[Federal Register Volume 79, Number 33 (Wednesday, February 19, 2014)]
[Notices]
[Pages 9558-9563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03566]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71536; File No. SR-MSRB-2014-01]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed Rule Change Consisting of
Proposed Revisions to MSRB Rule G-30, on Prices and Commissions and the
Deletion of Rule G-18, on Execution of Transactions
February 12, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 29, 2014, the Municipal Securities Rulemaking Board
(the ``MSRB'' or ``Board'') filed with the Securities and Exchange
Commission (the ``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the MSRB. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB is filing with the Commission a proposed rule change
consisting of proposed revisions to MSRB Rule G-30, on prices and
commissions and the deletion of Rule G-18, on execution of transactions
(the ``proposed rule change'').
The text of the proposed rule change is available on the MSRB's Web
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2014-Filings.aspx, at the MSRB's principal office, and at the Commission's
Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The MSRB has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.
[[Page 9559]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Summary of Proposed Rule Change
The purpose of the proposed rule change is to codify the substance
of existing fair-pricing obligations of brokers, dealers, and municipal
securities dealers (collectively, ``dealers'') and further streamline
the MSRB's Rule Book. Fair-pricing provisions are currently organized
in two separate rules, Rules G-18 and G-30, with interpretive guidance
under Rule G-30 as well as under a third rule, Rule G-17, on fair
dealing. We note that market participants support the objective of
consolidating and codifying the existing substance of these rules and
interpretive guidance.
To achieve this objective, the MSRB is proposing to consolidate
Rules G-18 and G-30 into a single fair-pricing rule, and to consolidate
the existing interpretive guidance under Rules G-17 and G-30 and codify
that guidance in the same rule. Existing Rule G-18 provides a pricing
standard for agency transactions, while existing Rule G-30(a) provides
a pricing standard for principal transactions, with both rules using
different formulations to reflect differences between the two types of
trades. As a practical matter, the investor-protection function of the
two provisions does not differ, and it is appropriate to organize these
standards in a single rule, as proposed. In addition, the MSRB has
issued extensive interpretive guidance under MSRB Rules G-17 and G-30
discussing fair pricing in general, as well as in specific scenarios.
The proposed rule change would consolidate the substance of this
guidance \3\ and codify it into rule language.\4\ The MSRB will archive
this interpretive guidance, current as of January 1, 2013, on its Web
site. To the extent that past interpretive guidance does not conflict
with any MSRB rules or interpretations thereof, it remains potentially
applicable, depending on the facts and circumstances of a particular
case.
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\3\ The formal fair-pricing guidance under current Rule G-30
that is to be codified was not filed with the Commission, and is as
follows: Review of Dealer Pricing Responsibilities (Jan. 26, 2004)
(``2004 Notice''); Interpretive Notice on Commissions and Other
Charges, Advertisements and Official Statements Relating to
Municipal Fund Securities (Dec. 19, 2001); Republication of
September 1980, Report on Pricing (Oct. 3, 1984); Interpretive
Notice on Pricing of Callable Securities (Aug. 10, 1979);
Interpretive Letter--Rules G-21, G-30 and G-32 (Dec. 11, 2001); and
Factors in pricing (Nov. 29, 1993). The formal fair-pricing guidance
under Rule G-17 that is to be codified that was not filed with the
Commission is as follows: Guidance on Disclosure and Other Sales
Practice Obligations to Individual and Other Retail Investors in
Municipal Securities (Jul. 14, 2009); MSRB Reminds Firms of their
Sales Practice and Due Diligence Obligations When Selling Municipal
Securities in the Secondary Market (Sept. 20, 2010); and Bond
Insurance Ratings--Application of MSRB Rules (Jan. 22, 2008). The
formal guidance under Rule G-17 that is to be codified that was
filed with the Commission is contained in Restated Interpretive
Notice Regarding the Application of MSRB Rules to Transactions with
Sophisticated Municipal Market Professionals (Jul. 9, 2012).
