NAMA NOTABLE news. Pre-Trade Transparency: It s Not Just for Investors. N at i o n a l A s s o c i at i o n o f m u n i c i pa l a dv i s o r s

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1 NAMA NOTABLE news N at i o n a l A s s o c i at i o n o f m u n i c i pa l a dv i s o r s Pre-Trade Transparency: It s Not Just for Investors The Securities and Exchange Commission is the new kid on the muni market regulatory block. But it s already made its presence felt with big initiatives like muni advisor registration and stiffer enforcement on continuing disclosure. One of its emerging agenda items, pre-trade transparency, could also have big implications for muni advisors and their issuer clients. Post-trade price transparency is better than ever. Investors today can see the price on a bond shortly after it trades. This is a huge leap forward. And yet, muni market critics, including some SEC commissioners, think investors are still in the dark. They would like more pre-trade transparency. The Case for Better Pre-Trade Transparency When an investor puts a bond out for sale, or makes an offer to buy a bond in the secondary market, there s a good chance nothing will happen. That s the nature of an over-the-counter market like ours. But when nothing happens investors, and retail investors in particular, can only guess why. Was a lot of the same bond out for sale at the same time? Are investors more interested in other types of bonds? How long has that same bond J u n e 2 4, In this issue: Pre-Trade Transparency: It s Not Just for Investors New NAMA Member 2 NAMA s Response to NFMA Public Affairs Committee Report Committee Chair Spotlight: Steve Szanto NAMA 2015 Annual Conference Planning Committee Report GFOA Annual Conference Follow-up tended to stay on the market? Secondary market prices are useful, but they can t answer these types of questions , Justin Marlow, Ph.D. University of Washington Most of the information on pre-trade transparency lives in alternative trading systems (ATS) like KnightBondPoint, the Muni- Center, and Municipal Bond Information Services. ATS are a lot like Craig s List for munis. Each day bond brokers and dealers use them to post about a million buy and sell offers on behalf of their clients. If two brokers connect, they negotiate a trade. ATS data indicate that about one in ten postings produces a trade. So again, we can learn a lot from trades that don t happen....continued on Page 2. A N N O U N C I N G : T H E M u n i c i p a l a d v i s o r s e r i e s w o r k s h o p WHEN: Wednesday, October 7, 2015 WHERE: Double Tree Hotel and Suites, Charleston, South Carolina HOW: Registration for all NAMA members for the MA Series Workshop will be available at the same time as registration for the NAMA Annual Conference as early as August WHAT: The Workshop will encompass the following topics: *Successful study habits *Test taking tips and strategies *Series 50 test content *Practice questions 1

2 Pre-Trade Transparency: It s Not Just for Investors Continued... One path to broader pre-trade transparency is to encourage ATS to publish their bids and offers. There are many practical challenges to this, including protecting investor anonymity, sorting out legitimate bids and offers from noise, and ensuring ATS would remain a viable business. Some have even called for ATS to extend into an electronic exchange, like what we now have for equities, but that seems unlikely for now. What it Means for Issuers Pre-trade information presents some risks and challenges, but it would offer muni advisors a new tool to address important questions about pricing and execution on new issues: How do actual trades on an issuer s bonds compare to bids and offers? If traded prices are lower than the best bid price or higher than the best offer price, that s evidence the trade could have happened at a price more favorable to the issuer. What is the liquidity level for an issuer s bonds? If an issuer s bonds have sat on the market for a long time, or if investors have to take steep price discounts to sell them, that s evidence of underwriting risk that could be reasonably priced into a new issue. Who are an issuer s peers in the market? When bid and offer prices on its bonds move in the pre-trade market, which other issuers move in similar ways? The SEC s nascent effort to expand pre-trade