[Federal Register: April 14, 2009 (Volume 74, Number 70)]
[Notices]
[Page 17237-17240]
[DOCID:fr14ap09-113]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28690; 812-13235-55]

Blackrock International Growth and Income Trust, et al.; Notice
of Application

April 7, 2009.
AGENCY: Securities and Exchange Commission.

ACTION: Notice of application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 19(b) of
the Act and rule 19b-1 under the Act.

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Summary of Application: Applicants request an order to permit certain
closed-end investment companies to make periodic distributions of long-
term capital gains with respect to their outstanding common stock as
frequently as twelve times each year, and as frequently as
distributions are specified by or in accordance with the terms of any
outstanding preferred stock that such investment companies may issue.

Applicants: BlackRock International Growth and Income Trust; BlackRock
Global Equity Income Trust; BlackRock Preferred and Equity Advantage
Trust; BlackRock Real Asset Equity Trust; BlackRock World Investment
Trust; BlackRock Enhanced Dividend AchieversTM Trust;
BlackRock Global Opportunities Equity Trust; BlackRock Health Sciences
Trust; BlackRock Global Energy and Resources Trust; BlackRock S&P
Quality Rankings Global Equity Managed Trust; BlackRock Strategic
Dividend AchieversTM Trust; BlackRock Dividend
AchieversTM Trust; BlackRock EcoSolutions Investment Trust;
BlackRock Enhanced Government Fund, Inc.; BlackRock Enhanced Capital
and Income Fund, Inc. (the ``Funds'') and BlackRock Advisors, LLC. (the
``Adviser'').

Filing Dates: June 21, 2007, July 23, 2008, August 18, 2008, September
22, 2008 and January 27, 2009.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on May 4, 2009, and should be accompanied by proof of service on
applicants, in the form of an affidavit or, for lawyers, a certificate
of service. Hearing requests should state the nature of the writer's
interest, the reason for the request, and the issues contested. Persons
who wish to be notified of a hearing may request notification by
writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090; Applicants, c/o BlackRock Advisors,
LLC, 100 Bellevue Parkway, Wilmington, Delaware 19809.

FOR FURTHER INFORMATION CONTACT: Wendy Friedlander, Senior Counsel, at
(202) 551-6837, or James M. Curtis, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Office of Chief Counsel).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549-1520 (telephone<PHONE_NUMBER>).

Applicants' Representations

    1. Each of the Funds is a closed-end management investment company
registered under the Act.\1\ The common stock issued by each Fund is
traded on either the New York Stock Exchange or NYSE Alternext US.
Currently, only the BlackRock Preferred and Equity Advantage Trust has
preferred stock outstanding, which stock is not traded on any exchange.
Applicants believe that, in general, the common stockholders of the
Funds are conservative, dividend-sensitive investors who desire current
income periodically.
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    \1\ Applicants request that any order issued granting the relief
requested in the application also apply to any closed-end investment
company (``fund'') that in the future: (a) Is advised by the Adviser
(including any successor in interest) or by any entity controlling,
controlled by, or under common control (within the meaning of
section 2(a)(9) of the Act) with the Adviser; and (b) complies with
the terms and conditions of the requested order. A successor in
interest is limited to entities that result from a reorganization
into another jurisdiction or a change in the type of business
organization.
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    2. The Adviser is registered under the Investment Advisers Act of
1940. Each Fund and the Adviser have entered into an investment
advisory agreement pursuant to which the Adviser provides investment
advisory and portfolio management services to such Fund. The Adviser is
a wholly-owned subsidiary of BlackRock, Inc.
    3. Applicants represent that on September 25, 2008, the Board of
Directors or Board of Trustees (``Board'') of each of the Funds,
including a majority of the members of each Board who are not
``interested persons'' of such Fund, as defined in section 2(a)(19) of
the Act (``Independent Members''), met and considered the adoption of a
periodic pay-out policy (``Plan'') with respect to the Fund's common
stock. Applicants represent that each Plan would provide for periodic
level distributions to the Fund's common stockholders based upon a
fixed amount per share, a fixed percentage of market price or a fixed
percentage of net asset value (``NAV'') per share of common stock.
    4. Applicants represent that each Board requested and evaluated,
and the Adviser furnished, such information as

the Board believed was reasonably necessary to make an informed
determination of whether the Fund should adopt and implement a Plan.
Applicants represent that at the meeting, each Board, including a
majority of the Independent Members of the Board, determined that
adoption and implementation of the Plan was consistent with the Fund's
investment objectives and policies and in the best interest of the Fund
and its stockholders, after considering information such as the
purpose(s) of the Plan, any potential or actual conflicts of interest
that the Adviser or any affiliated person of the Adviser may have
relating to the adoption or implementation of the Plan, whether the
rate of distribution under the Plan would exceed the Fund's expected
total return (in relation to NAV per share of common stock) and the
reasonably foreseeable material effects of such Plan on the Fund's
long-term total return (in relation to market price and NAV).
    5. Applicants represent that at the September 25, 2008 meeting,
each Board, including a majority of Independent Members of the Board,
adopted compliance policies and procedures in accordance with rule 38a-
1 under the Act that are reasonably designed to ensure that all notices
required to be sent to Fund stockholders pursuant to section 19(a) of
the Act and rule 19a-1 thereunder (``Notices'') comply with Condition
II below, and that all other written communications by a Fund or its
agents regarding distributions under a Fund's Plan comply with
condition III below. Applicants represent that each Board also adopted
policies and procedures at that meeting that require the Fund to keep
records that demonstrate the Fund's compliance with all of the
conditions of the requested Order and that are necessary for the Fund
to form the basis for, or demonstrate the calculation of, the amounts
disclosed in its Notices.
    6. Applicants represent that each Board recorded the information in
its meeting minutes that it considered and that formed the basis for
the Board's approval of each Fund's Plan. Applicants represent that
such minutes will be preserved for a period of not less than six years
from the date of such meeting, the first two years in an easily
accessible place, or for such longer period as may otherwise be
required by law.

Applicants' Legal Analysis

    1. Section 19(b) generally makes it unlawful for any registered
investment company to make long-term capital gains distributions more
than once each year. Rule 19b-1 limits the number of capital gains
dividends, as defined in section 852(b)(3)(C) of the Internal Revenue
Code (``Code'') (``distributions''), that a fund may make with respect
to any one taxable year to one, plus a supplemental ``clean up''
distribution made pursuant to section 855 of the Code not exceeding 10%
of the total amount distributed for the year, plus one additional
capital gain dividend made in whole or in part to avoid the excise tax
under section 4982 of the Code.
    2. Section 6(c) provides that the Commission may, by order upon
application, conditionally or unconditionally exempt any person,
security, or transaction, or any class or classes of persons,
securities or transactions, from any provision of the Act, if and to
the extent that the exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
    3. Applicants state that the one of the concerns underlying section
19(b) and rule 19b-1 is that shareholders might be unable to
differentiate between regular distributions of capital gains and
distributions of investment income. Applicants argue that by providing
the information required by section 19(a) and rule 19a-1, and by
complying with the procedures adopted under the Plans and the
conditions listed below, each Fund will ensure that its stockholders
are provided sufficient information to understand that their periodic
distributions are not tied to the Fund's net investment income (which
for this purpose is the Fund's taxable income other than from capital
gains) and realized capital gains to date, and may not represent yield
or investment return. Accordingly, applicants assert that continuing to
subject the Funds to section 19(b) and rule 19b-1 would afford
shareholders no extra protection.
    4. Applicants note that section 19(b) and rule 19b-1 also were
intended to prevent certain improper sales practices, including, in
particular, the practice of urging an investor to purchase shares of a
fund on the basis of an upcoming capital gains dividend (``selling the
dividend''), where the dividend would result in an immediate
corresponding reduction in NAV and would be in effect a taxable return
of the investor's capital. Applicants assert that the ``selling the
dividend'' concern should not apply to closed-end investment companies,
such as the Funds, which do not continuously distribute shares.
According to applicants, if the underlying concern extends to secondary
market purchases of shares of closed-end funds that are subject to a
large upcoming capital gains dividend, adoption of a Plan actually
helps minimize the concern by avoiding, through periodic distributions,
any buildup of large end-of-the-year distributions.
    5. Applicants also note that the common stock of closed-end funds
that invest primarily in equity securities often trade in the
marketplace at a discount to their NAV. Applicants believe that this
discount may be reduced for closed-end funds that pay relatively
frequent dividends on their common stock at a consistent rate, whether
or not those dividends contain an element of long-term capital gain.
    6. Applicants assert that the application of rule 19b-1 to a Plan
actually could have an undesirable influence on portfolio management
decisions. Applicants state that, in the absence of an exemption from
rule 19b-1, the implementation of a Plan imposes pressure on management
(i) not to realize any net long-term capital gains until the point in
the year that the fund can pay all of its remaining distributions in
accordance with rule 19b-1, and (ii) not to realize any long-term
capital gains during any particular year in excess of the amount of the
aggregate pay-out for the year (since as a practical matter excess
gains must be distributed and accordingly would not be available to
satisfy pay-out requirements in following years), notwithstanding that
purely investment considerations might favor realization of long-term
gains at different times or in different amounts. Applicants thus
assert that the limitation on the number of capital gain distributions
that a fund may make with respect to any one year imposed by rule 19b-1
may prevent the efficient operation of a Plan whenever that fund's
realized net long-term capital gains in any year exceed the total of
the periodic distributions that may include such capital gains under
the rule. Applicants assert that the requested order would minimize
these effects of rule 19b-1 by enabling the Funds to realize long-term
capital gains as often as investment considerations dictate without
fear of violating rule 19b-1.
    7. Applicants state that Revenue Ruling 89-81 under the Code
requires that a fund that has both common stock and preferred stock
outstanding designate the types of income, e.g., investment income and
capital gains, in the same proportion as the total distributions
distributed to each class for the tax year. To satisfy the
proportionate designation requirements

