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Forests and Trees: Remarks before the 2023 Municipal Securities Disclosure Conference

Washington D.C.

May 10, 2023

I am grateful for the chance to be part of today’s conference, albeit only a virtual part. Thank you to Dave Sanchez and the Office of Municipal Securities for the important work you do, including outreach events like this conference. Convening experts and people with first-hand knowledge is a good way to work through difficult issues. Discussions like those that make up today’s event are a tool we should employ to think through the many complicated and consequential issues on the Commission’s agenda. To all the panelists, thank you for taking part in the conference, and to those watching, thank you for your interest. The views that I will share with you are my own and not necessarily those of the Securities and Exchange Commission (“SEC”) or my fellow Commissioners.

I was thinking back recently to running cross country in ninth grade. I used to ride my bike over to Forest Hill Park in suburban Cleveland, Ohio where my team practiced. John D. Rockefeller Jr. gave the 235 acre site of his family’s former summer home for use as a park eighty-five years ago.[1] Except for one dastardly hill, the beautiful park was a wonderful place to run. My ninth-grade self was unaware of the interesting history of the place, but as I looked into that history recently, I noticed a theme—municipal securities. When Rockefeller donated it, Forest Hill Park became part of a larger park system, which, according to one source was “[s]purred by a bond issue in 1916.”[2] Fifty years later, another bond issuance funded the construction of a community center at one end of Forest Hill Park, where my brother played hockey.[3] Thirty years after that, another bond issuance spurred a “bitter, bruising political battle” in which “[h]istoric preservationists argued that the expansion would destroy the Rockefeller legacy.”[4]

That municipal bonds showed up with just a bit of historical digging reminded me how municipal securities intertwine with our daily lives, how varied are the contributions they make to our lives, and thus how careful we must be in overseeing the municipal securities markets. Bearing this context in mind, I will spend a few minutes discussing data standardization under the Federal Data Transparency Act (“FDTA”) and in connection with environmental, social, and governance (”ESG”) issues. In both cases, an insistence on standardization can obscure real differences across municipal issuers.

Given that this disclosure conference is the first since the passage of the FDTA, let me start there. While I appreciate the great value of structured data to securities analysis, I have had doubts about imposing uniform data standards, which invariably require the use of regulator-specified technologies. Congress made clear in the FDTA, however, that it expects the Commission and other financial regulators to require the use of structured data in financial reporting, including, with respect to municipal securities, “for information submitted to the [Municipal Securities Rulemaking Board (“MSRB”)].”[5]

I look forward to engaging during the implementation process with market participants, particularly with municipal issuers and investors. Their participation in the process will be crucial to its success. The unique characteristics of the municipal bond market will require us to consider carefully how the structured data mandate should apply. After all, if the costs of a public municipal bond offering get too high, municipal issuers can raise funds in ways other than selling bonds, such as through the private markets or bank financing. Moreover, because the FDTA empowers the Commission to call for structured data only with respect to “information submitted to the [MSRB],” our implementation of structured data requirements inadvertently could deprive investors of information if issuers reduce their voluntary disclosures through the EMMA system.

Although broad, the statutory mandate expressly reserves the Commission’s ability to tailor requirements, and we should use that authority to get the balance right. To do so, we need more than enthusiastic hand-waving about the general benefits of increased transparency. We need a frank discussion, grounded in the municipal market’s unique qualities, about what concrete benefits we expect structured data to produce. We need to understand what structured data will make possible that is not possible now, and how those new possibilities will advance the quality of these disclosures in ways that benefit our markets and investors. For example, if a key benefit of structured data is in empowering analysts to aggregate data across issuers, how does that aggregation benefit participants in this specific market? Do municipal issuers face unique costs in structuring their data? Are there tools upon which small and infrequent municipal securities issuers could rely to minimize these costs? How can the SEC best assist municipal issuers seeking to standardize their data? Will standardization of data obscure important distinctions across municipal securities or their issuers?

Only after we have had this discussion will we be ready to determine how the Commission should tailor the structured data mandate to the municipal market. For example, given the great diversity in sizes and types of municipal issuers, the Commission may determine that the benefits of requiring certain issuers to use structured data are minimal or that the costs are too high. Similarly, given the nature of the disclosures required under MSRB Rule G-32 and Exchange Act Rule 15c2-12, the Commission may determine that a blanket imposition of the structured data requirement to all “information provided to the [MSRB]”[6] will not provide significant benefits to the market.[7] Moreover, the Act applies not only to information supplied by municipal issuers but also presumably to information provided to the MSRB by Commission-regulated market participants, such as broker-dealers and municipal advisors,[8] and the Commission will need to give careful thought to whether structuring this information also makes sense. Of paramount importance, as we think about the scope of tailoring FDTA requirements, our focus must be on what investors need and not on eliciting data for other purposes.

