What Is EMMA and How Do Investors Use It to Research Municipal Bonds?
EMMA is the municipal bond market's free public website for disclosure documents, prices and other data. The name stands for Electronic Municipal Market Access. The Municipal Securities Rulemaking Board, known as the MSRB, describes the EMMA website as the municipal market's free source of data and information on virtually all municipal bonds, with real-time trade prices, official statements, credit ratings, ongoing disclosure documents and other information about more than one million outstanding municipal securities.
EMMA's own overview page states that the website was established to increase the transparency of the municipal securities market by providing free public access to municipal securities disclosures and data. For a student, the simplest comparison is with EDGAR. EDGAR is the SEC's system for the documents of public companies and other filers. EMMA plays a similar role for municipal securities, but it is funded and operated by the MSRB, which EMMA's site describes as a self-regulatory organization, and not by the SEC. This entry explains what EMMA is, what it contains, which rules cause documents to be submitted to it, and how an investor can use it.
What EMMA Is
The MSRB's page about the website states that the MSRB established EMMA in 2008 to provide retail investors with centralized, online and free access to municipal securities market disclosure documents and transaction pricing data on a real-time basis. The same page states that EMMA now serves not only retail investors but all market participants.
EMMA's overview page describes the people it serves as investors, state and local governments and other market participants. It also states that EMMA is designated by the SEC as the official source for municipal securities data and disclosure documents. That statement comes from EMMA's own description of itself, and a reader who needs the legal basis for the designation should consult the SEC's and the MSRB's rules.
What EMMA Contains
EMMA's overview page lists several kinds of content. It holds hundreds of thousands of municipal disclosure documents, including official statements for bond offerings since 1990, advance refunding documents and continuing disclosure documents. It also provides real-time prices and yields at which bonds and notes are bought and sold, and interest rates for municipal securities.
Investor.gov describes the same material in investor terms. It says EMMA offers free public access to official disclosures, trade data, credit ratings and other resources and tools for understanding the municipal securities market. It lists the disclosure documents as official statements, which it describes as the functional equivalents of a prospectus; refunding documents submitted to the MSRB since 1990; annual financial information and operating data; and notices of certain important events and voluntary disclosures. For market transparency data, it says EMMA provides free data that includes real-time prices and yields at which bonds and notes are bought and sold, for most trades occurring on or after January 31, 2005.
It is useful to group the content into three kinds. The first is primary market disclosure, which describes a new issue when it is sold. The second is continuing disclosure, which follows the issuer and the bonds afterward. The third is trade and market data, which shows what investors have paid and received in the secondary market.
Primary Market Disclosures
When a new issue of municipal securities is sold, the underwriter has submission duties. The MSRB's page on primary market disclosures states that underwriters submit official statements, preliminary official statements and other related pre-sale documents, and advance refunding documents, and that an electronic form providing descriptive information about the securities must accompany the submissions.
MSRB Rule G-32 sets out these duties. It applies to brokers, dealers and municipal securities dealers in primary offerings. The MSRB's summary of the rule states that a dealer must deliver to a customer, by no later than the settlement of the transaction, a copy of the official statement, or written notice that none is being prepared. It also states that official statements and Form G-32 information must be submitted to EMMA generally within one business day after the dealer receives the official statement from the issuer or its designee, but no later than the closing date. Advance refunding documents, when applicable, must be submitted to EMMA no later than five business days after the closing date.
The MSRB states that all documents and information submitted to it are made available on EMMA and on a subscription basis.
The Official Statement
The official statement is the center of the primary market disclosure. An MSRB overview of disclosure obligations for a primary offering describes it as the main document on which investors should be able to rely in making investment determinations. It provides information about the issuer, the securities and the projects being financed.
A preliminary official statement circulates before the final version is available. The final official statement is deemed final by the issuer, although it may omit pricing details that are determined later. The overview states that underwriters must deliver the final version to investors by settlement.
The overview also describes who is responsible for what. Issuers bear primary responsibility for the accuracy of the content and must comply with the anti-fraud provisions when they disclose information to investors. Underwriters must obtain and review the deemed final official statement, conduct due diligence, and ensure that the document contains no material misstatements or omissions. Municipal advisors and dealers are also bound by anti-fraud rules and by the fair dealing standards of MSRB Rule G-17.
Continuing Disclosure
Disclosure does not end when the bonds are sold. The documents that follow the issuer through the life of the bonds are called continuing disclosure, and SEC Rule 15c2-12 addresses them.
The MSRB's copy of Rule 15c2-12 and its description explain that the rule requires dealers, when underwriting certain types of municipal securities, to ensure that the state or local government issuing the bonds enters into an agreement to provide certain information to the MSRB. The agreements call for annual financial information and audited financial statements. They also call for notices of specific events. The events listed include principal and interest payment delinquencies, rating changes, and bankruptcy, insolvency or receivership. The MSRB states that event notices must be filed in a timely manner, but not in excess of ten business days after the occurrence of the event.
EMMA is where the information is collected for the public. The MSRB's description states that EMMA displays continuing disclosure information submitted since July 1, 2009, and that this central access point allows investors and the public to review bond-related disclosures.
