On July 1, the Municipal Securities Rulemaking Board “began a new era in municipal bond disclosure” with the official launch of the final phase of its Electronic Municipal Market Access system, also known as EMMA.
The MSRB introduced the EMMA system in phases, beginning in March 2008. With the launch of this final phase, EMMA provides access to all disclosure documents associated with municipal bonds, as well as real-time trade data on the approximately 1.2 million outstanding municipal bonds, according to an MSRB press release.
In the release, Lynette Kelly Hotchkiss, Executive Director says, “the creation of EMMA and the market transparency it provides catapults municipal bond disclosure decades ahead of the fragmented and cumbersome system that preceded it.”
Michael Ross, senior vice president and desk analyst with Morgan Keegan remembers that fragmented and cumbersome system well. “Before the creation of the Nationally Recognized Municipal Securities Information Repositories (NRMSIRs), analysts and investors would often have to call the issuer to request an official statement via mail or fax.”
By becoming the sole, centralized electronic repository for all disclosure documents and trade data, EMMA is bringing markedly improved access and efficiency to the municipal market, particularly for individual investors.
Theoretically, increased transparency should translate into greater pricing efficiency and less variability in pricing. But Michael Ross cautions against getting overly excited. The system still relies on compliance by the issuers, and the industry has yet to set a uniform standard for ensuring the timely filing of these documents. Nonetheless, he is optimistic that EMMA is a huge step in the right direction.
Also worth noting is EMMA’s nothing-short-of-impressive web site. Perhaps most notable is the real-time pricing information for recent trades. The straightforward search tool allows visitors to search for a specific bond issue by name or CUSIP number, as well as all bonds sold by a given issuer. The MSRB has clearly developed a visitor-friendly resource that also provides a plethora of educational materials that helps demystify the workings of the municipal bond market.
In a market plagued by challenges in recent times, it is a refreshing change to be able to celebrate progress.