transparency is meant to supply investors with new price-relevant information. But in the hands of a savvy muni advisor, that same information could yield some unexpected benefits for issuers. Justin Marlowe is Associate Professor of Public Affairs and Endowed Professor of Public Finance and Civic Engagement at the Evans School of Public Affairs at the University of Washington. Professor Marlowe supports improved public finance practices through many activities - university teaching, highly regarded academic research, and participation with industry organizations and conferences. Prior to academia, Professor Marlowe worked in local government in Michigan. He is a Certified Government Financial Manager, and he holds a Ph.D. and MA in Political Science from the University of Wisconsin-Milwaukee as well as a B.S. in Public Administration and MPA from Northern Michigan University. In addition to numerous academic books and journal articles, Professor Marlowe writes for Governing magazine, and authored Governing's Guide to Financial Literacy - Connecting Money, Policy and Priorities published last year, and available for download at New nama member Please welcome: Jay Wenger Susquehanna Group Advisors 3 Little Fox Lane Lititz, PA jwenger@susgrp.com (717) Nama s Response to NFMA Please find NAMA s comment letter to the National Federation of Municipal Analysts (NFMA) written March 3, 2015 in regards to Recommended Best Practices in Disclosure for Direct Purchase Bonds, Bank Loans, and other Bank- Borrower Agreements. This representation is one of many ways NAMA continues to work for our membership and all of the Issuers those members represent. You can read this comment letter on the NAMA website under the Industry Resources and Regulation tab. 2

3 Introduction Public affairs committee report The Era of the New Normal is here and the future is now. The National Association of Municipal Advisors ( NAMA ) continues to be fully dedicated to the protection of the rights of issuers while promoting a more vibrant, competitive, transparent, and efficient municipal securities marketplace for all participants. NAMA supports the MA regulation because our member firms are dedicated to the highest standards of ethics, professional qualification, duty to issuers and fair dealing and the time has come for any firm not committed to these principles to be eliminated from the marketplace. George Bernard Shaw said Progress is impossible without change, and those who cannot change their minds cannot change anything. President John F. Kennedy said Change is the law of life. And those who look only to the past or present are certain to miss the future. Mahatma Gandhi said You must be the change you wish to see in the world. Well said Mahatma, that sentiment defines the heart and soul of the organization that is NAMA. The NAMA Public Affairs Committee Members are NAMA President Terri Heaton; NAMA Past President Jeanine Rodgers Caruso; Kathleen Aho, President, Springsted Incorporated; Tom Johnsen, Partner, Fieldman Rolapp & Associates; John Haas, President of Ranson Financial; Shelley Aronson; President of First River Advisory; and Committee Chairman Larry Kidwell. All NAMA information released to the public is available for view and download at on Page 6. committee chair Spotlight Q. Where are you from or where did you grow up? A. I was Born in Europe, spoke fluent Hungarian. I grew up in Cleveland, Ohio and then Medina County, Ohio. We currently live in Geauga County, Ohio. Q. What drew you to the Ohio area, if you are not from there? A. Parents. Steve Szanto, CIPMA NAMA Membership Committee Co-Chair Q. Where did you go to college at, grad school and were you a member of any groups, sports teams, etc. that might interest people? A. I am a Graduate of Bowling Green State University, Ohio with a BA. I was on the swimming and diving team at BGSU I was a springboard diver 50 pounds ago. I went to Cleveland State University and have an M.S. in Urban Studies and an M.B.A. in Finance. Q. How long have you been a Municipal Advisor? A. I have been an Independent Public MA from ; and then 2008 to the present with Sudsina & Associates. Q. Do you have any hobbies or activities you enjoy that you would like to share? A. I am a licensed antique dealer in Ohio as a hobby. I deal in vintage ephemera, vintage postcards and Victorian trade cards, etc. I am also 4th Degree Black Belt in Tae Kwon Do, working toward my 5th degree. I teach and train in TKD. Q. Any details about your family you would like to share? A. Married, Leslie, my wife is a medical legal expert and an R.N., Rebecca, my daughter just graduated with a M.S. in Counseling from Youngstown State University, and Max, my son is pursuing his B.A. from Kent State University. My dog, Grady is Vice President of Security. Q. When you were in school did you ever dream of one day having the job you have now? A. When I was in school I had NO idea of this profession. 3