Submitting Continuing Disclosure
The people who submit continuing disclosure are different from the people who submit primary market documents. An MSRB advisory states that issuers and obligated persons with municipal securities subject to continuing disclosure agreements under Rule 15c2-12 submit their financial disclosures to EMMA. The MSRB's overview of the primary market adds that underwriters cannot participate in offerings of one million dollars or more without confirming that the issuer has agreed to provide annual financial information and event notices through a continuing disclosure agreement.
The advisory suggests that submissions be made through the EMMA Dataport in electronic word-searchable portable document format files. It suggests that annual financial information be indexed as Annual Financial Information and Operating Data, that audited financial statements be indexed as Audited Financial Statements or CAFR, and that a failure to file be indexed as Failure to Provide Annual Financial Information. It also suggests that submitters provide complete annual financial information by their contractual deadlines. If audited statements are not ready, the advisory suggests submitting unaudited statements with a notice that they are provided pending completion of the audited financial statements.
The advisory explains why the practices matter. Without proper disclosures on EMMA, it states, investors purchasing municipal securities in the secondary market risk doing so on the basis of incomplete and outdated information. For a reader, the practical lesson is to look at the dates and labels on what is posted, and to notice whether a notice of failure to file appears.
Trade Information
EMMA also publishes information about trading. Its overview says it provides real-time prices and yields at which bonds and notes are bought and sold. Investor.gov says the data covers most trades occurring on or after January 31, 2005.
Trade data answers a different question from a disclosure document. A disclosure document describes the issuer and the security. Trade data shows what the market has done with the security. An investor looking at a particular bond can use both: the documents to understand what the bond is, and the trade information to see recent prices and yields at which it has changed hands.
A Hypothetical Research Walkthrough
A hypothetical shows how an investor might use EMMA. Suppose a person is considering a municipal bond offered by a city. The person searches EMMA for the security. The official statement describes the terms of the offering and the issuer. The continuing disclosure documents show the annual financial information the issuer has submitted since the sale, along with any notices of events, such as a rating change. The credit rating information shows what rating the bond has been assigned. The trade information shows recent prices and yields. The person then compares what the documents say with what the dealer or investment professional has said about the bond. This illustration does not describe any actual bond and is not a recommendation to buy or sell any security.
The value of the walkthrough is that the investor looks at the issuer's own documents and at market prices instead of relying only on a sales description.
Other Sources of Municipal Information
EMMA is not the only place municipal information has appeared. Investor.gov notes that some states operate State Information Depositories, and that large issuers such as New York City maintain their own websites with issuer information. For offerings before 1990, Investor.gov states that formerly designated Nationally Recognized Municipal Securities Information Repositories may have archived information, although EMMA has since assumed this archival role.
EMMA and EDGAR Compared
The two systems have similar purposes and different operators and subjects. EDGAR is operated by the SEC and holds the filings of public companies and other filers, such as annual reports and registration statements. EMMA is operated by the MSRB and holds municipal securities disclosures and trade data. A person researching a corporation's stock goes to EDGAR. A person researching a municipal bond goes to EMMA.
Investor.gov's description of an official statement as the functional equivalent of a prospectus is a helpful link between them. In the corporate market, a prospectus is part of the registration statement that EDGAR holds. In the municipal market, the official statement is the corresponding offering document, and EMMA is where it is found.
Limits of EMMA
EMMA makes documents and data available, and the user still has to read and evaluate them. A document on EMMA is what a dealer, issuer or other party submitted. An official statement is an offering document, and an investor should read it as one, paying attention to the risks it describes. Continuing disclosure is only as current as the last submission, so a reader should check the dates on the documents and should notice whether an expected annual filing is missing.
Common Misunderstandings
One misunderstanding is that EMMA is run by the SEC. The MSRB funds and operates it.
A second misunderstanding is that EMMA is only for professionals. The MSRB states that it was established to provide retail investors with free online access and that it now serves all market participants.
A third misunderstanding is that EMMA contains only prices. It also contains official statements, advance refunding documents, continuing disclosure documents, credit ratings and interest rate information.
A fourth misunderstanding is that EMMA is the same thing as EDGAR. They are separate systems with different operators and subjects.
A fifth misunderstanding is that a bond's disclosure ends at the sale. Rule 15c2-12 calls for annual financial information, audited financial statements and event notices after the sale.
A sixth misunderstanding is that a document's presence on EMMA settles questions about a bond. EMMA makes available what was submitted, and an investor still has to read and evaluate it.
Key Points
EMMA, the Electronic Municipal Market Access website, is the municipal market's free source of data and information on virtually all municipal bonds. The MSRB funds and operates it, and it provides official statements, continuing disclosure documents, credit ratings, real-time trade prices and yields and interest rate information.
Under MSRB Rule G-32, underwriters submit official statements and related information to EMMA generally within one business day after receiving the official statement from the issuer, but no later than the closing date, and advance refunding documents no later than five business days after closing.
Under SEC Rule 15c2-12, underwriters must ensure the issuer agrees to provide annual financial information, audited financial statements and event notices, which are made public on EMMA. Event notices must be filed in a timely manner, not in excess of ten business days after the event.
EMMA does for municipal securities disclosure what EDGAR does for public company filings, and it also publishes trade data.