of Revenue Ruling 89-81, whenever a fund has realized a long-term
capital gain with respect to a given tax year, the fund must designate
the required proportionate share of such capital gain to be included in
common and preferred stock dividends. Applicants state that although
rule 19b-1 allows a fund some flexibility with respect to the frequency
of capital gains distributions, a fund might use all of the exceptions
available under the rule for a tax year and still need to distribute
additional capital gains allocated to the preferred stock to comply
with Revenue Ruling 89-81.
    8. Applicants assert that the potential abuses addressed by section
19(b) and rule 19b-1 do not arise with respect to preferred stock
issued by a closed-end fund. Applicants assert that such distributions
are fixed or determined in periodic auctions by reference to short-term
interest rates rather than by reference to performance of the issuer
and Revenue Ruling 89-81 determines the proportion of such
distributions that are comprised of the long-term capital gains.
    9. Applicants also submit that the ``selling the dividend'' concern
is not applicable to preferred stock, which entitles a holder to no
more than a periodic dividend at a fixed rate or the rate determined by
the market, and, like a debt security, is priced based upon its
liquidation value, credit quality, and frequency of payment. Applicants
state that investors buy preferred shares for the purpose of receiving
payments at the frequency bargained for, and do not expect the
liquidation value of their stock to change.
    10. Applicants request an order under section 6(c) granting an
exemption from the provisions of section 19(b) and rule 19b-1 to permit
each Fund to distribute periodic capital gains dividends (as defined in
section 852(b)(3)(C) of the Code) as often as monthly in any one
taxable year in respect of its common stock and as often as specified
by or determined in accordance with the terms thereof in respect of its
preferred stock.\2\
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    \2\ Applicants state that a future fund that relies on the
requested order will satisfy each of the representations in the
application except that such representations will be made in respect
of actions by the board of directors or board of trustees of such
future fund and will be made at a future time.
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Applicants' Conditions

    Applicants agree that, with respect to each fund seeking to rely on
the order, the order will be subject to the following conditions:

I. Compliance Review and Reporting

    The fund's chief compliance officer will: (a) report to the fund
Board, no less frequently than once every three months or at the next
regularly scheduled quarterly board meeting, whether (i) the fund and
the Adviser have complied with the conditions to the requested order,
and (ii) a Material Compliance Matter, as defined in rule 38a-1(e)(2),
has occurred with respect to compliance with such conditions; and (b)
review the adequacy of the policies and procedures adopted by the fund
no less frequently than annually.

II. Disclosures to Fund Shareholders

    A. Each Notice to the holders of the fund's common shares, in
addition to the information required by section 19(a) and rule 19a-1:
    1. Will provide, in a tabular or graphical format:
    (a) The amount of the distribution, on a per common share basis,
together with the amounts of such distribution amount, on a per common
share basis and as a percentage of such distribution amount, from
estimated: (A) Net investment income; (B) net realized short-term
capital gains; (C) net realized long-term capital gains; and (D) return
of capital or other capital source;
    (b) The fiscal year-to-date cumulative amount of distributions, on
a per common share basis, together with the amounts of such cumulative
amount, on a per common share basis and as a percentage of such
cumulative amount of distributions, from estimated: (A) Net investment
income; (B) net realized short-term capital gains; (C) net realized
long-term capital gains; and (D) return of capital or other capital
source;
    (c) The average annual total return in relation to the change in
NAV for the 5-year period (or, if the fund's history of operations is
less than five years, the time period commencing immediately following
the fund's first public offering) ending on the last day of the month
prior to the most recent distribution declaration date compared to the
current fiscal period's annualized distribution rate expressed as a
percentage of NAV as of the last day of the month prior to the most
recent distribution declaration date; and
    (d) The cumulative total return in relation to the change in NAV
from the last completed fiscal year to the last day of the month prior
to the most recent distribution declaration date compared to the fiscal
year-to-date cumulative distribution rate expressed as a percentage of
NAV as of the last day of the month prior to the most recent
distribution declaration date.
    Such disclosure shall be made in a type size at least as large and
as prominent as the estimate of the sources of the current
distribution; and
    2. Will include the following disclosure:
    (a) ``You should not draw any conclusions about the fund's
investment performance from the amount of this distribution or from the
terms of the fund's Plan'';
    (b) ``The fund estimates that it has distributed more than its
income and net realized capital gains; therefore, a portion of your
distribution may be a return of capital. A return of capital may occur,
for example, when some or all of the money that you invested in the
fund is paid back to you. A return of capital distribution does not
necessarily reflect the fund's investment performance and should not be
confused with `yield' or `income' ''; \3\ and
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    \3\ This disclosure will be included only if the current
distribution or the fiscal year-to-date cumulative distributions are
estimated to include a return of capital.
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    (c) ``The amounts and sources of distributions reported in this
Notice are only estimates and are not being provided for tax reporting
purposes. The actual amounts and sources of the amounts for tax
reporting purposes will depend upon the fund's investment experience
during the remainder of its fiscal year and may be subject to changes
based on tax regulations. The fund will send you a Form 1099-DIV for
the calendar year that will tell you how to report these distributions
for Federal income tax purposes.''
    Such disclosure shall be made in a type size at least as large as
and as prominent as any other information in the Notice and placed on
the same page in close proximity to the amount and the sources of the
distribution.
    B. On the inside front cover of each report to shareholders under
rule 30e-1 under the Act, the fund will:
    1. Describe the terms of the Plan (including the fixed amount or
fixed percentage of the distributions and the frequency of the
distributions);
    2. Include the disclosure required by condition II.A.2.a above;
    3. State, if applicable, that the Plan provides that the Board may
amend or terminate the Plan at any time without prior notice to fund
shareholders; and
    4. Describe any reasonably foreseeable circumstances that might
cause the fund to terminate the Plan and any reasonably foreseeable
consequences of such termination.
    C. Each report provided to shareholders under rule 30e-1 and each
prospectus filed with the Commission

on Form N-2 under the Act will provide the fund's total return in
relation to changes in NAV in the financial highlights table and in any
discussion about the fund's total return.

III. Disclosure to Stockholders, Prospective Stockholders and Third
Parties

    A. The fund will include the information contained in the relevant
Notice, including the disclosure required by condition II.A.2 above, in
any written communication (other than a Form 1099) about the Plan or
distributions under the Plan by the fund, or agents that the fund has
authorized to make such communication on the fund's behalf, to any fund
common stockholder, prospective common stockholder or third-party
information provider;
    B. The fund will issue, contemporaneously with the issuance of any
Notice, a press release containing the information in the Notice and
will file with the Commission the information contained in such Notice,
including the disclosure required by condition II.A.2 above, as an
exhibit to its next filed Form N-CSR; and
    C. The fund will post prominently a statement on its (or its
adviser's) Web site containing the information in each Notice,
including the disclosure required by condition II.A.2 above, and will
maintain such information on such Web site for at least 24 months.

