The Municipal Securities Information Library system.

• Author: Taylor, Christopher A.
• Position: Information retrieval system of the Municipal Securities Rulemaking Board - Includes related article

What happens to local governments' official statements and other disclosure documents after they are submitted to the Municipal Securities Rulemaking Board's library?

Since 1989, the Municipal Securities Rulemaking Board (MSRB) has been developing its Municipal Securities Information Library |TM~ (MSIL) system.(1) It consists of two subsystems:

* the Official Statement/Advance Refunding (OS/ARD) subsystem and

* the Continuing Disclosure Information (CDI) Pilot.

The main purpose of the MSIL system is to create a central collection of certain information about municipal securities--official statements, advance refunding documents and continuing disclosure information. This information is available to subscribers to the MSIL system, anyone who visits the MSIL system's Public Access Facility and, in the OS/ARD subsystem, by the sale of paper copies of documents.

The MSRB was created by Congress in 1975 to make rules regulating the municipal securities activities of brokers, dealers and municipal securities dealers. It does not have authority over market participants, such as issuers and corporate trustees, that are not dealers. The board is composed of 15 members who are divided into three equal categories--persons representing bank dealers, securities firms and the public. One public member must represent issuers and one investors.

MSRB rules require that dealers disclose all the material facts of a particular municipal security before selling it to a customer. The features of many municipal securities, however, have become quite complex. For example, there are a variety of call provisions that operate under specified conditions. Put provisions often contain preconditions which the holder must satisfy before exercising the put. And the credit structures of revenue and conduit bonds also can be complicated. The official statement is the only source for most of this information.

Since, under Securities and Exchange Commission (SEC) rule 15c2-12 underwriters are required to prepare an official statement for most municipal securities issued, the MSRB decided to require underwriters to file two copies of these documents with it for inclusion in the MSIL system. The MSIL system then makes this and other information available to the market.

Processing Issuance Documents

MSRB rules require underwriters to submit it the following documents soon after they receive them: two copies of most final official statements for primary offerings of municipal securities and two copies of escrow agreements for advance refundings in which a new issue of municipal securities is issued to refund outstanding securities. The rule applies to all securities sold to underwriters after December 31, 1989. Underwriters also must attach to each document a completed form that contains certain information, such as issue descriptions and Committee on Uniform Securities Identification Procedures (CUSIP) numbers, about the municipal securities described in the document.

In the OS/ARD subsystem, when a document is received MSIL system staff review it for acceptability. Unacceptable documents, such as preliminary official statements or documents accompanied by incomplete forms, are returned to the underwriter for correction. If a document is acceptable it is assigned a unique document number, and information about it is entered into the OS/ARD database, called MSILDex. Supervisors check the database information against the document, making any necessary corrections, then one copy of the document and its form is filed in the Public Access Facility. There are currently about 35,000 documents in the MSIL system.

The OS/ARD subsystem, which operates on the days that the MSRB's offices are open, usually receives from 25 to 80 acceptable documents per day. The MSIL system's goal is...