the 
MSRB's Electronic Municipal Market Access system (``EMMA''). The 
proposed rule change was published for comment in the Federal Register 
on August 7, 2008.\3\ The Commission received eighteen comment letters 
regarding the MSRB's proposed rule change.\4\ On November 5, 2008, the 
MSRB filed Amendment No. 1 to the proposed rule change.\5\ The text of 
Amendment No. 1 is available on the MSRB's Web site (http://www.msrb.org), at the MSRB's principal office, and at the Commission's 
Public Reference Room. On November 24, 2008, the MSRB submitted a 
letter responding to the comment letters.\6\ This order provides notice 
of the proposed rule change as modified by Amendment No. 1 and approves 
the proposed rule change, as amended, on an accelerated basis.\7\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 58256 (July 30, 
2008), 73 FR 46161 (August 7, 2008) (``Release No. 34-58256'').
    \4\ Exhibit A contains the citation key to the comments noted 
herein. Copies of the comment letters received by the Commission are 
available on the Commission's Internet Web site, located at http://www.sec.gov/comments/sr-msrb-2008-05/msrb200805.shtml and in the 
Commission's Public Reference Room at its Washington, DC 
headquarters.
    \5\ In Amendment No. 1, the MSRB proposed to establish as the 
operative date of the continuing disclosure service the later of 
July 1, 2009 or the effective date of any amendments to Rule 15c2-12 
under the Act (``Rule 15c2-12'' or ``Rule''), 17 CFR 240.15c2-12, 
that provide for the MSRB to serve as the sole repository for 
continuing disclosure documents, and to establish January 1, 2010 as 
the date on which submitters to the continuing disclosure service 
would be required to submit documents as word-searchable portable 
document format (PDF) files.
    \6\ See Letter from Ernesto A. Lanza, General Counsel, MSRB, to 
Florence E. Harmon, Acting Secretary, Commission, dated November 24, 
2008 (``MSRB Response Letter'').
    \7\ On August 7, 2008, the Commission published for comment in 
the Federal Register proposed amendments to Rule 15c2-12 that relate 
to the MSRB's implementation of the continuing disclosure service. 
See Securities Exchange Act Release No. 58255 (July 30, 2008), 73 FR 
46138 (August 7, 2008) (``Release No. 34-58255''). In a separate 
release issued today, the Commission is approving its proposed 
amendments to Rule 15c2-12 (``Rule 15c2-12 Amendments''). See 
Securities Exchange Act Release No. 59062 (December 5, 2008) (``Rule 
15c2-12 Amendments Adopting Release'').
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II. Description of the Proposed Rule Change

    Under 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 \8\ for whom financial information or 
operating data is presented in the final official statement has 
undertaken in writing to provide certain items of information to the 
marketplace.\9\ Rule 15c2-12(b)(5) provides that such items include: 
(A) Annual financial information concerning obligated persons; \10\ (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; \11\ and (D) notices of failures to 
provide annual financial information on or before the date specified in 
the written undertaking.\12\ Annual filings, material event notices, 
and failure to file notices generally are referred to as ``continuing 
disclosure documents.''
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    \8\ Rule 15c2-12(f)(10) defines ``obligated person'' as any 
person, including an issuer of municipal securities, who is either 
generally or through an enterprise, fund, or account of such person 
committed by contract or other arrangement to support payment of all 
or part of the obligations on the municipal securities sold in a 
primary offering (other than providers of bond insurance, letters of 
credit, or other liquidity facilities).
    \9\ See also Rule 15c2-12(d)(2), which provides for an exemption 
from the requirements of paragraph (b)(5) of Rule 15c2-12.
    \10\ Rule 15c2-12(f)(9) defines ``annual financial information'' 
as financial information or operating data, provided at least 
annually, of the type included in the final official statement with 
respect to an obligated person, or in the case where no financial 
information or operating data was provided in the final official 
statement with respect to such obligated person, of the type 
included in the final official statement with respect to those 
obligated persons that meet the objective criteria applied to select 
the persons for which financial information or operating data will 
be provided on an annual basis.
    \11\ Under Rule 15c2-12(b)(5)(C), such events currently consist 
of principal and interest payment delinquencies; non-payment related 
defaults; unscheduled draws on debt service reserves reflecting 
financial difficulties; unscheduled draws on credit enhancements 
reflecting financial difficulties; substitution of credit or 
liquidity providers, or their failure to perform; adverse tax 
opinions or events affecting the tax-exempt status of the security; 
modifications to rights of security holders; bond calls; 
defeasances; release, substitution, or sale of property securing 
repayment of the securities; and rating changes.
    \12\ Under current Rule 15c2-12(b)(5)(i), participating 
underwriters must reasonably determine whether the issuer has 
undertaken to send annual filings to all existing nationally 
recognized municipal securities information repositories 
(``NRMSIRs'') and any applicable state information depositories 
(``SIDs''), while the undertaking with respect to material event 
notices and failure to file notices must provide that they be sent 
to all existing NRMSIRs or to the MSRB, as well as to any applicable 
SID. Under the Rule 15c2-12 Amendments adopted today, participating 
underwriters must reasonably determine whether the issuer has 
undertaken to send continuing disclosure documents to the MSRB. See 
Rule 15c2-12 Amendments Adopting Release, supra note 7. The MSRB, 
which currently operates CDINet to process and disseminate notices 
of material events submitted to the MSRB, previously petitioned the 
Commission to amend Rule 15c2-12 to remove the MSRB as a recipient 
of material event notices due to the very limited level of 
submissions received by the MSRB, constituting a negligible 
percentage of material event notices currently provided to the 
marketplace. See Letter from Diane G. Klinke, General Counsel, MSRB, 
to Jonathan G. Katz, Secretary, Commission, dated September 8, 2005. 
In 2006, the Commission published proposed amendments to Rule 15c2-
12 to eliminate the MSRB as a repository for material event notices. 
See Exchange Act Release No. 54863 (December 4, 2006), 71 FR 71109 
(December 8, 2006) (``2006 Proposed Rule 15c2-12 Amendments''). In 
light of the Rule 15c2-12 Amendments and this proposal, the MSRB has 
determined to withdraw its petition and has requested that the 
Commission withdraw the 2006 Proposed Rule 15c2-12 Amendments. See 
Letter from Ernesto A. Lanza, General Counsel, MSRB to Florence E. 
Harmon, Acting Secretary, Commission, dated October 22, 2008. In 
this letter, the MSRB also noted its intention to file a proposed 
rule change with the Commission to discontinue CDINet since its 
functions would be replaced by the continuing disclosure component 
of EMMA.
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    The proposed rule change would establish, as a component of EMMA, 
the continuing disclosure service for the receipt of, and for making 
available to the public, continuing disclosure documents and related 
information to be submitted by issuers, obligated persons and their 
agents pursuant to continuing disclosure undertakings entered into 
consistent with Rule 15c2-12.\13\ As proposed, all continuing