IV. Delivery of 19(a) Notices to Beneficial Owners

    If a broker, dealer, bank or other person (``financial
intermediary'') holds common stock issued by the fund in nominee name,
or otherwise, on behalf of a beneficial owner, the fund: (a) Will
request that the financial intermediary, or its agent, forward the
Notice to all beneficial owners of the fund's stock held through such
financial intermediary; (b) will provide, in a timely manner, to the
financial intermediary, or its agent, enough copies of the Notice
assembled in the form and at the place that the financial intermediary,
or its agent, reasonably requests to facilitate the financial
intermediary's sending of the Notice to each beneficial owner of the
fund's stock; and (c) upon the request of any financial intermediary,
or its agent, that receives copies of the Notice, will pay the
financial intermediary, or its agent, the reasonable expenses of
sending the Notice to such beneficial owners.

V. Additional Board Determinations for Funds Whose Common Stock Trades
at a Premium If

    A. The fund's common stock has traded on the exchange that it
primarily trades on at the time in question at an average premium to
NAV equal to or greater than 10%, as determined on the basis of the
average of the discount or premium to NAV of the fund's common stock as
of the close of each trading day over a 12-week rolling period (each
such 12-week rolling period ending on the last trading day of each
week); and
    B. The fund's annualized distribution rate for such 12-week rolling
period, expressed as a percentage of NAV as of the ending date of such
12-week rolling period, is greater than the fund's average annual total
return in relation to the change in NAV over the 2-year period ending
on the last day of such 12-week rolling period; then:
    1. At the earlier of the next regularly scheduled meeting or within
four months of the last day of such 12-week rolling period, the Board
including a majority of the Independent Members of the Board:
    (a) Will request and evaluate, and the Adviser will furnish, such
information as may be reasonably necessary to make an informed
determination of whether the Plan should be continued or continued
after amendment;
    (b) Will determine whether continuation, or continuation after
amendment, of the Plan is consistent with the fund's investment
objective(s) and policies and in the best interests of the fund and its
stockholders, after considering the information in condition V.B.1.a
above; including, without limitation:
    (1) Whether the Plan is accomplishing its purpose(s);
    (2) The reasonably foreseeable effects of the Plan on the fund's
long-term total return in relation to the market price and NAV of the
fund's common stock; and
    (3) The fund's current distribution rate, as described in condition
V.B above, compared to with the fund's average annual total return over
the 2-year period, as described in condition V.B, or such longer period
as the Board deems appropriate; and
    (c) Based upon that determination, will approve or disapprove the
continuation, or continuation after amendment, of the Plan; and
    2. The Board will record the information considered by it and the
basis for its approval or disapproval of the continuation, or
continuation after amendment, of the Plan in its meeting minutes, which
must be made and preserved for a period of not less than six years from
the date of such meeting, the first two years in an easily accessible
place.

VI. Public Offerings

    The fund will not make a public offering of the fund's common stock
other than:
    A. A rights offering below net asset value to holders of the fund's
common stock;
    B. An offering in connection with a dividend reinvestment plan,
merger, consolidation, acquisition, spin-off or reorganization of the
fund; or
    C. An offering other than an offering described in conditions VI.A
and VI.B above, unless, with respect to such other offering:
    1. The fund's annualized distribution rate for the six months
ending on the last day of the month ended immediately prior to the most
recent distribution declaration date,\4\ expressed as a percentage of
NAV per share as of such date, is no more than 1 percentage point
greater than the fund's average annual total return for the 5-year
period ending on such date; \5\ and
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    \4\ If the fund has been in operation fewer than six months, the
measured period will begin immediately following the fund's first
public offering.
    \5\ If the fund has been in operation fewer than five years, the
measured period will begin immediately following the fund's first
public offering.
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    2. The transmittal letter accompanying any registration statement
filed with the Commission in connection with such offering discloses
that the fund has received an order under section 19(b) to permit it to
make periodic distributions of long-term capital gains with respect to
its common stock as frequently as twelve times each year, and as
frequently as distributions are specified in accordance with the terms
of any outstanding preferred stock that such fund may issue.

VII. Amendments to Rule 19b-1

    The requested relief will expire on the effective date of any
amendment to rule 19b-1 that provides relief permitting certain closed-
end investment companies to make periodic distributions of long-term
capital gains with respect to their outstanding common stock as
frequently as twelve times each year.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-8428 Filed 4-13-09; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 84, Number 229 (Wednesday, November 27, 2019)]
[Notices]
[Pages 65436-65443]
[FR Doc No: 2019-25707]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87583; File No. SR-MSRB-2019-13]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed Rule Change To Amend the
Information Facility of the MSRB's Electronic Municipal Market Access
(EMMA[supreg]) System

November 21, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on November 19, 2019 the Municipal Securities
Rulemaking Board (``MSRB'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the MSRB. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The MSRB filed with the Commission a proposed rule change to amend
the information facility of the MSRB's Electronic Municipal Market
Access (EMMA[supreg]) system (the ``EMMA IF'') \3\ to provide for (1)
the automated calculation and static display of the number of days
between (i) the annual fiscal period end date for an issuer \4\ or
obligated person \5\ and (ii) the date an annual financial disclosure
\6\ is

