Protec ting in v e s tor s a n d the public intere s t
M u n i c i pa l S e c u r i t i e s R u l e m a k i n g B oa r d
MSRB
Municipal Securities
Rulemaking Board
MSRB
Municipal Securities
Rulemaking Board
About
the MSRB
M u n i c i pa l S e c u r i t i e s R u l e m a k i n g B oa r d
Infrastructure projects financed by municipal bonds are fundamental to daily life. The
Municipal Securities Rulemaking Board works to ensure that the municipal bond market
operates fairly, efficiently and in a transparent manner to protect and benefit investors.
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Investors and the Public Interest
All Americans, even if they don’t realize it, benefit
from municipal bonds. Schools, hospitals, and highways
are just some of our nation’s infrastructure projects
made possible by municipal bonds. These borrowings—
ranging from under $100,000 to several billion dollars—
allow local governments and other public authorities to
finance essential capital projects.
Interestingly, it is the American public that largely
provides municipalities the money to build and maintain
the country’s infrastructure. It does so by purchasing
municipal bonds as investments, which in turn provide
reliable interest payments and tax benefits. Investors
own nearly $3 trillion of outstanding municipal securities
and individual investors own two-thirds of those,
either directly or through mutual funds. An additional
$100 billion is invested in 529 college savings plans,
another type of municipal security.
Maintaining the integrity of this large, public-purpose
market is the responsibility of the Municipal Securities
Rulemaking Board. The MSRB, whose mission is to
protect investors and foster a fair and efficient market,
also is an objective resource and repository of municipal
securities information for the marketplace, the public
and policymakers.
Created by Congress in 1975, the MSRB is a self-regulatory
organization governed by a 15-member Board of Directors
representing the public, banks and securities firms.
A professional staff manages MSRB’s day-to-day
operations and its activities are overseen by the U.S.
Securities and Exchange Commission.
MSRB
Municipal Securities
Rulemaking Board
MSRB
Municipal Securities
Rulemaking Board
Protecting Investors
two
M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
and market statistics for the
municipal market.
Investor Resources
The MSRB uses a variety of tools
including rules, market transparency, information sharing and
­outreach to fulfill its mission of
protecting investors and maintaining a fair and efficient market.
Rules and Standards
MSRB rules are based on principles
of fairness, disclosure of information and market transparency.
These rules apply to financial
professionals who sell municipal
securities to investors and to firms
that bring the securities to market.
MSRB rules seek to ensure that
firms or banks in the business of
buying and selling municipal securities act credibly, honestly and
with integrity. The rules also require
municipal securities dealers to
apply uniform practices to all
municipal bond transactions.
Market Information
and Transparency
MSRB
Municipal Securities
Rulemaking Board
Market transparency and access to
information is fundamental to a
fair and efficient market. The MSRB
has established the authoritative
collection of disclosure documents
and trade data on all municipal
securities. By making this information widely available to investors
and other market participants,
including regulators and policymakers, the MSRB serves as the
central source for data, documents
The MSRB provides investors
with tools to learn about and
understand municipal bonds.
The MSRB’s comprehensive data
and document collection is available on EMMA, the Electronic
Municipal Market Access system,
at www.emma.msrb.org. This free
website provides investors with a
single access point for complete
information about municipal bonds,
including offering documents,
ongoing financial and material
event disclosures, and real-time
trade data. The MSRB also provides educational tools and other
resources for investors on EMMA
and on www.msrb.org.
Compliance Support
Municipal bond trade data and
other information collected by
the MSRB support the efforts
of the enforcement agencies
that monitor municipal security
dealer compliance with MSRB
rules. Enforcement agencies use
MSRB data to monitor pricing in
municipal bond transactions and
ensure that dealers adhere to all
MSRB rules.
Outreach and Education
The MSRB’s regulatory and market
expertise provide the organization
with a singular vantage point
on the industry. To foster a fair
and efficient market, the MSRB
broadly shares its knowledge and
information with market participants. The MSRB’s outreach efforts
include seeking regular input
from the industry to help fulfill its
investor protection mandate.
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To foster a fair and efficient market, the MSRB works closely with state and
local governments that issue bonds but does not regulate them.
Rules and Standards
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M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
The MSRB’s investor protection
rules are based on fair and uniform
industry practices, market integrity,
professional qualifications and
operational standards.
Customer Protection
and Fair Practice
MSRB’s rules require municipal
securities professionals to treat
all customers fairly and equitably.
