Regulatory
SIFMA Submits Comments to the MSRB on Streamlining New Issue Information Submission Requirements
On May 8, SIFMA filed a comment letter with the MSRB on a proposal to streamline new issue information submission requirements under MSRB Rules G-32 and G-34.
The proposal would streamline the submission of data by allowing underwriters to satisfy certain of their submission requirements under Rule G-32 in connection with new issues of municipal securities by their submission of data to the New Issue Information Dissemination Service (NIIDS) operated by the Depository Trust and Clearing Corporation (DTCC) pursuant to Rule G-34. SIFMA shares its comments and concerns on selected parts of the proposal.
MSRB’s full notice can be found here.
MSRB Interpretive Notice on Rule G-17 covers Retail Order Periods and Dealer Payments to Issuer Personnel
On Monday, May 7, 2012, the SEC approved an interpretive notice on MSRB Rule G-17 concerning the duties of underwriters to state and local governments. While most of the focus has been on required disclosures and representations to issuers about the underwriter’s role in a transaction, the notice also includes important guidance regarding fair dealing obligations of dealers to issuers during a retail order period. Additionally, the notice reminded dealers of the application of MSRB Rule G-20, on gifts, gratuities, and non-cash compensation, and Rule G-17, in connection with certain payments made to, and expenses reimbursed for, issuer personnel during the municipal bond issuance process.
With respect to the disclosures, for “complex” transactions, the new interpretation will require bond underwriters to disclose to issuers all material financial risks and characteristics, incentives and conflicts of interest regarding the transactions or products. For “routine” transactions, underwriters will be required to disclose the material aspects of the structures if the issuer personnel do not otherwise have knowledge or experience with respect to such structures. These disclosures will be required to be made to an official of the issuer whom the underwriter reasonably believes has the authority to bind the issuer by contract with the underwriter. If the underwriter does not reasonably believe that the official to whom the disclosures are addressed is capable of independently evaluating the disclosures, the underwriter will be required to make additional efforts reasonably designed to inform the official or its employees or agent. Finally, the interpretive notice will prohibit an underwriter from recommending that the issuer not retain a municipal advisor. SIFMA will be working with its members to draft models disclosure language.
The new requirements will take effect on August 2, 2012.
MSRB’s notice can be found here.
Legislation Overview
Municipal Bond Market Support Act of 2012
On May 10, Reps. Tom Reed (R-NY) and Richard Neal (D-MA), members of the House Ways and Means Committee, introduced legislation H.R. 5705) that would permanently increase the bank-qualified debt limit to $30 million from $10 million and index it for inflation.
This legislation would allow banks to deduct 80% of the cost of buying and carrying the tax-exempt bonds of issuers whose annual issuance does not exceed $30 million.
SIFMA supports a permanent increase in the bank qualified limit. In fact, last week SIFMA co-signed a letter with other issuer and industry groups advocating for a temporary increase in the bank qualified limit in the context of pending federal highway legislation.
The Ways and Means Committee has no plans to take formal action on the legislation.
Follow bill summary and status here.
Middle Class Tax Fairness Act of 2012
On May 7, Rep Shelley Berkley (D-NV) introduced legislation (H.R. 5333) to amend the federal tax code to make permanent the deduction of State and local general sales taxes retroactive to January 1. Under current law, the ability of federal taxpayers to deduct general state and local sales taxes expired on January 1, 2012.
Ms. Berkley stated that this bill is also intended to impose a “fair share tax” on high-income taxpayers.
Follow the bill’s summary and status here.
Wall Street Journal Letter to the Editor
Appearing in the May 10th Wall Street Journal, SIFMA President & CEO Tim Ryan responded to Cass Sunstein’s May 1 Op-Ed: "The White House vs. Red Tape". In the letter, Ryan argues the Obama administration's recent executive order, trumpeted as an effort to harmonize U.S. and foreign regulations, effectively excludes the Dodd-Frank reforms and most other financial-services-related regulations and outlines the risk to jobs, economic growth and U.S. competitiveness of this apparently political move.
Highlights from the SIFMA Operations Conference + Exhibit 2012
Last week, operations experts from the public and private sector converged on Scottsdale, AZ for the SIFMA Operations Conference + Exhibit 2012. The three-day program featured top regulators and industry experts, including Cyrus Amir-Mokri, Department of Treasury and Grace Vogel, FINRA, William Rutledge, Promontory Financial Group and Robert L.D. Colby, Davis Polk. Speakers offered insights into the impact of changes to market infrastructure, how to manage risk and improve processing efficiencies, and other critical operational issues facing broker-dealers, asset managers, custodians and CCPs. The buzz from participants: “I’m glad I went and I’m definitely heading back next year!”
Prepared Remarks
Presentations
Video
Photos
Useful Links
SIFMA is proud to launch our new Proxy Resource Center (www.sifma.org/education), a user-friendly source of unbiased information about the importance and mechanics of the proxy process, geared for retail investors. Explore it yourself as you vote your own proxies, or contact SIFMA for more information about referring your clients to the site.
Save the Date
MSRB/SIFMA Municipal Securities Regulation Seminar
June 13, 2012 – Chicago
For details and registration click here
Save the Date
SIFMA's 4th Annual Municipal Bond Summit
October 1, 2012 — New York City
Registration Now Open – SIFMA’s Municipal Bond Summit - October 1, 2012 – NYC
SIFMA Releases Updated, 6th Edition of ‘Fundamentals of Municipal Bonds’
This informative volume is the newly revised and updated sixth edition of the long-heralded classic text on the municipal securities market. This text provides comprehensive coverage of the many developments in the municipal securities market that have taken place in recent years. It provides a basic understanding of the market for a wide range of readers, including experienced professionals—such as investment bankers, traders, brokers, and professional investors—as well as public officials, academicians, students, and sophisticated individuals.
Along with an extensive glossary of municipal bond terminology and a bibliography covering relevant print and online sources, as well as thorough descriptions of products prevalent in the market, the book provides detailed explanations and a variety of relevant examples to illuminate crucial areas such as the basics of municipal securities; financial products; issuers; primary and secondary markets; investing in bonds; credit analysis and understanding interest rates; and disclosure and regulatory requirements.
Illustrated with numerous tables, charts and mathematical formulas, this indispensable volume serves as a guide, reference work, and portal to the municipal securities industry. No investor or student of the market can afford to be without it. For more information or to purchase a copy, click here.
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