submitted to the EMMA system for such annual fiscal period (the
``Submission Calculator'') and (2) the reconfiguration of certain
information shown on the EMMA public website (emma.msrb.org) (the
``EMMA Portal'') \7\ to more prominently display an issuer's or
obligated person's annual financial disclosures and related information
(the ``proposed rule change'').
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    \3\ The EMMA IF serves to outline the basic functionality and
the high-level parameters by which the MSRB operates the EMMA
system. As further described in the EMMA IF, the EMMA system
consists of the EMMA Primary Market Disclosure Service, the EMMA
Continuing Disclosure Service, the EMMA Trade Price Transparency
Service and the EMMA Short-Term Obligation Rate Transparency
Service. See EMMA IF, available at: http://www.msrb.org/Rules-and-Interpretations/MSRB-Rules/Facilities/EMMA-Facility.aspx.
    \4\ Under 17 CFR 240.15c2-12 of the Exchange Act (``Rule 15c2-
12'' or the ``Rule''), the Commission has generally defined the term
``issuer of municipal securities'' to mean any governmental issuer
specified in section 3(a)(29) of the Act and the issuer of any
separate security, including a separate security as defined in rule
3b-5(a) under the Act. See 17 CFR 240.15c2-12(f)(4). The proposed
rule change uses the term issuer consistent with Rule 15c2-12(f)(4)
to mean any such ``issuer of municipal securities'' submitting
continuing disclosure documents and related information to the EMMA
system, whether on a voluntary basis or pursuant to a contractual
undertaking, such as a continuing disclosure agreement (as
hereinafter defined in note 6 infra).
    \5\ Section 15B(e)(10) of the Act defines ``obligated person''
as ``any person, including an issuer of municipal securities, who is
either generally or through an enterprise, fund, or account of such
person, committed by contract or other arrangement to support the
payment of all or part of the obligations on the municipal
securities to be sold in an offering of municipal securities.'' 15
U.S.C. 78o-4(e)(10). As interpreted by the Commission in Rule 15c2-
12(f)(10), the term ``obligated person'' means any person, including
an issuer of municipal securities, who is either generally or
through an enterprise, fund, or account of such person committed by
contract or other arrangement to support payment of all, or part of
the obligations on the municipal securities to be sold in the
offering (other than providers of municipal bond insurance, letters
of credit, or other liquidity facilities). See 17 CFR 240.15c2-
12(f)(10). The proposed rule change uses the term obligated person
consistent with Rule 15c2-12(f)(10) to mean any such ``obligated
person'' submitting continuing disclosure documents and related
information to the EMMA system, whether on a voluntary basis or
pursuant to a contractual undertaking, such as a continuing
disclosure agreement.
    \6\ Under Rule 15c2-12, a participating underwriter in an
offering of certain municipal securities must determine that an
issuer or obligated person has undertaken in a written agreement or
contract for the benefit of holders of the municipal securities to
provide certain information to the MSRB (a ``continuing disclosure
agreement''), which includes a requirement, among others, to provide
certain annual financial and operating information (i.e., ``annual
financial filings'') and audited financial statements (i.e.,
``audited financial filings''), if available (collectively, ``annual
financial disclosures''). See 17 CFR 240.15c2-12(b)(5)(i).
    \7\ As further defined in the EMMA IF, the EMMA Portal is the
functionality for displaying and otherwise making certain documents
and data available to the public without charge.
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    The Board is proposing these amendments to the EMMA IF and
corresponding enhancements to the EMMA system to promote greater
transparency in the municipal securities market, including by making
financial information more readily apparent to investors, market
professionals, and the general public through the EMMA Portal. The
Board believes the proposed rule change is consistent with the Act. By
promoting greater transparency and awareness of the financial
disclosures available in the municipal securities market, the Board
believes the proposed rule change would promote (1) the protection of
investors and the public interest and (2) the prevention of fraudulent
and manipulative acts and practices. The Board has determined to file
the proposed rule change under Section 19(b)(2) of the Act and requests
that the proposed rule change become operative on a date to be
determined by the MSRB through a notice published on its website not
later than 180 days following the publication of the Commission's
approval of the proposed rule change in the Federal Register, with such
operative date being not more than one year from the date of such MSRB
notice.
    The text of the proposed rule change is available on the MSRB's
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2019-Filings.aspx, at the MSRB's principal office, and at the Commission's
Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The MSRB has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change consists of amendments to the EMMA IF that
would provide for (1) the development and operation of the Submission
Calculator and (2) the reconfiguration of certain information shown on
the EMMA Portal, in order to more prominently display an issuer's or
obligated person's annual financial disclosures and related
information.
The Collection and Display of Financial Information on the EMMA Portal
    The EMMA System and EMMA Portal. The EMMA system consists of
several component functions that process and disseminate market
information submitted to the MSRB. For example, the EMMA Trade Price
Transparency Service publishes information on the EMMA Portal about
trading activity in the municipal securities market when such
information is reported by brokers, dealers, and municipal securities
dealers (collectively, ``dealers'') in accordance with MSRB Rule G-14,
on reports of sales or purchases. Similarly, the EMMA Primary Market
Disclosure Service processes submissions of official statements,
preliminary official statements, and related pre-sale documents for
display on the EMMA Portal when such information is submitted
voluntarily or in compliance with MSRB Rule G-32, on disclosures in
connection with primary offerings. Consequently, issuers, obligated
persons, dealers, investors, and the general public routinely interact
with the EMMA system in order to submit or access information. The EMMA
Portal averages more than 95,000 pageviews per day, which amounts to
over 35 million pageviews in a full year. In this way, the EMMA Portal
is relied upon as a free and credible source of market information and
provides unprecedented transparency about the municipal securities
market.\8\
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    \8\ See, e.g., Securities and Exchange Commission, Report on the
Municipal Securities Market, at p. 35 (July 31, 2012) (``2012
Municipal Report'') (stating EMMA ``significantly improved the
availability of both primary market and continuing disclosure
documents to investors''), available at https://www.sec.gov/news/studies/2012/munireport073112.pdf, and Commissioner Michael S.
Piwowar, Remarks at MSRB Dinner to Celebrate Milestones in Municipal
Market Transparency (April 24, 2018) (stating EMMA has ``empowered
investors with a level of transparency that was previously unknown
in this market and has transformed the municipal securities
industry''), available at https://www.sec.gov/news/speech/speech-piwowar-20180424.
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    Rule 15c2-12 and the EMMA Continuing Disclosure Service. A
continuing disclosure agreement that is entered into consistent with
the requirements of Rule 15c2-12 commits an issuer or obligated person
to provide continuing disclosure documents in conformance with the
process and other requirements prescribed by the MSRB, including the
entry of certain identifying information.\9\ The EMMA Continuing
Disclosure Service is the component of the EMMA system authorized to
receive, process, and disseminate continuing disclosure information
submitted by issuers, obligated persons, and their agents
(collectively, ``disclosure submitters'' or ``submitters'').\10\ Upon
receipt and processing, the EMMA Continuing Disclosure Service
disseminates annual financial disclosures, event notices, and other
disclosure documents on the EMMA Portal, making them publicly available
at no cost. The EMMA system uses certain identifying information
provided by submitters to electronically index and systematically
display submissions, which allows external users to more readily find
and access disclosure documents on the EMMA Portal.
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    \9\ See 17 CFR 240.15c2-12(b)(5)(i); see also Release No. 34-
59062 (December 5, 2008) 73 FR 76104 (December 15, 2008) (File No.
S7-21-08) (the ``Sole Repository Release'') (``The final amendments
require a Participating Underwriter to reasonably determine that the
issuer or obligated person has agreed at the time of a primary
offering: (1) To provide the continuing disclosure documents to the
MSRB instead of to each NRMSIR and the appropriate SID, if any; and
(2) to provide the continuing disclosure documents in an electronic
format and accompanied by identifying information as prescribed by
the MSRB.''). As further described herein, the EMMA system uses
certain identifying information provided by a submitter to
electronically index a disclosure document.
    \10\ See Release No. 34-59061 (December 5, 2008), 73 FR 75778
(December 12, 2008) (File No. SR-MSRB-2008-05) (December 8, 2008)
(the ``Continuing Disclosure Service Release'') (establishing the
EMMA Continuing Disclosure Service ``for the receipt of, and for
making available to the public, continuing disclosure documents and
related information to be submitted by issuers, obligated persons
and their agents pursuant to continuing disclosure undertakings
entered into consistent with Rule 15c2-12'').
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    Submission Process for Annual Financial Disclosures. In authorizing
the EMMA Continuing Disclosure Service, the Commission granted
authority to the MSRB to prescribe the identifying information
collected by the EMMA system for purposes of sorting, categorizing, and
retrieving continuing disclosure submissions.\11\ When