\4\ The MSRB is separately proposing to consolidate its
interpretive guidance under Rule G-17 related to time of trade
disclosures, suitability of recommendations, and dealings with
sophisticated municipal market professionals (``SMMPs'') and to
codify that guidance into several rules: A new time of trade
disclosure rule (proposed Rule G-47), a revised suitability rule
(Rule G-19), and two new SMMP rules (proposed Rules D-15 and G-48).
See Securities Exchange Act Release No. 70593 (Oct. 1, 2013), 78 FR
62867 (Oct. 22, 2013), File No. SR-MSRB-2013-07.
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The MSRB believes the new fair-pricing rule will significantly
enhance regulated entities' ability to understand and comply with their
fair-pricing obligations by organizing them together in a single
location. Further, the relevant information from the existing
interpretive guidance will be succinctly stated in the new rule. The
MSRB believes this could be particularly beneficial for new municipal
market entrants, which would be in a position to focus, with respect to
fair-pricing obligations, on the new, consolidated rule. In sum, the
MSRB believes that the proposed rule change will ease burdens on
dealers and reduce costs by clarifying dealer obligations.
The structure of proposed Rule G-30 (rule language followed by
supplementary material) is the same structure used by FINRA and other
self-regulatory organizations (``SROs''). The MSRB intends generally to
transition to this structure for all of its rules going forward in
order to streamline the rules, harmonize the format with that of other
SROs, and make the rules easier for dealers and municipal advisors to
understand and follow.
Following is a summary of the provisions and the supplementary
material comprising proposed Rule G-30:
Rule Language
Proposed revised Rule G-30(a) applies to principal transactions and
states that a dealer can only purchase municipal securities for its own
account from a customer, or sell municipal securities for its own
account to a customer, at an aggregate price (including any mark-up or
mark-down) that is fair and reasonable.\5\
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\5\ Proposed revised Rule G-30(a) is substantially similar to
the first clause of existing Rule G-30(a).
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Proposed revised Rule G-30(b) applies to agency transactions.
Subsection (i) states that when a dealer executes a transaction in
municipal securities for or on behalf of a customer, the dealer must
make a reasonable effort to obtain a price for the customer that is
fair and reasonable in relation to prevailing market conditions.
Subsection (ii) states a dealer cannot purchase or sell municipal
securities for a customer for a commission or service charge in excess
of a fair and reasonable amount.\6\
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\6\ Subsection (i) of proposed Rule G-30(b) is derived from
current Rule G-18. Subsection (ii) is derived from the first clause
of existing Rule G-30(b).
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Supplementary Material
Supplementary Material .01 specifies five general principles
concerning the fair-pricing requirements: (a) That a dealer, whether
effecting a trade on an agency or principal basis, must exercise
diligence in establishing the market value of the security and the
reasonableness of the compensation received on the transaction; (b)
that a dealer effecting an agency transaction must exercise the same
level of care as it would if acting for its own account; (c) that a
``fair and reasonable'' price bears a reasonable relationship to the
prevailing market price of the security; (d) that dealer compensation
on a principal transaction is considered to be a mark-up or mark-down
that is computed from the inter-dealer market price prevailing at the
time of the customer transaction; \7\ and (e) that reasonable
compensation differs from fair pricing.\8\
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\7\ This language was added to address comments the MSRB
received in response to its August 6, 2013 request for comment on a
draft of the proposed rule change.
\8\ Supplementary Material .01 is derived from the 2004 Notice.
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Supplementary Material .02 provides a non-exhaustive list of
relevant factors in determining the fairness and reasonableness of
prices.\9\
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\9\ Supplementary Material .02(a) is derived from the 2004
Notice. Supplementary Material .02(b) is derived from Rule G-30(a),
the 2004 Notice, the MSRB Interpretive Letter--Rules G-21, G-30 and
G-32 (Dec. 11, 2001), the MSRB Interpretive Letter--Factors in
Pricing (Nov. 29, 1993), the Republication of September 1980, Report
on Pricing (Oct. 3, 1984); and the Interpretive Notice on Pricing of
Callable Securities (Aug. 10, 1979).
