46138 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Proposed Rules 

1 17 CFR 240.15c2–12. 

2 17 CFR 240.15c2–12. 

3See Securities Exchange Act Release No. 26985 

(June 28, 1989), 54 FR 28799 (July 10, 1989 (‘‘1989 

Adopting Release’’). 

4 In 1993, the Commission’s Division of Market 

Regulation (n/k/a the Division of Trading and 

Markets) conducted a comprehensive review of 

many aspects of the municipal securities market, 

including secondary market disclosure (‘‘1993 Staff 

Report’’). Findings in the 1993 Staff Report 

highlighted the need for improved disclosure 

practices in both the primary and secondary 

municipal securities markets. The 1993 Staff Report 

found that investors need sufficient current 

information about issuers and significant obligors to 

better protect themselves from fraud and 

manipulation, to better evaluate offering prices, to 

decide which municipal securities to buy, and to 

decide when to sell. Moreover, the 1993 Staff 

Report found that the growing participation of 

individuals as both direct and indirect purchasers 

of municipal securities underscored the need for 

sound recommendations by brokers, dealers, and 

municipal securities dealers. See Securities and 

Exchange Commission, Division of Market 

Regulation (n/k/a Division of Trading and Markets), 

Staff Report on the Municipal Securities Market 

(September 1993) (available at http://www.sec.gov/ 

info/municipal.shtml). 

5See Securities Exchange Act Release No. 34961 

(November 10, 1994), 59 FR 59590 (November 17, 

1994) (‘‘1994 Amendments’’). 

In light of the growing volume of municipal 

securities offerings, as well as the growing 

ownership of municipal securities by individual 

investors, in March 1994, the Commission 

published the Statement of the Commission 

Regarding Disclosure Obligations of Municipal 

Securities Issuers and Others. See Securities 

Exchange Act Release No. 33741 (March 9, 1994), 

59 FR 12748 (March 17, 1994). The Commission 

intended that its statement of views with respect to 

disclosures under the federal securities laws in the 

municipal market would encourage and expedite 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Part 240 

[Release No. 34–58255; File No. S7–21–08] 

RIN–3235–AK20 

Proposed Amendment to Municipal 

Securities Disclosure 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Proposed rule. 

SUMMARY: The Securities and Exchange 

Commission (‘‘Commission’’) is 

publishing for comment proposed 

amendments to a rule under the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) relating to municipal 

securities disclosure. The proposal 

would amend certain requirements 

regarding the information that the 

broker, dealer, or municipal securities 

dealer acting as an underwriter in a 

primary offering of municipal securities 

must reasonably determine that an 

issuer of municipal securities or an 

obligated person has undertaken, in a 

written agreement or contract for the 

benefit of holders of the issuer’s 

municipal securities, to provide. 

Specifically, the amendments would 

require the broker, dealer, or municipal 

securities dealer to reasonably 

determine that the issuer or obligated 

person has agreed to provide the 

information covered by the written 

agreement to the Municipal Securities 

Rulemaking Board (‘‘MSRB’’ or 

‘‘Board’’), instead of to multiple 

nationally recognized municipal 

securities information repositories 

(‘‘NRMSIRs’’) and state information 

depositories (‘‘SIDs’’), as the rule 

currently provides, and to provide such 

information in an electronic format and 

accompanied by identifying information 

as prescribed by the MSRB. 

DATES: Comments should be received on 

or before September 22, 2008. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/proposed.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

No. S7–21–08 on the subject line; or 

• Use the Federal eRulemaking Portal 

(http://www.regulations.gov). Follow the 

instructions for submitting comments. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File No. 

S7–21–08. This file number should be 

included on the subject line if e-mail is 

used. To help us process and review 

your comments more efficiently, please 

use only one method. The Commission 

will post all comments on the 

Commission’s Internet Web site (http:// 

www.sec.gov/rules/proposed.shtml). 

Comments are also available for public 

inspection and copying in the 

Commission’s Public Reference Room, 

100 F Street, NE., Washington, DC 

20549 on official business days between 

the hours of 10 a.m. and 3 p.m. All 

comments received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Martha Mahan Haines, Assistant 

Director and Chief, Office of Municipal 

Securities, at (202) 551–5681; Mary N. 

Simpkins, Senior Special Counsel, 

Office of Municipal Securities, at (202) 

551–5683; Cyndi N. Rodriguez, Special 

Counsel, Office of Market Supervision, 

at (202) 551–5636; or Rahman J. 

Harrison, Special Counsel, Office of 

Market Supervision, at (202) 551–5663, 

Division of Trading and Markets, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–6628. 

SUPPLEMENTARY INFORMATION: The 

Commission is requesting public 

comment on a proposed amendment to 

Rule 15c2–12 under the Exchange Act.1

I. Background 

A. History of Rule 15c2–12 

The Commission has long been 

concerned with improving the quality, 

timing, and dissemination of disclosure 

in the municipal securities markets. In 

an effort to improve the transparency of 

the municipal securities market, in 

1989, the Commission adopted Rule 

15c2–122 (‘‘Rule’’ or ‘‘Rule 15c2–12’’) 

and an accompanying interpretation 

modifying a previously published 

interpretation of the legal obligations of 

underwriters of municipal securities.3

As adopted in 1989, Rule 15c2–12 

required, and still requires, 

underwriters participating in primary 

offerings of municipal securities of 

$1,000,000 or more to obtain, review, 

and distribute to potential customers 

copies of the issuer’s official statement. 

Specifically, Rule 15c2–12 required, and 

still requires, an underwriter acting in a 

primary offering of municipal securities: 

(1) To obtain and review an official 

statement ‘‘deemed final’’ by an issuer 

of the securities, except for the omission 

of specified information, prior to 

making a bid, purchase, offer, or sale of 

municipal securities; (2) in noncompetitively bid offerings, to send, 

upon request, a copy of the most recent 

preliminary official statement (if one 

exists) to potential customers; (3) to 

send, upon request, a copy of the final 

official statement to potential customers 

for a specified period of time; and (4) to 

contract with the issuer to receive, 

within a specified time, sufficient 

copies of the final official statement to 

comply with the Rule’s delivery 

requirement, and the requirements of 

the rules of the MSRB. 

While the availability of primary 

offering disclosure significantly 

improved following the adoption of 

Rule 15c2–12, there was a continuing 

concern about the adequacy of 

disclosure in the secondary market.4 To 

enhance the quality, timing, and 

dissemination of disclosure in the 

secondary municipal securities market, 

the Commission in 1994 adopted 

amendments to Rule 15c2–12.5 Among 


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the ongoing efforts by market participants to 

improve disclosure practices, particularly in the 

secondary market, and to assist market participants 

in meeting their obligations under the antifraud 

provisions. Id. 

6See 1994 Amendments, supra note 5. 

7Obligated persons include persons, including 

the issuer, committed by contract or other 

arrangement to support payment of all or part of the 

obligations on the municipal securities to be sold 

in an offering. See 17 CFR 240.15c2–12(f)(10). 

8 17 CFR 240.15c2–12(b)(5)(i)(A) and (B). 

9 17 CFR 240.15c2–12(b)(5)(i)(C). The following 

events, if material, require notice: (1) Principal and 

interest payment delinquencies; (2) non-payment 

related defaults; (3) unscheduled draws on debt 

service reserves reflecting financial difficulties; (4) 

unscheduled draws on credit enhancements 

reflecting financial difficulties; (5) substitution of 

credit or liquidity providers, or their failure to 

perform; (6) adverse tax opinions or events affecting 

the tax-exempt status of the security; (7) 

modifications to rights of security holders; (8) bond 

calls; (9) defeasances; (10) release, substitution, or 

sale of property securing repayment of the 

securities; and (11) rating changes. 

In addition, Rule 15c2–12(d)(2) provides an 

exemption from the application of paragraph (b)(5) 

of the Rule with respect to primary offerings if, 

among other things, the issuer or obligated person 

has agreed to a limited disclosure obligation, 

including sending certain material event notices to 

each NRMSIR or the MSRB, as well as the 

appropriate SID. See 17 CFR 240.15c2–12(d)(2). 

10 17 CFR 240.15c2–12(b)(5)(i)(D). Annual filings, 

material event notices, and failure to file notices are 

referred to collectively herein as ‘‘continuing 

disclosure documents.’’

11According to statistics assembled by the 

Securities Industry and Financial Markets 

Association (SIFMA), the amount of outstanding 

municipal securities grew from $1.2616 trillion in 

1996 to $2.6174 trillion at the end of 2007. See 

SIFMA ‘‘Outstanding U.S. Bond Market Debt’’

(available at http://www.sifma.org/research/pdf/ 

Overall_Outstanding.pdf ). 

12See SIFMA ‘‘Outstanding U.S. Bond Market 

Debt’’ (available at http://www.sifma.org/research/ 

pdf/Overall_Outstanding.pdf ). 

13See SIFMA ‘‘Holders of U.S. Municipal 

Securities’’ (available at http://www.sifma.org/ 

research/pdf/Holders_Municipal_Securities.pdf ). 

14See MSRB’s Real-Time Transaction Reporting 

Statistical Information, Monthly Summaries 2007 

(available at http://www.msrb.org/msrb1/TRSweb/

MarketStats/statistical_patterns_in_the_muni.htm). 

15See Securities Exchange Act Release No. 33741, 

supra note 5. 

16The four NRMSIRs are the Bloomberg 

Municipal Repository, DPC Data, Inc., Interactive 

Data Pricing and Reference Data, Inc., and Standard 

& Poor’s Securities Evaluations, Inc. 

17The three SIDs are the Municipal Advisory 

Council of Michigan, the Municipal Advisory 

Council of Texas, and the Ohio Municipal Advisory 

Council. 

18See http://www.bloomberg.com/markets/rates/

municontacts.html (Bloomberg Municipal 

Repository); http://www.munifilings.com/help/ 

help.cfm (DPC Data, Inc.); http:// 

www.interactivedata-prd.com/07company_info/ 

about_us/MN/NRMSIR.shtml (Interactive Data 

Pricing and Reference Data, Inc.); and http:// 

www.disclosuredirectory.standardandpoors.com/ 

(Standard & Poor’s Securities Evaluations, Inc.). 

19The Commission notes that the aspects of the 

Rule that relate to the provision of continuing 

disclosure documents to multiple locations (i.e., to 

each NRMSIR and SID) may have engendered 

certain inefficiencies in the current system. See 17 

CFR 240.15c2–12(b)(5)(i)(A) through (D). For 

instance, there have been reports that NRMSIRs 

may not receive continuing disclosure documents 

concurrently, resulting in the uneven availability of 

documents from the various NRMSIRs for some 

period of time. There also have been reports of 

inconsistent document collections among 

NRMSIRs, possibly due to the failure of some 

issuers or obligated persons to provide continuing 

disclosure documents to each NRMSIR. Finally, 

there have been reports indicating possible 

weaknesses in document retrieval at the NRMSIRs. 

See, e.g., Troy L. Kilpatrick and Antonio Portuondo, 

Is This the Last Chance for the Muni Industry to 

Self-Regulate?, THE BOND BUYER, August 6, 2007, 

and comments made at the 2001 Municipal Market 

Roundtable—‘‘Secondary Market Disclosure for the 

21st Century’’ held November 14, 2001 (‘‘2001 

Roundtable’’), and the 2000 Municipal Market 

Roundtable held October 12, 2000 (available at 

http://www.sec.gov/info/municipal/roundtables/

thirdmuniround.htm and http://www.sec.gov/info/ 

municipal/roundtables/2000participants.htm, 

respectively). 

other things, the 1994 Amendments 

placed certain requirements on brokers, 

dealers, and municipal securities 

dealers (‘‘Dealers’’ or, when used in 

connection with primary offerings, 

‘‘Participating Underwriters’’). In 

adopting the 1994 Amendments, the 

Commission intended ‘‘to deter fraud 

and manipulation in the municipal 

securities market’’ by prohibiting the 

underwriting and subsequent 

recommendation of transactions in 

municipal securities for which adequate 

information was not available on an 

ongoing basis.6

Specifically, under the 1994 

Amendments, Participating 

Underwriters are prohibited, subject to 

certain exemptions, from purchasing or 

selling municipal securities covered by 

the Rule in a primary offering, unless 

the Participating Underwriter has 

reasonably determined that an issuer of 

municipal securities or an obligated 

person 7 has undertaken in a written 

agreement or contract for the benefit of 

holders of such securities (‘‘continuing 

disclosure agreement’’) to provide 

specified annual information and event 

notices to certain information 

repositories. The information to be 

provided consists of: (1) Certain annual 

financial and operating information and 

audited financial statements (‘‘annual 

filings’’); 8 (2) notices of the occurrence 

of any of eleven specific events 

(‘‘material event notices’’) 9 and (3) 

notices of the failure of an issuer or 

other obligated person to make a 

submission required by a continuing 

disclosure agreement (‘‘failure to file 

notices’’).10 The 1994 Amendments 

require the Participating Underwriter to 

reasonably determine that an issuer of 

municipal securities or an obligated 

person has undertaken in the continuing 

disclosure agreement to provide: (1) 

Annual filings to each NRMSIR; (2) 

material event notices and failure to file 

notices either to each NRMSIR or to the 

MSRB; and (3) in the case of states that 

established SIDs, all continuing 

disclosure documents to the appropriate 

SID. Finally, the 1994 Amendments 

revise the definition of ‘‘final official 

statement’’ to include a description of 

the issuer’s or obligated person’s 

continuing disclosure undertakings for 

the securities being offered, and of any 

instances in the previous five years in 

which the issuer or obligated person 

failed to comply, in all material 

respects, with undertakings in previous 

continuing disclosure agreements. 

B. Disclosure Practices in the Secondary 

Market and Need for Improved 

Availability to Continuing Disclosure 

Since the adoption of Rule 15c2–12 in 

1989 and its subsequent amendment in 

1994, the size of the municipal 

securities market has grown 

considerably.11 There were over $2.6 

trillion of municipal securities 

outstanding at the end of 2007.12

Notably, at the end of 2007, retail 

investors held approximately 35% of 

outstanding municipal securities 

directly and up to another 36% 

indirectly through money market funds, 

mutual funds, and closed end funds.13

There is also substantial trading volume 

in the municipal securities market. 

According to the MSRB, more than $6.6 

trillion of long and short term municipal 

securities were traded in 2007 in more 

than 9 million transactions.14 Further, 

the municipal securities market is 

extremely diverse, with more than 

50,000 state and local issuers of these 

securities.15

Currently, there are four NRMSIRs 16

and three SIDs.17 Each of the NRMSIRs 

utilizes the information obtained from 

continuing disclosure documents to 

create proprietary information products 

that are primarily sold to and used by 

dealers, institutional investors and other 

market participants who subscribe to 

such products. With respect to the 

availability of municipal securities 

information to retail investors, each of 

the NRMSIRs also make continuing 

disclosure documents available for sale 

to non-subscribers.18

Although the existing practice for the 

collection and availability of municipal 

securities disclosures has substantially 

improved the availability of information 

to the market, the Commission believes 

that improvements could achieve more 

efficient, effective, and wider 

availability of municipal securities 

information to market participants.19

Among other things, improvements in 

information availability may allow 

investors to obtain information more 

readily and may help them to make 


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20For example, Rule 2a–7 under the Investment 

Company Act of 1940 specifies the characteristics 

of investments that may be purchased and held by 

money market funds. Among other requirements, 

Rule 2a–7 requires a money market fund to limit 

its portfolio investments to those securities that the 

fund’s board of directors determines present 

minimal credit risks (including factors in addition 

to any assigned rating). See Rule 2a–7(c)(3), 17 CFR 

270.2a–7(c)(3). 

21See, e.g., the comments of Leslie RichardsYellen, Principal, The Vanguard Group, at the 2001 

Roundtable, supra note 19. 

22See MSRB ‘‘Interpretive Notice Regarding Rule 

G–17 on Disclosure of Material Facts’’ (March 20, 

2002) (available at http://www.msrb.org/msrb1/ 

rules/notg17.htm). See also Securities Exchange Act 

Release No. 45591 (March 18, 2002), 67 FR 13673 

(March 25, 2002) (SR–MSRB–2002–01) (order 

approving MSRB’s proposed interpretation of the 

duty to deal fairly set forth in MSRB Rule G–17). 

23 Id. 

24Municipal Securities Information Library and 

MSIL are registered trademarks of the MSRB. The 

Official Statement and Advance Refunding 

Document (‘‘OS/ARD’’) system of the MSIL system 

was initially approved by the Commission in 1991 

and was amended in 2001 to establish the MSRB’s 

current optional electronic system for underwriters 

to submit official statements and advance refunding 

documents. See Securities Exchange Act Release 

Nos. 29298 (June 13, 1991), 56 FR 28194 (June 19, 

1991) (File No. SR–MSRB–90–2) (order approving 

MSRB’s proposal to establish and operate the OS/ 

ARD of the MSIL system, through which 

information collected pursuant to MSRB Rule G–36 

would be made available electronically to market 

participants and information vendors) and 44643 

(August 1, 2001), 66 FR 42243 (August 10, 2001) 

(File No. SR–MSRB–2001–03) (order approving 

MSRB’s proposal to amend the OS/ARD system to 

establish an optional procedure for electronic 

submissions of required materials under MSRB 

Rule G–36). 

25See note 22, supra. 

26See Letter from Diane G. Klinke, General 

Counsel, MSRB, to Jonathan G. Katz, Secretary, 

Commission, dated September 8, 2005 (‘‘MSRB 

Petition’’). 

27See Securities Exchange Act Release No. 54863 

(December 4, 2006), 71 FR 71109 (December 8, 

2006) (‘‘2006 Proposed Amendments’’). According 

to the MSRB Petition, the CDINet system was 

designed to permit issuers to satisfy their 

undertakings to provide material event notices 

through a single submission to the MSRB, rather 

than through separate submissions to each of the 

NRMSIRs. The MSRB stated that relatively few 

issuers had opted to use the CDINet system, and, 

in recent years, usage of the CDINet system had 

diminished. See MSRB Petition, supra note 26. 

28See 2006 Proposed Amendments, supra note 

27. 29 15 U.S.C. 78s(b). 30See Securities Exchange Act Release No. 57577 

(March 28, 2008), 73 FR 18022 (April 2, 2008) (File 

No. SR–MSRB–2007–06) (order approving the pilot 

portal). Primary offering information consists of the 

official statement and the advance refunding 

document that Participating Underwriters are 

required to send to the MSRB under MSRB Rule G–

36. 31See Securities Exchange Act Release No. 58256 

(July 30, 2008) (File No. MSRB–2008–05). 

32 15 U.S.C. 78s(b). 

33See Securities Exchange Act Release No. 58256, 

supra note 31. 

34 Id. 

35 Id. 

36 Id. 

more informed investment decisions. 

Specifically, the Commission believes 

that municipal securities disclosure 

documents should be made more 

readily and more promptly available to 

the public and that all investors should 

have better access to important market 

information that may affect the price of 

a municipal security, such as 

information in financial statements and 

notices regarding defaults and changes 

in ratings, credit enhancement provider, 

and tax status. 