[[Page 75779]]

disclosure documents and related information would be submitted to the 
MSRB, free of charge, through an Internet-based electronic submitter 
interface or electronic computer-to-computer data connection, at the 
election of the submitter, and public access to the documents and 
information would be provided through the continuing disclosure service 
on the Internet (``EMMA portal'') at no charge, as well as through a 
fee-based real-time data stream subscription service.\14\
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    \13\ EMMA was originally established, and began operation on 
March 31, 2008, as a complementary pilot facility of the MSRB's 
existing Official Statement and Advance Refunding Document (OS/ARD) 
system of the Municipal Securities Information Library (MSIL) 
system. 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 MSRB's Municipal Securities Information Library (MSIL) system 
collection of official statements and advance refunding documents 
and to the MSRB's Real-Time Transaction Reporting System (RTRS) 
historical and real-time transaction price data) (``pilot EMMA 
portal''). The pilot EMMA portal currently is accessible at http://emma.msrb.org.
    \14\ We note that the MSRB is required to file with the 
Commission a proposed rule change under Section 19(b) of the Act 
with respect to any fees it intends to charge subscribers in 
connection with a real-time data stream subscription service.
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    As proposed, the continuing disclosure service would accept 
submissions of (i) continuing disclosure documents as described in Rule 
15c2-12, and (ii) other disclosure documents specified in continuing 
disclosure undertakings entered into consistent with Rule 15c2-12 but 
not specifically described in Rule 15c2-12. In connection with 
documents submitted to the continuing disclosure service, the submitter 
would provide, at the time of submission, information necessary to 
accurately identify: (i) The category of information being provided; 
(ii) the period covered by any annual financial information, financial 
statements or other financial information or operating data; (iii) the 
issues or specific securities to which such document is related or 
otherwise material (including CUSIP number, issuer name, state, issue 
description/securities name, dated date, maturity date, and/or coupon 
rate); (iv) the name of any obligated person other than the issuer; (v) 
the name and date of the document; and (vi) contact information for the 
submitter. Submitters would be responsible for the accuracy and 
completeness of all documents and information submitted to EMMA.
    The MSRB proposed that submissions to the continuing disclosure 
service be made as portable document format (PDF) files configured to 
permit documents to be saved, viewed, printed and retransmitted by 
electronic means. If the submitted file is a reproduction of the 
original document, the submitted file must maintain the graphical and 
textual integrity of the original document. In addition, as of January 
1, 2010, the MSRB would require that such PDF files must be word-
searchable (that is, allowing the user to search for specific terms 
used within the document through a search or find function available in 
most standard software packages), provided that diagrams, images and 
other non-textual elements would not be required to be word-searchable 
due to current technical hurdles to uniformly producing such elements 
in word-searchable form without incurring undue costs.\15\ Although the 
MSRB would strongly encourage submitters to immediately begin making 
submissions as word-searchable PDF files (preferably as native PDF or 
PDF normal files, which generally produce smaller and more easily 
downloadable files as compared to scanned PDF files), implementation of 
this requirement would be deferred as noted above to provide issuers, 
obligated persons and their agents with sufficient time to adapt their 
processes and systems to provide for the routine creation or conversion 
of continuing disclosure documents as word-searchable PDF files.
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    \15\ See Amendment No. 1, supra note 5.
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    All submissions to the continuing disclosure service pursuant to 
this proposal would be made through password-protected accounts on EMMA 
by: (i) Issuers, which may submit any documents with respect to their 
municipal securities; (ii) obligated persons, which may submit any 
documents with respect to any municipal securities for which they are 
obligated; and (iii) designated agents, which may be designated by 
issuers or obligated persons to make submissions on their behalf. 
Issuers and obligated persons would be permitted under the proposal to 
designate agents to submit documents and information on their behalf, 
and would be able to revoke the designation of any such agents, through 
the EMMA on-line account management utility. Such designated agents 
would be required to register to obtain password-protected accounts on 
EMMA in order to make submissions on behalf of the designating issuers 
or obligated persons. Any party identified in a continuing disclosure 
undertaking as a dissemination agent or other party responsible for 
disseminating continuing disclosure documents on behalf of an issuer or 
obligated person would be permitted to act as a designated agent for 
such issuer or obligated person, without a designation being made by 
the issuer or obligated person as described above, if such party 
certifies through the EMMA on-line account management utility that it 
is authorized to disseminate continuing disclosure documents on behalf 
of the issuer or obligated person under the continuing disclosure 
undertaking. The issuer or obligated person, through the EMMA on-line 
account management utility, would be able to revoke the authority of 
such party to act as a designated agent.
    The MSRB proposed that electronic submissions of continuing 
disclosure documents through the continuing disclosure service would be 
made by issuers, obligated persons and their agents, at no charge, 
through secured, password-protected interfaces. Continuing disclosure 
submitters would have a choice of making submissions to the proposed 
continuing disclosure service either through a Web-based electronic 
submission interface or through electronic computer-to-computer data 
connections with EMMA that would be designed to receive submissions on 
a bulk or continuous basis.
    All documents and information submitted through the continuing 
disclosure service would be available to the public at no charge 
through the EMMA portal on the Internet, with documents made available 
for the life of the securities as PDF files for viewing, printing and 
downloading. As proposed, the EMMA portal would provide on-line search 
functions to enable users to readily identify and access documents that 
relate to specific municipal securities based on a broad range of 
search parameters. In addition, as noted above, the MSRB proposes that 
real-time data stream subscriptions to continuing disclosure documents 
submitted to EMMA would be made available for a fee.\16\ The MSRB would 
not be responsible for the content of the information or documents 
submitted by submitters displayed on the EMMA portal or distributed to 
subscribers through the continuing disclosure subscription service.
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    \16\ We note that the MSRB is required to file with the 
Commission a proposed rule change under Section 19(b) of the Act 
with respect to any fees it intends to charge subscribers in 
connection with a real-time data stream subscription service.
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    According to the MSRB, it 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

[[Page 75780]]

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 would be designed to minimize any 
potentially negative impact on the ability to access the EMMA portal.
    The Commission received eighteen comment letters regarding the 
proposed rule change.\17\ Fifteen commenters generally supported the 
proposed rule change\18\ and many of these commenters also provided 
various observations and suggestions. Two commenters, both of which are 
NRMSIRs, opposed the proposed rule change and suggested alternative 
approaches to achieving the Commission's objectives.\19\ One commenter 
neither supported nor opposed the proposal and addressed CUSIP 
licensing issues.\20\ The Commission also received the MSRB's response 
to the comment letters.\21\ These comment letters, as well as the 
MSRB's response to the comment letters, are more fully discussed below.
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    \17\ See supra note 4.
    \18\ See Busby Letter, DAC Letter, Vanguard Letter, GFOA Letter, 
e-certus Letter, SIFMA Letter, NABL Letter, Treasurer of the State 
of Connecticut Letter, Texas MAC Letter, OMAC Letter, ICI Letter, 
NAHEFFA Letter, EDGAR Online Letter, MSRB Letter, and NFMA Letter.
    \19\ See SPSE Letter and DPC DATA Letter.
    \20\ See ABA Letter.
    \21\ See MSRB Response Letter. A copy of the MSRB Response 
Letter is available on the Commission's Internet Web site at http://www.sec.gov/comments/sr-msrb-2008-05/msrb200805.shtml and in the 
Commission's Public Reference Room at its Washington, DC 
headquarters.
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III. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change, 
the comment letters received, and the MSRB's response to the comment 
letters and finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to the MSRB \22\ and, in particular, the requirements of 
Section 15B(b)(2)(C) of the Act \23\ and the rules and regulations 
thereunder. In particular, the Commission finds that the proposal to 
establish the continuing disclosure service will remove impediments to 
and help perfect the mechanisms of a free and open market in municipal 
securities, assist in preventing fraudulent and manipulative acts and 
practices, and, in general, will protect investors and the public 
interest by improving access to continuing disclosure documents by 
investors and market participants, enabling them to make informed 
investment decisions regarding municipal securities.
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    \22\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \23\ 15 U.S.C. 78o-4(b)(2)(C). Section 15B(b)(2)(C) of the Act 
requires, among other things, that the MSRB's rules 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 the public 
interest; and not be designed to impose any burden on competition 
not necessary or appropriate in furtherance of the purposes of the 
Act.
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    The Commission believes that the MSRB's proposed continuing 
disclosure service will serve as an additional mechanism to remove 
impediments to and help perfect the mechanisms of a free and open 
market in municipal securities. The continuing disclosure service will 
help make information more easily available to all participants in the 
municipal securities market on an equal basis and without charge 
through a centralized, searchable Internet-based repository, thereby 
removing potential barriers to obtaining such information. Broad 
availability of continuing disclosure documents through the continuing 
disclosure service should assist in preventing fraudulent and 
manipulative acts and practices by improving the opportunity for 
investors to obtain information about issuers and their securities, and 
help investors make informed investment decisions.
    The continuing disclosure service also should reduce the effort 
necessary for issuers and obligated persons to comply with their 
continuing disclosure undertakings because submissions will be made to 
a single venue \24\ through use of an electronic submission process. 
Similarly, a single centralized and searchable venue that provides 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 information available to all parties to such 
transactions, which should assist investors in having a more complete 
understanding of the terms of the securities and the potential 
investment risks. Access to this information without charge, which was 
previously available in most cases only through paid subscription 
services or on a per-document fee basis, also should help reduce 
informational costs for broker-dealers and municipal securities 
dealers, as well as other market participants, analysts, retail and 
institutional investors and the public generally. These changes are 
expected to further the objectives of Rule 15c2-12 of reducing the 
potential for fraud in the municipal securities market.
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    \24\ Some states may require issuers and/or obligated persons to 
submit disclosure information to state information depositories 
(``SIDs'') or other venues pursuant to state law. However, under the 
Rule 15c2-12 Amendments, participating underwriters no longer need 
to reasonably determine that issuers and/or obligated persons have 
undertaken to provide continuing disclosure documents to SIDs. See 
Rule 15c2-12 Amendments Adopting Release, supra note 7.
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    Indeed, we anticipate that the accessibility of documents through 
the repository will greatly benefit dealers in satisfying their 
obligation to have a reasonable basis for investment recommendations 
and other regulatory responsibilities, in addition to investors and 
other market participants who seek information about municipal 
securities. This conclusion is supported by various commenters.
    As noted above, commenters generally supported the proposed rule 
change. In particular, one commenter expressed the opinion that 
allowing issuers, obligated parties and dissemination agents to submit 
information to one location,\25\ electronically and free of charge in 
order to meet the obligations of Rule 15c2-12, is very useful to the 
state and local government community \26\ and several commenters 
remarked that allowing investors to retrieve information from this 
location would be advantageous to the marketplace and investors.\27\ 
Commenters believed that the single filing location would make the 
filing process easier for filers submitting filings and more efficient 
for investors accessing documents.\28\ One commenter also remarked that 
the availability of continuing disclosure documents in one venue as a 
component of EMMA, where there will also be posted the final official 
statement (or similar primary