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Supplementary Material .03 provides a non-exhaustive list of
relevant factors in determining the fairness and reasonableness of
commissions or
[[Page 9560]]
service charges.\10\ The proposed rule change makes it easier for
market participants to find these relevant factors.
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\10\ Supplementary Material .03 is derived from existing Rule G-
30(b), the 2004 Notice and Republication of September 1980, Report
on Pricing (Oct. 3, 1984). Supplementary Material .03(a)(viii)
refers to Rule 2830 of the National Association of Securities
Dealers, Inc. (``NASD''), which provides a sales charge schedule for
registered investment company securities, and remains in effect in
the Financial Industry Regulatory Authority, Inc. rulebook. The MSRB
recognizes that, due to the limitations of Section 15B(b)(2)(C) of
the Act, it could not, by rule or interpretation, ``impose any
schedule or fix rates of commissions, allowances, discounts, or
other fees to be charged'' by dealers for the sale of municipal fund
securities. The MSRB believes, however, that the charges permitted
by FINRA under NASD Rule 2830 may, depending upon the totality of
the facts and circumstances, be a significant factor in determining
whether a dealer selling municipal fund securities is charging a
commission or other fee that is fair and reasonable.
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Supplementary Material .04 discusses the application of fair-
pricing requirements to some of the situations that may create large
intra-day price differentials.\11\
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\11\ Supplementary Material .04 is derived from the 2004 Notice.
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Finally, Supplementary Material .05 discusses the general duty
under proposed revised Rule G-30(b)(i) of dealers operating alternative
trading systems to act to investigate any alleged pricing
irregularities on their systems brought to their attention, which duty
applies equally to transactions effected for SMMPs.\12\
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\12\ Supplementary Material .05 is derived from interpretive
guidance that was previously filed with the Commission and which is
separately proposed to be generally codified in Rule G-48 based on
its relevance to SMMPs. See Restated Interpretive Notice Regarding
the Application of MSRB Rules to Transactions with Sophisticated
Municipal Market Professionals (Jul. 9, 2012).
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2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act,\13\ which provides that the MSRB's
rules shall
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\13\ 15 U.S.C. 78o-4(b)(2)(c).
be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities and
municipal financial products, to remove impediments to and perfect
the mechanism of a free and open market in municipal securities and
municipal financial products, and, in general, to protect investors,
municipal entities, obligated persons, and the public interest.
The proposed rule change preserves the substance of the current
requirement that dealers must exercise diligence in establishing the
market value of a security and the reasonableness of the compensation
received on a transaction. This requirement protects investors and is
central to the role of a dealer in facilitating municipal securities
transactions. At the same time, the MSRB believes the proposed rule
change will remove impediments to and perfect the mechanism of a free
and open market. The MSRB believes it will ease burdens on dealers and
reduce costs by clarifying dealer obligations. Most commenters agree
and believe that the proposed rule change would promote regulatory
efficiency. For example, one commenter supports the adoption of the
proposed rule and believes it will ease the burden on firms and market
participants seeking to comply with the rule.\14\ Two commenters
commend the MSRB's effort to promote regulatory efficiency through its
proposed consolidation of Rules G-18 and G-30 and codification of
related interpretive guidance.\15\ Another commenter supports the
MSRB's efforts to promote regulatory efficiency and is generally
supportive of this rule consolidation which preserves the substance of
existing fair-pricing requirements.\16\
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\14\ See letter from David T. Bellaire, Esq., Executive Vice
President and General Counsel, Financial Services Institute
(``FSI''), dated September 20, 2013.
\15\ See letter from Robert J. McCarthy, Director of Regulatory
Policy, Wells Fargo Advisors, LLC (``WFA''), dated September 20,
2013 and letter from Gerald K. Mayfield, Senior Counsel, Wells Fargo
& Company Law Department, Wells Fargo Securities, dated September
20, 2013.