receiving the submission of an annual financial disclosure, the MSRB
generally requires \12\ disclosure submitters to enter the following
information:
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    \11\ See 17 CFR 240.15c2-12(b)(5)(i). See also the Sole
Repository Release, supra note 9, 73 FR at 76114 (``We [i.e., the
SEC] believe that providing identifying information with each
submitted document will permit the repository to sort and categorize
the document efficiently and accurately. We also anticipate that the
inclusion with each submission of the basic information needed to
accurately identify the document will facilitate the ability of
investors, market participants, and others to reliably search for
and locate relevant disclosure documents.'') and the Continuing
Disclosure Service Release, supra note 10, 73 FR at 75781, fn. 48
(stating ``the commitment by an issuer to provide identifying
information exists only if it were included in a continuing
disclosure agreement. As a result, issuers submitting continuing
disclosure documents pursuant to the terms of undertakings that were
entered into prior to the effective date of [the amendments to the
Rule effectuated by the Sole Repository Release] and that did not
require identifying information will be able to submit documents
without supplying identifying information.'')
    \12\ As noted in the Continuing Disclosure Service Release, a
continuing disclosure agreement specifies whether an issuer or
obligated persons must provide identifying information. As a result,
issuers and obligated persons submitting continuing disclosure
documents pursuant to the terms of certain continuing disclosure
agreements--i.e., agreements entered into prior to the effective
date of the Commission's 2008 amendments to the Rule that did not
require identifying information--are permitted to submit documents
without supplying such identifying information. See Continuing
Disclosure Release, supra note 10, at 73 FR 75781, fn. 48.
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     Disclosure Category. Submitters identify the appropriate
indexing category for the annual financial disclosure (the ``disclosure
category'') as being an annual financial filing and/or audited
financial filing.\13\
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    \13\ Disclosure submitters select the ``Annual Financial
Information and Operating Data (Rule 15c2-12)'' disclosure category
field for an annual financial filing and/or the ``Audited Financial
Statements or CAFR (Rule 15c2-12)'' disclosure category field for an
audited financial filing.
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     Brief Content Description. Submitters may provide a brief
description of the content of the annual financial filing and/or
audited financial filing.
     Fiscal Period Covered. Submitters enter the annual fiscal
period covered by the annual financial disclosure in the date field,
including a fiscal year end date (the ``Fiscal Period End Date'').\14\
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    \14\ The EMMA Dataport Manual for Continuing Disclosure
Submissions provides instructions and other information for issuers,
obligated persons, dealers, municipal advisors, or staff of any
other organization submitting to the EMMA Continuing Disclosure
Service via the EMMA Dataport web user interface. The manual is
published on the MSRB's website and is available at: http://
www.msrb.org/~/media/pdfs/msrb1/EMMA/pdfs/EMMACDManual.ashx?la=en.
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    Once published by a disclosure submitter, the EMMA Continuing
Disclosure Service (1) timestamps the annual financial disclosure to
register the time and date of the submission of the annual financial
disclosure to the EMMA system (the ``Posted Date''), (2) processes the
information entered by a submitter to classify and index the annual
financial disclosure on the EMMA Portal, and (3) disseminates the
annual financial disclosure document and related information, such as
the fiscal period information, on the EMMA Portal, making the annual
financial disclosure and related information publicly available at no
cost.
Concerns Regarding the Timeliness of Annual Financial Disclosures
    The timeliness of financial disclosures is often cited as an
important factor in their usefulness to investors and other market
participants, and the subject of how to improve the timeliness of
financial disclosures in the municipal securities market has been, and
continues to be, a significant concern of the Commission and various
market participants.\15\
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    \15\ See, e.g., 2012 Municipal Report, supra note 8 at p. 74
(citing Release No. 34-33741, ``Statement of the Commission
Regarding Disclosure Obligations of Municipal Securities Issuers and
Others'' (March 9, 1994), 59 FR 12748 (March 9, 1994)).
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    The Commission's 1994 Interpretive Release and Rule Amendments. The
Commission has emphasized the importance of timely disclosure for
decades. As early as its 1994 interpretive release regarding the
disclosure obligations of municipal security issuers and others, the
Commission stated that, ``[t]o avoid providing investors with a stale,
and therefore potentially misleading, picture of financial condition
and results of operations, issuers and obligors need to release their
annual financial statements as soon as practical.'' \16\ Later in the
same year when it amended Rule 15c2-12 to require continuing disclosure
agreements to thereafter incorporate provisions regarding annual
financial disclosures and certain event notices, the Commission further
highlighted the importance of financial information in the secondary
market, declaring that ``purchasers in the secondary market need the
same level of financial information and operating data in making
investment decisions as purchasers in the underwritten offering.'' \17\
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    \16\ Release No. 34-33741, ``Statement of the Commission
Regarding Disclosure Obligations of Municipal Securities Issuers and
Others'' (March 9, 1994), 59 FR 12748, at 12753 (March 9, 1994)
(File No. S7-4-94).
    \17\ Release No. 34-34961 (November 10, 1994), 59 FR 59950
(November 17, 1994) (File No. S7-5-94).
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    The Commission's 2012 Municipal Report. Building on its prior
statements, the Commission's 2012 Municipal Report affirmed that,
``[t]imely financial reporting, including timely issuance of audited
annual financial information, not only aids market participants in
making informed investment decisions, but is critical to the function
of an efficient trading market.'' \18\ Citing comments from market
participants, the 2012 Municipal Report concluded that, ``[t]he major
challenge in the secondary market disclosure, according to market
participants, is the timeliness and completeness of filings as well as
compliance with continuing disclosure agreements.'' The report also
noted certain concerns raised by municipal issuers about the burden of
increased regulation,\19\ including the concern that mandating a
specific timeframe for the dissemination of financial information may
not be feasible for the municipal market.\20\ In acknowledgment of the
limitations on the regulation of municipal issuers under the existing
regulatory scheme, the 2012 Municipal Report made a series of
recommendations involving ``a combination of approaches, including
legislative, regulatory and industry-based initiatives.'' \21\ One of
those recommendations included the enhancement of the EMMA system, so
that ``retail investors have better access to disclosure with respect
to municipal securities as soon as practicable.'' \22\
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    \18\ 2012 Municipal Report, supra note 8, at p. 74.
    \19\ Id., at p. iv (``the Report notes concerns raised by
issuers about potential burdens that could result from increased
regulation.'')
    \20\ Id., at p. 80 (citing to the concerns of issuer
representatives at certain hearings regarding ``the necessity, or
even feasibility, of a mandated shorter timeframe for the
dissemination of financial information'' and the possibility that
``shorter deadlines could diminish the value of financial
information'' by causing governments to adopt a ``reduced set of
basic financial statements'').
    \21\ Id., at p. vii (``First, in light of the Commission's
limited regulatory authority, we recommend a number of potential
legislative changes which, if implemented by Congress, would provide
the Commission with additional authority to initiate changes to
improve municipal securities disclosures made by issuers. The
legislative changes would not result, however, in the repeal or
modification to the existing proscriptions on the SEC or the MSRB
requiring any presale filing of disclosure documents, known as the
`Tower Amendment' (discussed in more detail in the Report). The
legislative recommendations would nonetheless give the Commission
the authority to take regulatory steps that it determines to be
appropriate to meaningfully enhance disclosure practices by
municipal issuers, which could be accomplished in a short period of
time.'')
    \22\ Id., at p. 141; see also Recommendation of Market Structure
Subcommittee of IAC [i.e., the Commission's Investor Advisory
Committee], Select Enhancements to Protect Retail Investors in
Municipal and Corporate Bonds, July 5, 2018, available at https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac061418-market-structure-subcommittee-recommendation.pdf (recommending the
MSRB enhance the EMMA Portal to highlight to ``investors, when they
reach an obligor's landing page, if the obligor is out of compliance
with its continuing disclosure requirements as it relates to
financial reporting'').

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    Recent Commission Statements. Echoing the language of the 2012
Municipal Report, SEC Chairman Jay Clayton stated in December 2018
that, ``[t]imely and accurate information is essential for investors
and analysts. Without that, it is challenging to accurately evaluate
the current financial condition of a municipal issuer (or any issuer
for that matter).'' \23\ In the same speech, Chairman Clayton tasked
the Commission's Office of Municipal Securities to work with the MSRB
and other stakeholders to explore potential approaches to improve
transparency around the age and type of financial information.\24\
Reiterating his thoughts more recently, Chairman Clayton stated in July
2019 that ``the timeliness of municipal issuer financial reporting . .
. can and should be improved.'' \25\
---------------------------------------------------------------------------

    \23\ See Chairman Jay Clayton, Opening Remarks at the Municipal
Securities Conference, December 6, 2018, available at https://www.sec.gov/news/public-statement/statement-clayton-120618.
    \24\ Id (``To be clear: I believe that there are potential steps
that the SEC and the MSRB can take--that would be wholly consistent
with the words and spirit of the Tower Amendment--to improve
transparency around the age and type of financial information.'').
    \25\ See Chairman Jay Clayton, Remarks to the SEC Fixed Income
Market Structure Advisory Committee, July 29, 2019, available at
https://www.sec.gov//public-statement/clayton-remarks-fimsac-072919#_ftn1.
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    NFMA Letter to the Board. In May 2019, the Board received a letter
from the National Federation of Municipal Analysts (NFMA) that
expressed concerns regarding the timing of financial information in the
municipal securities market. The letter asserted that ``[u]sers of EMMA
do not have an easy way to determine the currency of financial
reporting by an issuer'' and encouraged the Board to ``create a counter
that would calculate and prominently display the greater of the number
of days since the end of the last fiscal year to the audit filing date
or the number of days since the last fiscal year for which there is not
a submitted audit.'' \26\
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    \26\ Letter from Scott Andreson, Chair, National Federation of
Municipal Analysts (NFMA), dated May 3, 2019 (the ``NFMA Letter''),
available at https://www.nfma.org/assets/documents/position.stmt/nfmaLetterSECMSRBmay3.pdf (last accessed on October 15, 2019).
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    The Board has developed the proposed rule change cognizant of the
historical evolution of disclosure practices in the municipal
securities market \27\ and the present concerns of certain market
participants regarding the timing of financial disclosures in the
municipal securities market.\28\ The Board believes the proposed rule
change would further promote transparency and efficiency in the
municipal securities market--primarily by making information about the
timing of annual financial disclosures more prominent on the EMMA
Portal, so that market participants can make more informed decisions--
without imposing significant additional burdens on dealers, municipal
issuers, or obligated persons.
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    \27\ In February 2017, the MSRB published a report analyzing the
timing of the submission of annual financial disclosures to the EMMA
system between the years 2010 and 2016. See MSRB: Timing of Annual
Financial Disclosures by Issuers of Municipal Securities (February
2017), available at http://www.msrb.org/msrb1/pdfs/MSRB-CD-Timing-of-Annual-Financial-Disclosures-2016.pdf. The Government Accounting
Standards Board (GASB) assessed the timeliness of audited annual
financial reports in a 2018 research memorandum measuring the number
of days to the release of audited annual financial reports broken
down by various factors such as size and type of government. See
GASB, Research Memorandum: Timeliness of Financial Reporting
(December 12, 2018), available at https://www.gasb.org/cs/ContentServer?c=Document_C&cid=1176171975910&d=&pagename=GASB%2FDocument_C%2FDocumentPage (last accessed on October 15, 2019).
    \28\ The Board is also aware that the Government Finance
Officers Association (GFOA) has announced an industry working group
to address timely and meaningful disclosures. See GFOA, Weekly
Members News, GFOA Launches Industry Working Group on Municipal Bond
Disclosure (July 25, 2019), available at http://www.estoregfoa.org/StaticContent/staticpages/NL07252019.html (last accessed on October
15, 2019); see also Sarah Wynn, New GFOA working group to address
timely disclosure, The Bond Buyer (July 26, 2019), available at
https://www.bondbuyer.com/news/new-gfoa-working-group-to-address-timely-disclosure (last accessed on October 15, 2019).
---------------------------------------------------------------------------