Furthermore, the Commission 

believes that improved access to the 

information in continuing disclosure 

documents not only would provide the 

investing public with important 

information regarding municipal 

securities, both during offerings and on 

an ongoing basis, but also would help 

fulfill the regulatory and information 

needs of municipal market participants, 

including Dealers, Participating 

Underwriters, mutual funds, and others. 

For example, many mutual funds 

include municipal securities in their 

portfolios that they routinely monitor 

for regulatory and other reasons.20 They 

do so by reviewing annual filings, as 

well as material event notices and 

failure to file notices, obtained from 

NRMSIRs and SIDs.21 In addition, the 

MSRB requires Dealers to disclose to a 

customer at the time of trade all material 

facts about a transaction known by the 

Dealer.22 Further, the MSRB requires a 

Dealer to disclose material facts about a 

security when such facts are reasonably 

accessible to the market.23 Accordingly, 

a Dealer is responsible for disclosing to 

a customer any material fact concerning 

a municipal security transaction made 

publicly available through sources such 

as NRMSIRs, the MSRB’s Municipal 

Securities Information Library

(‘‘MSIL’’) system,24 the MSRB’s RealTime Transaction Reporting System 

(‘‘RTRS’’), rating agency reports and 

other sources of information relating to 

the municipal securities transaction 

generally used by Dealers that effect 

transactions in the type of municipal 

securities at issue.25 Dealers use the 

information contained in the continuing 

disclosure documents to carry out these 

obligations. Therefore, improving access 

to information in the continuing 

disclosure documents would help 

facilitate and simplify the process of 

gathering the necessary information to 

carry out their obligations. For these 

reasons, the Commission believes that 

municipal market participants should 

have more efficient access to 

information in continuing disclosure 

documents to satisfy their regulatory 

requirements and informational needs. 

C. The MSRB’s Electronic Systems 

In 2006, the Commission published 

for comment proposed amendments to 

Rule 15c2–12 in response to a petition 

from the MSRB26 that would permit the 

MSRB to close its Continuing Disclosure 

Information Net (‘‘CDINet’’) system, 

thereby eliminating the MSRB as a 

location to which issuers could submit 

material event notices and failure to file 

notices.27 In the 2006 Proposed 

Amendments, the Commission 

indicated its belief that, given the 

limited usage of the MSRB’s CDINet 

system, among other things, the 

proposed elimination of the provision in 

Rule 15c2–12 that allows the filing of 

material event notices with the MSRB 

was warranted.28

The Commission recently approved 

the MSRB’s proposed rule change, filed 

under section 19(b) of the Exchange 

Act,29 to establish a pilot program for an 

Internet-based public access portal 

(‘‘pilot portal’’) for the consolidated 

availability of primary offering 

information about municipal securities 

that currently is made available in paper 

form, subject to copying charges, at the 

MSRB’s public access facility, and 

electronically by paid subscription on a 

daily over-night basis and by purchase 

of annual back-log collections.30 The 

MSRB is implementing the pilot portal 

as a service of its new Internet-based 

public access system, which it is 

designating as the Electronic Municipal 

Market Access (‘‘EMMA’’) system, as a 

pilot facility within the MSIL system. 

In the course of developing the 

primary offering information component 

of the EMMA system, the MSRB 

determined that it could incorporate in 

the EMMA system the collection and 

availability of continuing disclosure 

documents, thus eliminating the need 

for the Commission to adopt its 

proposed changes to Rule 15c2–12 to 

remove the MSRB as a repository of 

material event notices.31 As a result, the 

MSRB recently submitted to the 

Commission a proposed rule change, 

filed under section 19(b) of the 

Exchange Act,32 to expand the EMMA 

system to accommodate the collection 

and availability of annual filings, 

material event notices and failure to file 

notices.33 While the MSRB still intends 

to propose to terminate its CDINet 

System, subject to Commission 

approval,34 the MSRB’s subsequent 

decision to file a proposed rule change 

to expand the EMMA system to 

accommodate annual filings, material 

event notices, and failure to file 

notices 35 has led the MSRB to consider 

whether to withdraw the MSRB 

Petition.36 In light of the collection and 

availability of continuing disclosure 


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Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Proposed Rules 46141 

37 15 U.S.C. 78s(b). 38The Commission is publishing for public 

comment this proposed rule change at the same 

time as it publishes these proposed amendments to 

Rule 15c2–12. Comments on the MSRB’s proposed 

rule change should be directed to File No. SR–

MSRB–2008–05. 

39See Securities Exchange Act Release No. 58256, 

supra note 31. 

40The Commission notes that the MSRB would be 

required to file a proposed rule change with the 

Commission under Section 19(b) of the Exchange 

Act regarding any fees it proposes to establish for 

the subscription service. 

41See, e.g., Securities Exchange Act Release Nos. 

52056 (July 19, 2005), 70 FR 44722 (August 3, 2005) 

(File No. S7–38–04) (adopting amendments to 

encourage and, in some cases, mandate the use of 

an Internet site in securities offering) and 56135 

(July 26, 2007), 72 FR 42222 (August 1, 2007) (File 

No. S7–03–07) (adopting amendments to the proxy 

rules under the Exchange Act requiring issuers and 

other soliciting persons to post their proxy 

materials on an Internet Web site and providing 

shareholders with a notice of the Internet 

availability of the materials). 

42Historically, there has been support for the 

concept of a central repository. For example, in 

response to the proposing release for Rule 15c2–12 

in 1988, a majority of the comment letters 

supported a central repository and indicated a need 

to have a readily accessible central source of 

information about municipal bonds. See 1989 

Adopting Release, supra note 3. 

43See 1989 Adopting Release at 54 FR 28807, 

supra note 3. See also Securities Exchange Act 

Release No. 33742 (March 9, 1994), 59 FR 12759 

(March 17, 1994) (File No. S7–5-94) (proposing 

release for the 1994 Amendments) (‘‘1994 Proposing 

Release’’). 

44See 1989 Adopting Release, supra note 3. 

45 Id. 

46See 1994 Amendments, supra note 5. 

documents and in conjunction with the 

Commission’s proposal today to amend 

Rule 15c2–12, the Commission is 

considering whether to withdraw its 

2006 Proposed Amendments. 

Under the MSRB’s proposed rule 

change—filed under section 19(b) of the 

Exchange Act 37 and under separate 

consideration by the Commission 38—

the EMMA system would be expanded 

from the pilot program to allow for the 

electronic collection through the 

MSRB’s Web site of continuing 

disclosure documents and related 

information received by the MSRB from 

issuers and obligated persons pursuant 

to undertakings under the Rule and for 

free public access to such information 

through MSRB web-based systems.39

Information regarding the continuing 

disclosure documents would also be 

made available through a data stream by 

subscription for a fee.40

II. Description of the Proposal 

A. Proposed Amendments to Rule 15c2–

12 

The Commission is considering 

whether the development of a 

centralized system for the electronic 

collection and availability of 

information about outstanding 

municipal securities would improve the 

current paper-based system. Since the 

adoption of the 1994 Amendments, 

there have been significant 

advancements in technology and 

information systems that allow market 

participants and investors, both retail 

and institutional, easily, quickly, and 

inexpensively to obtain information 

through electronic means. The 

exponential growth of the Internet and 

the capacity it affords to investors, 

particularly retail investors, to obtain, 

compile and review information has 

likely helped to keep investors better 

informed. In addition to the 

Commission’s EDGAR system, which 

contains filings by public companies 

required to file periodic reports and by 

mutual funds, the Commission has 

increasingly encouraged and, in some 

cases required, the use of the Internet 

and Web sites by public reporting 

companies and mutual funds to provide 

disclosures and communicate with 

investors.41

The Commission believes that, at 

present, information about municipal 

issuers and their securities that is 

accessible on the Internet may not be as 

consistently available or comprehensive 

as information about other classes of 

issuers and their securities. This may be 

due, in part, to the lack of a central 

point of collection and availability of 

information in the municipal securities 

sector.42 Therefore, the Commission is 

proposing to amend Rule 15c2–12 to 

provide for a single centralized 

repository that receives submissions in 

an electronic format to encourage a 

more efficient and effective process for 

the collection and availability of 

continuing disclosure documents. In the 

Commission’s view, a single repository 

that receives submissions in an 

electronic format could assist in 

facilitating and simplifying submissions 

of continuing disclosure documents 

under the Rule by enabling issuers and 

obligated persons to comply with their 

undertakings by submitting their 

continuing disclosure documents only 

to one repository, as opposed to 

multiple repositories. 

The Commission also believes that 

having a centralized repository that 

receives submissions in an electronic 

format would provide ready and prompt 

access to continuing disclosure 

documents by investors and other 

municipal securities market 

participants. Rather than having to 

approach multiple locations, investors 

and other market participants would be 

able to go solely to one location to 

retrieve continuing disclosure 

documents, thereby allowing for a more 

convenient means to obtain such 

information. Moreover, the Commission 

believes that having one repository 

electronically collect and make 

available all continuing disclosure 

documents would increase the 

likelihood that investors and other 

market participants obtain complete 

information about a municipal security 

or its issuer, since the information 

would not be dispersed across multiple 

repositories. In addition, the 

Commission preliminarily expects that 

the consistent availability of such 

information from a single source could 

simplify compliance with regulatory 

requirements by Participating 

Underwriters and others, such as 

mutual funds and Dealers. Information 

vendors (including NRMSIRs and SIDs) 

and others also would have ready access 

from a single source to continuing 

disclosure documents for use in their 

value-added products. 

The Commission notes that, when it 

adopted Rule 15c2–12 in 1989, it 

strongly supported the development of 

one or more central repositories for 

municipal disclosure documents.43 In 

this regard, the Commission noted in 

the 1989 Adopting Release that ‘‘the 

creation of multiple repositories should 

be accompanied by the development of 

an information linkage among these 

repositories’’ so as to afford ‘‘the widest 

retrieval and dissemination of 

information in the secondary market.’’ 44

The Commission further stated that the 

‘‘use of such repositories will 

substantially increase the availability of 

information on municipal issues and 

enhance the efficiency of the secondary 

trading market.’’ 45 In addition, the 

Commission stated when it adopted the 

1994 Amendments that the 

‘‘requirement to deliver disclosure to 

the NRMSIRs and the appropriate SID 

also allay[ed] the anti-competitive 

concerns raised by the creation of a 

single repository.’’ 46

As noted earlier, the Commission has 

long been interested in improving the 

availability of disclosure in the 

municipal securities market. At the time 

the Commission adopted Rule 15c2–12 

and amended it in 1994, disclosure 

documents were submitted in paper 

form. The Commission believed that, in 

such an environment where document 

retrieval would be handled manually, 

the establishment of one or more 

repositories could be beneficial in 

widening the retrieval and availability 

of information in the secondary market, 

since the public could obtain the 

disclosure documents from multiple 

locations. The Commission’s objective 


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47See note 19, supra. 

48See also discussion in Sections V. and VI., 

infra. 

49 15 U.S.C. 78o–4. 

50 15 U.S.C. 78s(b). 

51 15 U.S.C. 78o–4(b)(2)(C). 

52See Securities Exchange Act Release No. 57577, 

supra note 30. 

of encouraging greater availability of 

municipal securities information 

remains unchanged. However, as 

indicated earlier, there have been 

significant inefficiencies in the current 

use of multiple repositories that likely 

have impacted the public’s ability to 

retrieve continuing disclosure 

documents.47 Although the Commission 

in the 1989 Adopting Release supported 

the development of an information 

linkage among the repositories, none 

was established to help broaden the 

availability of the disclosure 

information. Also, since the adoption of 

the 1994 Amendments, there have been 

significant advancements in technology 

and information systems, including the 

use of the Internet, to provide 

information quickly and inexpensively 

to market participants and investors. In 

this regard, the Commission 

preliminarily believes that the use of a 

single repository to receive, in an 

electronic format, and make available 

continuing disclosure documents, in an 

electronic format, would substantially 

and effectively increase the availability 

of municipal securities information 

about municipal issues and enhance the 

efficiency of the secondary trading 

market. 

The Commission acknowledges that, 

if the proposed amendments were 

adopted to provide for a single 

repository, competition with respect to 

services provided by the existing 

NRMSIRs could decline, including a 

potential reduction in current services 

relating to municipal securities that are 

not within the ambit of Rule 15c2–12 or 

a potential narrowing of competing 

information services regarding 

municipal securities.48 The 

Commission, however, preliminarily 

believes that any potential effect on 

competition that could result from 

having a single repository would be 

justified by the more efficient and 

effective process for the collection and 

availability of continuing disclosure 

documents by a single repository. For 

instance, utilizing the Internet for the 

collection and availability of continuing 

disclosure documents would modernize 

the method of delivery of such 

documents to the single repository and 

make the documents more readily and 

easily accessible to investors and others. 

Moreover, in providing for a single 

repository for continuing disclosure 

documents that investors and others 

could easily access, the proposed 

amendments would foster the goals of 

the Exchange Act to protect investors 

and promote the public interest. For 

example, investors would be able to 

readily retrieve information from the 

central repository about municipal 

securities, and thus it would be easier 

for them to make more informed 

decisions in assessing whether to 

purchase, sell, or hold municipal 

securities. Similarly, commercial 

vendors could readily access the 

information to redisseminate it or use it 

in whatever value-added products they 

may wish to provide. 

As a result, the Commission 

preliminarily does not believe that 

having a single repository would have a 

significant adverse effect on the ability 

or willingness of private information 

vendors to compete to create and market 

value-added products. In fact, a single 

repository where documents are 

submitted in an electronic format could 

encourage the private information 

vendors to disseminate municipal 

securities information by reducing the 

cost of entry into the information 

services market. Vendors may need to 

make some adjustments to their 

infrastructure or facilities. However, 

some vendors could determine they no 

longer need to invest in the 

infrastructure and facilities necessary to 

collect and store continuing disclosure 

documents, and new entrants into the 

market would not need to purchase the 

information from multiple locations, but 

rather could readily access such 

information from one centralized 

source. Thus, all vendors would have 

equal availability to the continuing 

disclosure documents and be able to 

compete in providing value-added 

services. 

The Commission requests comment 

on whether it should amend Rule 15c2–

12 as proposed in this release, or 

whether it is preferable to continue to 

have multiple sources for such 

information. The Commission requests 

comment on whether having one 

repository instead of multiple 

repositories for the submission of, and 

access to, continuing disclosure 

documents would improve access to 

secondary market disclosure for 

investors and municipal securities 

market participants. The Commission 

also requests comment on whether the 

availability of such information from a 

single source would simplify 

compliance with regulatory 

requirements by Participating 

Underwriters and others. The 

Commission seeks comment on any 

possible disadvantages in having only 

one repository responsible for the 

collection of, and access to, municipal 

securities information. Furthermore, the 

Commission requests comment whether 

it should contemplate alternative ways 

of improving the efficiency of the 

current structure, including the use of 

the existing NRMSIRs, instead of 

amending the Rule to provide for only 

one repository. In this regard, the 

Commission seeks comment concerning 

whether instead Rule 15c2–12 should be 

amended to require Participating 

Underwriters to reasonably determine 

that the continuing disclosure 

agreements provide solely for the 

electronic submission of such 

documents to each of the NRMSIRs. 

Commenters should provide reasons 

why submitting documents, 

electronically or otherwise, to multiple 

NRMSIRs, rather than to a single 

repository, would be preferable. 

If the Commission should determine 

to amend the Rule to refer to one 

repository, the Commission also is 

proposing to revise Rule 15c2–12 to 

delete all references to NRMSIRs and 

instead to insert references to the MSRB. 

Established pursuant to an act of 

Congress 49 as a self-regulatory 

organization (‘‘SRO’’) for brokers, 

dealers and municipal securities dealers 

engaged in transactions in municipal 

securities, the MSRB is subject to 

Commission oversight, as provided by 

the Exchange Act. As an SRO, the MSRB 

is required to file its rules and changes 

to those rules with the Commission for 

notice and comment and Commission 

review under Section 19(b) of the 

Exchange Act.50 Pursuant to Section 

15B(b)(2)(C) of the Exchange Act, the 

MSRB’s rules are required to be 

designed, in part, ‘‘to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, * * * to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in municipal 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market in municipal securities, 

and, in general, to protect investors and 

the public interest.’’ 51 The MSRB’s 

existing RTRS and MSIL systems, and 

the primary offering information 

component of the EMMA system that 

has been approved by the Commission 

(relating to the submission of official 

statements and advance refunding 

documents),52 were subject to notice 

and comment and Commission review. 

Similarly, the MSRB’s proposal to 

establish a continuing disclosure 


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53See Securities Exchange Act Release No. 58256, 

supra note 31. 54For example, the MSRB is experienced with 

operating CDINet, the MSIL system, and the RTRS 

system. 55Specifically, the Commission stated that it 

would consider the competitive implications of an 

MSRB request for NRMSIR status. See Securities 

Exchange Act Release No. 28081 (June 1, 1990), 55 

FR 23333 (June 7, 1990) (File No. SR–MSRB–89–9). 

See also 1994 Proposing Release and 1994 

Amendments, supra notes 43 and 5, respectively. 

Although the MSRB is not seeking NRMSIR status, 

the MSRB essentially would become a repository if 

the proposed amendments were adopted. 

56See Securities Exchange Act Release No. 28081, 

supra note 55. 

57The Commission notes that the MSRB would be 

required to file a proposed rule change with the 

Commission under Section 19(b) of the Exchange 

Act regarding the electronic format it proposes to 

use. 

58 17 CFR 240.15c2–12(b)(5)(i)(A) through (D). 

59 17 CFR 240.15c2–12(d)(2)(ii)(A) and (B). 

component within the EMMA system, 

as well as any future changes to that 

component, would be subject to 

Commission review under section 19(b) 

of the Exchange Act.53 Further, the 

Commission believes that, in addition to 

being subject to Commission oversight 

as an SRO, the MSRB is both familiar 

with the complexities of municipal 

securities and the municipal securities 

market and has experience in 

developing and maintaining electronic 

information systems for that market.54

Collectively, these factors lead the 

Commission to propose to amend Rule 

15c2–12 to provide that the MSRB be 

the centralized location for collecting 

(in an electronic format) and making 

information about municipal securities 

available to the public at no cost. 

The Commission previously stated 

that it would specifically consider the 

competitive implications of the MSRB 

becoming a repository.55 In addition, 

the Commission stated that, if the 

Commission were to conclude that the 

MSRB’s status as a repository might 

have adverse competitive implications, 

it would consider whether it should 

take any action to address these 

effects.56 As noted above, the 

Commission recognizes that 

competition with respect to certain 

information services regarding 

municipal securities that are provided 

by the existing NRMSIRs could decline 

should the MSRB become the central 

repository. However, the Commission 

believes that the reasons it provided 

above regarding the competitive 

implications with respect to having a 

single repository similarly would apply 

if the MSRB were the sole repository. 

