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Statement on Proposal of Amendments to Municipal Securities Disclosure Rule (Exchange Act Rule 15c2-12)

Commissioner Kara M. Stein

U.S. Securities and Exchange Commission

March 1, 2017

I want to thank the staff for their hard work on this proposal and, in particular, Ed Fierro, Rebecca Olsen, and Jessica Kane.

The municipal securities market is significant in its size and scope.  Over 40,000 issuers have, together, issued more than $3.8 trillion in currently outstanding securities.  Towns, cities, and states use the proceeds to build and maintain schools, roads, and bridges,[1] and American households own a large portion of these securities, both directly and through mutual funds.[2]

Commission rules currently require dealers in municipal securities to take certain steps to promote disclosure of important information by issuers to investors.  This includes information about significant events, such as issuer defaults, changes to ratings, and changes to the rights of holders. This information is meaningful to investors because it helps them evaluate whether an issuer will make good on its obligations.

Over the last several years, growth in the public issuance of municipal securities has leveled out.  At the same time, many municipal issuers have turned to alternative means of financing, such as bank loans.  Information about such financings is important to investors because it contributes to an understanding of an issuer’s overall financial condition and whether they should buy or hold a particular municipal security.  Currently, however, investors may have limited access, or substantially delayed access, to information about these non-public financings.  Not only does this limit the ability of investors to evaluate the issuer, it also puts many investors at an informational disadvantage compared to those who provide the alternative financing.

Today’s proposal would take a step toward increased transparency.  Specifically, it would update the rule with the aim of providing more timely information about alternative municipal financings to investors.  This would include information about the incurrence of bank loans and similar obligations, as well as related priority rights, events of default, and termination events.  This enhanced transparency would help to put all investors on an equal footing when evaluating the overall financial obligations of issuers.  By improving market efficiency, it should benefit both issuers and investors.

Accordingly, I am pleased to support the proposal, and I look forward to feedback from the public.


[1] See, for example, Securities and Exchange Commission, Report on the Municipal Securities Market (July 31, 2012).

[2] See Federal Reserve Board, Financial Accounts of the United States: Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts, at 121 Table L.212 (Third Quarter 2016) (Dec. 8, 2016), available at

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