The need to focus on investors leads me right to ESG issues. Corporate and municipal issuers already make risk disclosures that might fall into the category of ESG. Calls for corporate and municipal issuers to make additional ESG disclosures often come from non-investors seeking to influence issuer behavior, rather than investors seeking to allocate capital. Many companies and municipalities already make disclosures that are designed for these non-investor audiences, but some interested parties want ESG disclosures—regardless of their financial materiality—to be included in securities disclosures.

The Municipal Securities Rulemaking Board (“MSRB”) recently dipped its toe into the ESG waters with a request for information on ESG practices in the municipal securities market.[9] The comments in response were telling; the MSRB summarized one sentiment: “Regulatory action is premature.”[10] Another frequently expressed view was that the MSRB, in suggesting that it has a role in ESG disclosures, had strayed outside of its mandate. It can be tempting for regulators to jump on the ESG bandwagon and attempt to brute force ESG disclosures through regulatory mandates. ESG classifications are fluid and subject to political pressure and differing regional priorities, to the extent that they can be distilled into meaningful metrics at all, which I doubt.

Moreover, nearly every government action is justified in terms of its public (read, “social”) benefits, and many, if not most, physical infrastructure projects are required to undergo environmental review. Does it therefore follow that every government bond issue should qualify for a high “S” rating? If not, who is in a position to make that determination? Can a high “E” rating be awarded prior to a successful environmental impact review, or would it be appropriate to assign a low “E” rating even that review is positive?

Layer the lack of clarity on all of these issues onto the extraordinarily diverse array of entities that raise money in our municipal securities market, and it seems doubtful that encouraging or mandating ESG disclosures is going to provide much clarity at all. Voluntary efforts at helping issuers think through risks that might fall within ESG buckets may be helpful, without impinging on issuers’ ability to tell their unique stories, but issuers and others are already working through these issues. Whether the Commission or the MSRB have anything positive to contribute at this stage seems doubtful. As the Government Finance Officers Association pointed out in its response to the MSRB’s 2021 Request for Information on ESG Practices in the Municipal Securities Market, at this early stage, imposing a uniform reporting standard “would not provide meaningful assistance for investors[] and [would] cause needless workload for issuers.”[11] It is still not clear what information investors are looking for, what presentation of that information would clarify rather than confuse relevant data points, and who, if anyone, is best situated to make these decisions in a way that will benefit investors. Accordingly, for the foreseeable future “[e]ach issuer should determine what, if any, disclosures are appropriate as discussed with bond counsel.”[12]

Concerns about greenwashing are driving calls for taxonomies by which certain municipal securities can be designated “sustainable.” Here too, caution is in order. Regulators are not well-equipped to decide what is sustainable, and attempts to do so can quickly devolve into political battles. Is a bond issuance that expands my beloved Forest Hill Park by nature sustainable? Or, is it not, for the reasons cited by the opponents above, that it would destroy the Rockefeller legacy? The MSRB has waded into the pool with designations on EMMA.[13]

Thank you for your time today. On my next run through Forest Hill Park, I will surely think of Rockefeller’s generous gift and the municipal bond offerings that have enabled multiple generations to enjoy that gift. May the rest of your conference this afternoon be as enjoyable as a run in the park.


[1]   Forest Hill Park, Encyclopedia of Cleveland History,   

[2]   Cleveland Heights, Encyclopedia of Cleveland History,  

[3]   Marian Morton, Cleveland Heights’ “Emerald Necklace”: Parks, Property, and Politics, View from the Overlook,  

[4]   Id.

[5]   15 U.S.C. 78o-4(b)(8).

[6]   Id.

[7]   See Ballard Spahr LLP, Structured Data is Coming to the Municipal Securities Market—Now What? at 8-9, (

[8]   See id. at 7.

[9]   MSRB Notice 2021-17, Request for Information on Environmental, Social and Governance (ESG) Practices in the Municipal Securities Market (Dec. 8, 2021),

[10] MSRB, Summary of Responses to the MSRB’s Request for Information on ESG Practices in the Municipal Securities Market at 8,

[11] Government Finance Officers Association, Letter re MSRB Notice 2021-17 Request for Information on Environmental, Social and Governance (ESG) Practices in the Municipal Securities Marketat  4 (Mar. 8, 2022),

[12] Id.

[13] See MSRB, New EMMA Feature Helps Investors Identifyg Green, Social, Climate and Sustainable Bond Investments (Oct. 25, 2021), also MSRB, Making an Impact: ESG Investing and Municipal Bonds,

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