[[Page 75781]]

market disclosure document), and pricing information, will provide 
readers the benefit of the proper context for reviewing the continuing 
disclosure.\29\ Others expressed support for the MSRB's proposal to 
make the continuing disclosure service a free service for both issuers 
and other obligated persons \30\ submitting documents as well as for 
investors and other market participants \31\ accessing continuing 
disclosure information. One commenter expressed a belief that the 
proposed rule change would be a means of removing impediments to and 
helping to perfect the mechanisms of a free and open market in 
municipal securities within the meaning of the Act.\32\
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    \25\ See id.
    \26\ See GFOA Letter.
    \27\ See, e.g., GFOA Letter, SIFMA Letter, Vanguard Letter, 
Treasurer of the State of Connecticut Letter, ICI Letter.
    \28\ Id.
    \29\ See SIFMA Letter.
    \30\ See GFOA Letter.
    \31\ See, e.g., GFOA Letter, Busby Letter, NFMA Letter, DAC 
Letter, Vanguard Letter, and EDGAR Online Letter.
    \32\ See SIFMA Letter.
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    One commenter recommended that the Commission maintain close 
oversight of EMMA, ensure proper testing of the system, and revisit 
this matter in two to three years.\33\ A second commenter also 
expressed a belief that the Commission should establish rigorous 
ongoing inspection and oversight of EMMA.\34\ We note that, because the 
MSRB is a self-regulatory organization (``SRO''), the Commission has, 
and exercises, oversight authority over the MSRB. The MSRB must file 
proposed rule changes with the Commission under Section 19(b) of the 
Act, including any changes to the EMMA system and any fees relating to 
the EMMA system. In addition, the MSRB is subject to the recordkeeping 
requirements of 17(a) of the Act \35\ and is subject to the 
Commission's examination authority under Section 17(b) of the Act.\36\ 
Through the Commission's recordkeeping requirements and examination and 
rule filing processes, the Commission oversees the MSRB and will 
ascertain whether the MSRB is implementing EMMA appropriately and 
meeting EMMA's stated objectives, as well as complying with all of its 
legal obligations under the Act.
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    \33\ See Treasurer of the State of Connecticut Letter.
    \34\ See DAC Letter.
    \35\ 15 U.S.C. 78q(a).
    \36\ 15 U.S.C. 78q(b).
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    Eleven commenters that supported the proposed rule change also 
believed that EMMA submissions should be accompanied by identifying 
information.\37\ Several of these commenters suggested various specific 
types of identifiers that were sometimes different from, or in addition 
to, those set forth in the proposed rule change. In this regard, 
specific identifiers that were suggested by commenters included: The 
identification of obligated persons other than issuers and successor 
parties; \38\ the issuer's investor contact information; \39\ a link to 
issuer's Web site; \40\ the CUSIP numbers for all primary and secondary 
market debt covered by relevant information; \41\ the use of electronic 
``cover sheets;'' \42\ the pre-registration of identifying information; 
\43\ a mechanism to readily locate CUSIP numbers by the issuer's six 
digit prefix and at the same time list by nine digit CUSIPs in certain 
circumstances; \44\ and a CUSIP catalog.\45\ In its response letter, 
the MSRB noted that the use of accurate identifiers for continuing 
disclosure submissions in EMMA is vitally important to ensure correct 
indexing and access to continuing disclosure documents.\46\ The MSRB 
indicated that, except as noted below,\47\ documents provided to it are 
required to be accompanied by identifying information relating to the 
nature of the document, the securities and entities to which it 
applies, and the entity making the submission, as prescribed by the 
MSRB. In connection with EMMA submissions, the MSRB noted that the 
submitter will be required to provide, at the time of submission, 
information necessary to correctly identify the following: The category 
of information being provided; the period covered by any financial 
information; the issues or specific securities to which such document 
is related or otherwise material (including CUSIP number, issuer name, 
state issue description, securities name, dated date, maturity date 
and/or coupon rate); the name of any obligated person other than the 
issuer; the name and date of the document; and the contact information 
for the submitter.\48\ According to the MSRB, since all continuing 
disclosure documents submitted to EMMA will be made through a unique, 
password protected accounts by issuers, obligated persons and their 
designated agents, once the indexing information is provided, the EMMA 
system will match each document with the appropriate identifying 
information for the submitter. The MSRB believes that these processes 
will adequately address issues relating to the use of identifiers for 
the submission process. The MSRB also believes that the use of these 
identifiers ensures both that the submission process is not unduly 
burdensome and that standardized market identifiers commonly used in 
the municipal marketplace serve as the basis on which EMMA users would 
be able to conduct document searches. Furthermore, while the MSRB 
believes that the identifiers it proposed are appropriate and cover 
most of the identifying elements recommended by the commenters, the 
MSRB also will consider whether any additional identifiers would be 
appropriate. The Commission believes that it is appropriate for the 
MSRB to incorporate without change in the continuing disclosure service 
the indexing information that the MSRB initially had proposed. The 
Commission believes that the MSRB has provided valid reasons for not 
incorporating at this time the additional indexing information that 
commenters suggested. As the MSRB noted, the proposed identifiers are 
standardized market identifiers used in the municipal marketplace, 
which should help ensure that the transition to the continuing 
disclosure service will not be unduly burdensome for submitters. We 
note, however, that the MSRB indicated that it will consider additional 
identifiers in the future.\49\
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    \37\ See NFMA Letter, DAC Letter, GFOA Letter, Vanguard Letter, 
SIFMA Letter, NABL Letter, Treasurer of the State of Connecticut 
Letter, Texas MAC Letter, OMAC Letter, ICI Letter, and EDGAR Online 
Letter.
    \38\ See GFOA Letter, Treasurer of the State of Connecticut 
Letter, Vanguard Letter, and ICI Letter.
    \39\ See NFMA Letter.
    \40\ Id.
    \41\ Id.
    \42\ See GFOA Letter.
    \43\ See Treasurer of the State of Connecticut Letter.
    \44\ Id.
    \45\ See NFMA Letter.
    \46\ See MSRB Response Letter.
    \47\ See infra note 48.
    \48\ As the Commission noted in its adopting release for 
amendments to Rule 15c2-12 [Release No. 34-59062; File No. S7-21-08, 
December 5, 2008], the commitment by an issuer to provide 
identifying information exists only if it were included in a 
continuing disclosure agreement. As a result, issuers submitting 
continuing disclosure documents pursuant to the terms of 
undertakings that were entered into prior to the effective date of 
the final amendments and that did not require identifying 
information will be able to submit documents without supplying 
identifying information. In its response, the MSRB indicated that 
the submitter making a submission pursuant to a continuing 
disclosure undertaking entered into prior to the effective date of 
the proposed Rule 15c2-12 amendments who seeks to make such 
submission without providing identifying information could do so.
    \49\ We note that the MSRB is required to file with the 
Commission a proposed rule change under Section 19(b) of the Act 
with respect to any additional indexing information that it may 
propose to prescribe.
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    One commenter, who neither supported nor opposed the proposal, 
questioned whether the MSRB would seek appropriate licensing for its 
use of the commenter's intellectual property rights with respect to the 
CUSIP

