Municipal Securities Rulemaking Board EMMA Electronic Municipal Market

Municipal Securities Rulemaking Board EMMA – Electronic Municipal Market Access: Real-Time Disclosure in the Municipal Securities Market National Federation of Municipal Analysts May 5 - 8, 2009 Seattle, Washington Lynnette Hotchkiss, Executive Director

MSRB in a Nutshell • Self Regulatory Organization for broker-dealers and bank dealers in the municipal market – no rulemaking authority over issuers, intermediaries or other market participants – no non-securities rulemaking authority • MSRB coordinates with SEC, FINRA, bank regulators on enforcement • Coordinating efforts with IRS, Treasury, others on market issues • Congressionally mandated mission: – protect investors and the public interest – promote fair and efficient municipal bond market • MSRB furthers mission through rulemaking, information services/systems, outreach and education and market leadership

MSRB’s Recent Investor Protection and Fair Practice Initiatives – auction rate securities – MSRB Notice 2008 -09 (Feb 19, 2008) • Focus on customer protection obligations – fair dealing, disclosure of material facts, suitability of recommendations – bond insurer downgrades – MSRB Notice 2008 -04 (Jan 22, 2008) • Focus on customer protection obligations – fair dealing, disclosure of material facts, suitability of recommendations, fair pricing – bank tying arrangements – MSRB Notice 2008 -34 (Aug 14, 2008) • Focus on promoting compliance with federal banking laws when structuring transactions with liquidity facilities – political contributions – MSRB Notice 2008 -38 (Sept 11,

MSRB’s Recent Transparency and Market Efficiency Initiatives – NIIDS – New Issue Information Dissemination Service MSRB requirements effective Sept 30, 2008 • Dissemination of key new issue bond data to market through DTCC ♦ Assures rapid and consistent disclosure to the market ♦ Promotes efficient trade processing and reporting ♦ Currently analyzing NIIDs data – Auction Rate and VRDO Transparency • Collect and disseminate resets, related data and key documents for each ARS auction and VRDO remarketing – Research and Market Statistics

MSRB Recent Market Leadership Initiatives – Resource to Congressional leaders • Congressional Committees • Individual Senators and Representatives – Resource to other Federal and State regulators – MSRB Statement for House Financial Services Committee Hearing on “Municipal Bond Turmoil: Impact on Cities, Towns, and States” on March 12, 2008 – MSRB Statement for House Financial Services Committee Hearing on “Auction Rate Securities Market: A Review of Problems and Potential Resolutions, ” on September 18, 2008 – MSRB Testimony for Senate Banking Committee Hearing on “Enhancing Investor Protection and the Regulation of the Securities Markets, ” on March 26, 2009

MSRB Recent Market Leadership Initiatives – MSRB Statement Regarding Regulation of the Municipal Market on January 9, 2009 • Focus attention on unregulated municipal market participants • Uses pay-to-play as an example – MSRB Letter to Congress with Specific Recommendations on Regulating Financial Intermediaries on February 11, 2009 • Focus on regulation of intermediaries • Suggests Muni Czar or industry coordinating committee • Calls for better coordination of federal and state enforcement activities • Muni derivatives to be subject to same regulatory framework developed for other derivative markets • Articulates role for market-specific SROs to complement antifraud authority of federal securities laws

EMMA: Electronic Municipal Market Access http: //www. emma. msrb. org • Internet-based portal providing free public access to disclosure documents and real-time trade prices • EMMA contains – official statements – current & historical from 1990 – advance refunding documents – current & historical from 1990 – – – trade prices – real-time & historical from 2005 SHORT – transparency for ARS and VRDOs market statistics Access Equals Delivery (May 2009) secondary market disclosures (July 2009)

EMMA Electronic Municipal Market Access • EMMA to expand over course of this year to provide: – variable rate securities rate reset & liquidity information – beginning April 2009; expanded to provide copies of LOCs late 2009 – auction rate security rate bidding data & documents – beginning second half of 2009 – market statistics/investor education – expanded coverage throughout the year – enhanced official statement dissemination – real-time posting of OSs, all-electronic dissemination expected late spring 2009 – continuing disclosure – centralized all-electronic

EMMA Electronic Municipal Market Access • Free real-time continuing disclosure access • SEC Rule 15 c 2 -12 amended, as of July 1, 2009, to: – replace NRMSIRs and SIDs with MSRB as central filing venue – provide for submissions to EMMA solely in electronic format – provide for indexing information to accompany all submissions • MSRB’s continuing disclosure service would: – accept submissions for all issues subject to continuing disclosure undertakings, even if issued prior to July 1, 2009 – make available disclosures submitted on & after launch of continuing disclosure service on July 1, 2009

EMMA Electronic Municipal Market Access • Free real-time continuing disclosure access • System highlights: – continuing disclosures submitted to EMMA by issuers, obligated persons & agents, at no cost, through web upload or B 2 B stream – leverage underwriter OS submissions & market data to organize issues & securities for indexing purposes – free real-time public access to continuing disclosures through EMMA web portal – integrated display of continuing disclosures with

Municipal Securities Rulemaking Board EMMA – Electronic Municipal Market Access: Real-Time Disclosure in the Municipal Securities Market National Federation of Municipal Analysts May 5 - 8, 2009 Seattle, Washington Lynnette Hotchkiss, Executive Director