In an August 1 release, the MSRB said it has scratched a proposed rule that would have required reporting of direct-purchases and bank loans by municipal issuers.

In the March concept release (MSRB Reg. Notice 2016-11) , the MSRB noted concerns that municipal borrowings in the form of direct purchases or bank loans increased the risk to investors in municipal securities if the other borrowings remained undisclosed. The Board’s concept release proposed rule-making that would require municipal advisors and others to disclose such borrowings. That proposal, though, posed potential conflicts with the “Tower Amendment” and related restrictions prohibiting federal securities regulators (and SROs) from requiring reporting by States and their political subdivisions. We discussed the proposal here (Apr. 28, 2016).

Responding to the comments received on the concept release, the Board said:

However, in light of comments received in response to the concept proposal, the Board will not pursue rulemaking at this time but will continue to raise awareness about the issue among regulators and market participants, and encourage industry-led initiatives that support voluntary disclosure best practices. In order to facilitate the filing of bank loan disclosures on EMMA, the MSRB has been working with issuer representatives to enhance the submission process. The MSRB will soon release changes to the website that improve this process by issuers and also enhances the ability of investors to locate available bank loan disclosures.

“Our concerns about the need for improved disclosure of bank loans and other financings by municipal entities and obligated persons has not diminished whatsoever,” Singer said. “While we acknowledge that MSRB rulemaking is not the best approach at this time, we continue to urge market participants to consider this shortcoming in our market.”

MSRB Release (Aug. 1, 2016).