The Submission Calculator and Illustrative Examples
    The Board believes that the Submission Calculator would provide an
important transparency tool for market participants that would make
information reported to the EMMA system regarding the timing of annual
financial disclosures more readily apparent. As discussed above, the
Submission Calculator would automatically calculate and statically
display the elapsed number of days between (1) the Fiscal Period End
Date for an issuer or obligated person, as such date is entered by a
submitter through the process of publishing an annual financial
disclosure on the EMMA Portal, and (2) the Posted Date of an annual
financial disclosure submitted to the EMMA system for such annual
fiscal period.\29\ The Submission Calculator would depend on the
existing information required to be provided by a submitter,
calculating the number of days elapsed based solely on the entry of the
Fiscal Period End Date and the Posted Date for an annual financial
disclosure.\30\ The day of the Posted Date would be included in the
calculation, as further demonstrated below.\31\ This number of days
elapsed would be displayed on the EMMA Portal at the individual
security details level.\32\ Importantly, the MSRB would not evaluate
the substantive content of the documents and information submitted, and
the Submission Calculator would not analyze the relevant content to
evaluate an issuer's or obligated person's compliance with the terms of
an applicable continuing disclosure agreement or any applicable law,
regulation, or other legal obligation.\33\
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    \29\ Both dates are currently visible on the EMMA Portal.
    \30\ Consistent with its current functionality, the EMMA system
would continue to intake, display, and disseminate annual financial
disclosures and related information. The EMMA system would continue
to conduct format checks, validate the submitter, and timestamp
annual financial disclosures with a Posted Date; however, there
would not be an evaluative analysis of the documents or information
submitted, nor a validation of the disclosure categories selected by
the submitter (e.g., ``Other Financial/Operating Data'' is
erroneously selected rather than ``Annual Financial Information and
Operating Data (Rule 15c2-12)'' or ``Audited Financial Statements or
CAFR (Rule 15c2-12)''). Nevertheless, the submission calculator
would show as not applicable upon the entry of erroneous information
that would result in negative calculations and, in the future, the
EMMA system may provide soft data checks requesting submitters to
confirm entries that are likely erroneous. See Release No. 34-84837
(December 17, 2018), 83 FR 65765, at 65767 (November 21, 2018) (File
No. SR-MSRB-2018-09) (describing the ``ministerial'' functioning of
the EMMA system). Accordingly, the submitter would remain
responsible for the content of the documents and information
submitted to the EMMA system related to an annual financial
disclosure, including the proper disclosure category (or categories)
of an annual financial disclosure. Moreover, as the resulting
calculation performed by the Submission Calculator would depend on
this information, it is imperative that disclosure submitters make
accurate and complete submissions.
    \31\ Stated differently, the Posted Date would not count as an
additional full day toward the Submission Calculator's count total.
For illustrative purposes, if an issuer submitted an annual
financial disclosure on the same day as the date of the end of its
annual fiscal period, the Submission Calculator would display zero
days as the timing of such annual financial disclosure. If an issuer
submitted an annual financial disclosure on the day following the
date of the end of its annual fiscal period, the Submission
Calculator would display one day as the timing of such annual
financial disclosure, and so on.
    \32\ The EMMA Portal's security details pages enable users to
access documents and information associated with a particular
municipal security, such as an official statement, continuing
disclosure document, and/or trade report.
    \33\ Consistent with the EMMA system's current functionality, if
a submitter enters an erroneous Fiscal Period End Date for an annual
financial disclosure, then the Submission Calculator would perform
its calculation based on the erroneous Fiscal Period End Date
entered by the submitter. See also note 30.
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    The following are illustrative examples of the submission process
and resulting calculations of the Submission Calculator.

     Example One--Single Submission. An issuer submits its
audited financial statements to the EMMA system on December 23, 2020
and identifies \34\ (1) the annual financial disclosure as meeting both
disclosure categories of an audited financial filing and annual
financial filing \35\ and (2) the Fiscal Period End Date for the annual
financial disclosure as June 30, 2020. The Submission Calculator would
display the number of days between the Posted Date for the issuer's
annual financial disclosure and the Fiscal Period End Date of the
issuer's 2020 annual fiscal period as 176 days.\36\
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    \34\ A submitter would need to select the appropriate disclosure
category (or disclosure categories) applicable to the submission of
an annual financial disclosure for the Submission Calculator to
perform its calculation. For example, if the submitter in this fact
pattern only identified the submission as falling within the
disclosure category of ``Other,'' then the Submission Calculator
would not have the necessary information to perform or display its
calculation. In these circumstances, the Submission Calculator would
display as not applicable on the EMMA Portal for the relevant
securities until such time as the issuer submits a disclosure
selected as meeting the disclosure category of an annual financial
disclosure with a Fiscal Period End Date.
    \35\ Submitters may select multiple disclosure categories for a
continuing disclosure filing, including an annual financial
disclosure. The fields currently entitled ``Annual Financial
Information and Operating Data (Rule 15c2-12)'' and ``Audited
Financial Information Statements or CAFR (Rule 15c2-12)'' are
respectively intended for the submission of annual financial filings
and audited financial filings.
    \36\ The Submission Calculator would display the calculation
available for the annual financial disclosure with the earliest
Posted Date for the most recent Fiscal Period End Date. The results
of a Submission Calculator would show as not applicable on the EMMA
Portal for securities that do not yet have a published annual
financial disclosure submission.
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    Example Two--Second Year Submission. An issuer submits its audited
financial statements to the EMMA system on December 23, 2020 and
identifies (1) the annual financial disclosure as meeting both
disclosure categories of an audited financial filing and annual
financial filing and (2) the Fiscal Period End Date for the annual
financial disclosure as June 30, 2020. The Submission Calculator would
display the number of days between the Posted Date for the issuer's
latest annual financial disclosure and the Fiscal Period End Date of
the issuer's 2020 annual fiscal period as 176 days. Subsequently, the
issuer's next annual fiscal period ends on June 30, 2021. On January 4,
2022, the issuer submits its audited financial statements to the EMMA
system for its annual fiscal period ending on June 30, 2021. The issuer
identifies (1) the annual financial disclosure as meeting both
disclosure categories of an audited financial filing and annual
financial filing and (2) the Fiscal Period End Date for the annual
financial disclosure as June 30, 2021. Upon processing of the
subsequent submission, the Submission Calculator would refresh to
display the number of days between the Posted Date for the issuer's
latest annual financial disclosure and the Fiscal Period End Date of
the issuer's 2021 annual fiscal period as 188 days.\37\
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    \37\ The Submission Calculator would continue to reflect its
calculation for the most recent annual fiscal period until such time
as a submitter publishes a new annual financial disclosure for a
subsequent fiscal period, as identified by the Fiscal Period End
Date entered by a submitter. Upon the processing of a new annual
financial disclosure for a subsequent fiscal period, the EMMA system
would no longer display the prior calculation for the preceding
annual fiscal period. Using the facts of this example to illustrate
this point, the Submission Calculator would continue to display the
number of days between the issuer's latest annual financial
disclosure and the end of its 2020 annual fiscal period as 176 days
until the second submission is submitted and processed on January 4,
2022, at which time the Submission Calculator would then display the
number of days between the issuer's latest annual financial
disclosure and the Fiscal Period End Date of its 2021 annual fiscal
period as 188 days.
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     Example Three--Annual Financial Disclosures through
Sequential Submissions for the Same Fiscal Period. An issuer submits
its annual financial information and operating data, which does not
include the issuer's audited financial statements, to the EMMA system
on December 23, 2020. The issuer identifies (1) the annual financial
disclosure as meeting the disclosure category of an annual financial
filing and (2) the Fiscal Period End Date for the annual financial
disclosure as June 30, 2020. The Submission Calculator would display
the number of days between the Posted Date for the issuer's annual
financial disclosure and the Fiscal Period End Date of the issuer's
2020 fiscal period as 176 days. Subsequently, the issuer submits its
audited financial statements on January 4, 2021 for the same annual
fiscal period and identifies (1) the annual financial disclosure as
meeting the disclosure category of an audited financial filing and (2)
the Fiscal Period End Date as June 30, 2020. The Submission Calculator
would continue to display the number of days between the Posted Date
for the issuer's annual financial disclosure and the Fiscal Period End
Date of the issuer's 2020 annual fiscal period as 176 days, because the
Submission Calculator would generate its calculation from the earlier
Posted Date for the submission of the unaudited financial information
and operating data.\38\
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    \38\ The Submission Calculator would apply similar logic in
other fact patterns where annual financial disclosures are published
to the EMMA system in a piecemeal method, as through multiple
submissions on different dates. See Example Four.
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     Example Four--Annual Financial Disclosures with Sequential
Submissions for Issues with Multiple Obligated Persons with Different
Fiscal Periods. An obligated person for an issue of municipal
securities (``Obligated Person One'') submits its audited financial
statements as an annual financial disclosure for an issue of municipal
securities on December 23, 2020. Obligated Person One identifies (1)
the annual financial disclosure as meeting both disclosure categories
of an audited financial filing and annual financial filing and (2) its
Fiscal Period End Date as June 30, 2020. The Submission Calculator
would display the number of days between the Posted Date of the issue's
annual financial disclosure and the Fiscal Period End Date of Obligated
Person One's 2020 annual fiscal period as 176 days.
    Subsequently, another obligated person for the same issue of
municipal securities (``Obligated Person Two'') submits its audited
financial statements as an annual financial disclosure for the issue on
January 4, 2021. Obligated Person Two identifies (1) the annual
financial disclosure as meeting both disclosure categories of an
audited financial filing and annual financial filing and (2) its Fiscal
Period End Date as June 30, 2020. The Submission Calculator would not
refresh and continue to display the number of days between the Posted
Date of the issue's prior annual financial disclosure submitted by
Obligated Person One and the Fiscal Period End Date of Obligated Person
One's 2020 annual fiscal period as 176 days, because the Submission
Calculator would perform its calculation based on the earliest Posted
Date for an annual financial disclosure with the most recent Fiscal
Period End Date.
    Subsequently, a third obligated person for the same issue of
municipal securities (``Obligated Person Three'') submits its audited
financial statements as an annual financial disclosure for the issue on
January 5, 2021. Obligated Person Three identifies (1) the annual
financial disclosure as meeting both disclosure categories of an
audited financial filing and annual financial filing and (2) its Fiscal
Period End Date as July 31, 2020. Upon processing, the Submission
Calculator would refresh to display the number of days between the
Posted Date of the issue's annual financial disclosure submitted by
Obligated Person Three and the Fiscal Period End Date of Obligated
Person Three's 2020 annual fiscal period as 158