Securities professionals must make
investment recommendations
about municipal bonds that are
consistent with a customer’s
investment objectives and financial
and tax status.
If an investor buys or sells a municipal bond through a municipal
securities dealer, the price must be
fair and reasonable in relation to
current market prices and conditions. When a customer invests in a
529 college savings plan through
a dealer, the commission charged
also must be fair and reasonable.
The MSRB’s general anti-fraud
rule prohibits deceptive, dishonest
and unfair practices covering a
broad range of activities.
Market Integrit y
MSRB
Municipal Securities
Rulemaking Board
In a market where bond issuers
are political entities, the MSRB
ensures marketplace integrity
with a rule against “pay-to-play”
practices. This rule seeks to sever
any connection between political
contributions to issuers and
the awarding of municipal bond
underwriting contracts to municipal
securities dealers. Dealers face
a two-year ban on business with
local or state government when
contributions are made to government officials. The firms must disclose their political contributions
to issuer officials, and the MSRB
posts these disclosures on its
website, at www.msrb.org, for
public scrutiny.
The MSRB’s rule prohibiting “payto-play” has served as a model for
federal, state and local governmental entities seeking to address
concerns over the influence of
political contributions.
Disclosures to Customers
MSRB rules are designed to
ensure that municipal securities
dealers provide their customers
with important information about
their municipal bond investments.
When selling new bonds, dealers
must make sure the customer
has access to offering documents.
Prior to a trade on an existing
security, dealers must disclose
material facts about the bond to
the customer. And they must
document every trade with a
customer in a trade confirmation
that discloses basic facts about
the trade.
To guard against false or misleading
statements, municipal securities
dealers must uphold standards
for advertisements of municipal
securities. Advertisements for 529
college savings plans must meet
additional standards to ensure that
disclosures to customers are comparable to those of mutual funds.
five
Municipal securities trade reporting, settlement and confirmation standards are set by
the MSRB to ensure the efficiency and consistency of market operations. With daily trades
valued at an average of $23 billion, operational standards are essential to the market.
Rules and Standards
six
M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
value of transactions makes trade
reporting and recordkeeping a
monumental undertaking. To
ensure efficiency of these market
operations, the MSRB sets standards for how municipal securities
professionals process and settle
customer transactions.
Professional
Qualifications
The MSRB maintains professional
qualification standards for dealers
and their employees operating in
the municipal securities business.
The MSRB requires municipal
securities professionals to demonstrate their knowledge of the
industry through qualifying exams.
Individuals with additional responsibilities within their firm, such as
supervising the bond underwriting
department, must pass a second
MSRB qualifying exam.
The MSRB requires municipal
securities professionals to participate in regularly scheduled
continuing education courses.
Professionals also must maintain
knowledge of the regulatory
framework and participate in
ongoing training provided by
their firms.
MSRB rules prohibit municipal
securities professionals who have
been barred from national securities exchanges or registered securities associations from working in
the municipal securities business.
Operational Standards
Approximately 40,000 municipal
bonds, valued at around $23 billion,
trade each day. This volume and
MSRB
Municipal Securities
Rulemaking Board
Municipal bond trades must be
executed in a consistent manner,
while trade information reported to
the MSRB must be accurate and
complete. Each firm also must
preserve its transaction records.
The MSRB’s standards govern
internal supervision of municipal
securities activity at each regulated firm. Compliance with MSRB
rules is the responsibility of both
municipal securities professionals
and management at the firms and
banks. This sets the bar high and
puts securities firms and banks—
and their reputations—on the line.
Rulemaking and
Enforcement
The MSRB’s rulemaking process
utilizes the expertise of the MSRB’s
Board of Directors and the invaluable input of industry and public
participants. New rules, or proposals to amend existing rules, typically develop because of changes in
the market that require industry
standards. The Securities and
Exchange Commission must
approve all MSRB rules, which
are enforced by other financial
regulators that oversee securities
firms and banks.
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The MSRB qualifies municipal securities professionals through examinations and continuing education programs.
Exams are reviewed on a regular basis to ensure that they reflect changes or developments in the market and
that they measure the appropriate skills and knowledge of municipal securities professionals.
Market Information
and Transparency
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M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
state governments, produce plan
disclosure documents that summarize their features, including
investments, fees and risks.
Municipal bond data and document
collection form the basis of the
MSRB’s market information and
transparency efforts. This information takes several forms and is
shared with multiple audiences.
