SIFMA Suggests Improvements in SEC Municipal Bond Disclosure Framework

SIFMA issued a white paper in which it voiced concerns over the framework for disclosure in the municipal securities market. Characterizing the current structure as inefficient and outdated, SIFMA discussed the history of Exchange Act Rule 15c2-12. SIFMA suggested that the current structure is a result of not keeping up with the pace of change. SIFMA stated that when the disclosure framework for the municipal securities market was established, market communication was paper-based, and that disclosure now occurs within fractions of a second.

SIFMA recommended, among other changes, that requirements applied in earlier rules for financial advisors now should apply to municipal advisors. SIFMA also suggested that municipal advisors should be responsible for confirming that statements in offering documents on competitive transactions are accurate when the advisors are engaged by issuers to help prepare official statements. Acknowledging the limitations that underwriters face in due diligence when preparing the document, SIFMA asserted that this requirement would ensure the accuracy of official statements and the appropriate protection of investors.

SIFMA also recommended that the SEC:

• update the collection of disclosure information to reflect the availability of information on the MSRB's EMMA system;

• harmonize the "end of the underwriting period" in Exchange Act Rule 15c2-12 and the definition of "primary offering disclosure period" in MSRB Rule G-32; and

• specify a date on which annual financial information will be provided.