days, because the Submission Calculator would perform its calculation
based on the Posted Date for Obligated Person Three's annual financial
disclosure, which has the most recent Fiscal Period End Date.
Enhancement of the EMMA Display
    In addition to providing for the development and operation of the
Submission Calculator, the proposed rule change would also provide for
the enhancement and reconfiguration of certain information shown on the
EMMA Portal to more prominently display an issuer's or obligated
person's annual financial disclosures and related information. More
specifically, the revised EMMA Portal would more prominently display
the information reported about an annual financial disclosure for a
municipal security, including the Fiscal Period End Date, the Posted
Date, and the results of the Submission Calculator. The MSRB would also
increase the prominence of the links provided by any issuer through its
customized homepage to other websites containing relevant
information.\39\ With these enhancements to the EMMA Portal and the
implementation of the Submission Calculator, the security details page
for a municipal security generally would provide the information shown
in Figure 1 below, which is shown as processed with the hypothetical
facts and resulting calculation from ``Example One--Single Submission''
above.
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    \39\ The EMMA system allows issuers to enhance the display of
their municipal securities information on EMMA Portal by creating a
free custom EMMA issuer homepage. One of the customizations
supported is the ability for an issuer to designate links to
independent websites. See the MSRB's Customizing an EMMA[supreg]
Issuer Homepage, available at http://www.msrb.org/msrb1/EMMA/pdfs/EMMA-Issuer-Homepage-Fact-Sheet-for-Issuers.pdf.

                                Figure 1
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Timing of Annual Financial Disclosure
    Fiscal Period End Date: 06/30/2020.
    Posted Date: 12/23/2020.
    Timing of Disclosure: 176 Days.
Hyperlink to Disclosure Document PDF(s).
Hyperlink(s) to Other Website(s) if Provided.
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    While each of these data points, other than the Submission
Calculator results shown as the Timing of Disclosure in Figure 1, are
currently available on the EMMA Portal, the proposed rule change is
intended to improve users' awareness of this information. Nothing about
this display would be evaluative of an issuer's or obligated person's
compliance with the applicable terms of a continuing disclosure
agreement. The proposed rule change would not modify how submitters
provide this information to the EMMA system, nor require submitters to
input any new data, but it would augment the display of information
reported to the EMMA system to make it more apparent to users.
Discussion of Proposed Amendments to the Text of the EMMA IF
    The proposed rule change would amend the text of the EMMA IF to
provide for the development and otherwise describe the operation of the
Submission Calculator. More specifically, the proposed rule change
would amend the EMMA IF to define the term ``EMMA metrics'' to mean the
calculations, data, and metrics derived from municipal securities
disclosure documents and related information submitted to the EMMA
system. In this way, the calculations, data, and metrics generated by
the Submission Calculator would be included in the term ``EMMA
metrics.'' This definition is intended to provide greater clarity
regarding the various types of information that may be disseminated by
the EMMA system in light of the Submission Calculator's new
functionality,\40\ including more precisely delineating the
distinctions between disclosure documents, related information,
indexing information, and EMMA metrics.\41\
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    \40\ Assuming approval of the proposed rule change, on the
operative date the EMMA system would only process the EMMA metrics
generated by the Submission Calculator for dissemination and display
on EMMA Portal.
    \41\ For example, the proposed rule change more precisely
articulates that the term `indexing information' is a subset of
`related information' that includes the disclosure category fields
of ``Annual Financial Information and Operating Data (Rule 15c2-
12)'' and the ``Audited Financial Statements or CAFR (Rule 15c2-
12)'' for purposes of the Submission Calculator's functionality.
This clarification is important to delineate the Submission
Calculator's use of indexing information as entered by a submitter
from the EMMA metrics generated by the Submission Calculator.
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2. Statutory Basis
    The proposed rule change is consistent with the provisions of
Section 15B(b)(2)(C) of the Act,\42\ which provides that the MSRB's
rules shall:
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    \42\ 15 U.S.C. 78o-4(b)(2)(C).

. . . be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities and
municipal financial products, to remove impediments to and perfect
the mechanism of a free and open market in municipal securities and
municipal financial products, and, in general, to protect investors,
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municipal entities, obligated persons, and the public interest.

    The Board believes the proposed rule change is consistent with the
Act because the proposed rule change would promote (1) the protection
of investors and the public interest and (2) the prevention of
fraudulent and manipulative acts and practices, principally by
promoting greater transparency and awareness of the financial
disclosures available in the municipal securities market through the
EMMA Portal. The proposed rule change would promote the protection of
investors and the public interest by increasing investors' and the
general public's awareness of the type and timing of financial
information available in the municipal securities market and,
consequently, enable investors and other market participants to make
more informed decisions. More broadly, the proposed rule change would
enable the general public to more readily access the financial
information reported to the EMMA Portal. The proposed rule change would
promote the prevention of fraudulent and manipulative acts and
practices by fostering a better understanding among all market
participants of the type and timing of financial information available
in the municipal securities market, including by making the type and
timing of financial information more readily apparent on the EMMA
Portal, and, thereby, mitigating some information asymmetries that may
exist in the market, such as between retail investors and institutional
investors. In short, the Board believes that the proposed rule change
is consistent with the Act because it would enhance market transparency
regarding existing municipal issuer financial disclosure practices,
including by improving the accessibility and availability of
information displayed on the EMMA Portal and by making the Submission
Calculator results readily apparent to EMMA users.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Board has conducted an analysis on the proposed rule change to
gauge its overall economic impact and assess its burden on
competition.\43\ For the