4 NAMA 2015 ANNUAL CONFERENCE PLANNING COMMITTEE REPORT Planning for this year s Annual Conference, to be held October 7-9 in historic Charleston, South Carolina, is nearly complete. Attendees will hear the latest on the regulatory environment and other governmental initiatives from SEC and MSRB representatives. NAMA s Best Practices Committee will be presenting on MAs fiduciary duty. Knowledge-building sessions will include: Quantitative skills and techniques New (as their promoters will sometimes contend) financing programs Bond referenda Bank loan disclosure, lessons learned from MCDC and other disclosure issues Wrapping up the Conference will be a presentation by the SEC s Office of Compliance, Inspections and Examinations, followed by a members-only session during which NAMA members will relate their firms experiences with SEC examinations. Full details will be announced in the Conference Brochure, scheduled to be released in mid-july. Please extend your appreciation to your insightful and hardworking committee comprised of Maggie Burger, Larry Kidwell, Larry Burger, Pam Clary, Lori Raineri, Jonathan Millard, Tom Kaleko, Mike Sudsina, Jim Mann and Jeanine Rodgers Caruso. CPE Sponsorship Approved NAMA has become listed on the National Registry of CPE Sponsors. We expect to be able to qualify seven or maybe even eight sessions for continuing professional education (CPE) units. While neither the MSRB nor the SEC have yet imposed formal CPE requirements on MAs, it s important for NAMA to position itself for that possibility. It might be possible for attorneys, certified public accountants and other professionals who already have formal CPE requirements to apply these CPE units toward fulfilling their obligations. Test Prep Workshop As announced in the April newsletter, an unprecedented addition to this year s Conference will be a workshop designed to begin to prepare us for the MSRB s Series 50 test for MAs that the MSRB will begin to administer in early This Test Prep Workshop will be held on the afternoon of Wednesday, October 7, before the Conference s Welcome Reception. There will be an additional charge, beyond the Conference Registration fee, to participate in the Workshop so that NAMA can cover its costs. The Workshop will encompass the following topics: Successful study habits Test taking tips and strategies Series 50 test content Practice questions The content is being refined by NAMA s Testing and Standards Committee led by Mike Harrigan and Leo Karwejna.. Bobby Day of Day Financial will be the principal presenter. NAMA is sponsoring Day Financial s development of Series 50 test preparation materials in the form of an electronic book that can be purchased by NAMA members at a discounted price. The Workshop will be webcast live so that those unable to attend the Conference can still participate and submit questions in real-time. Recordings of the Workshop will be available as well. See ad on page 1. Gfoa annual conference follow-up The 109th Annual GFOA Conference was held in Philadelphia, Pennsylvania on May 31st through June 3rd. As always this conference tackled tough topics from MCDC Initiative and Ongoing Disclosure Enforcement to SEC Municipal Advisor Rule, Regulator Next Steps and Issuer Reaction. NAMA s own attorney, Dave Sanchez, Sidley Austin, was a panelist on the MCDC discussion and as a former attorney with the SEC provided great perspective. NAMA got involved in sponsoring this year s event as a Friend of GFOA. NAMA s logo was recognized throughout the conference as well as listed in the conference guide. Pairing up with the GFOA throughout the year on municipal advisor/issuer related initiatives adds value to our industry overall. We plan to continue to our friendship with the GFOA for years to come. 4