[[Page 75782]]

database.\50\ The MSRB stated in its response letter that it is 
continuing its discussions with the appropriate parties relating to the 
use of CUSIP data and expects that all necessary arrangements will be 
in place to operate the continuing disclosure service as anticipated by 
the July 1, 2009 implementation date.\51\ If there are any 
unanticipated and unresolved issues in connection with the use of the 
CUSIP data, the MSRB stated that it will consult with the Commission 
and, if necessary, make any filings to modify data usage by EMMA or to 
adjust the implementation date. In light of the MSRB's assurances that 
this issue is expected to be resolved in advance of the continuing 
disclosure service's proposed implementation date of July 1, 2009, the 
Commission does not believe that it is necessary to delay its approval 
of the proposed rule change. Nonetheless, we will continue to monitor 
the progress of EMMA, including the issue relating to licensing rights 
to the CUSIP database, prior to EMMA's implementation.
---------------------------------------------------------------------------

    \50\ See ABA Letter.
    \51\ See MSRB Response Letter.
---------------------------------------------------------------------------

    Some commenters expressed their belief that EMMA should have a 
simple user interface and intuitive search functionality.\52\ One 
commenter noted that ``[a]s demonstrated, we believe that there are 
ample ways for the public to locate particular documents, either 
through a CUSIP number or an entity's name. It is imperative for these 
fields to be applied to all securities and for the MSRB to determine 
the most efficient way to do so.'' \53\ The MSRB stated its belief that 
its pilot of the primary market service of the EMMA portal is user-
friendly and that the continuing disclosure service of EMMA will also 
be user-friendly, in part, because the continuing disclosure service 
will provide the same accessibility to information to municipal market 
participants and easy-to-use identifiers for submissions as currently 
provided by the pilot of the primary market service of the EMMA portal. 
For example, if users have a CUSIP number, they will be able to go 
directly to the related documents on the EMMA system and, similarly, a 
user can go to the market activity page and see all the disclosures 
that were posted on a certain date.\54\ The MSRB also noted its 
intention to continue to make improvements to the system.\55\ The 
Commission believes the MSRB has proposed a reasonably efficient way to 
apply identifying fields to the continuing disclosure documents 
submitted to the EMMA system and expects that the MSRB will continue to 
monitor the EMMA portal to ensure that document submission is easy and 
document access is efficient on an ongoing basis and that the MSRB will 
propose rule changes to the continuing disclosure service pursuant to 
Section 19(b) of the Act as changes are needed.\56\
---------------------------------------------------------------------------

    \52\ See EDGAR Online Letter, NFMA Letter and GFOA Letter.
    \53\ See GFOA Letter.
    \54\ See MSRB Response Letter.
    \55\ Id.
    \56\ We note that the MSRB is required to file with the 
Commission a proposed rule change under Section 19(b) of the Act 
with respect to the operation of the continuing disclosure service 
and with respect to any changes to the continuing disclosure 
service.
---------------------------------------------------------------------------

    Some commenters expressed concerns that access to previous filings 
made with NRMSIRs may no longer be available.\57\ Nothing in the MSRB's 
proposal will prevent the NRMSIRs from continuing to make historical 
information available. We recognize, however, that the NRMSIRs may 
decide not to do so. The MSRB stated in its response letter that while 
it does not have the authority to mandate the submission of historical 
data by issuers, issuers, obligated persons and their agents will be 
free to submit to EMMA continuing disclosure documents and related 
information previously submitted to the NRMSIRs.\58\ The MSRB also 
stated that it is willing to communicate with the NRMSIRs on the 
continued availability of historical documents and related information 
and believes that such communication will be fruitful.\59\ As a 
practical matter, we believe that this is largely a transitional issue 
until EMMA has collected documents for a number of years and anticipate 
that requests for such documents from the NRMSIRs by those persons who 
are not already subscribers to their services may be expected to 
decline over time.
---------------------------------------------------------------------------

    \57\ See, e.g., Vanguard Letter and ICI Letter.
    \58\ See MSRB Response Letter.
    \59\ As discussed more fully in the Rule 15c2-12 Amendments 
Adopting Release, the Commission believes that the current NRMSIRs 
could decide it is in their commercial interest to make historical 
information available.
---------------------------------------------------------------------------

    Several commenters also made observations and suggestions regarding 
the access and security features of the continuing disclosure 
service.\60\ One commenter suggested that the MSRB should distinguish 
between the responsibilities of obligated persons and submitters.\61\ 
Two commenters recommended a special methodology for conduit borrowers 
to access EMMA.\62\ Three commenters stated that issuers and obligated 
persons should have the ability to verify information submitted to EMMA 
by third parties and to correct errors either by accessing the system 
directly or by reporting any errors to a ``hotline.'' \63\
---------------------------------------------------------------------------

    \60\ See NABL Letter, NAHEFFA Letter, GFOA Letter, and NFMA 
Letter.
    \61\ See NABL Letter.
    \62\ See NAHEFFA Letter and GFOA Letter.
    \63\ See NAHEFFA Letter, GFOA Letter, NFMA Letter.
---------------------------------------------------------------------------

    The MSRB noted in its response letter that its proposal does not 
change the obligations of issuers or obligated persons and their 
designated agents, which are established pursuant to the terms of 
continuing disclosure agreements, and that all persons, including 
issuers, obligated persons and designated agents will be able to access 
filings on EMMA to verify their availability and the accuracy of their 
indexing. The MSRB also noted that all submission methods will provide 
appropriate feedback to submitters for error correction and submission 
confirmation purposes. The MSRB also provides a Web site that allows 
submitters to provide questions and comments associated with 
submissions, as well as a help desk with dedicated personnel during 
MSRB business hours. Furthermore, the proposal will allow issuers and 
obligated persons to maintain control over those persons who may submit 
filings on their behalf. The MSRB will permit only those persons 
identified as designated agents in continuing disclosure agreements to 
submit documents without advance approval through EMMA and will notify 
issuers of the identity of those persons who submit documents on their 
behalf. Issuers and obligated persons also will be able to revoke self-
certification of dissemination agents through the EMMA on-line account 
management utility at any time.
    With respect to conduit financings,\64\ two commenters \65\ 
expressed concern that EMMA does not appropriately accommodate issues 
relating to the real parties in interest in such financings. In conduit 
financings, the bond issuing authority (e.g., a state or local 
government) may issue tax exempt bonds on behalf of certain entities 
(e.g., not-for profit organizations). Under these arrangements, the 
entity for which the tax exempt bonds were issued may be regarded as 
the real obligated party with the responsibility of submitting 
continuing disclosure documents and ensuring that such submissions are

