More continuing disclosure changes on the way


Beginning in July 2020, the Municipal Securities Rulemaking Board (MSRB) plans to “enhance transparency” of continuing disclosure submissions on its Electronic Municipal Market Access (EMMA) website.  The most notable change is that the MSRB will begin to display a submission calculator, which will indicate the number of days between the end of an Issuer’s fiscal year and the date an Issuer’s financial disclosure is submitted.

Timely disclosure of audited financial statements and any other required financial information has long been a concern of bond investors. These initiatives are a part of an ongoing effort by the MSRB to address the concerns raised by municipal market participants in the area of disclosure.  This new directive does not require that annual disclosure documents be submitted within a specific timeline; however, the potential exists for bond investors to favor Issuers that submit disclosure documents in a timelier fashion over Issuers with longer disclosure timelines. Continued emphasis on timely and accurate disclosure practices is important for Issuer’s to ensure market access in the future.  The submission calculator is based on the descriptive information provided by the person submitting the information on behalf of the issuer.  It is important that careful attention is made when entering the information to ensure that the calculation is correct based upon the reporting period.

The Issue:  Encouraging Timeliness of Disclosures

When Issuers sell bonds in the public market, they are required to provide bond investors with information on an ongoing basis while the bonds are outstanding. The information includes audited financial statements, other unaudited and financial information, certain reportable events that may be of interest to bond holders and, at times, specific data regarding an enterprise, such as an electric utility. Bond investors have long expressed concern about the timeliness, access and accuracy of annual disclosure information provided by Issuers. For example, in the corporate bond market, investors oftentimes receive quarterly financial updates, whereas in the municipal market, investors may have to wait six to twelve months following the close of the fiscal year to receive updated financial information. 

New Disclosure Initiatives

Other MSRB initiatives have included requiring Issuers to submit certain reportable events within 10 business days. Last year, the MSRB added new reportable events for bonds that are issued after February 27, 2019, including requiring issuers to report new financial obligations, such as bank loans, if they are deemed to be “material” to these outstanding bonds.  The most recent initiative includes:

  • Publishing the number of days between end of fiscal year and disclosure on EMMA.
  • Reconfiguration of Issuer’s information on EMMA to more prominently display disclosure information.
  • New features to display how disclosure submissions have been modified over time.

Impact on Issuers

There is not an immediate impact on Issuers; however, the potential exists for bond investors to favor Issuers that submit disclosure documents in a timelier fashion and avoid purchasing bonds from Issuers with longer disclosure timelines. Therefore, issuers may want to reassess how quickly annual financial information is filed on the EMMA system after it is released.

Disclosure issues and the requirements placed on Issuers will continue to evolve.  In order to ensure municipal market access in the future, Issuers should continue to emphasize timely and accurate disclosure practices.

For more information on this topic or to learn how Baker Tilly specialists can help, contact our team.

Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

Doug Green
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