TRADE Data
In a typical year, investors buy and
sell tens of thousands of bonds
worth an average of $6 trillion.
The MSRB collects data on all
municipal bond trades, including
the price, amount, and time and
date of each trade. In 2009, the
MSRB launched a transparency
program for auction rate securities
and variable rate demand obligations to increase disclosure in this
sector of the municipal market.
The MSRB collects disclosure
documents for municipal bonds
and 529 college savings plans.
Hundreds of thousands of documents previously in paper form
have been converted into electronic
documents and are now located
in the MSRB’s electronic library.
Continuing Disclosures
Throughout the life of a bond,
issuers produce annual financial
disclosures and notices that summarize material events affecting
the issuer. Rating changes, bond
calls, defaults and changes in tax
status are among these continuing
disclosures. The MSRB is expanding its electronic document system
to collect and add continuing
disclosures to its collection of
primary market disclosures and
trade price information.
Research
Disclosure Documents
Municipal bond issuers that sell
bonds to the public typically
­produce documents that summarize the particular features of
their bonds. Official statements
include descriptions of the
terms and ­purpose of a bond,
the source of revenue and how
the security will be repaid,
among other ­information. The
official statement also outlines
the issuer’s financial condition.
MSRB
Municipal Securities
Rulemaking Board
529 college savings plans,
which are a popular type of
municipal security offered by
Using its collection of source data
for the municipal market, the MSRB
assembles market-wide information that illustrates trends and
highlights trading and new-issue
activity. This information is available to a variety of audiences
either electronically via one of the
MSRB’s websites (www.msrb.org
or www.emma.msrb.org) or as
part of periodic research reports.
The MSRB has an ongoing
commitment to provide market
participants, regulators and policymakers with research-related
products and statistical information.
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Market statistics produced by the MSRB are available to a wide
range of audiences and provide both daily and longer-range
perspectives on the municipal market.
Most Active Securities Based on Number of Trades for NOVEMBER 13, 2008*
CUSIP
Security Description
592646XE8
Metropolitan Wash D C ARPTS AUTH
ARPT SYS REV-AMT-SER B (09/27/2007)
PENNSYLVANIA ST PUB SCH BLDG AUTH
LEASE REV-SCH DIST PHILADELPHIA PJ-SER B
(12/28/2006)
MINNEAPOLIS MINN HEALTH CARE SYS
REV-FAIRVIEW HEALTH SVCS-SER B
(11/12/2008)
709207DE1
60374VCV3
93978EY55
62551PAT4
682004DK9
246352CC0
60374VCT8
19648ANJ0
786005FQ6
Maturity
Date
Interest
Rate
(%)
Price
Average
Yield
Average
Number
of
Trades
10/1/2027
5
81.359
6.725
260
30-DAY AVERAGE TRADE SUMMARY
BY NUMBER OF TRADES
(10/3/2008–11/13/2008)
24,703
6/1/2025
5
96.849
5.236
215
11/15/2038
6.5
100.132
6.404
178
6.375
100.8
6.246
124
5.25
99.469
5.27
107
5.8
98.767
3.912
100
5.75
101.07
4.388
98
6.625
101.273
6.449
95
6.25
100.55
6.115
94
5
98.86
5.077
94
WASHINGTON ST HEALTH CARE FACS AUTH
REV-CATHOLIC HEALTH INITIATIVES-D
(11/20/2008)
10/1/2033
MULTNOMAH CNTY ORE HOSP FACS AUTH
REV-PROVIDENCE HEALTH SYS (07/21/2004)
10/1/2022
OMAHA PUB PWR DIST NEB SEPARATE ELEC
REV-NEB CITY 2-SER A (12/02/2008)
2/1/2039
DELAWARE RIV PORT AUTH PA & NJ REV(12/01/1999)
1/1/2026
MINNEAPOLIS MINN HEALTH CARE SYS
REV-FAIRVIEW HEALTH SVCS-SER A
(11/12/2008)
11/15/2028
COLORADO HEALTH FACS AUTH REVCATHOLIC HEALTH INITIATIVES-D1 (11/20/2008) 10/1/2033
SACRAMENTO CALIF MUN UTIL DIST ELEC
REV-REF-SER Q (08/22/2002)
8/15/2028
9,001
Average number
of trades is 45,858
12,154
30-DAY AVERAGE TRADE SUMMARY
BY PAR AMOUNT
(10/3/2008–11/13/2008)
$7,819m
$5,198m
Average par amount
is $15,678 million
*Excludes variable rate and zero coupon securities
$2,660m
Trade Summary
Trade Type
Customer Bought
Customer Sold
Inter-Dealer Trade
All Trades
Number of Securities
Number of Trades
Par Amount ($ Millions)
10,196
8,687
6,381
15,915
21,856
11,007
13,140
46,003
$  7,683
$  5,105
$  2,353
$15,141
� Customer Bought � Customer Sold � Inter-Dealer Trade
529 college savings plans consist of municipal securities offered by state governments. The MSRB regulates dealer sales of
529 plans, collects disclosure documents on these popular college savings plans and makes them available to investors.