[[Page 75783]]

accurate. Accordingly, these commenters expressed concern that EMMA 
will not appropriately discriminate whether the bond issuing authority, 
or the certain entity on behalf of which the tax-exempt bonds are 
issued, is responsible for the continuing disclosure submissions. The 
MSRB responded that the proposal establishes, through the account 
opening process, a mechanism that would permit, on an optional basis, 
issuers of conduit financings to identify obligated persons and the 
securities for which such persons are obligated.\66\ Furthermore, the 
MSRB plans to establish methods for submitters to contact it with 
questions and to report any problems submitters may discover with 
filings they electronically send to the EMMA system.\67\ The Commission 
believes that the MSRB has established appropriate measures with 
respect to security and controls for the submission of documents to the 
continuing disclosure service.
---------------------------------------------------------------------------

    \64\ Conduit financings are financings in which authorities with 
bond issuing authority issue tax-exempt bonds on behalf of certain 
entities, including not-for profit organizations.
    \65\ See NAHEFFA Letter and NFMA Letter.
    \66\ See MSRB Response Letter.
    \67\ Id.
---------------------------------------------------------------------------

    Some commenters that supported the proposed rule change suggested 
incorporation of an interactive data standard (i.e., XBRL).\68\ The 
MSRB responded that it will take all such suggestions under 
consideration for future revisions to the continuing disclosure 
service. The MSRB noted, however, that documents need not be created in 
any particular manner in order to be saved or scanned into a PDF 
format. The MSRB indicated that it does not view establishing XBRL as a 
data standard for EMMA submissions as appropriate at this time, 
although it noted that it continues to be interested in working with 
the municipal market in the future on interactive data initiatives. The 
Commission believes that, in the future, access to continuing 
disclosure documents through the EMMA system could be enhanced by 
improved methods for the electronic presentation of information, but 
believes that the MSRB's technology choices for EMMA are appropriate at 
this time.
---------------------------------------------------------------------------

    \68\ See, e.g., GFOA Letter, e-certus Letter, and EDGAR Online 
Letter.
---------------------------------------------------------------------------

    Seven of the commenters that supported the proposed rule change 
indicated that EMMA should have the capability to accept voluntary and 
non-periodic disclosures in addition to Rule 15c2-12 disclosures \69\ 
or recommended the addition of features such as information regarding 
late or missing filings.\70\ In its response letter, the MSRB stated 
that although the continuing disclosure service will not allow for the 
submission of continuing disclosure documents beyond those currently 
set forth in Rule 15c2-12 or those documents identified in an 
undertaking by the issuer or obligated person, the MSRB expects to 
propose in a future filing to accept submissions of a broader 
scope.\71\ The Commission believes that limiting the scope of the 
documents to be submitted through the continuing disclosure service to 
those referenced in continuing disclosure agreements will fulfill the 
intended purpose of Rule 15c2-12 and thus is reasonable at this time.
---------------------------------------------------------------------------

    \69\ See ICI Letter, NFMA Letter, NABL Letter, GFOA Letter, 
Vanguard Letter and SIFMA Letter, Treasurer of the State of 
Connecticut Letter.
    \70\ See, e.g., ICI Letter.
    \71\ See MSRB Response Letter.
---------------------------------------------------------------------------

    One commenter expressed support for the dissemination of 
information in a bulk format.\72\ Some commenters expressed concerns 
regarding fees to be charged by the MSRB for subscriptions to the real-
time data feed and whether the transfer of documents through the data 
feed would be delayed.\73\ In addition, three commenters suggested that 
the MSRB should provide SIDs with a data feed of filing information and 
one of these commenters stated that this data feed should be provided 
free of charge.\74\ Further, one commenter expressed concern that 
broker-dealers would pass on fees to their customers to support the 
EMMA system.\75\
---------------------------------------------------------------------------

    \72\ See, e.g., EDGAR Online Letter.
    \73\ See DPC DATA Letter, NFMA Letter and GFOA Letter.
    \74\ See Texas Mac Letter, OMAC Letter, and GFOA Letter.
    \75\ See SPSE Letter.
---------------------------------------------------------------------------

    In its response letter, the MSRB stated that in addition to 
providing access to continuing disclosure documents through the EMMA 
portal without charge to all persons on an equal basis on its Internet 
website, the MSRB also will offer real-time subscriptions to EMMA's 
continuing disclosure documents and information as they are submitted 
and processed.\76\ According to the MSRB, its goal is to ensure an 
efficient process for making available real-time data subscription 
products at a reasonable cost.\77\ The MSRB also stated that it will 
work with the SIDs to ensure that they will have reasonable access to 
the documents submitted for issues in their respective states and will 
not incur costs related to the entire EMMA subscription product.\78\
---------------------------------------------------------------------------

    \76\ See MSRB Response Letter.
    \77\ Id.
    \78\ Id.
---------------------------------------------------------------------------

    The Commission notes that fees relating to the EMMA system, such as 
subscription fees for a data feed for access to documents submitted to 
the continuing disclosure service, also must be filed with the 
Commission as a proposed rule change under Section 19(b) of the Act. 
Accordingly, any fees relating to the continuing disclosure service 
would be published for public comment by the Commission and interested 
persons would have the opportunity to offer their views on them.
    With respect to the comment that broker-dealers would pass on fees 
to their customers to support the EMMA system, the Commission again 
notes that the MSRB, as an SRO, would have to file any fees relating to 
the support or use of the continuing disclosure service with the 
Commission under Section 19(b) of the Exchange Act, to the extent such 
fees are not already covered by the MSRB's current fee schedule. The 
Commission further notes that broker-dealers currently are charged fees 
for access to disclosure documents obtained from the NRMSIRs that they 
currently may or may not pass on to their customers. According to the 
MSRB, it presently anticipates no increase in fees on brokers, dealers, 
and municipal securities dealers that effect transactions in municipal 
securities to establish and operate the EMMA system.\79\ The MSRB has 
stated that it has funds on hand that, together with amounts it will 
collect in the future under its current fee schedule, it believes will 
be sufficient to establish and operate the continuing disclosure 
service of the EMMA system.\80\
---------------------------------------------------------------------------

    \79\ See MSRB Response Letter.
    \80\ Id.
---------------------------------------------------------------------------

    Two commenters opposed the proposal and suggested alternative 
approaches to greater access to continuing disclosure documents by 
investors and others.\81\ They believed that the MSRB's proposal would 
not improve the overall continuing disclosure regime and that it does 
not address the core problems with the current system, such as the 
significant level of delinquent filings. One of these commenters stated 
that the proposal imposes restrictions on filing formats (i.e., single-
electronic) and technology and misstates important attributes of the 
current municipal disclosure regime. This commenter urged enforcement 
of existing provisions of Rule 15c2-12 and otherwise working within the 
existing disclosure system. The other commenter believed that a 
``central post office'' approach is preferable.\82\
---------------------------------------------------------------------------

    \81\ See DPC DATA Letter and SPSE Letter.
    \82\ Under a central post office approach, issuers and obligors 
would file documents through a single electronic venue in a 
standardized format. The central post office would then forward the 
centrally-filed documents in real time to the NRMSIRs. See also SPSE 
Letter, at 3-5.