5 Public affairs committee report...continued. SEC Examination of MA Firms William Shakespeare said To be or not to be, that is the question. Representatives of the SEC Office of Compliance, Inspections, and Examinations (OCIE) recently informed NAMA approximately firms have examined to date, with several NAMA members that have been examined, or with examinations in process. So, if the answer to Mr. Shakespeare s question for an MA firm was to be, then for lack of better descriptive phraseology, it is now go time. The 2015 NAMA Annual Conference will feature a session of representatives of MA firms which have completed their first SEC examinations. The session promises to provide valuable insights to Conference attendees as the session explores the examination process, observations of the panelists, and general information regarding SEC examination of MA firms. Also, Representatives of the SEC OCIE will again conduct a 2015 NAMA Annual Conference session to provide an overview of the examination process and answer questions of Conference attendees. Registration for the 2015 NAMA Annual Conference will open shortly, and all municipal advisors are invited and encouraged to attend these valuable sessions. NAMA Membership Now Open to Dealer Employees In October 2014, NAMA voted to change the name of the organization to the National Association of Municipal Advisors ( NAMA ). NAMA membership is now open to the employees of bank and broker-dealers and other professional firms who provide municipal advisor services. Membership in NAMA had been limited to only independent municipal advisory firms. The new structure provides an opportunity for membership for individuals who are engaged in municipal advisor activities, but are not employed by independent municipal advisory firms. These steps were taken to ensure that the Association is better prepared to address the needs of all municipal advisory professionals and improve the municipal securities industry. MSRB Rulemaking Update The MSRB has stated that it expects to resubmit to the SEC certain rules which had previously been submitted and subsequently withdrawn, and submit a number of new rules (i.e. see Recent Regulatory Matters herein). According to Executive Director Lynnette Kelly "In the year ahead, the MSRB is focused on enhancing the integrity of the municipal market by improving pricing for investors and issuers and implementing a regulatory framework for municipal advisors." NAMA will continue to assist their efforts to protect the interests of investors, issuers, and the public trust. It is expected the MSRB will continue to be very active in fulfilling its mandate to complete the regulatory structure for the MA Industry. NAMA member firms should be ready to implement changes to existing business processes and approaches necessary to comply fully with new regulations and rules promulgated. SEC and MSRB Rules in Effect The following SEC and MSRB Rules are now effect, or have upcoming effective dates, for municipal advisors: 1. SEC Rule 15Ba1-8(a) Books and Records 2. MSRB Rule G-1 Separately Identifiable Department of a Bank 3. MSRB Rule G-2 Standards of Professional Qualification (Effective Date: April 27, 2015) 4. MSRB Rule G-3 Professional Qualification Requirements (Effective Date: April 27, 2015) 5. MSRB Rule G-5 Disciplinary Actions by Appropriate Regulatory Agencies; Remedial Notices by Registered Securities Associations 6. MSRB Rule G-8 Books and Records to be made by Municipal Advisors (Effective Date: 04/23/2015) 7. MSRB Rule G-9 Preservation of Records (Effective Date: 04/23/2015) 8. MSRB Rule G-17 Conduct of Municipal Securities and Municipal Advisory Activities 9. MSRB Rule G-44 Supervisory Compliance Obligations (Effective Date: 04/23/2015) 10. MSRB Rule A-3 Membership on the Board 11. MSRB Rule A-7 Assessments 12. MSRB Rule A-8 Rulemaking Procedures 13. MSRB Rule A-11 Assessments for Municipal Advisor Professionals 14. MSRB Rule A-12 Registration 15. MSRB Rule A-16 Examination Fees 16. MSRB Rule D-4 Board 17. MSRB Rule D-11 Associated Persons 18. MSRB Rule D-13 Municipal Advisory Activities (Effective Date April 27, 2015) 19. MSRB Rule D Appropriate Regulatory Agency A listing of MSRB Rules for Municipal Advisors approved by the SEC with effective dates can be found on the MSRB website located at Rules.aspx?tab=5. NAMA strongly recommends that members check this site regularly for updates to the MA Rules....Continued on Page 7. 5

