G-47 Time-of-Trade Disclosures – Now Material Information is Served Up Fast and Easy

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G-47 Time-of-Trade Disclosures – Now Material Information is Served Up Fast and Easy

Fast and easy access to local material information for Munis.

The SEC approved the MSRB Rule G-47 and it comes into effect on July 5th.  G-47 is designed to protect the buyers and sellers of municipal bonds by requiring the more sophisticated municipal market professionals to disclose “material information” to customers.  The material information under the rule is broadly defined as information that any “reasonable investor” should consider in their decision.   Examples are given as to what this information might include but leaves open the full scope.   The rule cites the MSRB EMMA system as one source for this information but also leaves open where this information might be found, to include sources that are “reasonably accessible to the market”.  It sounds “reasonable” that the SEC wants investors to know about information outside of EMMA, such as significant news that impacts the credit worthiness of the bond.

The challenge to market professionals is getting “reasonable access” to the important news.  There  are thousands of sources of local news, each streaming articles containing buried nuggets of information about municipal credit situations.  But from these thousands of sources only one-half of one percent (0.5%) of the articles contains information that is materially important.  Therefore finding the nuggets of material information within the local news is a substantial challenge for everyone.

Bitvore for Munis is the solution to this problem.  We give easy access to the material news every investor should be told when they buy a bond. Bitvore for Munis analyzes news from over 3,000 sources proactively watching for 300 material situations that may impact the risk of a municipal bond.  And Bitvore for Munis watches the ever-changing streams of news 24 hours every day.

Why is local news so important to making a muni investment decision?  If I was buying a municipal bond, I would certainly want to be informed of all local economic and political news that effects the risk in the bond.   There was a time, not so far past, when municipal bonds were considered safe.  Today, we know many cities, counties and states are having financial struggles.  So are other facilities supported by bonds like toll roads, schools and public utilities.  Today the situation behind the credit risk of a bond is very dynamic.

Here are some examples of material news picked up early from local news sources by Bitvore for Munis on Friday and provided to our customers.

Macomb County MI – Officials have a massive $300M hole in their budget due to retiree benefits.  Ouch!  That is an important nugget if you own or are considering bonds in that area.

East Palo Alto, CA – The city has a serious budget issue coming down the pipe. Wholesale water prices are up dramatically, and the cost is more than the city coffers can afford.  Either these costs are going to get passed to the residents and businesses or cuts are going to be made in budgets.   Either choice may increases the credit risk in bonds in the area.

West Virginia – State taxes are below estimates.  Despite hiring freezes and budget cuts, West Virginia is behind in tax collections in nearly every tax category.

G-47 is coming fast and impacts the trading procedures for thousands of investment professionals.  The good new is that Bitvore is here to fill an important part of the time of trade disclosure requirements.

By | 2017-06-28T04:13:48+00:00 May 5th, 2014|General|0 Comments

About the Author:

Jeff Curie is the President of Bitvore Corp, a provider of A.I.-based products that identify risk and opportunity for professionals in the financial, insurance and commercial real estate industries. Mr. Curie is a technology entrepreneur focused on leveraging emerging technologies to offer effective solutions to previously unsolvable problems.

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