Investor Resources
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M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
EMMA
Electronic Municipal Market Access
Official Statements
Through EMMA, investors can
access and download electronic
official statements on most
municipal bonds issued since 1990.
EMMA’s searchable database
contains more than 200,000
offering documents, which provide investors with key data
about the particular features of
a municipal bond.
Ongoing disclosures
Official statements and other
disclosure documents are just one
way investors can learn important
information about a particular
municipal security. Documents
called continuing disclosures,
made available by an issuer after
it issues a bond, are highly relevant for investors. For instance,
they provide an ongoing picture
of an issuer’s fiscal health, which
can affect the value of its bonds.
MSRB
Municipal Securities
Rulemaking Board
In the past, continuing disclosure
documents have not been freely
available to individual investors on
a timely basis. But a persistent
and coordinated effort on the part
of the MSRB and the Securities and
Exchange Commission addressed
this deficiency. Their effort led to
an historic improvement in investor
access to ongoing disclosure information about municipal bonds.
EMMA is being expanded to provide
investors with free and immediate
access to continuing disclosures
associated with existing bonds.
529 Plan Documents
EMMA also provides information
about most 529 college savings
plans available in the United States.
The 529 plan disclosures on EMMA
include important information for
investors about establishing, making
contributions to and managing a 529
account. Investors can print or download these documents on EMMA.
Trade Data
EMMA houses real-time and historic
trade data for municipal bonds,
which investors can use to assess
market prices and yields. Trade data
on EMMA is linked to municipal
disclosure documents, providing
Eleven
Before 2008, obtaining offering documents for one of the 1.3 million outstanding U.S. municipal securities
was cumbersome and time-consuming. There was no place where the average investor could quickly look
up and access an official statement about a bond. There also was no single location where investors could
see both real-time trade data on municipal bonds and their associated disclosure documents.
This all changed with EMMA, the Electronic Municipal Market Access system, which makes municipal bond
documents and trade data available to investors for free at www.emma.msrb.org.
EMMA is the first venue where investors can easily access comprehensive information about municipal
bonds. This free, one-stop shop for municipal disclosure documents and trade data increases fair and equal
access to municipal market information. EMMA’s interface is clear and easy to navigate, and designed
particularly for individual investors.
investors with comprehensive information unavailable anywhere else.
Educational Tools
EMMA’s Education Center contains
an extensive library of municipal
bond and investor information
with clear and easy-to-understand
explanations of municipal bonds
and how the market works. The
Education Center provides answers
to frequently asked questions about
municipal bonds and houses the
most complete glossary in the
industry, among other helpful
information.
Educational information on EMMA
ranges from a fundamental explanation of bond basics to in-depth
descriptions of various kinds and
features of bonds. Daily and other
municipal market statistics are
available on EMMA to help investors gain a fuller understanding
of trading activity in the municipal
bond market.
The MSRB continues to expand the
Education Center to serve the
needs of individual investors.
Compliance Support
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M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
with MSRB rules. The MSRB
provides reports to enforcement
agencies to identify potential rule
violations or failure to comply
with other MSRB requirements.
Effective surveillance and enforcement of dealer activity is essential
to protect investors in the municipal market.
The Securities and Exchange
Commission, the Financial
Industry Regulatory Authority, the
United States Treasury Department,
the Federal Deposit Insurance
Corporation and the Federal
Reserve, among others, receive
information from the MSRB as part
of routine oversight of the municipal bond market and in the course
of formal enforcement activities.
The MSRB provides critical support
for the government and selfregulatory agencies that enforce
MSRB rules by sharing the trade
and disclosure information it collects each day. The MSRB’s tradereporting program, called the
Real-Time Transaction Reporting
System, allows it to provide enforcement agencies with information
needed to assess industry compliance with MSRB rules.
