WASHINGTON -- Securities and Exchange Commissioner Richard Roberts last week threw his support behind a National Federation of Municipal Analysts recommendation that municipal bond issuers spell out in official statements whether they will supply secondary market disclosure.
"In my view, the proposal is a very positive one," Mr. Roberts told an Investment Company Institute conference in Washington on creditors' rights.
"I think that the willingness of an issuer to provide secondary-market information, or to indicate sources from which it may be obtained, should be significant to funds investing in municipal securities," he said.
The federation's board of governors recommended Aug. 12 that issuers declare in the introduction of official statements whether they will provide annual financial statements and other pertinent credit information on a regular basis upon request or whether they have made no provision to do so.
The resolution has drawn extensive support from the investment community, with officials of over 100 companies having signed on as of last week. But, in practice, the number of firms that are refusing to buy deals that do not have such pledges in bond documents is minimal.
Nevertheless, some market observers say that the resolution will take hold along with possible new rules this winter from the Securities and Exchange Commission for short-term bond funds and the possible approval by the agency of the Municipal Securities Rulemaking Board's pilot system for secondary-market disclosure.
Last week, Mr. Roberts said the agency is studying whether to restrict tax-exempt money market funds from investing in the variable-rate demand notes and other short-term debt of issuers that do not pledge to provide secondary-market disclosure. Such a move could be a major catalyst for broader market disclosure since the disclosures that issuers make in connection with short-term debt would likely be taken into account by buyers of an issuer's long-term bonds.
The move, however, could draw objections from sone bond analysts who say that funds investing in variable-rate demand notes may be an inappropriate vehicle for such a disclosure rule.
An SEC staff member said recently that rules affecting tax exempt funds could be issued as early as next month.
The MSRB's proposed 18-month pilot would accept market-sensitive information from bond trustees -- and, eventually, other market participants -- by mail, facsimile machine, and electronically. Public comments on the plan were due at the SEC last week.