WASHINGTON - Groups representing bond analysts and issuers have asked the Municipal Securities Rulemaking Board for financial assistance in establishing a three-part program to help issuers improve secondary market disclosure.
The plan, announced yesterday by the Government Finance Officers Association and the National Federation of Municipal Analysts, calls for development of a disclosure handbook and a training program. It also calls for a related marketing program to make issuers aware of the handbook and the MSRB's pilot continuing disclosure system.
The request, which did not estimate a total cost or the amount being sought from the MSRB, was unveiled just hours before the MSRB is scheduled this morning to unveil possible new rules designed to deal with political contributions by underwriters and secondary market disclosure.
In a 10-page letter sent to the MSRB on July 22, the two groups asked for funds to help prepare a handbook for issuers that describes secondary market disclosure and how to use the MSRB's Continuing Disclosure Information pilot system. CDI has been in operation since January, but has been used only sparsely by issuers and trustees.
The groups also asked for aid to develop a training program that consultants, state agency staff members, private companies, and trade groups could use to educate issuers on the CDI system and the groups' handbook. The groups also asked for assistance in developing a marketing strategy for the CDI system and the handbook.
"We believe there is a lack of knowledge and understanding of the CDI system in the issuer community and the market generally, and this situation is not likely to change unless there is some significant outreach effort." Spain and Bateman said in their letter to the board.
One proposal the MSRB may unveil today would require managing underwriters to provide updated disclosure information to regulators annually on any deal they handle, industry observers say. The board is currently barred by federal law from imposing secondary market disclosure requirements on issuers directly.
The board also may recommend to the Securities and Exchange Commission that it propose a requirement that issuers send ongoing disclosure to the MSRB's CDI system.
SEC commissioner Richard Roberts said recently that agency officials are considering such a step since many regulators do not believe the SEC is barred by federal statute from imposing secondary market disclosure requirements on issuers.
Bond analysts issued a statement earlier this week saying that they support ongoing voluntary efforts to improve secondary market disclosure in the municipal market but that they oppose any formal federal requirements.