The Commission does not believe that 

there are competitive implications that 

would uniquely apply to the MSRB in 

its capacity as the sole repository, as 

opposed to any other entity that could 

be the sole repository. In fact, the 

Commission believes that, if the MSRB 

were the sole repository, its status as an 

SRO would provide an additional level 

of Commission oversight, as any 

changes to its rules relating to 

continuing disclosure documents would 

have to be filed for Commission 

consideration as a proposed rule change 

under section 19(b) of the Exchange Act. 

Accordingly, similar to the discussion 

above, the Commission believes that any 

competitive impact that could result 

from the MSRB’s status as the sole 

repository would be justified by the 

benefits that such status could provide. 

The Commission believes that one of the 

benefits in having the MSRB be the sole 

repository would be its ability to 

provide a ready source of continuing 

disclosure documents to all investors, 

broker-dealers and information vendors 

who wish to use that information for 

their products. Private vendors could 

utilize the MSRB in its capacity as a 

repository as a means to collect 

information from the continuing 

disclosure documents to create valueadded products for their customers. As 

noted earlier, vendors may need to make 

some adjustments to their infrastructure 

or facilities in using the MSRB’s 

services as a repository of continuing 

disclosure documents. However, some 

vendors could determine they no longer 

need to incur the cost of obtaining and 

storing continuing disclosure 

documents, and new entrants into the 

information services market would not 

need to purchase the information from 

multiple locations. Thus, all vendors 

would have equal availability to these 

public documents and would be able to 

develop whatever services they choose. 

The Commission requests comment 

concerning whether the MSRB should 

serve as the sole repository of 

continuing disclosure documents or 

whether another entity, such as a 

private vendor, should serve as the sole 

repository, instead of the MSRB. If 

commenters believe another entity 

should be the sole repository, 

commenters should provide reasons for 

their viewpoint. The Commission seeks 

comment on whether the MSRB would 

be an appropriate operator of a 

centralized repository for the collection 

and availability of continuing disclosure 

information about municipal securities, 

and whether there is a more appropriate 

location or means through which such 

information could be made readily 

available to the public without charge. 

Commenters are also asked to address 

whether the MSRB’s status as an SRO 

would be an advantage or disadvantage 

to its serving as the sole repository. In 

addition, the Commission requests 

comment on whether having the MSRB 

serve as the sole repository would 

encourage or discourage competition 

between the MSRB and private vendors, 

or others. 

If the Commission were to amend the 

Rule to provide for the MSRB to serve 

as the sole repository, the Commission 

would amend Rule 15c2–12(b)(5), 

which sets forth the undertakings to 

which Participating Underwriters must 

reasonably determine that issuers or 

other obligated persons have 

contractually agreed to provide in 

connection with primary offerings 

subject to the Rule. The proposed 

amendments would revise 

subparagraphs (b)(5)(i)(A) through (D) of 

Rule 15c2–12 to require Participating 

Underwriters to reasonably determine 

that the issuer or obligated person has 

agreed at the time of a primary offering: 

(1) To provide the continuing disclosure 

documents directly to the MSRB instead 

of to each NRMSIR and appropriate SID, 

and (2) to provide the continuing 

disclosure documents in an electronic 

format and accompanied by identifying 

information as prescribed by the MSRB. 

Specifically, the Commission proposes 

to amend Rule 15c2–12(b)(5)(i)(A) 

through (D) by deleting references in 

each of those provisions to NRMSIR and 

SID and adding language to require 

Participating Underwriters to reasonably 

determine that issuers or obligated 

persons have undertaken to provide 

continuing disclosure documents to the 

MSRB in an electronic format as 

prescribed by the MSRB.57

The Rule requires that Participating 

Underwriters reasonably determine that 

the information undertaken to be 

provided, in addition to being submitted 

to the NRMSIRs, or, in some cases, to 

the MSRB, must be submitted to a SID, 

if an appropriate SID has been 

established by that state.58 The 

Commission adopted an exemption 

from paragraph (b)(5) of the Rule that, 

among other things, contains conditions 

on limited undertakings relating to 

making financial information or 

operating data available upon request or 

at least annually to a SID, and providing 

material event notices to each NRMSIR 

or the MSRB, and to a SID.59 Because 

the Commission is now proposing to 

amend the Rule to provide for a single 

repository for the electronic collection 

and availability of continuing disclosure 

documents that the Commission 

believes would efficiently and 

effectively improve disclosure in the 

municipal securities market, the 

Commission believes that it is no longer 

necessary to specifically require in the 


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60 17 CFR 240.15c2–12(d)(2)(i). 

61 17 CFR 240.15c2–12(d)(2)(ii)(A). 

62 17 CFR 240.15c2–12(d)(2)(ii)(B). 

63Similar to the earlier discussion regarding the 

deletion of references to the SIDs in Rule 15c2–

12(b)(5)(i), the proposed amendments to Rule 15c2–

12(d)(2)(ii)(A) and (B) would not affect the legal 

obligations of issuers and obligated persons to 

provide financial information, operating data and 

material event notices, along with any other 

submissions, to the appropriate SID, if any, that are 

required under the appropriate state law. 

Furthermore, the proposed amendments to Rule 

15c2–12(d)(2)(ii)(A) and (B) would have no effect 

on the obligations of issuers and obligated persons 

under outstanding limited undertakings entered 

into prior to any effective date of the proposed 

amendments to the Rule to submit financial 

information, operating data and material event 

notices to the appropriate SID, if any, as stated in 

their existing limited undertakings, nor on their 

obligation to make other submissions that may be 

required under the appropriate state law. 

64 In addition, the availability of audited financial 

statements and other financial and statistical data 

in an electronic format by issuers subject to the 

Rule could encourage the establishment of the 

necessary taxonomies and permit states and local 

governments to make use of XBRL in the future, 

should they wish to do so. 

Rule that Participating Underwriters 

reasonably determine that issuers and 

obligated persons have contractually 

agreed to provide continuing disclosure 

documents to the SIDs. The 

Commission, therefore, is proposing to 

delete references to the SIDs in the Rule. 

As discussed further below, the 

Commission, however, notes that there 

may be an obligation to provide such 

documents to a SID, if required by 

applicable state law, which also could 

be beneficial in improving disclosure in 

the municipal securities market. 

Specifically, the Commission is 

proposing to delete references to the 

SIDs in Rule 15c2–12(b)(5)(i)(A) through 

(D). Under these proposed amendments, 

Participating Underwriters no longer 

would need to reasonably determine 

that issuers or obligated persons have 

agreed in the continuing disclosure 

agreements to provide continuing 

disclosure documents to the appropriate 

SID, if any. The proposed amendments, 

however, would not affect the legal 

obligations of issuers and obligated 

persons to provide continuing 

disclosure documents, along with any 

other submissions, to the appropriate 

SID, if any, that are required under the 

appropriate state law. In addition, the 

proposed amendments would have no 

effect on the obligations of issuers and 

obligated persons under outstanding 

continuing disclosure agreements 

entered into prior to any effective date 

of the proposed amendments to the Rule 

to submit continuing disclosure 

documents to the appropriate SID, if 

any, as stated in their existing 

continuing disclosure agreements, nor 

on their obligation to make any other 

submissions that may be required under 

the appropriate state law. 

The Commission requests comment 

on whether the reference to the SIDs 

should be deleted in the Rule. The 

Commission requests comment on the 

impact of deleting the references to the 

SIDs in the Rule, including the impact 

of the proposed deletion on the 

obligations of Participating 

Underwriters, issuers and obligated 

persons. The Commission also requests 

comment on the effect of the proposed 

deletion on SIDs and their role in the 

collection and disclosure of continuing 

disclosure documents. 

The proposed amendments also 

would revise Rule 15c2–12(d)(2)(ii), 

which is part of an exemptive provision 

from Rule 15c2–12(b)(5). The exemption 

in Rule 15c2–12(d)(2) currently 

provides that paragraph (b)(5) of the 

Rule, which relates to the submission of 

continuing disclosure documents 

pursuant to continuing disclosure 

agreements, does not apply to a primary 

offering if three conditions are met: (1) 

The issuer or the obligated person has 

less than $10 million of debt 

outstanding; 60 (2) the issuer or obligated 

person has undertaken in a written 

agreement or contract (‘‘limited 

undertaking’’) to provide: (i) Financial 

information or operating data regarding 

each obligated person for which 

financial information or operating data 

is presented in the final official 

statement, including financial 

information and operating data which is 

customarily prepared by such obligated 

person and is publicly available, upon 

request to any person or at least 

annually to the appropriate SID,61 and 

(ii) material event notices to each 

NRMSIR or the MSRB, as well as the 

appropriate SID; 62 and (3) the final 

official statement identifies by name, 

address and telephone numbers the 

persons from which the foregoing 

information, data and notices can be 

obtained. The proposed amendments 

would revise the limited undertaking set 

forth in 15c2–12(d)(2)(ii)(A) and (B) by 

deleting references to the NRMSIRs and 

SIDs and solely referencing the MSRB. 

Accordingly, under the proposed 

amendment to Rule 15c2–12(d)(2)(ii), a 

Participating Underwriter would be 

exempt from their obligations under 

paragraph (b)(5) of the Rule as long as 

an issuer or obligated person has agreed 

in its limited undertaking to provide 

financial information, operating data 

and material event notices to the MSRB 

in an electronic format as prescribed by 

the MSRB, and the exemption’s other 

conditions are satisfied. In conjunction 

with this proposed change, the 

Commission also would amend the 

provision of the exemption relating to 

the limited undertaking to provide that 

the type of financial information or 

operating data described in Rule 15c2–

12(d)(2)(ii)(A) regarding each obligated 

person be submitted at least annually to 

the MSRB.63

With respect to the proposed 

electronic submission of continuing 

disclosure documents, the Commission 

believes that this method would better 

enable the information to be promptly 

posted and made available to the public 

without charge. Electronic submission 

also would eliminate the need for 

manual handling of paper documents, 

which can be a less efficient and more 

costly process. For instance, the 

submission of paper documents would 

require the repository to manually 

review, sort and store such documents. 

There is also a potential for a less 

complete record of continuing 

disclosure documents at the repository 

if such documents are submitted in 

paper to the repository and, for instance, 

are misplaced or misfiled. As discussed 

below, the Commission believes that 

submissions in an electronic format 

should not be very burdensome on 

issuers or other obligated persons, since 

many continuing disclosure documents 

already are being created in an 

electronic format and, as a result, are 

readily transmitted by electronic 

means.64

The Commission requests comment 

on the proposed amendment to provide 

continuing disclosure documents in an 

electronic format. The Commission 

requests comment on whether 

submitting continuing disclosure 

documents in an electronic format 

would increase the efficiency of 

submission and availability of 

continuing disclosure documents, and 

whether submitting the documents in an 

electronic format would facilitate wider 

availability of the information. The 

Commission also requests comment on 

alternative methods of providing 

secondary market disclosure, including 

whether commenters instead believe 

that the NRMSIRs should establish new 

comprehensive electronic systems for 

the submission of such documents. 

Furthermore, the Commission requests 

comment concerning whether the 

proposed amendments to Rule 15c2–12 

should allow for the submission of 

paper documents and, if so, whether 

any conditions should be imposed in 

connection with paper submissions. 

Comments are also requested on 

whether the proposed amendments to 

Rule 15c2–12 should allow for the 


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65The Commission notes that the MSRB would be 

required to file a proposed rule change with the 

Commission pursuant to Section 19(b) of the 

Exchange Act regarding any such identifying 

information that it wished to specify. 

66The commitment by an issuer to provide 

identifying information would exist only if it were 

included in a continuing disclosure agreement. As 

a result, issuers submitting continuing disclosure 

documents pursuant to the terms of undertakings 

entered into prior to the effective date of the 

proposed amendments that did not require 

identifying information could submit documents 

without supplying identifying information. 

availability of paper copies upon 

request from the central repository. 

To enable the continuing disclosure 

documents to be identified and 

retrieved accurately, the Commission is 

proposing new subparagraph (b)(5)(iv) 

of Rule 15c2–12 to require Participating 

Underwriters to reasonably determine 

that the issuer or obligated person has 

undertaken in writing to accompany all 

documents submitted to the MSRB with 

identifying information as prescribed by 

the MSRB. Similarly, the Commission is 

proposing a conforming change in 

subparagraph (d)(2)(ii)(C) of Rule 15c2–

12 relating to the limited undertaking 

set forth in Rule 15c2–12(d)(2)(ii) to 

provide that all documents provided to 

the MSRB would be required to be 

accompanied by identifying information 

as prescribed by the MSRB.65

The Commission believes that 

providing identifying information with 

each submitted document would permit 

the repository to sort and categorize the 

document efficiently and accurately. 

The Commission also anticipates that 

including in each submission the basic 

information needed to accurately 

identify the document would facilitate 

the ability of investors, market 

participants, and others to reliably 

search for and locate relevant disclosure 

documents. Furthermore, the 

Commission preliminarily expects that 

there would be a minimal burden on 

Participating Underwriters to comply 

with the proposed new subparagraph 

(b)(5)(iv) of Rule 15c2–12 since it would 

only require that the Participating 

Underwriters reasonably determine that 

issuers and obligated persons have 

contractually agreed to one additional 

provision relating to the identifying 

information, while there would be a 

significant benefit to investors and other 

municipal market participants to easily 

retrieve the information. Indeed, issuers 

and other obligated persons that choose 

to submit continuing disclosure 

documents through some existing 

dissemination agents and document 

delivery services already are supplying 

identifying information with their 

submissions.66

The Commission requests comment 

on the proposed amendments to the 

Rule regarding supplying identifying 

information as prescribed by the MSRB. 

The Commission also requests comment 

on alternative methods that would assist 

investors and municipal market 

participants in locating specific 

information about a municipal security 

that is submitted under the Rule. 

In addition, because the Commission 

is proposing to amend the Rule to 

reference the MSRB as the sole 

repository, the Commission proposes to 

make a similar change to Rule 15c2–

12(b)(4)(ii), which currently refers to a 

NRMSIR with respect to the time period 

in which the Participating Underwriter 

must send the final official statement to 

any potential customer. Specifically, 

under Rule 15c2–12(b)(4), from the time 

the final official statement becomes 

available until the earlier of: (1) Ninety 

days from the end of the underwriting 

period, or (2) the time when the official 

statement is available to any person 

from a NRMSIR, but in no case less than 

twenty-five days following the end of 

the underwriting period, the 

Participating Underwriter in a primary 

offering is required to send to any 

potential customer, upon request, the 

final official statement. The Commission 

proposes to amend the language in Rule 

15c2–12(b)(4)(ii) to refer to the MSRB 

instead of to a NRMSIR. Accordingly, 

Participating Underwriters would have 

the time period from when the final 

official statement becomes available 

until the earlier of: (1) Ninety days from 

the end of the underwriting period, or 

(2) the time when the official statement 

is available to any person from the 

MSRB, but in no case less than twentyfive days following the end of the 

underwriting period, to send the final 

official statement to a potential 

customer, upon request. The 

Commission requests comment on this 

proposed change to Rule 15c2–

12(b)(4)(ii), including whether 

Participating Underwriters or others 

would encounter problems complying 

with this provision as a result of the 

proposed revision. 

Finally, the Commission proposes to 

make similar changes in Rule 15c2–

12(f)(3) and (f)(9), which define the 

terms ‘‘final official statement’’ and 

‘‘annual financial information,’’

respectively. Rule 15c2–12(f)(3) defines 

the term ‘‘final official statement’’ to 

mean a document or set of documents 

prepared by an issuer of municipal 

securities or its representatives that is 

complete as of the date delivered to the 

Participating Underwriter and that sets 

forth information concerning, among 

other things, financial information or 

operating data concerning such issuers 

of municipal securities and those other 

entities, enterprises, funds, accounts, 

and other persons material to an 

evaluation of the offering. Rule 15c2–

12(f)(9) defines the term ‘‘annual 

financial information’’ to mean financial 

information or operating data, provided 

at least annually, of the type included 

in the final official statement with 

respect to an obligated person, or in the 

case where no financial information or 

operating data was provided in the final 

official statement with respect to such 

obligated person, of the type included in 

the final official statement with respect 

to those obligated persons that meet the 

objective criteria applied to select the 

persons for which financial information 

or operating data will be provided on an 

annual basis. Both definitions allow for 

financial information or operating data 

to be set forth in the document or set of 

documents, or be included by specific 

reference to documents previously 

provided to each NRMSIR, and to a SID, 

if any, or filed with the Commission. 

The Commission is proposing 

amendments to Rule 15c2–12(f)(3) and 

(f)(9) to replace references to a NRMSIR 

and SID, with references to the MSRB’s 

Internet Web site. Accordingly, the 

proposed amendments to paragraphs 

(f)(3) and (f)(9) of the Rule would allow 

issuers to reference financial 

information or operating data set forth 

in specified documents available to the 

public from the MSRB’s Internet Web 

site (or filed with the Commission) as 

part of the final official statements and 

annual financial information, instead of 

referencing specific documents 

previously provided to each NRMSIR 

and SID. The Commission requests 

comment on the proposed changes to 

the definitions of ‘‘final official 

statement’’ and ‘‘annual financial 

information’’ contained in Rule 15c2–

12. 

B. Submissions Required by Existing 

Undertakings 

The proposed amendments to Rule 

15c2–12 would only impact continuing 

disclosure agreements that are entered 

into in connection with primary 

offerings occurring on or after the 

effective date of these proposed 

amendments, if they were adopted by 

the Commission. In accordance with the 

proposed amendments, Participating 

Underwriters would have to reasonably 

determine that a continuing disclosure 

agreement specifically referenced the 

MSRB as the sole repository to receive 

and make available the issuer’s or 

obligated person’s continuing disclosure 

documents. The Commission 

understands, however, that existing 


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46146 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Proposed Rules 

67See Letters from Brandon Becker, Director, 

Division of Market Regulation (n/k/a Division of 

Trading and Markets), Commission, to: Michael R. 

Bloomberg, President, Bloomberg L.P., dated June 

26, 1995, and Aaron L. Kaplow, Vice President, 

Kenny S&P Information Services, dated June 26, 

1995; and Letters from Robert L.D. Colby, Deputy 

Director, Division of Market Regulation (n/k/a 

Division of Trading and Markets), Commission, to: 

Peter J. Schmitt, President, DPC Data, Inc., dated 

June 23, 1997, and John King, Chief Operating 

Officer, Interactive Data, dated December 21, 1999. 

68 Issuers or obligated persons with existing 

limited undertakings under Rule 15c2–

12(d)(2)(ii)(B) that reference the MSRB rather than 

the NRMSIRs as the location to submit material 

event notices would not be affected by this 

proposed approach because they would continue to 

submit such notices to the MSRB as stated in their 

limited undertaking. However, issuers or obligated 

persons with existing limited undertakings that 

reference the NRMSIRs as the location to submit 

material event notices would provide such notices 

to the MSRB in its capacity as the sole NRMSIR. 

undertakings by issuers and obligated 

persons that were entered into prior to 

the effective date of these proposed 

amendments may specify in their 

continuing disclosure agreements that 

continuing disclosure documents be 

submitted to the current NRMSIRs in 

existence at the time a submission is 

made. 