6 Public affairs committee report...continued. Regulatory Matters The following provides an update regarding the status of certain regulatory initiatives, actions, and information affecting the municipal advisory industry. NAMA Letter to the SEC Direct Purchase Transactions NAMA provided commentary to the Securities and Exchange Commission regarding an MA exemption for direct purchase transactions on December 15, The Bond Buyer covered the story in an article dated December 16, NAMA Letter to SEC MSRB Rule G-3 NAMA provided commentary to the Securities and Exchange Commission regarding support for proposed MSRB Rule G-3 which the Commission is presently deliberating. The Bond Buyer covered the story in an article dated January 29, The referenced commentary letters are available for access and review through the NAMA website. A complete listing of NAMA (NAIPFA) commentary, testimony, and opinion editorials regarding the regulation of municipal advisors is accessible via the NAMA website. MSRB Rule G-42 Core Standards of Conduct for Municipal Advisors On January 9, 2014, the MSRB issued a Request for Comment on Draft MSRB Rule G-42 Core Standards of Conduct for Non-Solicitor Municipal Advisors. The Proposed Rule was submitted to the SEC and the SEC did not taken action to approve the Proposed Rule. The MSRB refiled the Proposed Rule in April NAMA provided Rule G-42 commentary to the Securities and Exchange Commission in a letter dated May 29, The Bond Buyer covered the story in an article dated June 1, The SEC is presently considering comments and deliberating the Proposed Rule, with action expected in the near future. Status Update: Treasury REG Arbitrage Restrictions on Tax-Exempt Bonds On September 13, 2013, the IRS released two sets of proposed regulations that would make several significant changes to, among other things, the way in which issue price is to be calculated. Currently, the determination of issue price is determined based upon the price at which a substantial amount of the securities are sold, where the term substantial amount is defined as 10% of the bonds. In addition, underwriters are currently permitted to rely on their reasonable expectations about sale prices at the time of pricing. However, the IRS s proposed changes would eliminate an underwriter s ability to rely on its reasonable expectations, and would change the definition of substantial amount to 25%. Thus, the issue price would be determined based solely upon an underwriter s ability to sell 25% of the securities. Further, because issue price must be based upon actual sales prices, and because it may not be possible to determine the issue price on the sale date, or even by the issue date, the proposed rules permit issuers to make yield reduction payments to the IRS if the issue prices are later determined to be higher, and the yield lower, than estimated. NAIPFA provided commentary to the IRS opposing the proposed rules, as did several other market participant organizations. NAIPFA provided commentary to the IRS opposing the proposed rules, as did several other organizations representing market participants and issuers. In February 2014, the Treasury Department held hearings with respect to the proposed changes. Concerns were expressed that the new rules could negatively impact issuers engaging in the competitive sale of municipal securities due to the potential inability of underwriters to meet the 25% per maturity threshold within a necessary time frame. Further concerns were expressed that this inability could cause for issuers to make yield reduction payments due to underwriter cheapening of prices, which could also result in issuers receiving prices and yields that are less favorable than those proposed by other bidders. Further concerns were expressed that such results, and accompanying uncertainty created therefrom, could curtail issuer, and underwriter, willingness to participate in the competitive sale process. NOW THIS JUST IN -- on June 23, 2015, the Treasury Department Issued REG RIN-1545-BM46 Issue Price Determination. The action is a partial withdrawal of notice of proposed rulemaking, notice of proposed rulemaking, and notice of public