\16\ See letter from David L. Cohen, Managing Director and
Associate General Counsel, Securities Industry and Financial Markets
Association (``SIFMA''), dated September 20, 2013.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.\17\ The proposed
rule change consolidates existing Rules G-18 and G-30 and codifies
current interpretive guidance reasonably and fairly implied by those
rules or Rule G-17. The proposed rule change makes no substantive
change and, therefore, does not add any burden on competition. The MSRB
believes, as discussed above, that the proposed rule change will, by
contrast, ease burdens on dealers and reduce costs by clarifying dealer
obligations. As noted, most commenters agree and believe that the
proposed rule change would promote regulatory efficiency.
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\17\ On September 26, 2013 the MSRB publicly announced its
adoption of a formal policy to further integrate the use of economic
analysis in MSRB rulemaking. By its terms, the policy does not apply
to rulemaking initiatives, like the proposed rule change, that were
initially presented to the MSRB Board of Directors before September
26, 2013. The MSRB has, however, historically taken account of the
costs and burdens of its rulemaking initiatives, including those
associated with the proposed rule change. Significantly, the
proposed rule change would make no substantive change to existing
requirements.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
On August 6, 2013, the MSRB published a request for public comment
on a draft of the proposed rule change.\18\ The MSRB received five
comment letters.\19\
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\18\ See MSRB Notice 2013-15 (Aug. 6, 2013).
\19\ Comment letters were received from: (1) FSI, (2) the
Investment Company Institute (``ICI''), (3) SIFMA, (4) WFA, and (5)
Wells Fargo Securities. Wells Fargo Securities' sole comment is that
it strongly supports the comments specified in WFA's letter and that
it urges the MSRB to strongly consider WFA's comments.
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Following are summaries of the comment letters:
Support for the Proposal
Comments: Four of the five commenters generally support the MSRB's
initiative to consolidate and codify the fair-pricing requirements. FSI
supports the adoption of the proposed rule and believes it will ease
the burden on firms and market participants seeking to comply with the
rule. WFA and Wells Fargo Securities commend the MSRB's effort to
promote regulatory efficiency through its proposed consolidation of
Rules G-18 and G-30 and codification of related interpretive guidance.
SIFMA supports the MSRB's efforts to promote regulatory efficiency and
is generally supportive of this rule consolidation which preserves the
substance of existing fair-pricing requirements.
MSRB Response: The MSRB believes these comments support the MSRB's
statement on the burden on competition.
Application to Municipal Fund Securities
Comment: ICI requests that, for the sake of clarity, the MSRB
expressly limit the scope of the rule to municipal securities other
than municipal fund securities that are 529 college savings plans. ICI
believes that there are significant differences in the pricing and
execution of transactions in municipal fund securities as compared with
those involving other types of municipal securities. If, instead, the
MSRB intends for the rule to apply to transactions involving municipal
fund securities, ICI recommends that the MSRB clarify the
[[Page 9561]]
rule's meaning in the context of municipal fund securities.
MSRB Response: The MSRB intends for the proposed rule to apply to
transactions involving municipal fund securities. Unless an MSRB rule
specifically exempts municipal fund securities, the proposed rule
applies to municipal fund securities. The MSRB believes no further
clarification regarding the proposed rule's application to municipal
fund securities is necessary. An investor that invests in a broker-sold
529 college savings plan may pay a fee provided to the dealer that
represents the dealer's commission and any other charge. The proposed
rule includes a non-exhaustive list of potentially relevant factors in
determining the fairness and reasonableness of commissions and service
charges, and the last listed factor in subsection (viii) pertains
expressly to 529 plans.
The Proposed Rule Should Be Revised To Include Additional
Existing Guidance
Comments: SIFMA and WFA request that the proposed rule include a
description of the relationship between mark-up, current inter-dealer
market prices, and compensation in order to avoid confusion.
MSRB Response: The MSRB agrees that the requested addition would
further clarify the proposed rule and has added language drawn from its
existing guidance to address the commenters' concern. The added
language is in Supplementary Material .01(d).