The Commission believes that, if the 

proposed amendments to Rule 15c2–12 

were adopted, it would be more efficient 

and effective to implement a sole 

repository expeditiously. Towards this 

end, the Commission wishes to create a 

mechanism by which issuers or 

obligated persons could comply with 

their existing undertakings by 

submitting the continuing disclosure 

documents to one location, thereby 

providing investors and municipal 

market participants with prompt and 

easy access to continuing disclosure 

documents at no charge. 

One approach that the Commission 

could consider to address this situation 

would be to direct its staff to withdraw 

all ‘‘no action’’ letters recognizing 

existing NRMSIRs 67 and for the 

Commission to designate the MSRB as 

the only NRMSIR. As a result, 

continuing disclosure documents that 

are provided pursuant to existing 

continuing disclosure agreements—i.e., 

those agreements entered into prior to 

the effective date of the proposed 

amendments which typically reference 

the NRMSIRs as the location to which 

a submission should be made—would 

be provided to the MSRB in its capacity 

as the sole NRMSIR.68 Providing all 

submissions—for both past and future 

offerings—to the same location 

preliminarily would be expected to be 

less confusing to, and could simplify the 

submission process for, issuers and 

other obligated persons subject to 

continuing disclosure agreements, as 

well as to investors and others who 

wish to obtain such information. 

The Commission requests comment 

relating to the potential withdrawal of 

the ‘‘no action’’ letters provided to the 

NRMSIRs and having one NRMSIR—

the MSRB—be the sole NRMSIR for 

those continuing disclosure agreements 

entered into prior to any Commission 

adoption of the proposed amendments 

to Rule 15c2–12. The Commission 

requests comment on the effect of the 

potential withdrawal of the ‘‘no action’’

letters on Participating Underwriters, 

issuers, NRMSIRs, investors and others. 

The Commission requests comment on 

possible alternative methods of 

transitioning from the current system of 

sending documents to multiple 

NRMSIRs. The Commission requests 

comment on whether there are any 

transition issues with respect to the 

proposed amendments, such as whether 

there would be any conflicts with 

respect to terms in existing continuing 

disclosure agreements. The Commission 

seeks comment on whether there are 

concerns that the NRMSIRs would not 

retain the historical continuing 

disclosure documents and whether 

commenters anticipate any problems in 

obtaining such documents from the 

current NRMSIRs, if they were no longer 

recognized as such. If commenters 

foresee any such problems, they should 

suggest alternative approaches for the 

retention of and access to historical 

information. The Commission also seeks 

comment on any issues or problems that 

could arise if investors seek to obtain 

and compare information from multiple 

repositories—e.g., historical continuing 

disclosure documents from the 

NRMSIRs and current continuing 

disclosure documents from the MSRB—

and whether there are any alternative 

methods that would allow them to 

obtain complete information about 

municipal securities, including 

obtaining historical information. 

The Commission seeks comment on 

any other transition issues in 

connection with the proposed 

amendments to Rule 15c2–12. In this 

regard, the Commission seeks comment 

on whether it would be appropriate to 

immediately move to an electronic form 

of submission if the Commission were 

to approve the proposed amendments to 

the Rule or whether there would be a 

need to maintain the option of 

submitting documents in paper form 

either as a temporary option during a 

transition period or as a permanent 

option. Finally, with respect to the 

transition to a sole repository for 

continuing disclosure documents, the 

Commission requests comment on 

whether commenters foresee any 

differences that could occur between the 

existing structure of multiple NRMSIRs 

and one repository regarding the scope, 

quantity, and continuity of information. 

III. Request for Comments 

The Commission seeks comment on 

all aspects of the proposed amendments 

to the Rule. In addition to the comments 

requested throughout the proposing 

release, comment is requested on 

whether the proposed amendments 

would further the Commission’s goal of 

enhancing investors’ prompt and 

efficient access to important information 

regarding municipal issuers, and 

whether the proposed amendments 

would improve the access to the 

information. Further, the Commission 

seeks comment regarding whether the 

proposed amendments would simplify 

the ability of municipal issuers and 

other obligated persons to provide 

annual filings, material event notices, 

and failure to file notices. In addition, 

the Commission requests comment 

regarding the impact of the proposed 

amendments on Participating 

Underwriters and Dealers, as well as on 

the NRMSIRs and SIDs. The 

Commission requests comment on the 

impact on investors, vendors and others 

that may be affected by the proposed 

amendments. Further, the Commission 

requests comment on whether there are 

alternative approaches to improving the 

public’s access to information about 

municipal securities that the 

Commission should consider. For 

example, the Commission seeks 

comment on possible alternatives 

including: Whether the Commission 

should retain the current process of 

collecting and making available 

continuing disclosure documents 

through the existing NRMSIRs and, if 

so, whether the NRMSIRs should only 

accept submissions in an electronic 

format and allow for electronic access to 

them; whether the Commission should 

open the process and allow any other 

person or entity be the sole repository 

for the collection and availability of 

continuing disclosure documents, rather 

than proposing to amend the Rule to 

establish the MSRB as the sole 

repository. In addition, the Commission 

seeks comment on the operation of a 

system of continuing disclosure by the 

MSRB as opposed to another entity, 

such as a private vendor that is not an 

SRO. In this regard, the Commission 

requests comment on whether it is 

appropriate for an SRO, such as the 

MSRB, to function in the capacity as the 

sole information repository under the 

Rule. Finally, the Commission requests 

comment on the advantages and 


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69 44 U.S.C. 3501 et seq. 

70 17 CFR 240.15c2–12(b). 

71 17 CFR 240.15c2–12(d)(2)(i). 

72 17 CFR 240.15c2–12(d)(2)(ii)(A). 

73 17 CFR 240.15c2–12(d)(2)(ii)(B). 

74NRMSIRs currently collect, index, store, 

retrieve and disseminate disclosure documents. 

disadvantages of having one repository 

instead of having multiple NRMSIRs. 

IV. Paperwork Reduction Act 

Certain provisions of the proposed 

amendments to the Rule contain 

‘‘collection of information 

requirements’’ within the meaning of 

the Paperwork Reduction Act of 1995 

(‘‘PRA’’).69 In accordance with 44 U.S.C. 

3507 and 5 CFR 1320.11, the 

Commission has submitted revisions to 

the currently approved collection of 

information titled ‘‘Municipal Securities 

Disclosure’’ (17 CFR 240.15c2–12) 

(OMB Control No. 3235–0372) to OMB. 

An agency may not conduct or sponsor, 

and a person is not required to respond 

to, a collection of information unless it 

displays a currently valid control 

number. 

A. Summary of Collection of 

Information 

Currently, under paragraph (b) of Rule 

15c2–12, a Participating Underwriter is 

required: (1) To obtain and review an 

official statement ‘‘deemed final’’ by an 

issuer of the securities, except for the 

omission of specified information, prior 

to making a bid, purchase, offer, or sale 

of municipal securities; (2) in noncompetitively bid offerings, to send, 

upon request, a copy of the most recent 

preliminary official statement (if one 

exists) to potential customers; (3) to 

send, upon request, a copy of the final 

official statement to potential customers 

for a specified period of time; (4) to 

contract with the issuer to receive, 

within a specified time, sufficient 

copies of the final official statement to 

comply with the Rule’s delivery 

requirement, and the requirements of 

the rules of the MSRB; and (5) before 

purchasing or selling municipal 

securities in connection with an 

offering, to reasonably determine that 

the issuer or obligated person has 

undertaken, in a written agreement or 

contract, for the benefit of holders of 

such municipal securities, to provide 

annual filings, material event notices, 

and failure to file notices (i.e., 

continuing disclosure documents) to 

each NRMSIR (or, alternatively, to the 

MSRB in the case of material event 

notices and failure to file notices).70

Under the proposed amendments to the 

Rule, Participating Underwriters would 

be required to reasonably determine that 

the issuer or obligated person has 

undertaken in a continuing disclosure 

agreement to provide continuing 

disclosure documents to the MSRB, in 

an electronic format and accompanied 

by identifying information, in each case 

as prescribed by the MSRB. The 

proposed amendments to the Rule 

would not substantively change any of 

the current obligations of Participating 

Underwriters, except to the extent that 

Participating Underwriters would have 

to reasonably determine that the issuer 

or obligated person has agreed in the 

continuing disclosure agreement to 

provide continuing disclosure 

documents to a single repository instead 

of to multiple NRMSIRs. 

The proposed amendments also 

would revise Rule 15c2–12(d)(2)(ii), 

which is part of an exemptive provision 

from Rule 15c2–12(b)(5). The exemption 

in Rule 15c2–12(d)(2) currently 

provides that paragraph (b)(5) of the 

Rule, which relates to the submission of 

continuing disclosure documents 

pursuant to continuing disclosure 

agreements, does not apply to a primary 

offering if three conditions are met: (1) 

The issuer or the obligated person has 

less than $10 million of debt 

outstanding; 71 (2) the issuer or obligated 

person has undertaken in a written 

agreement or contract to provide: (i) 

Financial information or operating data 

regarding each obligated person for 

which financial information or 

operating data is presented in the final 

official statement, including financial 

information and operating data which is 

customarily prepared by such obligated 

person and is publicly available, upon 

request to any person or at least 

annually to the appropriate SID,72 and 

(ii) material event notices to each 

NRMSIR or the MSRB, as well as the 

appropriate SID; 73 and (3) the final 

official statement identifies by name, 

address and telephone number the 

persons from which the foregoing 

information, data and notices can be 

obtained. The proposed amendments 

would revise the limited undertaking set 

forth in 15c2–12(d)(2)(ii)(A) and (B) by 

deleting references to the NRMSIRs and 

SIDs and solely referencing the MSRB. 

Accordingly, under the proposed 

amendment to Rule 15c2–12(d)(2)(ii), a 

Participating Underwriter would be 

exempt from its obligations under 

paragraph (b)(5) of the Rule as long as 

an issuer or obligated person has agreed 

in its limited undertaking to provide 

financial information, operating data 

and material event notices to the MSRB 

in an electronic format as prescribed by 

the MSRB, and the exemption’s other 

conditions are satisfied. In conjunction 

with this proposed change, the 

Commission also would amend the 

provision of the exemption relating to 

the limited undertaking to provide that 

the type of financial information or 

operating data described in Rule 15c2–

12(d)(2)(ii)(A) regarding each obligated 

person be submitted at least annually to 

the MSRB. 

B. Proposed Use of Information 

The proposed amendments to the 

Rule would provide for a single 

repository that receives submissions in 

an electronic format to encourage a 

more efficient and effective process for 

the collection and availability of 

continuing disclosure documents. The 

proposed amendments to Rule 15c2–12 

are intended to improve the availability 

of continuing disclosure documents that 

provide current information about 

municipal issuers and their securities. 

The proposed amendments would 

enable investors and other municipal 

securities market participates to have 

ready and prompt access to the 

continuing disclosure documents of 

municipal securities issuers. This 

information could be used by retail and 

institutional investors; underwriters of 

municipal securities; other market 

participants, including broker-dealers 

and municipal securities dealers; 

municipal securities issuers; vendors of 

information regarding municipal 

securities; the MSRB and its staff; 

Commission staff; and the public 

generally. 

C. Respondents 

In 2006, the Commission submitted a 

request to OMB for extension and 

approval of the collection of information 

associated with the existing Rule (‘‘2006 

PRA Submission’’). OMB approved the 

extension of the 2006 PRA Submission 

on March 29, 2007. The current 

paperwork collection associated with 

Rule 15c2–12 applies to broker-dealers, 

issuers of municipal securities, and the 

NRMSIRs.74 Currently, there are four 

NRMSIRs. The proposal would require 

that a Participating Underwriter in a 

primary offering of municipal securities 

reasonably determine that the issuer or 

an obligated person has undertaken in a 

continuing disclosure agreement to 

submit specified continuing disclosure 

documents to the MSRB in an electronic 

format and accompanied by identifying 

information, as prescribed by the MSRB. 

In the 2006 PRA Submission, the 

Commission estimated that the 

respondents impacted by the paperwork 

collection associated with the current 

Rule would consist of: 500 brokerdealers, 10,000 issuers, and four 


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75See 2006 PRA Submission. 

76 Id. 

77 Id. 

78 500 (number of broker-dealer respondents in 

2006 PRA Submission)¥250 (maximum estimate of 

broker-dealers impacted by the proposed 

amendments to the Rule) = 250 (broker-dealers). In 

order to provide an estimate for the paperwork 

burden that would not be under-inclusive, 

Commission staff elected to use the higher end of 

the estimate for the total number of broker-dealers 

impacted by the proposed amendments. 

79 (250 (maximum estimate of broker-dealers 

impacted by the proposed amendments to the Rule) 

× 1 hour) + (250 (maximum estimate of brokerdealers impacted by the proposed amendments to 

the Rule) × .5 hour (estimate for one-time burden 

to issue notice regarding broker-dealer’s obligations 

under the proposed amendments to the Rule)) = 375 

hours. 

80 250 (maximum estimate of broker-dealers 

impacted by the proposed amendments to the Rule) 

× 1 hour = 250 hours. 

81See 2006 PRA Submission. 

82 10,000 (annual filings) × 30 minutes = 5,000 

hours. 

83The revision in the number of annual filings 

from the 10,000 annual filings included in the 2006 

PRA Submission to approximately 12,000 to 15,000 

annual filings reflects current information provided 

to Commission staff by MSRB staff, which advised 

that some issuers submit more than one annual 

NRMSIRs.75 Commission staff expects 

that there would be a reduction in the 

number of broker-dealers included in 

the current paperwork collection 

associated with the Rule, based on 

current information it obtained, as 

described below. Commission staff 

expects that there would be no change 

from the current paperwork collection 

associated with the Rule in the number 

of respondents that are issuers. The only 

other change in the number of 

respondents from the current paperwork 

collection would be that, in lieu of the 

four existing NRMSIRs, there would be 

a single repository. 

D. Total Annual Reporting and 

Recordkeeping Burden 

In the 2006 PRA Submission, the 

Commission included estimates for the 

hourly burdens that the Rule would 

impose upon broker-dealers, issuers of 

municipal securities, and the NRMSIRs. 

Commission staff has relied on these 

estimates and on updated information 

its staff has obtained to prepare the 

analysis discussed below for each of the 

aforementioned entities and to compare 

current paperwork burdens associated 

with the Rule to paperwork burdens 

associated with the Rule as proposed to 

be amended. 

Commission staff estimates the 

aggregate information collection burden 

for the amended Rule to consist of the 

following: 

1. Broker-Dealers 

Under the 2006 PRA Submission, the 

Commission estimated that the Rule 

imposes a paperwork collection burden 

for 500 broker-dealers.76 In addition, the 

Commission estimated that it would 

require each of these broker-dealers an 

average burden of one hour per year to 

comply with the Rule.77 This burden 

accounted for the time it would take a 

broker-dealer to reasonably determine 

that the issuer or obligated person has 

undertaken, in a written agreement or 

contract, for the benefit of holders of 

such municipal securities, to provide 

annual filings, material event notices, 

and failure to file notices (i.e., 

continuing disclosure documents) to 

each NRMSIR (or, alternatively, to the 

MSRB in the case of material event 

notices and failure to file notices). 

Based on information provided to 

Commission staff by MSRB staff in a 

telephone conversation on April 11, 

2008, Commission staff estimates that 

currently 200 to 250 broker-dealers 

potentially could serve as Participating 

Underwriters in an offering of 

municipal securities. Therefore, 

Commission staff estimates that, under 

the proposed amendments, the 

maximum number of broker-dealer 

respondents would be 250. This 

estimate represents a reduction of 250 

broker-dealers from the current 

paperwork collection associated with 

the Rule.78 Commission staff believes 

that this estimated reduction in the 

number of broker-dealer respondents 

could be attributed in part to the fact 

that it may have been over-inclusive in 

estimating the number of broker-dealer 

respondents in the past. Further, both 

large and small broker-dealer firms 

increasingly have consolidated their 

operations during the past several years 

and some firms have left the municipal 

securities business, which also could 

account for a reduction in the number 

of broker-dealer respondents. Moreover, 

in connection with developing the 

proposed amendments, Commission 

staff has attempted to obtain more 

current information with respect to the 

number of respondents that would be 

subject to a paperwork collection. The 

proposed amendments, however, would 

not alter the paperwork burden of 

broker-dealers from that of the current 

Rule. Accordingly, Commission staff 

estimates that 250 broker-dealers would 

incur an estimated average burden of 

one hour per year to comply with the 

Rule, as proposed to be amended. 

Commission staff estimates that a 

broker-dealer would incur a one-time 

paperwork burden to have its internal 

compliance attorney prepare and issue a 

notice advising its employees who work 

on primary offerings of municipal 

securities about the proposed revisions 

to Rule 15c2–12, if they are adopted by 

the Commission. Commission staff 

estimates that it would take the internal 

compliance attorney approximately 30 

minutes to prepare a notice describing 

the broker-dealer’s obligations in light of 

the proposed amendments to Rule. 

Commission staff believes that the task 

of preparing and issuing a notice 

advising the broker-dealer’s employees 

about the proposed amendments is 

consistent with the type of compliance 

work that a broker-dealer typically 

handles internally. Accordingly, 

Commission staff estimates that 250 

broker-dealers would each incur a onetime, first-year burden of 30 minutes to 

prepare and issue a notice to its 

employees regarding the broker dealer’s 

obligations under the proposed 

amendments. 

Therefore, under the proposed 

amendments, the total burden on these 

respondents would be 375 hours for the 

first year 79 and 250 hours for each 

subsequent year.80

2. Issuers 

The Commission believes that issuers 

prepare annual filings and material 

event notices as a usual and customary 

practice in the municipal securities 

market. Issuers’ undertakings regarding 

the submission of annual filings, 

material event notices, and failure to file 

notices that are set forth in continuing 

disclosure agreements contemplated by 

the existing Rule, as well as the 

proposed amendments to the Rule, 

impose a paperwork burden on issuers 

of municipal securities. 

In the 2006 PRA Submission, the 

Commission estimated that Rule 15c2–

12 imposed a total paperwork burden of 

5,000 hours on 10,000 issuers in any 

given year.81 In determining the 

paperwork burden for issuers under the 

2006 PRA Submission, the Commission 

estimated that each issuer would submit 

each year one annual filing that 

describes its finances and operations. 

Thus, under the 2006 PRA Submission, 

the Commission estimated that issuers 

would prepare approximately 10,000 

packages of annual filings yearly and 

that it would take each issuer 30 

minutes to do so, for a total burden of 

5,000 hours.82 However, based on 

information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February 

2008, Commission staff estimates that, 

in connection with the proposed 

amendments, 10,000 municipal issuers 

with continuing disclosure agreements 

would prepare approximately 12,000 to 

15,000 annual filings yearly.83


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filing each year. Also, the estimate for the number 

of annual filings includes the submission of annual 

financial information or operating data described in 

Rule 15c2–12(d)(2)(ii)(A). 

