WASHINGTON -- The Municipal Securities Rulemaking Board yesterday proposed a revamped secondary market disclosure system that will accept municipal bond information on paper, through facsimile and electronically.
The proposal, which calls for an 18-month pilot program, is designed to overcome the Securities and Exchange Commission's complaints about the MSRB's previous plan, which would have only accepted secondary market information electronically.
"We're doing what the SEC asked us to do, to take in paper form what we were willing to take in electronic form," Christopher Taylor, MSRB's executive director, said yesterday.
"The primary reason for doing this on a pilot basis," he said, "is that we have no information about how much would flow through the system." The pilot program, he said, should determine how much and how frequently secondary market information would come in from trustee banks and issuers.
The proposal for a revamped system would be much more expensive than the earlier one, which was limited to electronic filings. The new system would cost between $300,000 to $500,000, and subscribers would pay from $10,000 to $15,000 per year plus the cost of telephone service to receive secondary market information.
The earlier system would have cost $100,000 to $150,000, and subscribers would have been charged about $5,000 per year.
Under the pilot program for the new system, the MSRB would accept information -- up to 100 documents per day of up to three pages -- on paper and through facsimile. During the first six months of the pilot, the MSRB would receive information only from trustees. After that it would be expanded to issuers. Subscribers would receive, through facsimile, any information the MSRB got on paper or through facsimile.
"At the end of the 18-month pilot period, the board would evaluate system operations and decide whether to continue, substantially modify, or discontinue the system," the MSRB said in the proposal it sent to the SEC.
The system must be approved by the Securities and Exchange Commission and it is not yet clear how soon the MSRB could have the secondary market system up and running once approval was obtained.
SEC officials said yesterday they could not say when the commission would be ble to consider and vote on the proposal. The next public meeting is tentatively scheduled for Oct. 24.
It took the SEC a year to approve the MSRB's Official Statement and Advance Refunding Document System. The commission approved that system last June, deferring action at that time on the secondary market disclosure system.
The MSRB is currently putting OS/ARD -- the official statement and refunding document system -- in place and plans to begin distributing tapes of these documents to subscribers in January 1992. Subscribers pay $12,000 per year for that information.
