SEC Investor Advisory Committee Meeting – Discussion of Enhancements for Municipal and Corporate Bonds
Summary
- The SEC’s Investor Advisory Committee (IAC) met to discuss disclosure enhancements for municipal and corporate bonds. The Market Structure Subcommittee of the IAC produced a set of disclosure recommendations aimed at protecting retail investors in the muni and corporate bond markets. The Subcommittee’s recommendations include the following:
- Finalize proposed changes to Rule 15c2-12 related to bank loans and other financial transactions, taking into account stakeholder comments;
- Update the 1994 Interpretive Guidance on Rule 15c2-12;
- Work with the MSRB on improved EMMA functionality, including flagging issuers that are out of compliance with their continuing disclosure obligations; and
- Further study disclosure in the municipal and corporate markets.
- There was broad support on the subcommittee for the recommendations.
- One committee member noted that uploading disclosure documents in pdfs, instead of in XBRL, makes it difficult for market participants to analyze documents. Another member asked if the MSRB could begin looking at how to use machine-readable formats and data tagging to improve the accessibility of disclosure documents. Ultimately, no XBRL amendment was added to the recommendations.
- One committee member said that legislative changes may be necessary to bring more transparency about issuers of municipal securities to investors (such as through a revision of the Tower Amendment), as the SEC only has authority to regulate underwriters.
- The committee voted the recommendations through but held open the possibility that further recommendations would be included later.