84See 2006 PRA Submission. 

85This additional burden of 15 minutes may 

decrease over time as issuers become more efficient 

at converting continuing disclosure documents into 

an electronic format and preparing any identifying 

information that the repository may prescribe. Also, 

Commission staff estimates that, for the estimated 

30% of issuers that utilize the services of a 

designated agent, the designated agent would 

convert the document into an electronic format (if 

the issuer has not already done so) and add the 

identifying information on the issuer’s behalf and 

then submit the information to the MSRB. The 

additional paperwork burden of 15 minutes 

described above would remain the same whether or 

not an issuer utilizes a designated agent because the 

information would need to be converted into an 

electronic format and identifying information 

added, whether the issuer or the designated agent 

on the issuer’s behalf performed these tasks. 

Commission staff has elected to use conservative 

estimates for purposes of this rulemaking but 

believes that ultimately the estimated additional 

paperwork burden of 15 minutes would be lower 

for those issuers that use designated agents that 

implement computer-to-computer interfaces with 

the MSRB. 

86 15,000 (maximum estimate of annual filings) × 

45 minutes = 11,250 hours. In order to provide an 

estimate for the paperwork burden that would not 

be under-inclusive, Commission staff elected to use 

the higher end of the estimate for the total number 

of annual filings estimated to be submitted each 

year. 

87Under the proposed amendments, the increase 

in the annual paperwork burden for issuers with 

respect to the submission of annual filings is a 

result of the 15 minute increase in time it would 

require each issuer to submit annual filings, as well 

as Commission staff’s revision of the estimate for 

the total number of annual filings submitted by 

issuers, which increased by 5,000 over the 

Commission’s estimates in the 2006 PRA 

Submission. Issuers’ burden under the 2006 PRA 

Submission is as follows: 10,000 annual filings × 30 

minutes = 5,000 hours. Issuers’ burden under the 

proposed amendments is as follows: 15,000 annual 

filings × 45 minutes = 11,250 hours. The difference 

in burden between the proposed amendments and 

the 2006 PRA Submission is as follows: 11,250 

hours¥5,000 hours = 6,250 hours. 

88This estimate for material event notices 

includes the submission of material event notices 

described in Rule 15c2–12(d)(2)(ii)(B). 

89See 2006 PRA Submission. 

90Commission staff notes that this additional 

burden of 15 minutes may decrease over time as 

issuers become more efficient at converting 

continuing disclosure documents into an electronic 

format and preparing any identifying information 

that the repository may prescribe, as set forth in the 

proposed amendments. Also, Commission staff 

estimates that, for the estimated 30% of issuers that 

utilize the services of a designated agent, the 

designated agent would convert the document into 

an electronic format (if the issuer has not already 

done so) and add the identifying information on the 

issuer’s behalf and then submit the information to 

the MSRB. The additional paperwork burden of 15 

minutes described above would remain the same 

whether or not an issuer utilizes a designated agent 

because the information would need to be 

converted into an electronic format and identifying 

information added, whether the issuer or the 

designated agent on the issuer’s behalf performed 

these tasks. Commission staff has elected to use 

conservative estimates for purposes of this 

rulemaking but believes that ultimately the 

estimated additional paperwork burden of 15 

minutes would be lower for those issuers that use 

designated agents that implement computer-tocomputer interfaces with the MSRB. 

91 60,000 (maximum estimate of material event 

notices) × 45 minutes = 45,000 hours. In order to 

provide an estimate for the paperwork burden that 

would not be under-inclusive, Commission staff has 

elected to use the higher end of the estimate for the 

total number of material event notices estimated to 

be submitted each year. 

92Under the proposed amendments, the increase 

in the annual paperwork burden for issuers with 

respect to the submission of material event notices 

is a result of the 15 minute increase in time it would 

require each issuer to submit material event notices, 

as well as Commission staff’s upward revision of its 

estimate for the total number of material event 

notices that issuers would submit, which is 

estimated to increase by 58,500 notices over the 

Commission’s estimate in the 2006 PRA 

Submission, as noted earlier. See text 

accompanying note 88. Issuers’ burden under the 

2006 PRA Submission is as follows: 1,500 material 

event notices × 30 minutes = 750 hours. Issuers’

burden under the proposed amendments is as 

follows: 60,000 material event notices × 45 minutes 

= 45,000 hours. The difference in burden between 

the proposed amendments and the 2006 PRA 

Submission is as follows: 45,000 hours¥750 hours 

= 44,250 hours. 

Issuers could submit continuing 

disclosure documents directly to the 

single repository or could do so 

indirectly through a designated agent. 

Based on telephone conversations with 

industry sources in May 2008, 

Commission staff estimates that 

approximately 30% of issuers today 

utilize the services of a designated agent 

to submit disclosure documents to 

NRMSIRS. An issuer would engage the 

services of a designated agent as a 

matter of convenience to advise it of the 

timing and type of continuing 

disclosure documents to be submitted to 

the repository. Commission staff does 

not believe that the percentage of issuers 

that rely on the services of a designated 

agent would change appreciably as a 

result of the proposed amendments 

because the proposed amendments 

simply would revise the location to 

which continuing disclosure documents 

would be submitted. 

In the 2006 PRA Submission, the 

Commission estimated that the process 

for an issuer to submit the annual filings 

to each of the four NRMSIRs would 

require approximately 30 minutes.84

Commission staff estimates that, under 

the proposed amendments, an issuer 

would take approximately 45 minutes to 

submit the same annual filings to a 

single repository in an electronic format 

and accompanied by identifying 

information. This estimate includes 

approximately 30 minutes to prepare 

the annual filing, which is consistent 

with the 2006 PRA Submission, plus a 

new burden of an additional 15 minutes 

to convert the information into an 

electronic format and add any 

identifying information that the 

repository may prescribe.85 Therefore, 

under the proposed amendments, the 

total burden on issuers of municipal 

securities to submit 15,000 annual 

filings to the MSRB is estimated to be 

11,250 hours.86 This amount represents 

an increase of 6,250 hours from the 

5,000 hours included in the 2006 PRA 

Submission.87

In connection with developing the 

proposed amendments, the Commission 

has attempted to obtain more current 

information regarding the number of 

material event notices that potentially 

would be submitted annually to the 

proposed single repository. Based on 

information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February, 

2008, it is estimated that, on an annual 

basis, the MSRB would receive 

approximately 50,000 to 60,000 notices 

of the occurrence of a material event.88

Commission staff notes that this new 

estimate represents a substantial 

increase in the estimated number of 

material event notices that issuers 

would file relative to the number of 

material event notices included in the 

2006 PRA Submission, and believes that 

the disparity could be due in part to the 

difficulty in obtaining an accurate, nonduplicative estimate of the number of 

paper documents filed with the various 

NRMSIRs, as well as Commission staff’s 

decision to use conservative estimates 

for purposes of this rulemaking. 

Under the 2006 PRA Submission, the 

Commission estimated that the process 

for an issuer to submit a material event 

notice to a NRMSIR would require 

approximately 30 minutes.89

Commission staff estimates that, under 

the proposed amendments, providing 

this same information to the MSRB 

would require approximately 45 

minutes. This estimate includes 

approximately 30 minutes to prepare 

the material event notice, which is 

consistent with the 2006 PRA 

Submission, plus a new burden of an 

additional 15 minutes to convert the 

information into an electronic format 

and add any identifying information 

that the repository may prescribe.90

Therefore, under the proposed 

amendments, the total burden on issuers 

to submit material event notices to the 

MSRB would require 45,000 hours.91

This amount represents an increase of 

44,250 hours from the 750 hours 

included in the 2006 PRA Submission.92

Based on information provided to 

Commission staff by MSRB staff in a 

series of telephone conversations in 

February, 2008, Commission staff 

estimates that, on an annual basis, the 

MSRB would receive approximately 


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93Commission staff notes that this additional 

burden of 15 minutes may decrease over time as 

issuers become more efficient at converting 

continuing disclosure documents into an electronic 

format and preparing any identifying information 

that the repository may prescribe. Also, 

Commission staff estimates that, for the estimated 

30% of issuers that utilize the services of a 

designated agent, the designated agent would 

convert the document into an electronic format (if 

the issuer has not already done so) and add the 

identifying information on the issuer’s behalf and 

then submit the information to the MSRB. The 

additional paperwork burden of 15 minutes 

described above would remain the same whether or 

not an issuer utilizes a designated agent because the 

information would need to be converted into an 

electronic format and identifying information 

added, whether the issuer or the designated agent 

on the issuer’s behalf performed these tasks. 

Commission staff has elected to use conservative 

estimates for purposes of this rulemaking but 

believes that ultimately the estimated additional 

paperwork burden of 15 minutes would be lower 

for those issuers that use designated agents that 

implement computer-to-computer interfaces with 

the MSRB. 

94 2,000 (maximum estimate of failure to file 

notices) × 30 minutes = 1,000 hours. 

95 11,250 hours (estimated burden for issuers to 

submit annual filings) + 45,000 hours (estimated 

burden for issuers to submit material event notices) 

+ 1,000 hours (estimated burden for issuers to 

submit failure to file notices) = 57,250 hours. 

96 2,000 hours × 3.5 (3 full-time employees and 

1 half-time employee) = 7,000 hours. 97 29,400 hours (estimated burden for each 

NRMSIR in the 2006 PRA Submission)—7,000 

hours (estimated burden for MSRB under the 

proposed amendments) = 22,400 hours (estimated 

reduction from current Rule’s burden). 98 117,600 hours (estimated burden for all four 

NRMSIRs in the 2006 PRA Submission)—7,000 

hours (estimated burden for MSRB under the 

proposed amendments) = 110,600 hours (estimated 

reduction from current Rule’s burden). 

99 250 hours (total estimated burden for brokerdealers) + 57,250 hours (total estimated burden for 

issuers) + 7,000 hours (total estimated burden for 

MSRB) = 64,500 hours. The initial first-year burden 

would be 64,625 hours: 375 hours (total estimated 

burden for broker-dealers in the first year) + 57,250 

hours (total estimated burden for issuers) + 7,000 

hours (total estimated burden for MSRB) = 64,625 

hours. 

100See 2006 PRA Submission. 

101 123,850 hours (total burden under current 

Rule)—64,500 hours (total burden under amended 

Rule) = 59,350 hours. In the first year, the aggregate 

burden would be reduced by 59,225 hours: 123,850 

(total burden under current Rule)—64,625 hours 

(total burden under amended Rule in the first year) 

= 59,225 hours. 

1,500 to 2,000 failure to file notices. 

Commission staff estimates that the 

current process of preparing and 

submitting a failure to file notice to a 

NRMSIR would require approximately 

15 minutes. Commission staff estimates 

that, under the proposed amendments, 

providing this same information to the 

MSRB would require approximately 30 

minutes. This estimate includes 

approximately 15 minutes to prepare 

and submit the failure to file notice, 

plus an additional 15 minutes to convert 

the information into an electronic 

format and add any identifying 

information that the repository would 

prescribe.93 Therefore, under the 

proposed amendments, the total burden 

on issuers to prepare and submit failure 

to file notices to the MSRB would be 

1,000 hours.94 Thus, the estimated 1,000 

hours to prepare and submit failure to 

file notices to the MSRB represents a 

new paperwork burden of 1,000 hours. 

Accordingly, under the proposed 

amendments, the total burden on issuers 

to submit annual filings, material event 

notices and failure to file notices to the 

MSRB would be 57,250 hours.95 This 

represents an increase in the total 

number of burden hours for issuers of 

51,500 hours from the 5,750 hours 

included in the 2006 PRA Submission. 

3. The MSRB 

In the 2006 PRA Submission, the 

Commission estimated that the total 

burden on each NRMSIR of collecting, 

indexing, storing, retrieving and 

disseminating information requested by 

the public to be 29,400 hours and that 

the total burden on all four NRMSIRs 

was 117,600 hours (4 NRMSIRs × 29,400 

hours). The proposed amendments 

contemplate that the MSRB would be 

the sole repository and would receive 

disclosure documents in an electronic, 

rather than paper, format. Based on 

information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February, 

2008, Commission staff estimates that 

the burden to collect, index, store, 

retrieve, and make available the 

pertinent documents would be the 

number of hours that MSRB employees 

would be assigned to the system for 

collecting, storing, retrieving, and 

making available the documents. In a 

series of telephone conversations 

between MSRB staff and Commission 

staff in February 2008, the MSRB 

advised that three full-time employees 

and one half-time employee would be 

assigned to these tasks and that each 

full-time employee would spend 

approximately 2,000 hours per year 

working on these tasks. Therefore, the 

total burden on the MSRB to collect, 

store, retrieve, and make available the 

disclosure documents covered by the 

proposed amendments would be 7,000 

hours per year.96 Thus, the total burden 

on the MSRB to collect, store, retrieve, 

and make available the disclosure 

documents covered by the proposed 

amendments would be 22,400 hours 97

less than the burden for each NRMSIR 

to collect, index, store, retrieve and 

make available disclosure documents 

under the 2006 PRA Submission, and 

110,600 hours 98 less than the burden for 

all four NRMSIRs to collect, index, 

store, retrieve and make available 

disclosure documents as estimated in 

the 2006 PRA Submission. The 

difference in the burden hour estimate 

for the MSRB to collect, store, retrieve, 

and make available continuing 

disclosure documents under the 

proposed amendments in comparison to 

the burden on the NRMSIRs estimated 

in the 2006 PRA Submission could be 

attributed to the fact that the proposed 

amendments contemplate that the 

continuing disclosure documents would 

be collected, stored, retrieved and made 

available electronically, whereas the 

2006 PRA Submission contemplated 

that these documents would be 

collected, stored, retrieved and made 

available in paper format. In part, the 

estimate in the 2006 PRA Submission 

was based on the expectation that the 

documents would be collected, stored, 

retrieved and made available in paper 

rather than electronic format, which 

would require more people to perform 

these tasks. 

4. Annual Aggregate Burden for 

Proposed Amendments 

Accordingly, Commission staff 

expects that the ongoing annual 

aggregate information collection burden 

for the proposed amendments to the 

Rule would be 64,500 hours.99 The 

current annual aggregate information 

collection burden for the Rule is 

123,850 hours.100 Therefore, if the 

Commission were to adopt the proposed 

amendments, the ongoing annual 

aggregate information collection burden 

for Rule 15c2–12 is estimated to be 

reduced by 59,350 hours.101

E. Total Annual Cost Burden 

1. Issuers 

The Commission expects that some 

issuers could be subject to some costs 

associated with the proposed electronic 

submission of annual filings, material 

event notices and failure to file notices, 

particularly if they (or their agent) 

currently submit paper copies of these 

documents to the NRMSIRs. It is likely, 

however, that many issuers of 

municipal securities currently have the 

computer equipment and software 

necessary to convert paper copies of 

continuing disclosure documents to 

electronic copies and to electronically 

transmit the documents to the MSRB. 

For issuers that currently have such 

capability, the start-up costs to provide 

continuing disclosure documents to the 

MSRB would be minimal because they 

already would possess the necessary 

resources internally. Some issuers may 

have the necessary computer equipment 

to transmit documents electronically to 


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102 Generally, the technology resources necessary 

to transfer a paper document into an electronic 

format are a computer, scanner and possibly 

software to convert the scanned document into the 

appropriate electronic document format. Most 

scanners include a software package that is capable 

of converting scanned images into multiple 

electronic document formats. An issuer would only 

need to purchase software if the issuer (i) has a 

scanner that does not include a software package 

that is capable of converting scanned images into 

the appropriate electronic format, or (ii) purchases 

a scanner that does not include a software package 

capable of converting documents into the 

appropriate electronic format. 

103Commission staff estimates the cost for an 

issuer to upgrade or acquire the necessary 

technology to transfer its paper continuing 

disclosure documents into an electronic format are 

based upon the following estimates for purchasing 

the necessary equipment from a commercial 

vendor: (i) An issuer’s cost for a computer would 

range from $500 to $3,000; (ii) an issuer’s cost for 

a scanner would range from $200 to $1,000; and (iii) 

an issuer’s cost for software to submit documents 

in an electronic format would range from $50 to 

$300. 

104Commission staff estimates the cost for an 

issuer to upgrade or acquire the software to submit 

documents in an electronic format would range 

from $50 to $300. Issuers that only need to upgrade 

existing software would incur costs closer to the 

lower end of this estimate, while those issuers that 

need to purchase completely new software packages 

would incur costs closer to the higher end of this 

estimate. 

105 [$64 (cost to have third party convert annual 

filing into an electronic format) × 2 (maximum 

estimated number of annual filings filed per year 

per issuer)] + [$8 (cost to have third party convert 

material event notice or failure to file notice into 

an electronic format) × 3 (maximum estimated 

number of material event or failure to file notices 

filed per year per issuer)] + [$50 (estimated monthly 

Internet charge) × 12 months] = $752. Commission 

staff estimates that an issuer would file one to five 

continuing disclosure documents per year. These 

documents generally consist of no more than two 

annual filings and three material event or failure to 

file notices. 

106 [$4300 (maximum estimated one-time cost to 

acquire technology to convert continuing disclosure 

documents into an electronic format)] + [$50 

(estimated monthly Internet charge) × 12 months] 

= $4900. After the initial year, issuers who acquire 

the technology to convert continuing disclosure 

documents into an electronic format internally 

Continued 

the MSRB, but may need to upgrade or 

obtain the software necessary to submit 

documents to the MSRB in the 

electronic format that it prescribes. For 

these issuers, the start-up costs would 

be the costs of upgrading or acquiring 

the necessary software. Issuers that 

presently do not provide their annual 

filings, material event notices and/or 

failure to file notices in an electronic 

format and that are currently sending 

paper copies of their documents to the 

NRMSIRs pursuant to their continuing 

disclosure agreements could incur some 

costs to obtain electronic copies of such 

documents if they are prepared by a 

third party (e.g., accountant or attorney) 

or, alternatively, to have a paper copy 

converted into an electronic format. 

These costs would vary depending on 

how the issuer elected to convert its 

continuing disclosure documents into 

an electronic format. An issuer could 

elect to have a third-party vendor 

transfer its paper continuing disclosure 

documents into the appropriate 

electronic format. An issuer also could 

decide to undertake the work internally, 

and its costs would vary depending on 

the issuer’s current technology 

resources. 

The cost for an issuer to have a thirdparty vendor transfer its paper 

continuing disclosure documents into 

an appropriate electronic format could 

vary depending on what resources are 

required to transfer the documents into 

the appropriate electronic format. One 

example of such a transfer would be the 

scanning of paper-based continuing 

disclosure documents into an electronic 

format. Based on information provided 

to Commission staff through limited 

inquiries to commercial vendors in 

February 2008, Commission staff 

estimates that the cost for an issuer to 

have a third-party vendor scan 

documents would be $6 for the first 

page and $2 for each page thereafter. 