---------------------------------------------------------------------------

[[Page 75784]]

    In its response letter, the MSRB expressed its belief that the 
establishment of single submission and dissemination venue through 
EMMA's continuing disclosure service would significantly improve upon 
the current municipal disclosure system.\83\ The MSRB believed that a 
simple, secure and centralized system will simplify issuers' 
submissions. According to the MSRB, for example, the fact that 
continuing disclosure documents will be publicly available for free 
through a searchable Web site in which all filings for a particular 
issue are displayed as a single collection will serve, for the first 
time, to make it easy for issuers, investors and others to determine 
whether or not filings are missing, whether due to an issuer failing to 
make a filing or otherwise.
---------------------------------------------------------------------------

    \83\ See MSRB Response Letter.
---------------------------------------------------------------------------

    While the Commission acknowledges that the MSRB's proposal does not 
address all of the information challenges of the municipal market, the 
Commission continues to believe that the MSRB's proposal is a 
significant step forward in facilitating the submission of, and access 
to, secondary market municipal disclosures. As noted previously, a 
large majority of the commenters supported the MSRB's proposal and 
believed that it will improve the overall continuing disclosure regime. 
The Commission also believes that this will be the case. We anticipate 
that public access to all continuing disclosure documents on the 
Internet, as provided by the proposal, will promote market efficiency 
and help deter fraud and manipulation in the municipal securities 
market by improving the availability of information to all investors. 
With respect to one commenter's concern that the proposal would impose 
restrictions on filing formats, impose technology requirements that do 
not exist under the current system and provide no appreciable benefit, 
the Commission notes that the availability of continuing disclosure 
documents at a single repository that can be readily accessed and 
easily searched through electronic means will provide significant 
benefits that are not available under the current NRMSIR system. The 
Commission notes that the submission of continuing disclosure documents 
in an electronic format will allow the information to be posted and 
disseminated promptly. The Commission also notes that the MSRB's 
proposed filing format and choice of technology will eliminate the need 
for manual handling of paper documents, which is less efficient and 
more costly, and will increase the potential for a more complete record 
of continuing disclosure documents that otherwise might be misfiled or 
lost under a manual system. Furthermore, the Commission believes that 
submissions in an electronic format will not be burdensome on issuers 
or obligated persons since many documents are now routinely created in 
an electronic format and can be readily transmitted by electronic 
means. With respect to the comment that the existing disclosure system 
should be retained and the existing provisions of the Rule 15c2-12 
enforced, the Commission believes that enforcement of the provisions of 
Rule 15c2-12 is an important mechanism for the protection of municipal 
securities investors and the efficient operation of the marketplace. 
However, the Commission also believes that the quality, timing, and 
availability of disclosure in the municipal securities markets will be 
substantially improved by the MSRB's proposal.
    With respect to the comment favoring a ``central post office,'' the 
Commission believes that this approach is less likely to make access to 
continuing disclosure documents as efficient as the MSRB's continuing 
disclosure service and therefore would not achieve the goal. For 
example, with a central post office there would continue to be no 
single location to which investors, particularly individuals, could 
turn for free access to information regarding municipal securities. 
Instead, individuals or entities that wish to obtain such information 
would find it necessary first to access the central post office to find 
out what documents might be available from NRMSIRs and SIDs and then to 
contact one or more NRMSIRs or SIDs and pay their fees to obtain the 
document or documents they seek. This would be a less efficient process 
than the MSRB's proposal, in which interested persons could directly 
access, view and print for free continuing disclosure documents from 
one place--the MSRB's Internet site.
    Moreover, a ``central post office'' would not, to the same extent 
as the MSRB's EMMA system, simplify compliance with regulatory 
requirements by, and reduce compliance costs of, broker-dealers, 
municipal securities dealers, and others. This is because they would 
have to first access the ``central post office'' to determine what 
documents are available and then contact one or more NRMSIRs or SIDs to 
obtain these documents for a fee or subscribe to commercial services to 
do so on their behalf. We believe that greater benefits will be 
achieved by providing public access to all continuing disclosure 
documents on the Internet, as provided by the proposal. We anticipate 
that access to all continuing disclosure documents without charge 
through the MSRB's Internet site will better promote market efficiency 
and help deter fraud and manipulation in the municipal securities 
market by improving the availability of information to all investors.
    Two commenters, both of which are NRMSIRs, also raised concerns 
about the potential adverse effects on competition and raised issues 
about the proposal's consistency with Congressional intent regarding 
the regulation of municipal securities.\84\ Both of these commenters 
believed that the proposal is contrary to Section 15B(d) of the 
Act,\85\ commonly referred to as the Tower Amendment. One of these 
commenters also expressed its belief that the proposal would reduce 
current value-added products and services provided by existing NRMSIRs 
and other vendors; narrow competing information services regarding 
municipal securities; and result in a loss of innovation in offering 
competing information services regarding municipal securities.\86\ This 
commenter also expressed its belief that the proposal is anti-
competitive and would unfairly displace private vendors that have made 
significant investment under the current system with a ``quasi-
governmental organization'' that is subsidized and could provide value-
added services for free.\87\ The other commenter expressed a belief 
that the proposal places the MSRB in direct competition with commercial 
vendors.\88\
---------------------------------------------------------------------------

    \84\ See DPC DATA Letter and SPSE Letter.
    \85\ 15 U.S.C. 78o-4(d).
    \86\ See SPSE Letter.
    \87\ Id.
    \88\ See DPC DATA Letter.
---------------------------------------------------------------------------

    With respect to their comments regarding competition, the MSRB 
responded that it did not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.\89\ The MSRB expressed its 
belief that existing vendors would continue to have rapid access to all 
of the same documents they previously received, now accompanied by 
consistent indexing information, and would fully be able to provide 
value added products based on such documents. Additionally, the MSRB 
responded that it believed that the availability of continuing 
disclosure

[[Page 75785]]

documents through the EMMA portal and the continuing disclosure 
subscription service would promote competition among private data 
vendors and other enterprises engaged in, or interested in becoming 
engaged in, the market for information services by eliminating existing 
barriers to new entrants into the market for municipal securities 
information. The MSRB added that none of the functionalities of the 
continuing disclosure service constitute value-added services that 
compete inappropriately with the private sector. Rather, the MSRB noted 
that these functionalities are critical for the continuing disclosure 
services operation as a free, centralized source of information for 
retail investors that provides investors with the necessary tools to 
find the information for which they are searching and to understand 
such information once it is found. Furthermore, the MSRB expressed its 
belief that its operation of the continuing disclosure service would 
serve as a basis on which private enterprises could themselves 
concentrate more of their resources on developing and marketing value-
added services. In the MSRB's opinion, the shift in the flow of 
continuing disclosure documents from the current NRMSIRs to EMMA (from 
which such entities and others could still obtain documents on a real-
time basis accompanied by indexing information) would represent only a 
temporary dislocation in the processes by which current vendors that 
produce value-added services obtain the raw documents on which these 
services are based.
---------------------------------------------------------------------------

    \89\ See MSRB Response Letter.
---------------------------------------------------------------------------

    Moreover, the MSRB expressed its belief that the proposal will 
prove to be of long-term benefit to such vendors. The MSRB noted that 
much of the impact of the proposed rule change on commercial 
enterprises will result from increased competition in the marketplace 
resulting from the entry of additional commercial enterprises to 
compete with existing market vendors for value-added services, rather 
than from the operation of the continuing disclosure service. 
Furthermore, the MSRB stated its belief that the benefits realized by 
the investing public from the broader and easier availability of 
disclosure information about municipal securities justifies any 
potential negative impact on existing enterprises resulting from the 
operation of EMMA. The MSRB emphasized that its activities are subject 
to the supervision of the Commission and that any changes to EMMA and 
related systems must be filed with the Commission. The MSRB further 
commented that it has worked closely with all of the marketplace's key 
constituencies, including issuers, bond attorneys, financial advisers, 
and others in the development of EMMA and represented that it will 
continue to do so as EMMA becomes fully operational.
    The Commission believes that the proposal will modernize the method 
of availability of continuing disclosure documents by issuers and, by 
making use of the Internet, will make these documents readily 
accessible to investors and others at no charge. The continuing 
disclosure service will not alter the availability of such documents to 
commercial vendors or their ability to disseminate such information, 
together with whatever value-added products they may wish to provide. 
The Commission notes that the MSRB has represented that documents 
provided through EMMA will be available to all persons on an equal 
basis and that the MSRB will continue to make the full collection of 
documents available by subscription on an equal basis, without imposing 
restrictions on subscribers from re-disseminating such documents or 
from otherwise offering value-added service and products, based on such 
documents on terms determined by each subscriber.\90\ Further, the 
Commission notes that the MSRB has represented that EMMA will be 
designed to provide real-time access to documents and information as 
they are submitted and processed \91\ and that all continuing 
disclosures received by the MSRB will be available through a data-
stream subscription simultaneously with posting on the EMMA portal.\92\
---------------------------------------------------------------------------

