Whether you call it “Netflix for municipal bonds” or “disclosure-on-demand,” MuniDeals.com has established a niche position in the world of primary market disclosure for municipal bonds.
The first qualified disclosure portal* for the municipal bond market, MuniDeals is an online system through which investors can download or request printed copies of official statements for new issues that come to market. The portal not only supports the needs of the investing public, but also offers several advantages to the broker/dealer – and ultimately, the issuer – as well.
The Municipal Securities Rulemaking Board (MSRB) officially launched the Electronic Municipal Market Access (EMMA) system last year, marking a new era in municipal bond disclosure. EMMA dramatically increased the transparency in the municipal marketplace by providing one-stop electronic access to official statements and other disclosure documents for municipal bonds.
But in accordance with MSRB Rule G-32, investors who purchase new municipal securities are entitled to receive “all available information relevant to his or her investment decision by the settlement of the transaction.” Translated, that means that the underwriter has the obligation to supply both a digital copy and/or a hard copy of the official statement and other disclosure documents upon request.
MuniDeals saw an opportunity to be able to assist broker/dealers in this regard by functioning as a vehicle through which to streamline the distribution of disclosure materials in both digital and paper formats. These include preliminary and final official statements, notices of sale, offering circulars, and supplements. MuniDeals delivers disclosure materials to the investor’s desktop or doorstep.
“The MSRB has been supportive of our efforts,” says Jim Higgins, Chief Executive Officer of MuniDeals. “While EMMA provides a digital platform, there is a convergence of media formats – the world isn’t all digital, nor is it all paper. There is a need for both in today’s municipal marketplace.”
Under Rule G-32, when a new municipal bond issue comes to market, the broker/dealer is obligated to send investors a “Notice of Accessibility” – either electronic or by mail – to let them know that the official statement is available on EMMA. Furthermore, they must have printed official statements ready to mail the day after a request for a hard copy is made by the public.
By also posting the official statement on the MuniDeals Qualified Portal, an investor can view and download offering documents or order a hard copy – free of charge. The official statement will print and mail by the next business day. While documents are provided to the investor for free, the issuer is charged a flat fee per deal, as a cost of issuance.
This on-demand system is highly efficient, eliminating unnecessary printing, express shipping and warehousing of materials that may ultimately go to waste.
Rule G-32 states that the broker/dealer is obligated to provide investors with the opportunity to receive a printed version of the official statement for 30 days following the issuance of a new municipal bond.
During that period, the public can request a hard copy directly from the MuniDeals web site. After the 30-day period, the “request a printed copy” button is removed from MuniDeals’ site, allowing digital downloads only..
While both EMMA and MuniDeals are free to the public, users are required to register at MuniDeals in order to gain access to documents. This procedure allows MuniDeals to supply the underwriter with a detailed compliance report on the distribution of electronic and paper versions of these important documents
As the underwriter for the recent Trinity International University (Illinois) revenue refunding bond issue, BMO Capital Markets used the MuniDeals portal to provide access to the official statement for the deal. “In addition to providing a vehicle for ensuring that the investing public has easy access to electronic and hard copies of official statements, the MuniDeals portal also served as a convenient tool for the transaction’s working group,” according to Lindsay Wall, a Vice President in the Public Finance group at BMO Capital Markets.
“The MuniDeals on-demand system appears to have great potential for saving underwriters’ time and money – savings that can ultimately be passed on to issuers,” says Lindsay Wall. Welcome words in today’s economic climate.
To date, issuers in 18 states have begun using the Muni Deals Qualified Portal. The future of municipal disclosure has arrived.
*Qualified Portals: The MSRB defines a qualified portal as “an Internet-based utility providing access by any purchaser or potential purchaser of offered municipal securities to the (Official Statement) for such offered municipal securities in a designated electronic format, and allowing such purchaser or potential purchaser to search for (using the nine-digit CUSIP number and other appropriate search parameters), view, print and save the OS, at no charge, for a period beginning on the first business day after such OS becomes available from EMMA and ending no earlier than 30 calendar days after the end of the primary offering disclosure period for such offered municipal securities; provided that any such utility shall not be a qualified portal unless notice to users that OSs are also available from EMMA is posted and a hyperlink to EMMA are posted on the page on which searches on such utility for OSs may be conducted.” Source: Municipal Rulemaking Securities Board Notice 2009-28, dated June 1, 2009. Footnote 37.
The MSRB does not approve qualified portals, but as long as they meet the criteria set forth by the definition, they are deemed a “qualified portal.”