Based on information provided to 

Commission staff by MSRB staff in a 

series of telephone conversations in 

February 2008, Commission staff 

estimates that material event and failure 

to file notices consist of one to two 

pages, while annual filings range from 

eight to ten pages to several hundred 

pages, but average about 30 pages in 

length. Accordingly, the approximate 

cost for an issuer to use a third party 

vendor to scan a material event notice 

or failure to file notice would be $8 

each, and the approximate cost to scan 

an average-sized annual financial 

statement would be $64. Based on 

information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February 

2008, Commission staff estimates that 

an issuer would submit one to five 

continuing disclosure documents 

annually. 

Alternatively, an issuer that currently 

does not have the appropriate 

technology could elect to purchase the 

resources to electronically format the 

disclosure documents on its own.102

Based on information obtained by 

Commission staff through limited 

inquiries of commercial vendors in 

February 2008, Commission staff 

estimates that an issuer’s initial cost to 

acquire these technology resources 

could range from $750 to $4,300.103

Some issuers may have the necessary 

hardware to transmit documents 

electronically to the MSRB, but may 

need to upgrade or obtain the software 

necessary to submit documents to the 

MSRB in the electronic format that it 

prescribes. Based on information 

obtained by Commission staff through 

limited inquiries of commercial vendors 

in February 2008, Commission staff 

estimates that an issuer’s cost to update 

or acquire this software could range 

from $50 to $300.104

In addition, issuers without direct 

Internet access could incur some costs 

to obtain such access to submit the 

documents. However, Commission staff 

notes that Internet access is now broadly 

available to and utilized by businesses, 

governments, organizations and the 

public, and Commission staff expects 

that most issuers of municipal securities 

currently have Internet access. In the 

event that an issuer does not have 

Internet access, it would incur costs in 

obtaining such access, which 

Commission staff estimates to be 

approximately $50 per month, based on 

its limited inquiries to Internet service 

providers. Otherwise, there are multiple 

free or low cost locations that an issuer 

could utilize, such as various 

commercial sites, which could help an 

issuer to avoid the costs of maintaining 

continuous Internet access solely to 

comply with the proposed amendments 

to the Rule. 

Accordingly, Commission staff 

estimates that the costs to some issuers 

to submit continuing disclosure 

documents to a single repository in 

electronic format could include: (i) An 

approximate cost of $8 per notice to use 

a third party vendor to scan a material 

event notice or failure to file notice, and 

an approximate cost of $64 to use a 

third party vendor to scan an averagesized annual financial statement, (ii) an 

approximate cost ranging from $750 and 

$4,300 to acquire technology resources 

to convert continuing disclosure 

documents into an electronic format, 

(iii) $50 to $300 solely to upgrade or 

acquire the software to submit 

documents in an electronic format; and 

(iv) approximately $50 per month to 

acquire Internet access. 

For an issuer that does not have 

Internet access and elects to have a third 

party convert continuing disclosure 

documents into an electronic format 

(‘‘Category 1’’), the total maximum 

external cost such issuer would incur 

would be $752 per year.105 For an issuer 

that does not have Internet access and 

elects to acquire the technological 

resources to convert continuing 

disclosure documents into an electronic 

format internally (‘‘Category 2’’), the 

total maximum external cost such issuer 

would incur would be $4,900 for the 

first year and $600 per year 

thereafter.106 Accordingly, Commission 


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would only have the cost of obtaining Internet 

access. $50 (estimated monthly Internet charge) × 

12 months = $600. 

107Total cost for Category 1: 10,000 issuers × $752 

(annual cost per issuer to have a third party convert 

continuing disclosure documents into an electronic 

format and for Internet access) = $7,520,000. Total 

cost for Category 2: 10,000 issuers × $4,900 (onetime cost to acquire technology to convert 

continuing disclosure documents into an electronic 

format and annual cost for Internet access) = 

$49,000,000. 10,000 issuers × $600 (annual cost per 

issuer for Internet access) = $6,000,000. In order to 

provide an estimate of the total costs to issuers that 

would not be under-inclusive, Commission staff 

elected to use all 10,000 issuers for each Category’s 

estimate. 

108The MSRB estimated that it would take an 

entity approximately 240 to 480 hours of computer 

programming to develop the computer-to-computer 

interface with the MSRB. $289 (hourly wage for a 

senior programmer) × 240 hours = $69,360. $289 

(hourly wage for a senior programmer) × 480 hours 

= $138,720. The $289 per hour estimate for a senior 

programmer is from SIFMA’s Office Salaries in the 

Securities Industry 2007, modified by Commission 

staff to account for an 1800-hour work-year and 

multiplied by 5.35 to account for bonuses, firm size, 

employee benefits and overhead. 

109For this estimate, Commission staff has 

included the cost of having the designated agent’s 

compliance clerk submit electronically the 

pertinent continuing disclosure document and any 

identifying information to the MSRB. 15 minutes 

(.25 hours) (estimated time per document to gather 

identifying information) × $62 (hourly wage for a 

compliance clerk) = $15.50 (approximately $16). 

The $62 per hour estimate for a compliance clerk 

is from SIFMA’s Office Salaries in the Securities 

Industry 2007, modified by Commission staff to 

account for an 1800-hour work-year and multiplied 

by 2.93 to account for bonuses, firm size, employee 

benefits and overhead. 

110 $1,000,000 (cost to establish computer system) 

+ $350,000 (annual operation costs for computer 

system, excluding salary and other related costs for 

employees) = $1,350,000 (first year cost to MSRB). 

After the first year, the only cost would be the 

annual operation cost of $350,000. These costs do 

not include the salary and other overhead costs 

related to the employees who would maintain the 

system. MSRB staff advised Commission staff that 

the personnel costs associated with operating the 

portal for continuing disclosure documents would 

be approximately $400,000 per year. 

111 17 CFR 240.17a–1. 

staff estimates that the total cost for 

issuers, if they all were classified as 

Category 1, would be $7,520,000 per 

year, and that the total cost for issuers, 

if they all were classified as Category 2, 

would be $49,000,000 for the first year 

and $6,000,000 per year thereafter.107

Alternatively, an issuer could elect to 

use the services of a designated agent to 

submit continuing disclosure 

documents to the MSRB. As noted 

above, Commission staff believes that 

approximately 30% of municipal issuers 

that submit continuing disclosure 

documents today rely on the services of 

a designated agent. Generally, when 

issuers utilize the services of a 

designated agent, they enter into a 

contract with the designated agent for a 

package of services, including the 

submission of continuing disclosure 

documents, for a single fee. Based on 

information provided to Commission 

staff by industry sources in telephone 

conversations in May 2008, it is 

anticipated that five of the largest 

designated agents would submit 

documents electronically to the MSRB 

via a direct computer-to-computer 

interface. Based on information 

provided to Commission staff by MSRB 

staff during telephone conversations in 

May 2008, Commission staff estimates 

that the start-up cost for an entity to 

develop a direct computer-to-computer 

interface with the MSRB would range 

from approximately $69,360 to 

$138,720.108 Thus, the maximum 

estimated total start-up cost of 

developing a direct computer-tocomputer interface by each of the five 

designated agents for the submission of 

continuing disclosure documents to the 

MSRB would be $693,600. 

The Commission believes that, in 

light of the estimated cost to develop 

and implement a computer-to-computer 

interface with the MSRB, it is unlikely 

that issuers would elect to proceed with 

this approach given the availability of 

less expensive alternatives to submitting 

continuing disclosure documents 

electronically to the MSRB. However, 

some issuers could choose to submit 

their continuing disclosure documents 

to the MSRB through a designated agent. 

A designated agent could submit 

continuing disclosure documents along 

with identifying information to the 

MSRB on behalf of numerous issuers. 

Depending on its business model, a 

designated agent could submit 

continuing disclosure documents along 

with identifying information to the 

MSRB via the Internet or through a 

direct computer-to-computer interface. 

In either case, the issuer could incur a 

cost associated with the designated 

agent’s electronic submission of the 

pertinent continuing disclosure 

document and any identifying 

information to the MSRB. Commission 

staff estimates that this cost could be 

approximately $16 per continuing 

disclosure document.109

2. MSRB 

The MSRB would incur costs to 

develop the computer system to allow it 

to collect, store, process, retrieve, and 

make available continuing disclosure 

documents furnished to it by issuers of 

municipal securities. Based on 

information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February 

2008, MSRB’s start-up costs associated 

with developing the portal for 

continuing disclosure documents, 

including hardware, an additional 

hosting site, and software licensing and 

acquisition costs, would be 

approximately $1,000,000. In addition, 

the MSRB indicated that the annual 

operating costs for this system, 

excluding salary and other costs related 

to employees, would be approximately 

$350,000. Accordingly, Commission 

staff estimates that the total costs for the 

MSRB would be $1,350,000 for the first 

year and $350,000 per year thereafter, 

exclusive of salary and other costs 

related to employees.110

F. Retention Period of Recordkeeping 

Requirements 

As an SRO subject to Rule 17a–1 

under the Exchange Act,111 if the 

proposed amendments to the Rule were 

adopted, the MSRB would be required 

to retain records of the collection of 

information for a period of not less than 

five years, the first two years in an 

easily accessible place. The proposed 

amendments to the Rule would contain 

no recordkeeping requirements for any 

other persons. 

G. Collection of Information is 

Mandatory 

Any collection of information 

pursuant to the proposed amendments 

to the Rule would be a mandatory 

collection of information. 

H. Responses to Collection of 

Information Will Not Be Kept 

Confidential 

The collection of information 

pursuant to the proposed amendments 

to the Rule would not be confidential 

and would be publicly available. 

I. Request for Comments 

Pursuant to 44 U.S.C. 3506(c)(2)(B), 

the Commission solicits comments 

regarding: (1) Whether the proposed 

collections of information are necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; (2) the accuracy of the 

Commission’s estimate of the burden of 

the revised collections of information; 

(3) whether there are ways to enhance 

the quality, utility, and clarity of the 

information to be collected; and (4) 

whether there are ways to minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of automated collection 

techniques or other forms of information 

technology. 

The Commission has submitted to 

OMB for approval the proposed 


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112Under the proposed amendments to paragraph 

(d)(2)(ii) of the Rule, a Participating Underwriter 

would be exempt from its obligations under 

paragraph (b)(5) of the Rule as long as an issuer or 

obligated person has agreed in its limited 

undertaking that the publicly available financial 

information or operating data described in 

paragraph (d)(2)(ii)(A) of the Rule would be 

submitted to the MSRB annually, instead of upon 

request to any person or at least annually to the 

appropriate SID, if any, and that the material event 

notices described in paragraph (d)(2)(ii)(B) of the 

Rule would be submitted to the MSRB, instead of 

to each NRMSIR or the MSRB and to the 

appropriate SID, if any, and as long as the other 

conditions of the exemption are met. 113Commission staff estimates that the annual 

information collection burden under the proposed 

amendments in the first year would be 64,625 

hours. 114 In the first year, this is a reduction of 59,225 

from the 2006 PRA Submission. 

115 117,600 hours (total annual hourly burden for 

all four NRMSIRs from 2006 PRA Submission) × 

$62 (hourly wage for a compliance clerk) = $7.3 

million. The $62 per hour estimate for a compliance 

clerk is from SIFMA’s Office Salaries in the 

Securities Industry 2007, modified by Commission 

staff to account for an 1,800-hour work-year and 

multiplied by 2.93 to account for bonuses, firm size, 

employee benefits and overhead. 

revisions to the current collection of 

information titled ‘‘Municipal Securities 

Disclosure.’’ Persons submitting 

comments on the collection of 

information requirements should direct 

them to the Office of Management and 

Budget, Attention: Desk Officer for the 

Securities and Exchange Commission, 

Office of Information and Regulatory 

Affairs, Washington, DC 20503, and 

should also send a copy of their 

comments to Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–0609, with 

reference to File No. S7–21–08, and be 

submitted to the Securities and 

Exchange Commission, Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549. As OMB is required to make 

a decision concerning the collection of 

information between 30 and 60 days 

after publication, a comment to OMB is 

best assured of having its full effect if 

OMB receives it within 30 days of 

publication. Requests for materials 

submitted to OMB by the Commission 

with regard to this collection of 

information should be in writing, 

should refer to File No. S7–21–08, and 

be submitted to the Securities and 

Exchange Commission, Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549. 

V. Costs and Benefits of Proposed 

Amendments to Rule 15c2–12 

The Commission is considering the 

costs and benefits of the proposed 

amendments to Rule 15c2–12 discussed 

above. As discussed below, the 

Commission believes that there would 

be an overall reduction in costs based 

on the proposed amendments. The 

Commission encourages commenters to 

identify, discuss, analyze, and supply 

relevant data regarding any such costs 

or benefits. 

A. Benefits 

Under the proposed amendments to 

the Rule, a Participating Underwriter 

would be prohibited from purchasing or 

selling municipal securities covered by 

the Rule in a primary offering, unless it 

has reasonably determined that the 

issuer of a municipal security has 

undertaken in a continuing disclosure 

agreement to provide continuing 

disclosure documents to the MSRB.112

The Commission believes that providing 

for a single repository that receives 

submissions in an electronic format, 

rather than multiple repositories, would 

encourage a more efficient and effective 

process for the collection and 

availability of continuing disclosure 

information. In the Commission’s view, 

a single electronic point of collection 

and accessibility of continuing 

disclosure documents could assist 

issuers and obligated persons in 

complying with their undertakings. 

Submission of continuing disclosure 

documents only to one repository rather 

than multiple repositories would reduce 

the resources issuers and obligated 

persons need to devote to the process of 

gathering and submitting continuing 

disclosure documents. Because the 

proposed amendments would provide 

for the electronic submission and 

availability of continuing disclosure 

documents, the costs to issuers and 

obligated persons of gathering and 

submitting this information ultimately 

could be reduced because they no 

longer would have to gather and submit 

documents in a paper format. As 

described more fully in Section IV. 

above, Commission staff estimates that 

the ongoing annual information 

collection burden under the proposed 

amendments would be 64,500 hours.113

This is a reduction of 59,350 hours from 

the 2006 PRA Submission.114 This 

overall reduction in the Rule’s 

paperwork burden—and the costs 

associated with that burden—

principally would benefit issuers or 

obligated persons. 

The Commission also believes that 

having a single repository that receives 

and makes available submissions in an 

electronic format would provide ready 

and prompt access to this information 

by investors and municipal securities 

market participants. Investors and 

market participants would be able to go 

solely to one location to retrieve 

continuing disclosure documents rather 

than having to approach multiple 

locations, thereby allowing for a more 

convenient means to obtain such 

information. In addition, the 

Commission preliminarily believes that 

having one repository electronically 

collect and make available all 

continuing disclosure documents would 

increase the likelihood that investors 

and other market participants would 

obtain complete information. 

The Commission expects that a single 

repository that receives submissions in 

an electronic format could simplify 

compliance with regulatory 

requirements by broker-dealers and 

others, such as mutual funds, by 

providing them with consistent 

availability of continuing disclosure 

documents from a single source. 

Information vendors (including 

NRMSIRs and SIDs) and others also 

would have ready access to all 

continuing disclosure documents that 

they in turn could use in their valueadded products. The Commission also 

expects that having a single repository 

that receives submissions in an 

electronic format would make the 

information available to all users. 

Under the current Rule, Commission 

staff estimates that the current annual 

paperwork cost for all four NRMSIRs to 

collect, index, store, retrieve and 

disseminate continuing disclosure 

information requested by the public to 

be approximately $7.3 million.115 Based 

on information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February 

2008, the MSRB staff estimated that the 

MSRB’s annual total costs to collect, 

index, store, retrieve and make available 

continuing disclosure information, 

would be $1,350,000 for the first year 

and $350,000 per year thereafter. 

Providing for a single repository could 

reduce the paperwork costs that 

NRMSIRs currently incur because they 

no longer would have to maintain 

personnel and other resources solely in 

connection with their status as a 

NRMSIR. 

Finally, the Commission preliminarily 

believes that the proposed amendments 

could encourage the dissemination of 

information in the information services 

markets by providing easier access to 

continuing disclosure documents. As a 

result, there potentially could be an 

increase in the number of information 

vendors disseminating continuing 

disclosure documents and value-added 

products because the cost of entry into 

the municipal securities information 

services market could be reduced. 


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116See 2006 PRA Submission. 

117 1 hour (estimated annual information 

collection burden for each broker-dealer) × $270 

(hourly cost for a broker-dealer’s internal 

compliance attorney) = $270. The hourly rate for 

the compliance attorney is from SIFMA’s 

Management & Professional Earnings in the 

Securities Industry 2007, modified by Commission 

staff to account for an 1,800-hour work-year and 

multiplied by 5.35 to account for bonuses, firm size, 

employee benefits and overhead. 

118See Section IV.D.1., supra. 

119 5 (maximum estimated number of continuing 

disclosure filed per year per issuer) × $62 (hourly 

wage for a compliance clerk) × 45 minutes (.75 

hours) (average estimated time for compliance clerk 

to submit a continuing disclosure document 

electronically) = $232.50. The $62 per hour estimate 

for a compliance clerk is from SIFMA’s Office 

Salaries in the Securities Industry 2007, modified 

by Commission staff to account for an 1,800-hour 

work-year and multiplied by 2.93 to account for 

bonuses, firm size, employee benefits and overhead. 

In order to provide an estimate of total costs for 

issuers that would not be under-inclusive, the 

Commission elected to use the higher end of the 

estimate of annual submissions of continuing 

disclosure documents. 

The Commission seeks comment on 

the anticipated benefits of the proposed 

amendments. 

B. Costs 

If the amendments to the Rule were 

adopted, the Commission would not 

expect broker-dealers to incur any 

additional recurring costs because the 

proposed amendments would not alter 

substantively the existing Rule’s 

requirements for these entities, except 

with respect to the place to which 

issuers would agree to make filings. The 

proposed amendments would change 

the location where the continuing 

disclosure documents of issuers or 

obligated persons would be submitted 

pursuant to continuing disclosure 

agreements. As noted above, 

Commission staff estimates that the 

annual information collection burden 

for each broker-dealer under the 

proposed amendments to the Rule 

would be one hour. This annual burden 

is identical to the burden that a brokerdealer has under the current Rule.116

Accordingly, Commission staff 

estimates that it would cost each brokerdealer $270 annually to comply with the 

Rule.117

In addition, Commission staff 

estimates that a broker-dealer could 

have a one-time internal cost associated 

with having an in-house compliance 

attorney prepare and issue a 

memorandum advising the brokerdealer’s employees who work on 

primary offerings of municipal 

securities about the proposed revisions 

to Rule 15c2–12, if they are adopted by 

the Commission. Commission staff 

estimates it would take internal counsel 

approximately 30 minutes to prepare 

this memorandum, for a cost of 

approximately $135.118

The Commission believes that the 

ongoing obligations of broker-dealers 

under the Rule would be handled 

internally because compliance with 

these obligations is consistent with the 

type of work that a broker-dealer 

typically handles internally. The 

Commission does not believe that a 

broker-dealer would have any recurring 

external costs associated with the 

proposed amendments to the Rule. The 

Commission requests comment on any 

costs broker-dealers could incur under 

the proposed amendments. 