    \90\ See MSRB Response Letter.
    \91\ See MSRB Response Letter.
    \92\ See Release No. 34-58256, supra note 3.
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change will 
encourage, rather than restrict, competition in the municipal 
securities information marketplace. The Commission further believes 
that any burdens on competition that may result from the proposed rule 
change are more than justified by the benefits that will flow from 
ready and free availability of municipal disclosure documents to 
broker-dealers, municipal securities dealers, mutual funds, analysts, 
retail and institutional investors, and the public generally. Both 
existing private vendors and new market entrants seeking to provide 
value-added products and services will be able to access all available 
continuing disclosure documents from EMMA for free, or for a 
subscription fee if they elect to receive a real-time data feed. 
Consequently, existing vendors and potential new market entrants no 
longer will have to pay multiple subscription fees or document charges 
to multiple NRMSIRs to access the continuing disclosure information 
that is necessary for value-added products and services. The MSRB's 
proposal is designed to help spur innovation and competition for value-
added products and services and is expected to reduce barriers to entry 
for new market participants. The Commission also notes that because 
continuing disclosure information will be available at the MSRB, 
existing vendors and new market entrants can conserve resources that 
otherwise would be utilized to obtain a full complement of available 
continuing disclosure information that is spread out across multiple 
NRMSIRs. In addition, while the Commission acknowledges that some 
existing vendors may need to make some adjustments to their line of 
business or services offered, these vendors and others may determine 
that they no longer need to invest in the infrastructure and facilities 
necessary to collect and store continuing disclosure information. The 
Commission believes that the proposed rule change likely will have a 
net benefit on the competitive landscape for municipal securities 
disclosure information services and further the purposes of the Act by 
deterring the potential for fraud in the municipal securities market.
    With respect to concerns that the MSRB could control private 
vendors' access to information through unfair fee structures and biased 
dissemination of information for the purpose of conditioning the market 
to use EMMA and the MSRB's own services,\93\ the Commission notes that 
the MSRB is required to file its fee changes and rule proposals 
relating to the EMMA system with the Commission under Section 19(b) of 
the Act. Thus, interested parties will have the opportunity to comment 
on any such proposal and bring to the Commission's attention any 
potential issues. The Commission has carefully considered the comments 
of the two NRMSIRs regarding competition, and the MSRB's response 
letter, and does not believe that the proposed rule change will impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, as discussed 
above, the Commission believes that any competitive impact that may 
result from the proposed rule change is justified by the benefits that 
will be provided to investors, broker-dealers, mutual funds, vendors of 
municipal information, municipal

[[Page 75786]]

security analysts, other market professionals and the market generally.
---------------------------------------------------------------------------

    \93\ See DPC DATA Letter.
---------------------------------------------------------------------------

    With respect to the comments of the two NRMSIRs regarding the Tower 
Amendment, the MSRB responded that it believes its proposal to create a 
continuing disclosure service is consistent with the MSRB's statutory 
authority under Section 15B(d) of the Act, i.e., the Tower 
Amendment.\94\ The MSRB believes that the continuing disclosure service 
of EMMA will serve as a necessary step to better facilitate the free 
and timely public access to continuing disclosure documents and related 
information. The service will remove impediments to and help perfect 
the mechanisms of a free and open market in municipal securities 
thereby, effectively, promoting investor protections and the public 
interest by ensuring equal access for all market participants to the 
critical disclosure information needed by investors in the municipal 
securities market. The MSRB believes that all of the continuing 
disclosure service's functionalities relate to the core mission of the 
MSRB and such functionalities are not inconsistent with any statutory 
limitations placed on MSRB activities. The MSRB believes that municipal 
securities disclosure documents should be made more readily and 
promptly available to the public and that all investors should have 
better access to important market information.
---------------------------------------------------------------------------

    \94\ Section 15B(d) of the Exchange Act states as follows: (1) 
Neither the Commission nor the Board is authorized under this title, 
by rule or regulation, to require any issuer of municipal 
securities, directly or indirectly through a purchaser or 
prospective purchaser of securities from the issuer, to file with 
the Commission or the Board prior to the sale of such securities by 
the issuer any application, report, or document in connection with 
the issuance, sale, or distribution of such securities. (2) The 
Board is not authorized under this title to require any issuer of 
municipal securities, directly or indirectly through a municipal 
securities broker or municipal securities dealer or otherwise, to 
furnish to the Board or to a purchaser or a prospective purchaser of 
such securities any application, report, document, or information 
with respect to such issuer: Provided, however, That the Board may 
require municipal securities brokers and municipal securities 
dealers to furnish to the Board or purchasers or prospective 
purchasers of municipal securities applications, reports, documents, 
and information with respect to the issuer thereof which is 
generally available from a source other than such issuer. Nothing in 
this paragraph shall be construed to impair or limit the power of 
the Commission under any provision of this title. 15 U.S.C. 78o-
4(d)(1) and (2).
---------------------------------------------------------------------------

    The Commission also does not believe that the proposed rule change 
is inconsistent with the Tower Amendment. The Tower Amendment prohibits 
the MSRB from directly or indirectly requiring an issuer of municipal 
securities to file with it any documents relating to the issuance, sale 
or distribution of such securities before such securities are sold.\95\ 
The Tower Amendment also prohibits the MSRB from directly or indirectly 
requiring an issuer of municipal securities, directly or indirectly 
through a municipal securities broker or dealer or otherwise, to 
furnish to it documents relating to the issuer, unless such information 
is available from a source other than the issuer.\96\ The MSRB's 
proposed rule change does not implicate Section 15B(d)(1) or (2) of the 
Act because it imposes no requirements on issuers. Instead, through the 
establishment of the continuing disclosure service of EMMA as an 
information venue, the proposed rule change enhances access to 
continuing disclosure information provided to the MSRB subsequent to 
the sale of municipal securities as a consequence of continuing 
disclosure agreements entered into consistent with a rule of the 
Commission's Rule 15c2-12, which is designed to deter fraud in the 
municipal securities market. The proposed rule change does not alter 
market participants' existing obligations, but rather it enhances the 
system for the receipt of, and for making available to the public of, 
the continuing disclosure documents. For these reasons, the Commission 
does not believe that the proposed rule change is contrary to Section 
15B(d) of the Act.
---------------------------------------------------------------------------

    \95\ 15 U.S.C. 78o-4(d)(1).
    \96\ 15 U.S.C. 78o-4(d)(2).
---------------------------------------------------------------------------

    Several commenters that supported the proposed rule change also 
made suggestions regarding the transition to the proposed system.\97\ 
For example, one commenter believed that there should be a three- to 
six-month transition period for submissions to EMMA and a twelve-month 
transition period for the submissions of searchable PDFs.\98\ Another 
commenter believed that there should be a nine-month transition period 
to a word searchable format.\99\ Another commenter believed that 
parties who have made paper filings in the past should be allowed 
additional time to transition to electronic filings.\100\ A fourth 
commenter noted that issuers and obligated persons may be confused as 
to where they should file continuing disclosure documents during the 
period of transition and suggested that these concerns could be 
addressed during a short transition period.\101\ The MSRB responded 
that, in view of the comments it received and discussions it has had 
with industry participants, and to further ensure a smooth transition 
for submitters and end users of continuing disclosures, it has filed 
Amendment No. 1 to delay the effectiveness of the continuing disclosure 
service until the later of July 1, 2009 or the effective date of the 
Rule 15c2-12 Amendments and to extend the transition to a word-
searchable format until January 1, 2010. Furthermore, the MSRB stated 
that it expects to file with the Commission to establish a pilot 
program for the continuing disclosure service that would allow for 
system testing through voluntary submissions of continuing disclosures 
prior to the effectiveness of the amendments to Rule 15c2-12 and the 
launch of the permanent continuing disclosure service.
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    \97\ See, e.g., GFOA Letter, e-certus Letter, Treasurer of the 
State of Connecticut Letter, and NABL Letter.
    \98\ See GFOA Letter.
    \99\ See Treasurer of the State of Connecticut Letter.
    \100\ See NABL Letter.
    \101\ See Vanguard Letter.
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IV. Order Granting Accelerated Approval of Proposed Rule Change