Comments: SIFMA requests that all factors discussed in existing
MSRB guidance be detailed in Supplementary Material .02, including
improved market conditions and trading history. WFA requests that the
rule include all factors discussed in existing MSRB guidance.
MSRB Response: The MSRB does not believe that all factors discussed
in existing MSRB guidance need be or should be specified in the
streamlined, proposed rule. First, the MSRB believes that the factor
specified in Supplementary Material .02(a) of the proposed rule
sufficiently encapsulates the concept of ``improved market
conditions.'' Second, like the factors specified in the existing
guidance, the factors specified in the proposed rule are not
exhaustive. The MSRB chose to include the factors that are listed in
the non-exhaustive list based on its experience administering and
interpreting Rules G-18 and G-30.
The Proposed Rule Should Be Revised To Include New Guidance
Comment: SIFMA requests that the MSRB expressly recognize in
commentary to the final rule that underlying ratings may not yet be
updated by the relevant rating agency to reflect material events
affecting an issuer or insurer and that dealers are neither under an
obligation to determine pricing based on ratings believed to be
inaccurate nor are they required to forecast ratings changes that have
not yet occurred.
MSRB Response: The MSRB disagrees with this request at this time.
The objective of this rulemaking initiative is to codify, not
substantively change, the existing fair-pricing requirements.\20\ This
request goes beyond the scope of this rulemaking initiative, and the
MSRB can consider this request as part of any consideration of
substantive changes at a later date.
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\20\ See MSRB Notice 2013-15 (Aug. 6, 2013) (proposing to
consolidate existing Rules G-18 and G-30 and ``codify existing
guidance regarding fair pricing''); id. (stating the proposed rule
``preserves the substance of the existing fair-pricing
requirements'').
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Comment: SIFMA believes the meaning of the term ``service charge''
should be clarified in the proposed rule.
MSRB Response: The MSRB disagrees with this request at this time.
The objective of this rulemaking initiative is to codify, not
substantively change, the existing fair-pricing requirements. This
request goes beyond the scope of this rulemaking initiative, and the
MSRB can consider this request as part of any consideration of
substantive changes at a later date.
Comment: SIFMA requests that Supplementary Material .03, which
lists factors that may affect the fairness and reasonableness of a
commission or service charge, include the following factor: ``the
presence of uniform commission arrangements disclosed to customers in
advance of transacting that are considered by the dealer to be fair and
reasonable.'' SIFMA states that this factor should be included because
the proposed rule should ``acknowledge a common industry practice of
having a standard pricing policy, for example, a uniform price per
bond, rather than having charges vary based on the aforementioned
factors.''
MSRB Response: The MSRB disagrees with this request at this time.
The objective of this rulemaking initiative is to codify, not
substantively change, the existing fair-pricing requirements. This
request, seeking incorporation in the rule of what the commenter states
is a common industry practice, goes beyond the scope of this rulemaking
initiative, and the MSRB can consider this request as part of any
consideration of substantive changes at a later date.
Comment: SIFMA states that MSRB staff has long provided informal
guidance that, if a dealer cannot determine the fair market value of a
municipal security after reasonable diligence and its customer needs to
sell the securities, the dealer may effect the trade as an agency
trade. SIFMA requests that the MSRB incorporate that informal staff
guidance in this rule proposal.
MSRB Response: The MSRB disagrees with this request. The purpose of
the proposed rule change is to codify existing formal MSRB guidance,
not informal staff guidance. Thus, this request goes beyond the scope
of this rulemaking initiative, and the MSRB can consider this request
as part of any consideration of substantive changes at a later date. We
note, in addition and without comment on the merits of any particular
informal guidance, that because the proposed rule change makes no
substantive change, the potential for any informal staff guidance to be
provided that was previously provided would likewise be unchanged.
Comment: WFA suggests that certain content in the proposed rule's
Supplementary Material .04, on Fair-Pricing Responsibilities and Large
Price Differentials, should be organized in its own supplementary
section. WFA believes the guidance concerning dealer duties when
transacting in illiquid municipal securities does not belong in section
.04 because the fact that a municipal bond is illiquid does not, by
itself, suggest there will be a large intra- day price differential.