Although Rule 15c2–12 relates to the 

obligations of broker-dealers, issuers or 

obligated persons indirectly could incur 

costs as a result of the proposed 

amendments. Pursuant to continuing 

disclosure agreements, issuers of 

municipal securities currently 

undertake to provide continuing 

disclosure documents to the NRMSIRs 

either directly or indirectly through an 

indenture trustee or a designated agent. 

In either case, some issuers could be 

subject to the costs associated with the 

proposed electronic filing of annual 

filings, material event notices and 

failure to file notices, particularly if they 

(or their agent) currently submit paper 

copies of these documents to the 

NRMSIRs. For those issuers that 

currently deliver their continuing 

disclosure documents electronically to 

the NRMSIRs, there should be minimal 

change in costs as a result of the 

proposed requirement that documents 

be submitted electronically. 

Issuers that presently do not provide 

their annual filings, material event 

notices and/or failure to file notices in 

an electronic format and that are 

currently sending paper copies of their 

documents to the NRMSIRs pursuant to 

their continuing disclosure agreements 

could incur some costs to obtain 

electronic copies of such documents 

from the party who prepared them or, 

alternatively, to have a paper copy 

converted into an electronic format. 

These costs would vary depending on 

how the issuer elected to convert their 

continuing disclosure documents into 

an electronic format. An issuer could 

elect to have a third-party vendor 

transfer their paper continuing 

disclosure documents into the 

appropriate electronic format. An issuer 

also could decide to undertake the work 

internally, and its costs would vary 

depending on the issuer’s current 

technology resources. An issuer also 

would need to have Internet access to 

submit documents electronically and 

would incur the costs of maintaining 

such service, if the issuer currently does 

not have Internet access, unless it relies 

on other sources of Internet access. 

It is likely, however, that many 

issuers of municipal securities currently 

possess the computer equipment and 

software necessary to convert paper 

copies of continuing disclosure 

documents to electronic copies and to 

electronically transmit the documents to 

the MSRB. For issuers that currently 

have such capability, the start-up costs 

to provide continuing disclosure 

documents to the MSRB would be 

minimal because they already would 

have the necessary resources internally. 

As described more fully in section IV. 

above, Commission staff estimates that 

the costs to some issuers to submit 

continuing disclosure documents to a 

single repository in an electronic format 

may include: (i) An approximate cost of 

$8 per notice to use a third party vendor 

to scan a material event notice or failure 

to file notice, and an approximate cost 

of $64 to use a third party vendor to 

scan an average-sized annual financial 

statement; (ii) an approximate cost 

ranging from $750 and $4,300 to acquire 

technology resources to convert 

continuing disclosure documents into 

an electronic format; (iii) $50 to $300 to 

upgrade or acquire the software to 

submit documents in an electronic 

format; (iv) approximately $50 per 

month to acquire Internet access; and (v) 

an approximate cost of $16 per 

continuing disclosure document to have 

a designated agent submit electronically 

continuing disclosure documents and 

identifying information to the MSRB. 

Also, as more fully described in Section 

IV. above, the total estimated cost of five 

designated agents developing computerto-computer interfaces for the 

submission of documents to the MSRB 

would be $693,600. 

Issuers or obligated persons also 

would have to provide certain 

identifying information to the repository 

pursuant to their undertakings in 

continuing disclosure agreements. As 

described more fully in section IV. 

above, Commission staff estimates that 

each issuer would submit one to five 

continuing disclosure documents 

annually to the MSRB, for a maximum 

estimated annual labor cost of 

approximately $232.50 per issuer.119

The Commission expects that the 

costs to issuers could vary somewhat, 

depending on the issuer’s size. The 

Commission believes that any such 

difference would be attributable to the 

fact that larger issuers may tend to have 

more issuances of municipal securities; 

thus, larger issuers may tend to submit 

more documents than smaller issuers. 

Thus, the costs of submitting documents 


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120Based on information provided to Commission 

staff by MSRB staff in telephone conversations in 

May 2008, this amount represents the estimated 

personnel costs associated with the MSRB’s having 

three and one-half persons devoted to operating the 

continuing disclosure portal. 

121See, e.g., Letter from Peter J. Schmitt, Chief 

Executive Officer, DPC Data, dated January 23, 

2008, regarding SR–MSRB–2007–06, submitted to 

www.sec.gov/comments. (‘‘DPC Data Letter’’). 

122 15 U.S.C. 78c(f). 

123 15 U.S.C. 78w(a)(2). 

could be greater for larger issuers. The 

Commission requests comments on 

costs that issuers and obligated persons 

could incur as a result of the proposed 

amendments. 

Further, the Commission does not 

anticipate that issuers would incur any 

costs associated with the need to revise 

the template for continuing disclosure 

agreements, if the proposed 

amendments are adopted. Commission 

staff contacted National Association of 

Bond Lawyers (‘‘NABL’’) staff in April 

2008 regarding the potential costs to 

issuers for bond lawyers to revise the 

provisions of continuing disclosure 

agreements that would be affected by 

the proposed amendments. According to 

NABL staff, the NABL members advised 

that the cost of revising the template for 

continuing disclosure agreements to 

reflect the proposed amendments would 

be insignificant and stated their belief 

that the costs would not be passed on 

to issuers. 

As discussed in section IV. above, the 

MSRB would incur costs to develop the 

computer system to allow it to collect, 

store, process, retrieve, and make 

available continuing disclosure 

documents furnished to it by issuers of 

municipal securities. Based on 

information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February 

2008, MSRB’s start-up costs associated 

with developing the portal for 

continuing disclosure documents, 

including hardware, an additional 

hosting site, and software licensing and 

acquisition costs, would be 

approximately $1,000,000. Based on 

information provided to Commission 

staff by MSRB staff in a series of 

telephone conversations in February 

2008, the MSRB staff estimated that the 

MSRB’s ongoing costs of operating the 

system, including allocated costs 

associated with such items as office 

space and licensing fees, would be 

approximately $1,350,000 for the first 

year and $350,000 per year thereafter. In 

addition, MSRB staff advised 

Commission staff that the personnel 

costs associated with operating the 

portal for continuing disclosure 

documents would be approximately 

$400,000 per year.120

Some NRMSIRs and other vendors of 

municipal disclosure information could 

incur costs in transitioning their 

business models if the Commission 

were to adopt the proposal to establish 

a single repository for municipal 

disclosure documents. In fact, existing 

NRMSIRs could be adversely affected by 

the proposed amendments because the 

proposal contemplates a single 

repository. Any NRMSIR that currently 

provides municipal disclosure 

documents as its primary business 

model could face a significant decline in 

its business, and thus in income, as a 

result of the proposed amendments.121

In addition, to transition from multiple 

repositories to a single repository, the 

Commission is considering whether to 

direct its staff to withdraw the ‘‘no 

action’’ letters issued to the NRMSIRs 

and to designate the MSRB as the 

NRMSIR. As a result, the NRMSIRs 

could experience an immediate decline 

in income with respect to those parts of 

their business that provide municipal 

disclosure documents to persons who 

request them. Also, NRMSIRs could 

have some costs if they continued to 

maintain historical continuing 

disclosure information that they have 

already received under existing 

continuing disclosure agreements. The 

Commission requests comment and 

empirical data on any anticipated costs 

that NRMSIRs could incur. 

Finally, under the proposed 

amendments, Rule 15c2–12 no longer 

would refer to SIDs. The proposed 

amendments would not affect the legal 

obligations of issuers or obligated 

persons to provide continuing 

disclosure documents, along with any 

other submissions, to the appropriate 

SID, if any, that may be required under 

the appropriate state law. In addition, 

the proposed amendments would have 

no effect on the obligations of issuers 

and obligated persons under 

outstanding continuing disclosure 

agreements entered into prior to any 

effective date of amendments to the 

Rule, if the Commission were to adopt 

such amendments, to submit continuing 

disclosure documents to the appropriate 

SID, if any, as stated in their existing 

continuing disclosure agreements, nor 

on their obligation to make any other 

submissions that may be required under 

the appropriate state law. Unlike 

NRMSIRs, SIDs are membership 

organizations and use information 

submitted to them in products for their 

members. While SIDs can charge fees for 

requested documents, the Commission 

believes, based on telephone 

conversations between Commission staff 

and representatives of SIDs in April 

2008, that this is not a primary source 

of revenue for them. The Commission 

does not expect that SIDs would 

experience a decline in operations or 

incur any costs as a result of the 

proposed amendments, but seeks 

comment on any anticipated impact that 

the proposed amendments could have 

on SIDs. 

C. Request for Comment on Costs and 

Benefits 

To assist the Commission in 

evaluating the costs and benefits that 

could result from the proposed 

amendments to the Rule, the 

Commission requests comments on the 

potential costs and benefits identified in 

this proposal, as well as any other costs 

or benefits that could result from the 

proposed amendments to the Rule. 

Commenters should provide analysis 

and data to support their views on the 

costs and benefits. In particular, the 

Commission requests comment on the 

costs and benefits of the proposed 

amendments on broker-dealers, issuers, 

the MSRB, NRMSIRs and other vendors, 

as well as any costs on others, including 

market participants and investors. 

VI. Consideration of Burden and 

Promotion of Efficiency, Competition, 

and Capital Formation 

Section 3(f) of the Exchange Act 122

requires the Commission, whenever it 

engages in rulemaking and is required to 

consider or determine whether an action 

is necessary or appropriate in the public 

interest, to consider whether the action 

would promote efficiency, competition, 

and capital formation. In addition, 

section 23(a)(2) of the Exchange Act 123

requires the Commission, when 

adopting rules under the Exchange Act, 

to consider the impact such rules would 

have on competition. Section 23(a)(2) of 

the Exchange Act also prohibits the 

Commission from adopting any rule that 

would impose a burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the 

Exchange Act. 

The proposed amendments to the 

Rule would revise subparagraph (b)(5) 

of Rule 15c2–12 to require Participating 

Underwriters to reasonably determine 

that the issuer or obligated person has 

agreed at the time of a primary offering: 

(1) To provide the continuing disclosure 

documents to the MSRB instead of to 

each NRMSIR and appropriate SID; and 

(2) to provide the continuing disclosure 

documents in an electronic format and 

accompanied by identifying information 

as prescribed by the MSRB. 


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124See note 19, supra. 

125See 1989 Adopting Release, supra note 3. 

126See 1989 Adopting Release at 54 FR 28807, 

supra note 3. See also 1994 Proposing Release, 

supra note 43. 127See 1989 Adopting Release, supra note 3. See 

also 1994 Proposing Release, supra note 43. 128See 1994 Amendments, supra note 5. 

129 In responding to the MSRB’s proposed rule 

change to revise its MSIL system, one NRMSIR 

expressed concern about the MSRB’s proposed 

competition with vendors to offer what it viewed 

as value-added features and services relating to 

disclosure documents. This NRMSIR stated that, if 

the MSRB were permitted to offer value-added 

content and features in connection with its 

proposed Internet-based portal for disclosure 

documents, it would inflict economic harm on 

existing data vendors. See DPC Data Letter, supra 

note 121. 

The Commission preliminarily 

believes that the proposed amendments 

to the Rule should help make the 

municipal securities disclosure process 

more efficient and help conserve 

resources for municipal security issuers, 

as well as investors and market 

participants. Under the current 

regulatory framework, issuers of 

municipal securities in their continuing 

disclosure agreements undertake to 

submit continuing disclosure 

documents to four separate NRMSIRs, 

and they submit such documents in 

paper or electronic form. The 

Commission anticipates that amending 

the Rule could promote the efficiency of 

the municipal disclosure process by 

reducing the resources municipal 

security issuers would need to devote to 

the process of submitting continuing 

disclosure documents. 

As noted above, the Commission has 

long been interested in improving the 

timing and availability of disclosure in 

the municipal securities market. At the 

time the Commission adopted Rule 

15c2–12 in 1989 and adopted the 1994 

Amendments, disclosure documents 

were submitted in paper form. The 

Commission believed that, in such an 

environment where document retrieval 

would be handled manually, the 

establishment of one or more 

repositories could be beneficial in 

widening the retrieval and availability 

of information in the secondary market, 

since the public could obtain the 

disclosure documents from multiple 

locations. The Commission’s objective 

of encouraging greater availability of 

municipal securities information 

remains unchanged. 

However, there have been significant 

inefficiencies in the current use of 

multiple repositories that likely have 

affected the public’s ability to retrieve 

continuing disclosure documents.124 In 

this regard, the Commission noted in 

the 1989 Adopting Release that ‘‘the 

creation of multiple repositories should 

be accompanied by the development of 

an information linkage among these 

repositories’’ so as to afford ‘‘the widest 

retrieval and dissemination of 

information in the secondary 

market.’’125 Although the Commission 

in the 1989 Adopting Release supported 

the development of an information 

linkage among the repositories, none 

was established to help broaden the 

availability of the disclosure 

information. Also, since the adoption of 

the 1994 Amendments, there have been 

significant advancements in technology 

and information systems, including the 

use of the Internet, to provide 

information quickly and inexpensively 

to market participants and investors. In 

this regard, the Commission 

preliminarily believes that the use of a 

single repository to receive, in an 

electronic format, and make available 

continuing disclosure documents in an 

electronic format would substantially 

and effectively increase the availability 

of municipal securities information 

about municipal issues and enhance the 

efficiency of the secondary trading 

market for these securities. 

In addition, the Commission 

preliminarily believes that having a 

single repository for electronically 

submitted information would provide 

investors, market participants, and 

others with a more efficient and 

convenient means to obtain continuing 

disclosure documents and would help 

increase the likelihood that investors, 

market participants, and others would 

make more informed investment 

decisions regarding whether to buy, sell 

or hold municipal securities. 

With respect to the Exchange Act goal 

of promoting competition, the 

Commission notes that, when it adopted 

Rule 15c2–12 in 1989, it strongly 

supported the development of one or 

more central repositories for municipal 

disclosure documents.126 The 

Commission ‘‘recognize[d] the benefits 

that may accrue from the creation of 

competing private repositories,’’ and 

indicated that ‘‘the creation of central 

sources for municipal offering 

documents is an important first step that 

may eventually encourage widespread 

use of repositories to disseminate 

annual reports and other current 

information about issuers to the 

secondary markets.’’ 127 Further, when it 

adopted the 1994 Amendments, the 

Commission stated that the 

‘‘requirement to deliver disclosure to 

the NRMSIRs and the appropriate SID 

also allay[ed] the anti-competitive 

concerns raised by the creation of a 

single repository.’’ 128

There have been significant advances 

in technology and information 

collection and delivery since that time, 

as discussed throughout this release, 

that indicate that having multiple 

repositories may not be necessary 

because the widespread availability and 

dissemination of information can be 

achieved through different, more 

efficient, means. Because the current 

environment differs markedly from the 

time when Rule 15c2–12 was adopted in 

1989 and subsequently amended in 

1994, the Commission believes that it is 

appropriate to propose an approach that 

utilizes the significant technological 

advances, such as the development and 

use of various electronic formats, that 

have occurred in the intervening years. 

The Commission’s proposal to 

provide for the establishment of a single 

repository for continuing disclosure 

documents would help further the 

Exchange Act objective of promoting 

competition because information about 

municipal securities, provided in an 

electronic format, would be more 

widely available to market 

professionals, investors, information 

vendors, and others as a result of the 

proposed amendments. For example, 

the Commission believes competition 

among vendors could increase because 

vendors could utilize this information to 

provide value-added services to 

municipal market participants. The 

Commission’s proposal also could 

promote competition in the purchase 

and sale of municipal securities because 

the greater availability of information as 

a result of the proposed amendments 

could instill greater investor confidence 

in the municipal securities market. 

Moreover, the greater availability of 

information also could encourage 

improvement in the completeness and 

timeliness of issuer disclosures and 

could foster interest in municipal 

securities by retail and institutional 

customers. As a result, more investors 

could be attracted to this market sector 

and broker-dealers could compete for 

their business. 

The Commission acknowledges that, 

if the proposed amendments were 

adopted to provide for a single 

repository, they potentially could have 

an adverse impact on one or more 

existing NRMSIRs, especially if their 

business models depended on their 

status as a NRMSIR.129 Moreover, 

NRMSIRs have received compensation 

for providing copies of continuing 

disclosure documents to persons who 

request them. Thus, one or more 

NRMSIRs possibly could be adversely 

affected by the proposal, if they no 

longer have available to them a steady 

flow of funds from providing for a fee 


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130See Securities Exchange Act Release No. 

28081, supra note 55. 

131 Id. 

copies of continuing disclosure 

documents to persons who request 

them. As a result of the proposed 

amendments, a NRMSIR could find that 

it would have to revise its current 

manner of doing business or face a 

significant downturn in its business 

operations. Vendors of information 

about municipal securities, other than 

NRMSIRs, also could be affected by the 

proposed amendments if the sole 

repository provides information 

electronically for no charge. 

In addition, there would be just one 

repository, and not four NRMSIRs as is 

currently the case, if the Commission 

were to adopt the proposed Rule 15c2–

12 amendments. Thus, the proposal 

could reduce competition with respect 

to services provided by NRMSIRs as 

information vendors. In addition to 

supplying municipal disclosure 

documents upon request, NRMSIRs also 

provide value-added market data 

services to municipal investors that 

incorporate continuing disclosure 

information. If NRMSIRs were adversely 

affected by the proposal to establish a 

single repository, it is possible that there 

could be a reduction in these valueadded market data services relating to 

municipal securities or a loss of 

innovation in offering competing 

information services regarding 

municipal securities. 

The Commission preliminarily does 

not believe that having a single 

repository would have a significant 

adverse effect on the ability or 

willingness of private information 

vendors to compete to create and market 

value-added data products. Commercial 

vendors could readily access the 

information made available by the 

repository to re-disseminate it or use it 

in whatever value-added products they 

may wish to provide. In fact, a single 

repository in which documents are 

submitted in an electronic format could 

encourage the private information 

vendors to disseminate municipal 

securities information by reducing the 

cost of entry into the information 

services market. Existing vendors could 

need to make some adjustments to their 

infrastructure or facilities. However, 

some vendors could determine that they 

no longer need to invest in the 

infrastructure and facilities necessary to 

collect and store continuing disclosure 

documents, and new entrants into the 

market would not need to obtain the 

information from multiple locations, but 

rather could readily access such 

information from one centralized 

source. Thus, all vendors should be able 

to obtain easily continuing disclosure 

documents and should be able to 

compete in providing value-added 

services. 

The Commission, therefore, 

preliminarily believes that any potential 

effect on competition that could result 

from the proposed amendments would 

be justified by the more efficient and 

effective process for the collection and 

availability of continuing disclosure 

documents. A single repository for the 

electronic collection and availability of 

these documents would foster the 

Exchange Act objective of promoting 

competition by simplifying the method 

of submission of continuing disclosure 

documents to one location and making 

the documents more readily accessible 

to investors and others by virtue of the 

documents being in an electronic 

format. 