Information Exchanges
The MSRB ensures a steady flow
of data to regulators on dealer
activities and industry compliance
MSRB
Municipal Securities
Rulemaking Board
Support provided to enforcement
agencies is not limited to data
reports. The MSRB provides inperson training for enforcement
personnel around the country on
a regular basis. These seminars
help educate fellow regulators
on MSRB rules and on the information systems that monitor
­market activity.
Online Tools
The MSRB provides a number of
online tools for enforcement professionals, including a dedicated,
secure website that provides
reports and interactive databases
to help oversee dealer compliance.
Formal Meetings
At regularly scheduled meetings
throughout the year, the MSRB
meets with enforcement agencies
to discuss any changes in rules
and compliance procedures. These
meetings provide a forum for
enforcement agencies to discuss
the MSRB’s rulemaking and market
information programs and to stay
apprised of new developments.
thirteen
The MSRB’s municipal market data help the enforcement agencies that enforce MSRB rules and monitor dealer activities.
The MSRB provides these fellow regulators with reports to identify potential rule violations or any failures to comply with
other MSRB requirements.
fourteen
Outreach
M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
Input From Market
Participants
The municipal securities business is
by definition a local one. State and
local governments raise capital to
pay for infrastructure and other
community needs. All of the local
capital-raising activities around
the country combine to create a
national municipal securities marketplace made up of participants
that operate independently of
each other.
A UNIFYING AGENT
The MSRB acts as a unifying agent
in this market by collecting market
information about issues of every
size and from every geographic
location. This enables the MSRB
to serve as a resource to market
professionals, the general public
and to key federal policymakers
such as Congress, the Department
of the Treasury and the Federal
Reserve by providing critical,
objective information about the
municipal market.
The MSRB also consults with state
regulators and legislators on the
municipal market and MSRB rules.
It provides state government
officials with trade data to support
state enforcement actions against
municipal securities dealers.
MSRB
Municipal Securities
Rulemaking Board
To fully inform its operations, the
MSRB actively seeks input from
market participants. Board members and MSRB staff spend hundreds of hours each year meeting
with investors, issuers, municipal
finance attorneys, financial advisors, municipal securities dealers
and others who provide advice and
expertise on current issues and
initiatives. This interaction helps
the MSRB understand how best to
protect investors, foster market
efficiency and address potential
problems.
Meanwhile, exchanges with market
participants occur on a daily basis
by phone, email, conference calls
and meetings. The MSRB also
receives valuable input from the
general public through EMMA.
Feedback received in these
exchanges provides the MSRB
with a constant flow of qualitative
information. It also helps the MSRB
refine its information products
based on the market’s needs and
evaluate the effectiveness of its
investor protection measures.
Formal advisory groups made up
of issuers, investors and other
market participants also provide
advice and expertise on current
issues and initiatives directly to
the MSRB’s Board of Directors.
The MSRB’s outreach efforts are
fundamental to its mission of
protecting investors and the
public interest. A fair and efficient
market requires widespread
sharing of information and
knowledge, and the MSRB is
central to that exchange.
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A backlog of infrastructure projects in the United States for highways, sewers and public power will
continue to make municipal bonds the primary financing tool for local and state governments.
sixteen
Contact Us
M u n i c ip a l S e c u r i t i e s R u l e m a k i n g B o a r d
The Municipal Securities
Rulemaking Board was established in 1975 by Congress to
develop rules regulating securities
firms and banks involved in
underwriting, trading and selling
municipal securities. The Board
operates information systems,
including the Electronic Municipal
Market Access (EMMA) system,
that are designed to promote
transparency and access to information. The MSRB also conducts
extensive outreach and education
activities. The Board is composed
of members from the municipal
securities dealer community and
the public, and is charged with
protecting investors and promoting a fair and efficient market.
The Board is a self-regulatory
organization that is subject to
oversight by the Securities and
Exchange Commission.
Municipal Securities
Rulemaking Board
MSRB
Municipal Securities
Rulemaking Board
1900 Duke Street
Suite 600
Alexandria, VA 22134
Phone: (703) 797-6600
E-mail: Information@msrb.org
Online: www.msrb.org or
www.emma.msrb.org
M u n i c i pa l S e c u r i t i e s R u l e m a k i n g B oa r d
MSRB
Municipal Securities
Rulemaking Board
MSRB
Municipal Securities
Rulemaking Board
Municipal Securities Rulemaking Board
1900 Duke Street, Suite 600
Alexandria, VA 22314
www.msrb.org
www.emma.msrb.org