hearing. In summary, the document partially withdraws the portion of the notice of proposed rulemaking published in the Federal Register on September 16, 2013 (78 FR 56842), relating to the definition of issue price for purposes of the arbitrage restriction under section 148 of the Internal Revenue Code (Code). Market participants will have 90 days to provide commentary in written or electronic format which must be received by 90 days after the publication in the Federal Register. Requests to speak and outlines of topics to be discussed at the public hearing scheduled for October 28, 2015 at 10:00 AM, must be received by 90 days after publication in the Federal Register. The NAMA Public Affairs Committee will review the original and newly revised document and provide comment in the coming weeks. The MSRB Municipal Securities Industry Update The National Association of Municipal Advisors is the recognized leader in representing the positions and views of the municipal advisor industry. NAMA is an active participant in the MSRB Municipal Securities Industry Roundtable which brings together representatives from the American Bankers Association, Bond Dealers of America, Government Finance Officers Association, Investment Company Institute, National Association of Bond Lawyers, National Association of State Auditors, Comptrollers and Treasurers, Securities Industry & Financial Markets Association, and National Federation of Municipal Analysts and others to discuss issues of concern to issuers, investors, and the public trust in the municipal securities industry. The MSRB Municipal Securities Industry Roundtable met on June 5, 2015 at the MSRB Offices in Alexandria, Virginia. NAMA representatives to the Roundtable included NAMA President Terri Heaton and Vice-President/Public Affairs Committee Chairman Larry Kidwell. The Roundtable began with opening comments by MSRB Vice-Chairman Marci Edwards and MSRB Executive Director Lynnette Kelly. The MSRB stated primary goals for the year to include continuation of the MA regulatory framework; fortification of municipal market structure; initiatives to increase market transparency; and enhancement of regulatory efficiency....continued on Page 8. nama Tel:

7 Public affairs committee report...continued NAMA President Terri Heaton reiterated the 2015 NAMA Agenda at this meeting of the Roundtable to support for the continuation of tax-exemption for municipal securities; oppose efforts to repeal the Tower Amendment; support for the protection of issuers and a strong, robust, competitive, and transparent municipal marketplace; support the efforts of regulators with implementation of the MA regulatory regime; development of, and support for, best practices standards for the legal conduct of MA activities and compliance with the law and regulations; provision of services to assist municipal advisor professionals to study for, and pass, the MSRB Series 50 Examination; provision of continuing professional education (CPE) programming as a member of the National Registry of CPE Sponsors; and ensuring the public policy positions of our member firms receive due consideration by those whose opinions determine and shape the law and future of the municipal securities industry. The meeting continued with a Roundtable discussion of an Update on Municipal Advisor Regulation and Market Implementation. The discussion was facilitated by Michael Post, General Counsel Regulatory Affairs of the MSRB. The MSRB distributed an Executive Summary of proposed Rule G-42 entitled Duties of Non- Solicitor Municipal Advisors to which NAMA has submitted commentary to the MSRB and SEC. The Summary included an overview, key provisions the proposed Rule G-42 addresses to include duties of municipal advisors, disclosure and conflicts of interest, documentation of client relationships, suitability of recommendations, prohibited activities, and inadvertent advice. The next agenda item was a discussion facilitated by Cadmus Hicks, an Investment Company Institute representative, regarding international banking regulations (Basel III) failing to include municipal securities as among High Quality Liquid Assets. There was a general sentiment among Roundtable participants, including NAMA representatives, that if investment-grade corporate securities are deemed HQLAs for the purposes of reserves to net