The Commission previously stated 

that it would specifically consider the 

competitive implications of the MSRB 

becoming a repository.130 In addition, 

the Commission stated that if the 

Commission were to conclude that the 

MSRB’s status as a repository might 

have adverse competitive implications, 

it would consider whether it should 

take any action to address these 

effects.131 As noted earlier, the 

Commission recognizes that 

competition with respect to certain 

information services regarding 

municipal securities that are provided 

by the existing NRMSIRs could decline 

should the MSRB become the central 

repository. The Commission believes 

that one of the benefits in having the 

MSRB be the sole repository would be 

its ability to provide a ready source of 

continuing disclosure documents to 

other information vendors who wish to 

use that information for their products. 

Private vendors could utilize the MSRB 

in its capacity as a repository as a means 

to collect information from the 

continuing disclosure documents to 

create value-added products for their 

customers. 

In addition, the Commission believes 

that the reasons it provided above 

regarding the competitive implications 

with respect to having a single 

repository similarly would apply if the 

MSRB were the sole repository. The 

Commission does not believe that there 

are competitive implications that would 

uniquely apply to the MSRB in its 

capacity as the sole repository as 

opposed to any another entity that could 

be the sole repository. In fact, the 

Commission believes that, if the MSRB 

were the sole repository, its status as an 

SRO would provide an additional level 

of Commission oversight, as changes to 

its rules relating to continuing 

disclosure documents would have to be 

filed for Commission consideration as a 

proposed rule change under section 

19(b) of the Exchange Act. Accordingly, 

the Commission believes that any 

competitive impact that could result 

from the MSRB’s status as the sole 

repository would be justified by the 

benefits that such status could provide. 

The Commission preliminarily 

believes that the proposed amendments 

could have a positive effect on capital 

formation by municipal securities 

issuers. The Rule is addressed to the 

obligations of broker-dealers 

participating in a primary offering of 

municipal securities (i.e., Participating 

Underwriters). Because continuing 

disclosure documents would be 

submitted electronically to a single 

repository, investors and other market 

participants potentially could obtain 

information about these issuers more 

readily than they can today. They no 

longer would have to contact several 

NRMSIRs to make sure that they have 

obtained complete information about 

the municipal issuer. Easier access to 

continuing disclosure documents 

regarding municipal securities could 

provide investors and other market 

participants with more complete 

information about municipal issuers. 

Moreover, this ready availability of 

continuing disclosure documents could 

encourage investors to consider 

purchasing new issuances of municipal 

securities because they could readily 

access information from a single 

repository and review that information 

in making an investment decision. As a 

result, the proposed amendments could 

help foster the Exchange Act goal of 

capital formation. 

The Commission proposes to delete 

references to the SIDs in Rule 15c2–12. 

Since the Commission is now proposing 

to amend the Rule to provide for a 

single repository for the electronic 

collection and availability of continuing 

disclosure documents that the 

Commission believes would efficiently 

and effectively improve disclosure in 

the municipal securities market, the 

Commission believes that it is no longer 

necessary to require in the Rule that 

Participating Underwriters reasonably 

determine that issuers and obligated 

persons have contractually agreed to 

provide continuing disclosure 

documents to the SIDs. 

The proposed amendments would not 

affect the legal obligations of issuers and 

obligated persons to provide continuing 

disclosure documents, along with any 

other submissions, to the appropriate 

SID, if any, that are required under the 


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46158 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Proposed Rules 

132Pub. L. No. 104–121, Title II, 110 Stat. 857 

(1996) (codified in various sections of 5 U.S.C., 15 

U.S.C. and as a note to 5 U.S.C. 601). 

133 5 U.S.C. 603(a). 

134 5 U.S.C. 605(b). 

135 17 CFR 240.0–10(c). 

136 17 CFR 240.0–10(f). 

137See Section IV.D.1., supra. 

138 17 CFR 230.157. See also 17 CFR 240.0–10(a). 

139Commission staff based this determination on 

its review of various public sources of financial 

information about these three NRMSIRs. 

140 5 U.S.C. 601(5). 

appropriate state law. In addition, the 

proposed amendments would have no 

effect on the obligations of issuers and 

obligated persons under outstanding 

continuing disclosure agreements 

entered into prior to any effective date 

of the proposed amendments to the Rule 

to submit continuing disclosure 

documents to the appropriate SID, if 

any, as stated in their existing 

continuing disclosure agreements, nor 

on their obligation to make any other 

submissions that are required under the 

appropriate state law. The Commission 

preliminarily does not believe that its 

proposal to delete references to SIDs in 

Rule 15c2–12 would have any potential 

effect on efficiency, competition or 

capital formation. 

Based on the analysis above, the 

Commission preliminarily believes that 

the proposed amendments to the Rule 

would not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. The 

Commission requests comment on all 

aspects of this analysis and, in 

particular, on whether the proposed 

amendments to the Rule would place a 

burden on competition, as well as the 

effect of the proposed amendments on 

efficiency, competition, and capital 

formation. The Commission specifically 

seeks comment on whether the 

proposed amendments would place a 

burden on competition or have an effect 

on efficiency, competition, and capital 

formation with respect to issuers, 

NRMSIRs or other vendors, the MSRB, 

broker-dealers, other market 

participants, investors, or others. 

VII. Consideration of Impact on the 

Economy 

For purposes of the Small Business 

Regulatory Enforcement Fairness Act of 

1996, or ‘‘SBREFA,’’ 132 the Commission 

must advise the OMB as to whether the 

proposed regulation constitutes a 

‘‘major’’ rule. Under SBREFA, a rule is 

considered ‘‘major’’ where, if adopted, it 

results or is likely to result in: (1) An 

annual effect on the economy of $100 

million or more (either in the form of an 

increase or a decrease); (2) a major 

increase in costs or prices for consumers 

or individual industries; or (3) 

significant adverse effect on 

competition, investment or innovation. 

The Commission requests comment 

on the potential impact of the proposed 

rule amendments on the economy on an 

annual basis. Commenters are requested 

to provide empirical data and other 

factual support for their view to the 

extent possible. 

VIII. Regulatory Flexibility Act 

Certification 

Section 603(a) of the Regulatory 

Flexibility Act 133 (‘‘RFA’’) requires the 

Commission to undertake an initial 

regulatory flexibility analysis of the 

proposed amendments to the Rule on 

small entities, unless the Commission 

certifies that the proposed amendments, 

if adopted, would not have a significant 

economic impact on a substantial 

number of small entities.134

For purposes of Commission 

rulemaking in connection with the RFA, 

a broker-dealer is a small business if its 

total capital (net worth plus 

subordinated liabilities) on the last day 

of its most recent fiscal year was 

$500,000 or less, and is not affiliated 

with any entity that is not a ‘‘small 

business.’’ 135 Some broker-dealers that 

would be subject to the proposed 

amendments meet these definitions of a 

‘‘small business.’’ In addition, for 

purposes of Commission rulemaking in 

connection with the RFA, a ‘‘small 

business’’ may also include a municipal 

securities dealer that is a bank 

(including a separately identifiable 

department or division of a bank) which 

has total assets of less than $10 million 

at all times during the preceding fiscal 

year; had an average monthly volume of 

municipal securities transactions in the 

preceding fiscal year of less than 

$100,000; and is not affiliated with any 

entity that is not a ‘‘small business.’’ 136

The proposed amendments to the 

Rule would not substantively change 

any of the current obligations of brokerdealers or municipal securities dealers, 

except to the extent that they would 

have to reasonably determine that the 

issuer or obligated person has agreed in 

writing to provide continuing disclosure 

documents to a single repository instead 

of to multiple NRMSIRs. The paperwork 

burden for broker-dealers or municipal 

securities dealers would not be altered 

by the proposed amendments, except to 

the extent that the firm’s compliance 

attorney would need to prepare and 

issue a notice to members or a 

memorandum explaining the impact of 

the proposed amendments to pertinent 

personnel, if the proposal is adopted by 

the Commission.137

For purposes of Commission 

rulemaking in connection with the RFA, 

an issuer or person, other than an 

investment company, is a ‘‘small 

business’’ or ‘‘small organization’’ if its 

‘‘total assets on the last day of its most 

recent fiscal year were $5 million or 

less.’’ 138 The Commission believes that 

at least three of the four NRMSIRs are 

part of large business entities that have 

assets in excess of $5 million.139 One of 

the current four NRMSIRs and possibly 

one or more vendors of continuing 

disclosure documents may be a ‘‘small 

business’’ for purposes of the RFA. As 

noted above, the proposed amendments 

could have a significant economic 

impact on the business model of one 

NRMSIR and possibly on the business 

models of one or more other vendors of 

municipal securities information. While 

the Commission acknowledges that the 

proposed amendments to the Rule could 

have a significant economic impact on 

certain vendors of municipal securities 

information, the Commission does not 

believe that the number of such vendors 

that could be affected by the proposed 

amendments represents a substantial 

number of small businesses. 

In addition, the Commission believes 

that two of the three SIDS may be a 

‘‘small business’’ or ‘‘small 

organization’’ for purposes of the RFA. 

The proposed amendments, however, 

would not affect any legal obligations 

issuers or obligated persons may have to 

provide continuing disclosure 

documents, along with any other 

submissions, to the appropriate SID, if 

any, that may be required under the 

appropriate state law. 

A ‘‘small governmental jurisdiction’’

is defined by the RFA to include 

‘‘governments of cities, counties, towns, 

townships, villages, school districts, or 

special districts, with a population of 

less than fifty thousand.’’ 140 Since the 

Rule applies to primary offerings of 

municipal securities with an aggregate 

principal amount of at least $1,000,000 

or more, some issuances by small 

governmental jurisdictions would not be 

covered by the Rule. For those small 

issuers whose primary offerings of 

municipal securities are impacted by 

the Rule, the Commission notes that 

issuers of municipal securities currently 

are familiar with, and provide, pursuant 

to their continuing disclosure 

agreements, continuing disclosure 

documents. Under the proposal, issuers 

would submit, pursuant to their 

undertakings in continuing disclosure 

agreements, continuing disclosure 

documents to the MSRB in an electronic 


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Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Proposed Rules 46159 

141See Section V.B., supra. 

142 Id. 

format and accompanied by identifying 

information, instead of to each of the 

four existing NRMSIRs. Accordingly, to 

the extent a small governmental 

jurisdiction has conducted a primary 

offering of municipal securities for 

which a Participating Underwriter has 

reasonably determined that the issuer 

has entered into a contractual 

undertaking covered by the Rule, its 

continuing disclosure documents would 

be submitted to one repository, instead 

of multiple ones as is the case today, 

and thus the small governmental 

jurisdiction would incur no significant 

additional economic impact as a result 

of the proposed amendments to the 

Rule. The Commission believes that 

many municipal issuers currently have 

the capability to convert paper 

documents to electronic documents. 

Those small governmental jurisdictions 

that: (i) Do not have continuing 

disclosure information in an electronic 

format; or (ii) do not have the internal 

means to convert continuing disclosure 

information into an electronic format, 

would have to incur a cost to convert 

their paper documents into an 

electronic file.141 Although some small 

governmental jurisdictions could incur 

costs to submit documents 

electronically to a single repository, the 

Commission does not believe that these 

costs would result in a significant 

economic impact for a substantial 

number of small governmental 

jurisdictions.142

In the Commission’s view, the 

proposed amendments would not have 

a significant economic impact on a 

substantial number of small entities, 

including broker-dealers, municipal 

securities dealers, small governmental 

jurisdictions, NRMSIRs and other 

vendors of municipal disclosure 

documents, SIDs, or other small 

businesses or small organizations. For 

the above reasons, the Commission 

certifies that the proposed amendment 

to the Rule would not have a significant 

economic impact on a substantial 

number of small entities. The 

Commission requests comments 

regarding this certification. The 

Commission requests that commenters 

describe the nature of any impact on 

small entities, including broker-dealers 

and municipal securities dealers, small 

governmental jurisdictions, NRMSIRs 

and other vendors of municipal 

disclosure documents, SIDS, or other 

small businesses or small organizations, 

and provide empirical data to support 

the extent of the impact. 

IX. Statutory Authority 

Pursuant to the Exchange Act, and 

particularly sections 3(b), 15(c), 15B and 

23(a)(1) thereof, 15 U.S.C. 78c(b), 78o(c), 

78o–4, and 78w(a)(1), the Commission 

is proposing amendments to § 240.15c2–

12 of Title 17 of the Code of Federal 

Regulations in the manner set forth 

below. 

List of Subjects in 17 CFR Part 240 

Brokers, Reporting and recordkeeping 

requirements, Securities. 

Text of Proposed Rule Amendments 

For the reasons set out in the 

preamble, Title 17, Chapter II, of the 

Code of Federal Regulations is proposed 

to be amended as follows. 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

1. The general authority citation for 

part 240 continues to read in part as 

follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 

78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78p, 

78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a–

20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–4, 

80b–11, and 7201 et seq.; and 18 U.S.C. 1350, 

unless otherwise noted. 

* * * * * 

2. Section 240.15c2–12 is amended by 

the following: 

A. Revise paragraph (b)(4)(ii), the 

introductory text of paragraph (b)(5)(i), 

and paragraphs (b)(5)(i)(A) and (B); 

B. In the introductory text of 

paragraph (b)(5)(i)(C) and in paragraph 

(b)(5)(i)(D) remove the phrase ‘‘to each 

nationally recognized municipal 

securities information repository or to 

the Municipal Securities Rulemaking 

Board, and to the appropriate state 

information depository, if any,’’; 

C. In paragraph (b)(5)(ii)(C) remove 

the phrase ‘‘, and to whom it will be 

provided’’; 

D. Add new paragraph (b)(5)(iv); 

E. Revise paragraph (d)(2)(ii); and 

F. Revise paragraphs (f)(3) and (f)(9). 

The additions and revisions read as 

follows. 

§ 240.15c2–12 Municipal securities 

disclosure. 

* * * * * 

(b) * * * 

(4) * * * 

(ii) The time when the official 

statement is available to any person 

from the Municipal Securities 

Rulemaking Board, but in no case less 

than twenty-five days following the end 

of the underwriting period, the 

Participating Underwriter in an Offering 

shall send no later than the next 

business day, by first-class mail or other 

equally prompt means, to any potential 

customer, on request, a single copy of 

the final official statement. 

(5)(i) A Participating Underwriter 

shall not purchase or sell municipal 

securities in connection with an 

Offering unless the Participating 

Underwriter has reasonably determined 

that an issuer of municipal securities, or 

an obligated person for whom financial 

or operating data is presented in the 

final official statement has undertaken, 

either individually or in combination 

with other issuers of such municipal 

securities or obligated persons, in a 

written agreement or contract for the 

benefit of holders of such securities, to 

provide the following to the Municipal 

Securities Rulemaking Board in an 

electronic format as prescribed by the 

Municipal Securities Rulemaking Board, 

either directly or indirectly through an 

indenture trustee or a designated agent: 

(A) Annual financial information for 

each obligated person for whom 

financial information or operating data 

is presented in the final official 

statement, or, for each obligated person 

meeting the objective criteria specified 

in the undertaking and used to select 

the obligated persons for whom 

financial information or operating data 

is presented in the final official 

statement, except that, in the case of 

pooled obligations, the undertaking 

shall specify such objective criteria; 

(B) If not submitted as part of the 

annual financial information, then when 

and if available, audited financial 

statements for each obligated person 

covered by paragraph (b)(5)(i)(A) of this 

section; 

* * * * * 

(iv) Such written agreement or 

contract for the benefit of holders of 

such securities also shall provide that 

all documents provided to the 

Municipal Securities Rulemaking Board 

shall be accompanied by identifying 

information as prescribed by the 

Municipal Securities Rulemaking Board. 

* * * * * 

(d) * * * 

(2) * * * 

(ii) An issuer of municipal securities 

or obligated person has undertaken, 

either individually or in combination 

with other issuers of municipal 

securities or obligated persons, in a 

written agreement or contract for the 

benefit of holders of such municipal 

securities, to provide the following to 

the Municipal Securities Rulemaking 

Board in an electronic format as 


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46160 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Proposed Rules 

prescribed by the Municipal Securities 

Rulemaking Board: 

(A) At least annually, financial 

information or operating data regarding 

each obligated person for which 

financial information or operating data 

is presented in the final official 

statement, as specified in the 

undertaking, which financial 

information and operating data shall 

include, at a minimum, that financial 

information and operating data which is 

customarily prepared by such obligated 

person and is publicly available; and 

(B) In a timely manner, notice of 

events specified in paragraph (b)(5)(i)(C) 

of this section with respect to the 

securities that are the subject of the 

Offering, if material; and 

(C) Such written agreement or 

contract for the benefit of holders of 

such securities also shall provide that 

all documents provided to the 

Municipal Securities Rulemaking Board 

shall be accompanied by identifying 

information as prescribed by the 

Municipal Securities Rulemaking Board; 

and 

* * * * * 

(f) * * * 

(3) The term final official statement 

means a document or set of documents 

prepared by an issuer of municipal 

securities or its representatives that is 

complete as of the date delivered to the 

Participating Underwriter(s) and that 

sets forth information concerning the 

terms of the proposed issue of 

securities; information, including 

financial information or operating data, 

concerning such issuers of municipal 

securities and those other entities, 

enterprises, funds, accounts, and other 

persons material to an evaluation of the 

Offering; and a description of the 

undertakings to be provided pursuant to 

paragraph (b)(5)(i), paragraph (d)(2)(ii), 

and paragraph (d)(2)(iii) of this section, 

if applicable, and of any instances in the 

previous five years in which each 

person specified pursuant to paragraph 

(b)(5)(ii) of this section failed to comply, 

in all material respects, with any 

previous undertakings in a written 

contract or agreement specified in 

paragraph (b)(5)(i) of this section. 

Financial information or operating data 

may be set forth in the document or set 

of documents, or may be included by 

specific reference to documents 

available to the public on the Municipal 

Securities Rulemaking Board’s Internet 

Web site or filed with the Commission. 

* * * * * 

(9) The term annual financial 

information means financial 

information or operating data, provided 

at least annually, of the type included 

in the final official statement with 

respect to an obligated person, or in the 

case where no financial information or 

operating data was provided in the final 

official statement with respect to such 

obligated person, of the type included in 

the final official statement with respect 

to those obligated persons that meet the 

objective criteria applied to select the 

persons for which financial information 

or operating data will be provided on an 

annual basis. Financial information or 

operating data may be set forth in the 

document or set of documents, or may 

be included by specific reference to 

documents available to the public on 

the Municipal Securities Rulemaking 

Board’s Internet Web site or filed with 

the Commission. 

* * * * * 

By the Commission. 

Dated: July 30, 2008. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–17856 Filed 8–6–08; 8:45 am] 

BILLING CODE 8010–01–P 


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