    As noted above, the MSRB now seeks pursuant to Amendment No. 1 to 
commence operation of the EMMA portal for continuing disclosure 
documents on July 1, 2009,\102\ which is commensurate with the 
effective date of the Rule 15c2-12 Amendments that we also are adopting 
today.\103\ In addition, Amendment No. 1 requests that the Commission 
delay the effectiveness of the provision of the proposed rule change 
relating to word searchable PDF files until January 1, 2010. The MSRB 
requests that the Commission find good cause, pursuant to Section 
19(b)(2) of the Act, for approving Amendment No. 1 prior to the 
thirtieth day after publication of notice of filing of Amendment No. 1 
in the Federal Register. The MSRB believes that the Commission has good 
cause for granting accelerated approval of the proposed rule change 
because the amendment does not substantively alter the original 
proposed rule change other than changing two effective dates to allow 
more time for implementation.
---------------------------------------------------------------------------

    \102\ See Amendment No. 1, supra note 5.
    \103\ See Rule 15c2-12 Amendments Adopting Release, supra note 
7.
---------------------------------------------------------------------------

    The Commission finds good cause to approve the proposed rule change 
on an accelerated basis. The proposed rule change was published in the 
Federal Register on August 7, 2008.\104\ The Commission believes that 
the proposal includes an appropriate transition period and believes 
that parties that have made paper filings in the past or that do not 
presently use word searchable formats will have sufficient time to 
transition to electronic filings as of July 1, 2009 and to a word 
searchable

[[Page 75787]]

PDF format as of January 1, 2010, respectively.
---------------------------------------------------------------------------

    \104\ See Release No. 34-58256, supra note 3.
---------------------------------------------------------------------------

V. 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 [email protected]. Please include 
File Number SR-MSRB-2008-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2008-05. 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-2008-05 and should be 
submitted on or before January 2, 2009.

VI. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 15B(b)(2)(C) of the Act and the rules and 
regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\105\ that the proposed rule change (SR-MSRB-2008-05), as modified 
by Amendment No. 1, be, and it hereby is, approved on an accelerated 
basis.
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    \105\ 15 U.S.C. 78s(b)(2).

    By the Commission.
Florence E. Harmon,
Acting Secretary.

Exhibit A

Key to Comment Letters Cited in Order Relating to the Establishment of 
a Continuing Disclosure Service of the Electronic Municipal Market 
Access System (EMMA) (File No. SR-MSRB-2008-05)

1. Letter from Fran Busby, to 21st Century Disclosure Initiative, 
Commission, dated October 7, 2008 (``Busby Letter'').
2. Letter from Paula Stuart, Chief Executive Officer, Digital 
Assurance Certification, L.L.C. (``DAC''), to Florence E. Harmon, 
Acting Secretary, Commission, dated September 25, 2008 (``DAC 
Letter'').
3. Letter from Christopher Alwine, Head of Municipal Money Market 
and Bond Groups, The Vanguard Group, Inc. (``Vanguard''), to 
Florence E. Harmon, Acting Secretary, Commission, dated September 
24, 2008 (``Vanguard Letter'').
4. Letter from Susan A. Gaffney, Director, Federal Liaison Center, 
Government Finance Officers Association (``GFOA''), to Florence E. 
Harmon, Acting Secretary, Commission, dated September 24, 2008 
(``GFOA Letter'').
5. Letter from Louis V. Eccleston, President, Standard & Poor's 
Securities Evaluations, Inc. (``SPSE''), to Florence E. Harmon, 
Acting Secretary, Commission, dated September 22, 2008 (``SPSE 
Letter'').
6. Letter from R.T. McNamar, CEO, e-certus, Inc. (``e-certus''), to 
Christopher Cox, Chairman, Commission, and Ernesto A. Lanza, Senior 
Associate General Counsel, MSRB, dated September 22, 2008 (``e-
certus Letter'').
7. Letter from Leslie M. Norwood, Managing Director and Associate 
General Counsel, Securities Industry and Financial Markets 
Association (``SIFMA''), to Florence E. Harmon, Acting Secretary, 
Commission, dated September 22, 2008 (``SIFMA Letter'').
8. Letter from William A. Holby, President, National Association of 
Bond Lawyers (``NABL''), to Florence E. Harmon, Acting Secretary, 
Commission, dated September 22, 2008 (``NABL Letter'').
9. Letter from Denise L. Nappier, Treasurer, State of Connecticut, 
to Christopher Cox, Chairman, Commission, dated September 22, 2008 
(``Treasurer of the State of Connecticut Letter'').
10. Letter from J. Douglas Adamson, Executive Vice President, 
Technical Services Division, American Bankers Association (``ABA''), 
to Florence E. Harmon, Acting Secretary, Commission, dated September 
22, 2008 (``ABA Letter'').
11. Letter from Laura Slaughter, Executive Director, Municipal 
Advisory Council of Texas (``Texas MAC''), to Christopher Cox, 
Chairman, Commission, and Ernesto A. Lanza, Senior Associate General 
Counsel, MSRB, dated September 22, 2008 (``Texas MAC Letter'').
12. Letter from K.W. Gurney, Director, Ohio Municipal Advisory 
Council (``OMAC''), to Christopher Cox, Chairman, Commission, and 
Ernesto A. Lanza, Senior Associate General Counsel, MSRB, dated 
September 22, 2008 (``OMAC Letter'').
13. Letter from Karrie McMillan, General Counsel, Investment Company 
Institute (``ICI''), to Florence E. Harmon, Acting Secretary, 
Commission, dated September 22, 2008 (``ICI Letter'').
14. Letter from Robert Donovan, Executive Director, Rhode Island 
Health and Educational Building Corporation and Steven Fillebrown, 
Director of Research, Investor Relations and Compliance, New Jersey 
Healthcare Financing Authority, on behalf of the National 
Association of Health and Educational Facilities Finance Authorities 
(``NAHEFFA''), to Florence E. Harmon, Acting Secretary, Commission, 
dated September 22, 2008 (``NAHEFFA Letter'').
15. Letter from Peter J. Schmitt, CEO, DPC DATA Inc. (``DPC DATA''), 
to Florence E. Harmon, Acting Secretary, Commission, dated September 
18, 2008 (``DPC DATA Letter'').
16. Letter from Philip D. Moyer, CEO & President, EDGAR Online 
(``EDGAR Online''), to Christopher Cox, Chairman, Commission, and 
Ernesto A. Lanza, Senior Associate General Counsel, MSRB, dated 
September 9, 2008 (``EDGAR Online Letter'').
17. Letter from Lynette Kelly Hotchkiss, Executive Director, MSRB, 
to Christopher Cox, Chairman, and James L. Eastman, Counsel, 
Commission, dated September 8, 2008 (``MSRB Letter'').
18. Letter from Rob Yolland, Chairman, National Federation of 
Municipal Analysts (NFMA), to Ernesto A. Lanza, Senior Associate 
General Counsel, MSRB, Commission, dated March 10, 2008 (``NFMA 
Letter'').

[FR Doc. E8-29376 Filed 12-11-08; 8:45 am]
BILLING CODE 8011-01-P