MSRB considers opening meetings to public in deference to pressure from market groups.

WASHINGTON -- Bowing to pressure from market participants, the Municipal Securities Rulemaking Board is expected to change its nearly 20-year-old closed-door meeting policy and open at least some of its deliberations to public view, a source close to the board said yesterday.

The board is considering at a meeting now underway in California whether to partially open at least one of its four quarterly meetings each year and whether to publish its agenda before meetings, the source said.

The panel also is considering whether to meet regularly with issuers and other market participants to spell out both its long- and shortterm agendas and whether to conduct regular regional meetings with dealers, said the source, who asked not to be identified.

The changes in procedures are being debated at the board's three-day quarterly meeting in Napa Valley, Calif., which began yesterday and runs through Friday.

The move follows pressure from the Government Finance Officers Association, several other issuer groups, and some municipal dealers seeking a change in the MSRB's meeting policy.

Also on the board's heavy agenda is whether to further amend the MSRB's controversial "pay-to-play" Rule G-37 in response to an urgent request by the Public Securities Association.

The board also is expected 'to hammer out a frank comment letter to the Securities and Exchange"Commission that outlines key concerns with the commission's proposed rule and interpretive release on disclosure.

The MSRB is expected to change' its meeting policy because "the perception is that the board has not been communicating enough with various issuer and industry groups," the source said.

"The board does not believe that it has consciously been keeping secrets," the source said, noting that the panel's quarterly report to market participants, MSRB Reports, is a road map of board initiatives.

Nevertheless, it might be time to "bite the bullet" and adopt some procedures that will lead to a more "formal and continuous outreach program," the source said.

If the board opts to open one or more meetings a year to the public, a key issue is whether to permit questions from the floor or other audience participation, the source said.

The SEC opens many of its meetings to the public, but it does not permit audience participation and discussion is often carefully scripted, other sources said.

The source also said the board used to hold regional meetings with dealers, but it stopped when dealer interest waned. "The board is going to be more aggressive," he said, noting that it may tap board alumni around the country to help drum up interest in the meetings.

"It certainly seems like a step in the right direction," said Aurel Arndt, chairman of the Government Finance Officers Association's committee on governmental debt and fiscal policy, in a telephone interview yesterday. Arndt's committee sent a bruising four-page letter to the board last month citing concerns that the board has failed to effectively lead the municipal industry through some of its roughest waters recently, including debates over ongoing disclosure and political contributions.

The committee cited in particular "the lack of adequate outreach and meaningful consultation with public officials on important issues" such as political contributions.

The panel urged the board to open some of its meetings to the public and to change the process that it uses to select members.

Critics say open board meetings will lead to major bottlenecks in important policymaking and distract board members and staff.

But Arndt said a more open process will help the board in the long run avoid conflict over some of its initiatives and, therefore, could speed up the process of market oversight.

The National Association of State Treasurers also passed a resolution recently calling for more openness and responsiveness by the MSRB.

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