capital, then investment-grade municipal securities should be treated no differently. NAMA is considering the development of commentary directed to the Office of the Comptroller of the Currency to address the matter. Lynnette Kelly, MSRB Executive Director, then facilitated a Roundtable discussion focused to a to a review of the SEC 2012 Report on the Municipal Securities Marketplace, events occurring since its release and relevance of the Report today. The next order of business included a discussion facilitated by NABL representatives President Antonio Martini and President-Elect Ken Artin relating to an initiative to develop policy and procedures directly relating to continuing disclosure obligations. The undertaking is in the earlier stages of composition and all Roundtable representatives agreed to assist NABL efforts in this worthwhile cause. Securities and Exchange Commission Update The Securities and Exchange Commission has five Commissioners who are appointed by the President of the United States with the advice and consent of the Senate. Their terms last five years and are staggered so that one Commissioner's term ends on June 5 of each year. To ensure that the Commission remains non-partisan, no more than three Commissioners may belong to the same political 7 party. The President also designates one of the Commissioners as Chairman, the SEC's top executive. Mary Jo White is the current Chairman of the SEC. The remaining members of the Commission include Luis Aguilar, Daniel Gallagher, Kara Stein, and Michael Piwowar. Through the years, NAMA has met with either SEC Commissioners, or members of their senior staff, to answer questions, provide the viewpoint of independent municipal advisors, and serve as an information resource to promote the development of sound public policy for the municipal securities industry. NAMA will continue to meet with members of the Commission, or senior staff members, to assist their efforts in any way possible. On June 3, 2015, NAMA representatives Terri Heaton, President; Kathy Aho, former NAMA President; Leo Karwenjna, Co-Chairman of the NA- MA Standards, Ethics, and Testing Committee; and Larry Kidwell, NAMA Vice-President and Public Affairs Committee Chairman. NAMA representatives expressed views with respect to various topics in meetings with the Offices of Chairman White and Commissioners Aguilar and Stein, and with representatives of the Office of Municipal Securities, the Office of Inspections, Compliance and Examinations, and the Office of Trading and Markets. SEC Announces Appointment of Director and Deputy Director OMS On May 20, 2015 the Securities and Exchange Commission named Jessica Kane Director of the agency s Office of Municipal Securities (OMS) who replaces the former Director John Cross. Jessica is a strong leader with sound judgement and great dedication said SEC Chair Mary Jo White She is the right person to lead the Office of Municipal Securities as the agency continues to play a crucial role in over- Jessica Kane seeing the municipal securities market. NAMA members may recall new Director presented on behalf of the Office of Municipal Securities at the 2014 Annual Conference. As Deputy Director, Ms. Kane oversaw all aspects of the office. She played a leading role in the implementation and operation of the municipal advisor registration regime, including the issuance of staff interpretive guidance on certain aspects of the SEC s final rules for municipal advisor registration. Ms. Kane also led efforts in the oversight of Municipal Securities Rulemaking Board (MSRB) rulemaking. On the same day, the SEC named Rebecca Olsen Deputy Director of the agency s Office of Municipal Securities, who replaces Jessica Kane who was the previous Deputy Director, following her service to OMS as Chief Counsel. In her new position Mr. Olsen will continue to play a leading role in overseeing all aspects of the Office of Municipal Securities. Rebecca s extensive experience in municipal securities will be invaluable as she takes on this new leadership role said SEC Chair Mary Jo White. As Chief Counsel Ms. Olsen was responsible for reviewing MSRB rulemaking and analysis of disclosure policy issues while serving as Rebecca Olson Office liaison to the Division of Enforcement s Municipal Securities and Public Pensions Unit....Continued on Page 9.

