SEC adopts new rule amendments
21 August 2018 Washington DC
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The Securities and Exchange Commission (SEC) had adopted amendments to enhance transparency in the municipal securities market.
The Commission adopted amendments to Exchange Act Rule 15c2-12 designed to better inform investors and other market participants about the current financial condition of issuers of municipal securities and obligated persons.
The adopted amendments to Rule 15c2-12 of the Securities Exchange Act will focus on material financial obligations that could impact an issuer’s liquidity, overall creditworthiness, or an existing security holder’s rights.
Specifically, the amendments add two new elements to the list included in the rule. These include incurrence of a financial obligation of the issuer or obligated person and default, an event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties.
SEC said direct placements by issuers and obligated persons as financing alternatives to public offerings of municipal securities have increased since 2009, demonstrating the need for more timely disclosure.
Jay Clayton, chairman of SEC, said: “Our municipal securities market is a $3.844 trillion dollar market, with new issuances of approximately $448.1 billion in 2017. Our Main Street investors are exposed to this market through many channels, including through mutual funds, money market funds, closed-end funds, and exchange-traded funds.”
He added: “Disclosures required by these rule amendments will better equip investors and intermediaries to make informed investment decisions about municipal securities.”
The Commission adopted amendments to Exchange Act Rule 15c2-12 designed to better inform investors and other market participants about the current financial condition of issuers of municipal securities and obligated persons.
The adopted amendments to Rule 15c2-12 of the Securities Exchange Act will focus on material financial obligations that could impact an issuer’s liquidity, overall creditworthiness, or an existing security holder’s rights.
Specifically, the amendments add two new elements to the list included in the rule. These include incurrence of a financial obligation of the issuer or obligated person and default, an event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties.
SEC said direct placements by issuers and obligated persons as financing alternatives to public offerings of municipal securities have increased since 2009, demonstrating the need for more timely disclosure.
Jay Clayton, chairman of SEC, said: “Our municipal securities market is a $3.844 trillion dollar market, with new issuances of approximately $448.1 billion in 2017. Our Main Street investors are exposed to this market through many channels, including through mutual funds, money market funds, closed-end funds, and exchange-traded funds.”
He added: “Disclosures required by these rule amendments will better equip investors and intermediaries to make informed investment decisions about municipal securities.”
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