reasons discussed below, the Board has determined that the proposed
rule change would not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.
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    \43\ See ``Policy on the Use of Economic Analysis in MSRB
Rulemaking,'' available at http://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx. In evaluating the
potential burden on competition, the Board was guided by its
principles that require the Board to consider costs and benefits of
a rule change, its impact on capital formation, and the main
reasonable alternative regulatory approaches.
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The Board's Determinations Regarding the Burden on Competition
    Section 15B(b)(2)(C) \44\ of the Exchange Act requires that MSRB
rules shall ``not be designed . . . to impose any burden on competition
not necessary or appropriate in furtherance of the purposes of this
title.'' The Board believes the proposed rule change is consistent with
Section 15B(b)(2)(C) \45\ because the proposed rule change promotes
transparency in the municipal securities market by (1) calculating and
clearly displaying the timing between an issuer's or obligated person's
reported Fiscal Period End Date and the Posted Date for the submission
of certain of its annual financial disclosures and (2) making existing
information about annual financial disclosures more readily apparent on
the EMMA Portal. Consequently, the Board believes the proposed rule
change would improve the awareness and understanding of market
participants regarding the type and timing of financial information
currently available on the EMMA Portal. Investors and other market
participants would benefit from these enhancements by being able to
more readily locate relevant financial information and, thereby, the
proposed rule change would improve overall transparency in the market.
Similarly, the calculations displayed by the Submission Calculator
would assist investors in their analysis of a municipal security's
financial information by clearly and prominently displaying a metric
for the standardized measure of the timing of that information.\46\
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    \44\ 15 U.S.C. 78o-4(b)(2)(C).
    \45\ Id.
    \46\ Recent economic literature bolsters the statements of
market participants that the timing of financial disclosures is a
significant factor in their usefulness. Specifically, academic
research finds that a delay in reporting is likely to convey a
negative signal with respect to issuers and have negative effects on
the capital markets, such as higher yield and lower liquidity. See
Henke, Trent S. and John J. Maher, ``Government Reporting Timeliness
and Municipal Credit Market Implications,'' Journal of Governmental
& Nonprofit Accounting, Vol. 5, No. 1, 2016, and Sherrill, D. Eli
and Rustin T. Yerkes, ``Municipal Disclosure Timeliness and the Cost
of Debt,'' The Financial Review, 53, 2018. At the same time, the
MSRB notes that timing may be one among many significant factors in
the usefulness of a financial disclosure, as for example the timing
of a disclosure generally does not speak to the quality or
completeness of a disclosure's contents.
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    Burdens on Disclosure Submitters. The Board believes that the
proposed rule change does not create any new compliance or reporting
burdens and, thereby, does not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the
Exchange Act. While the information provided to the EMMA Portal by
submitters might take on new prominence by virtue of the manner in
which the information would be displayed on the EMMA Portal under the
proposed rule change, the proposed enhancements would not alter the
basic process for submitting annual financial disclosures or change the
type of information collected related to such disclosures.\47\
Accordingly, the proposed rule change would not alter the burdens on
submitters in publishing annual financial disclosures to the EMMA
system in this way, and so does not result in any new burdens on
competition in this regard.
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    \47\ While the proposed enhancements would not alter the basic
process for submitting such information or change the type of
information collected, the MSRB is continually evaluating how user's
interface with the EMMA system and has ongoing projects to improve
that interface. See, e.g., ``MSRB Improves Search Functionality on
EMMA'' (May 29, 2019), available at http://www.msrb.org/News-and-Events/Press-Releases/2019/MSRB-Launches-Quick-Search.aspx.
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    Improvement to Market Transparency. The Board believes that the
proposed rule change would increase the accessibility and understanding
of financial disclosures in the municipal securities market and,
thereby, increase overall transparency in the market. The Submission
Calculator would depend entirely on the information entered by a
submitter, and the Board is cognizant of the potential for the
Submission Calculator to result in the display of a calculation
generated from erroneous information published by a submitter. To the
degree that the Submission Calculator would provide new prominence to
this information, the Board believes that submitters would have an
additional incentive to properly categorize and describe annual
financial disclosures, and so the incidences of submissions with
erroneous information would be expected to marginally decline from
current rates.\48\ To promote accuracy, the Board would continue to
provide educational resources and other tools to assist submitters in
properly completing the publication process. Similarly, the Board
believes that some of the misperceptions and other information
asymmetry that may result from market participants accessing erroneous
information published by submitters can be mitigated through
appropriate investor education. Consequently, the Board believes at
this time that the benefits of the additional awareness and
understanding that would result from the adoption of the Submission
Calculator would exceed any potential negative consequences of the
display of a calculation generated from erroneous information published
by a submitter.
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    \48\ To the degree that submitters exert greater diligence in
completing the disclosure submission process in response to the
Submission Calculator's functionality and the other enhancements to
the display of information on the EMMA Portal, the MSRB believes
that any additional burdens created by this change in market
behavior is exceeded by the benefits of greater market transparency
through the improved availability and understanding of market
information currently displayed on the EMMA Portal.
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The Board's Analysis of Alternatives to the Proposed Rule Change
    The Board has assessed alternative approaches to the proposed rule
change and has determined that the Submission Calculator and other
enhancements to the EMMA Portal are superior to these alternatives.
    Alternative Transparency Tools. The Board has considered various
iterations of the Submission Calculator for the calculation and display
of information regarding the timing of financial disclosures, including
various active counters that would sequentially increase each day. One
such alternative is a counter that would update each day to dynamically
display the number of days elapsed between an issuer's or obligated
person's annual fiscal period end and the current date. Similarly, the
Board has considered a counter that would dynamically display the
number of days elapsing between any financial disclosures submitted by
an issuer or obligated person, including interim financial information,
rather than just annual financial disclosures.
    The Board has determined at this time that such alternatives would
be inferior to the proposed rule change's Submission Calculator. In
evaluating these alternative approaches, the Board determined that (1)
limiting the Submission Calculator to evaluating the timing of annual
financial disclosures was most appropriate at this time, particularly
in light of the lack of uniformity in the disclosure of interim
financial information, and (2) displaying a static calculation would be
most easily understood by EMMA users and, thereby, the Submission
Calculator would best promote market transparency at this time. Among
other considerations, the Board evaluated whether dynamic tools might
confuse some users who repeatedly return to the

EMMA Portal and misunderstand the increasing display count.
Additionally, the Board considered concerns that, at this time, other
approaches with more complex functionality may require significant
alterations to the submission process and/or require disclosure
submitters to provide additional information to the EMMA system.
Accordingly, the Board has determined that, at this time, alternatives
that would create new burdens on disclosure submitters would be
inferior to the Submission Calculator.
    Rulemaking Alternatives. The Board has also considered new
rulemaking initiatives as an alternative to the proposed rule change.
The Board ultimately determined that the MSRB should focus at this time
on the proposed rule change's transparency efforts to more prominently
display existing financial information on the EMMA Portal and should
consider any related rulemaking initiatives in light of the MSRB's
ongoing retrospective rule review.\49\
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    \49\ The Board recently prioritized an ongoing effort to review
the MSRB's rules and related interpretive guidance for dealers and
municipal advisors. The purpose of the retrospective rule review is
to help ensure MSRB rules and interpretive guidance are effective in
their principal goal of protecting investors, issuers and the public
interest; not overly burdensome; clear; harmonized with the rules of
other regulators, as appropriate; and reflective of current market
practices. Among other criteria, retrospective rulemaking priorities
are evaluated based on whether the benefits of the rule are
commensurate with its burdens. See http://www.msrb.org/Rules-and-Interpretations/Retrospective-Rule-Review-Overview.aspx.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Board did not solicit written comments on the proposed change.
However, as previously noted above, the Board did receive one written
comment directly relevant to the proposed rule change from NFMA in May
2019.\50\ Among other recommendations on how to improve disclosure
practices in the municipal securities market, the NFMA Letter
encouraged the MSRB to modernize the EMMA system, including to provide
greater transparency on the currency of audit filings.\51\ More
specifically, NFMA encouraged the MSRB to ``create a counter that would
calculate and prominently display the greater of the number of days
since the end of the last fiscal year to the audit filing date or the
number of days since the last fiscal year for which there is not a
submitted audit.'' \52\ While the proposed rule change would not
incorporate such a dynamic counter,\53\ the MSRB believes that the
Submission Calculator and other enhancements to the EMMA system are
responsive to this particular recommendation.
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    \50\ See NFMA Letter, supra note 26.
    \51\ Id., at p. 4.
    \52\ Id.
    \53\ The Board did not incorporate this aspect of NFMA's
recommendation into the proposed rule change because the Board
determined at this time that such a dynamic counter would be
inferior to the Submission Calculator, in that the non-static
functionality of the dynamic counter might counterproductively
confuse some users who repeatedly return to the EMMA Portal and
misunderstand the dynamic nature of the increasing display count,
among other reasons. See related discussion under The Board's
Analysis of Alternatives to the Proposed Rule Change.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period of up to 90 days (i) as
the Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please
include File Number SR-MSRB-2019-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.

All submissions should refer to File Number SR-MSRB-2019-13. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the MSRB. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MSRB-2019-13 and should be submitted on
or before December 18, 2019.

    For the Commission, pursuant to delegated authority.\54\
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    \54\ 17 CFR 200.30-3(a)(12).
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Eduardo Aleman,
Deputy Secretary.
[FR Doc. 2019-25707 Filed 11-26-19; 8:45 am]
BILLING CODE 8011-01-P