Regulatory Update. Remarks of Jay Goldstone, Chair. Municipal Securities Rulemaking Board. at the. GFOA Annual Conference.

Transcription

1 Regulatory Update Remarks of Jay Goldstone, Chair Municipal Securities Rulemaking Board at the GFOA Annual Conference San Francisco, CA June 1, 2013

2 Good morning and thank you for the opportunity to provide an update from the MSRB. I m Jay Goldstone, Chair of the MSRB and the former chief operating officer of the city of San Diego. My experience as an issuer has certainly informed my tenure as chair of the MSRB. I want to address three areas of focus for the MSRB that directly involve the issuer community: o Initiatives that protect issuers o Enhancements to the EMMA website o Municipal advisor regulation. As you all know, the Dodd-Frank Wall Street Reform and Consumer Protection Act ushered in a number of changes for the municipal market. Notably, the law expanded the MSRB s mission to include the protection of state and local governments and other municipal entities, including public pension plans. One way we protect issuers is to make sure they have information to make decisions that are right for them. We recently made changes in regulations for underwriters to ensure that state and local governments have information they need to make informed decisions at every stage of an underwriting. We understand the concerns from both issuers and underwriters about the practical realities of implementing this rule interpretation. We recently published FAQs to help underwriters understand their expanded obligations to state and local governments.

3 The FAQs also help state and local government officials know what to expect from their underwriter. To complement this regulatory effort, the MSRB has also focused on providing education and outreach to the issuer community. The MSRB s online State and Local Government Toolkit provides helpful resources and tools for state and local governments that issue bonds somewhat infrequently. We think we can help protect issuers by helping them be more informed about the process of issuing municipal securities. As part of our effort to ensure that we are effectively regulating the market, the MSRB initiated a full-scale review of its entire rule book late in GFOA was among those that commented on our rules. The MSRB is considering and prioritizing the comments received. We will also weigh the comments against those of all stakeholders. If supported by the Board, some of those comments will ultimately result in new proposals. I want to emphasize that our engagement with stakeholders on this issue is not a onetime effort and we encourage feedback on an ongoing basis. Now I d like to turn to the topic of our EMMA website. We hope that all issuers are already using EMMA, but we want to make the site as useful as possible. This summer we will provide tools to help issuers provide timely and complete financial disclosures on EMMA.

4 One of those tools is an automated reminder to help issuers remember when their annual financial disclosure documents are due to be posted on EMMA. Another EMMA enhancement is the introduction of issuer homepages. These homepages will display all the issues of a particular issuer in a consolidated format. The improved interface will allow issuers to easily view and edit their list of securities, post contact information and add links to their websites. These enhancements are all part of the MSRB s long-term vision for the further evolution of municipal market transparency. The MSRB s vision aligns with the SEC s July 2012 report on market structure issues and the deficiencies in pre-trade price transparency in our market. It s time to start to address the structure of the market and what more we can do to demystify the pricing of municipal securities A key element is the planned development of a new central transparency platform on the EMMA website. This platform would include pre- and post-trade pricing information on a real-time basis, greatly enhancing the opportunity for price discovery for average investors. The final area I d like to address is regulation of municipal advisors. The Dodd-Frank Act expanded the MSRB s jurisdiction to include the regulation of municipal advisors. Unfortunately, implementation of rules and baseline qualification standards for municipal advisors must wait until the SEC finalizes its definition of municipal advisor.

5 Nonetheless, the MSRB continues to assess the appropriate regulatory framework for municipal advisors, a group of professionals defined by the Dodd-Frank Act to include solicitors and finders of public pension plans. That s why we are working to learn more about how municipal advisors interact with public pension plans. Municipal advisors act as solicitors and third-party finders that call on public pension plans, and their recommendations can have a significant impact on the plans. The MSRB plans to facilitate dialog with multiple stakeholders about how the MSRB can ensure that public pension plans are protected from unfair or inappropriate conduct. Over the next two weeks, the MSRB is hosting a series of roundtables to gain a deeper understanding of the public pension plan sector and of some of the key issues it faces today. The MSRB is also interested in public pension plans because we are charged with protecting investors in municipal securities. The issuers of these municipal securities may have disclosure obligations that are related to their public pension funds. The MSRB needs to ensure that bondholders have important information they need to make sound decisions. Regulators in Washington are clearly focused on inadequate disclosure practices related to public pension obligations. I think that s clear from the SEC s securities fraud charges against Illinois for allegedly failing to adequately disclose risks of underfunded pensions systems to investors. The MSRB of course has no enforcement role, but we are certainly working to educate ourselves about public pension plan issues as we continue to develop disclosure resources for issuers and a regulatory framework for advisors. The GFOA is an important stakeholder in many of the MSRB s regulatory, market transparency and education initiatives.

6 I welcome your comments and questions. Thank you.