8 Public affairs committee report...continued. Under the Dodd-Frank Act, the SEC established a standalone Office of Municipal Securities to administer SEC rules on practices of broker-dealers, municipal advisors, investors, and issuers in the municipal securities area and to coordinate with the Municipal Securities Rulemaking Board (MSRB) on rulemaking and enforcement actions. The Office of Municipal Securities advises the Commission and other SEC offices on policy matters, enforcement, and other issues affecting the municipal securities market and oversees MSRB rulemaking and the SEC s municipal advisor registration program. NAMA representatives have had the honor of working with both Ms. Kane and Ms. Olsen and wish them the very best in their new positions. NAMA will continue to look forward to any opportunity to assist their efforts and those of the Commission. NAMA and the GFOA The NAMA Public Affairs Committee continues to appreciate the close collaboration with Dustin McDonald with respect to a range of issues and topics concerning the municipal securities marketplace, with specific emphasis directed toward the impact of SEC and MSRB rules and actions affecting municipal issuers. NAMA will continue to align debt issuance and management policy interests with those of the GFOA to bolster support for legislative initiatives that expand issuer protections and enhance efficient access to the municipal marketplace. GFOA Priorities for 2015 have been outlined to include maintenance of tax-exemption for municipal securities; reclassification of investment grade municipal securities as High Quality Liquid Assets (HQLA) by the OCC and FRB; support of initiatives to increase the bank qualified debt limit; monitor and react to a federal multi-year transportation bill; continue to monitor the effect of the MA Rule and associated regulations; monitor and react to the prospects of MCDC 2.0; oppose any efforts to repeal the Tower Amendment; work with the SEC on matters related to public pension abuses; monitor and react to forthcoming IRS Issue Price Rules; and continue to deploy best practices and standards. NAMA looks forward to continuing to work with the GFOA to create a more competitive and efficient marketplace for municipal issuers. NAMA Strongly Supports Preservation of the Tax- Exemption of Municipal Bonds There remains a threat that the U.S. Congress could act to eliminate the tax-exempt status of municipal securities. NAMA remains vigilant while working with issuer and industry groups to support efforts to maintain the uncapped tax-exempt status of municipal securities. It was widely expected that the issue of tax-exemption, as a part of comprehensive tax reform ( CTR ), would be considered concurrently with the next round of efforts to increase the U.S. debt ceiling, but it was not. There seems to be growing sentiment surrounding both Houses of Congress that CTR may not be a matter for legislative consideration in 2015, but rather may be following the 2016 presidential election. Many organizations have published white papers that clearly state that any benefit the U.S. government would receive through the elimination of tax-exemption of municipal securities would pale in comparison to the increased costs which would be experienced by state and local issuers of tax-exempt debt. The American Society of Civil Engineers projects that approximately $3.7 trillion in new debt financing will be needed to construct new and rehabilitate existing infrastructure by 2020, and that approximately 90 percent of the cost will be borne by state and local governments. NAMA strongly supports the efforts to preserve the tax-exemption of municipal securities. NAMA encourages its member firms to review the listings of the US House Ways and Means Committee, and US Senate Finance Committee, and contact Members representing either your home State, Congressional District, or where member firms conduct business. The message to the US House and Senate is the elimination of tax-exemption for municipal securities will cost state and local government and taxpayers - far more than any gain achieved by the US government. The time is now, the future of the municipal securities industry is at stake. NAMA Opposes Repeal of the Tower Amendment The municipal marketplace was affected greatly by the voluntary MCDC initiative of the SEC Municipal Enforcement Division. If there was ever any doubt that the SEC takes the matter of issuer continuing disclosure seriously MCDC should have eliminated forever any thought to the contrary. There are presently talks occurring in DC that there could be an MCDC round two. The Bond Buyer reported that Lee Ann Gaunt, Chief of Municipal Enforcement at the Securities and Exchange Commission, commented at the December meeting of the GFOA The way we speak is through enforcement. The article reported further comments by Ms. Gaunt There is no big regulatory framework while pointing to the anti-fraud provision of the federal securities laws as her office s primary tool. Finally, Ms. Gaunt said Don t lie, cheat, or steal. That s the rule The GFOA, and other organizations, have voiced concerns that the MCDC initiative was effectively a precursor to future efforts by various entities to seek the repeal of the Tower Amendment which exempts municipal securities from the SEC securities registration and financial reporting regime. Time will only tell whether such concerns are justified. NAMA will stand to oppose efforts to repeal the Tower Amendment because such action would result in significantly higher costs of issuance for municipal issuers or obligated persons, creation of barriers to market entry for moderate and small sized issuers, and unnecessarily increase state and local governmental tax or user rates. Summary In the age of the new normal, it is a time to consider carefully and thoughtfully that winning fairly, squarely, by the rules is much more than an ideal it is the law. MA firms that comply with the law will shape the future of the new age those that do not will be relegated to the past and as Margaret Mitchell so eloquently titled her best-selling novel Gone With The Wind. 8