MSRB Response: Supplementary Material .04 (Fair-Pricing
Responsibilities and Large Price Differentials) is derived from Review
of Dealer Pricing Responsibilities (January 26, 2004), which is
interpretive guidance under Rule G-30. The guidance referenced by WFA
appears under an identical heading in the existing interpretive notice
(Fair-Pricing Responsibilities and Large Price Differentials). This
organization does not suggest a view on the part of the MSRB that
illiquidity alone suggests there will be a large price differential.
Indeed, Supplementary Material .04 states that the price differential
for illiquid issues ``might generally'' be larger.
Cross-Reference to Rule G-48
Comment: SIFMA believes a dealer's fair-pricing requirements, in
certain agency transactions, are significantly
[[Page 9562]]
affected by the status of a customer as a sophisticated municipal
market professional (``SMMP'') and acknowledges that the substance of
this reduced obligation may soon be codified in proposed Rule G-48.\21\
SIFMA requests that the proposed rule, at a minimum, cross reference
proposed Rule G-48. SIFMA believes a cross-reference will further
assist dealers and other market participants who seek to understand,
comply with, and enforce fair-pricing requirements.
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\21\ See Securities Exchange Act Release No. 70593 (Oct. 1,
2013), 78 FR 62867 (Oct. 22, 2013), File No. SR-MSRB-2013-07.
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MSRB Response: The MSRB disagrees with this request. Rule G-48, if
approved, will expressly modify dealers' pricing obligations when
dealing with SMMPS, and the MSRB does not believe a cross-reference to
Rule G-48 is necessary.
Reorganization of the Proposed Rule
Comment: SIFMA requests that the factors under proposed
Supplementary Material .02(b)(vii) relating to ratings and call
features be separately listed rather than combined given that they are
independent considerations.
MSRB Response: The MSRB disagrees with this request. All of the
factors included under Supplementary Material .02(b)(vii) relate
directly to the subject category described--``the rating and call
features of the security (including the possibility that a call feature
may not be exercised).'' The MSRB believes the organization of the
subsections is appropriate.
Clarification Concerning Guidance That Is Not in the Proposed
Rule
Comment: SIFMA requests clarification from the MSRB as to why
certain MSRB interpretive guidance concerning pricing in the primary
market is missing from the proposed rule. SIFMA highlights as examples:
Guidance on Disclosure and Other Sales Practice Obligations to
Individual and Other Retail Investors in Municipal Securities (Jul. 14,
2009); MSRB Interpretation of December 11, 2001 (differential re-
offering prices); MSRB Interpretation of March 16, 1984 (fixed- price
offerings); and Interpretive Notice Concerning the Application of MSRB
Rule G-17 to Underwriters of Municipal Securities (Aug. 2, 2012).
MSRB Response: The MSRB believes that the substance of all of the
interpretive guidance relating to fair-pricing under Rule G-17, which
includes Guidance on Disclosure and Other Sales Practice Obligations to
Individual and Other Retail Investors in Municipal Securities (Jul. 14,
2009) and Interpretive Notice Concerning the Application of MSRB Rule
G-17 to Underwriters of Municipal Securities (Aug. 2, 2012), is
incorporated in the proposed rule, except for guidance that pertains to
retail order periods. The rationale for this limited exception is that
the MSRB is considering codifying guidance concerning retail order
periods under a separate rule or rules that pertain specifically to
primary offerings and retail order periods. The substance of the
relevant guidance from the cited MSRB interpretive letter dated
December 11, 2001 (differential re-offering prices), essentially that
the resulting yield to the customer is the most important factor in
determining the fairness and reasonableness of a price in any given
transaction, is included in the proposed rule. The cited MSRB
interpretive letter dated March 16, 1984, regarding fixed-price
offerings does not contain any substantive guidance regarding fair
pricing that would warrant codification. That letter addresses Rule G-
11, which is a disclosure rule. Although the letter contains a one-
sentence description of Rule G-30, that sentence does not contain any
substantive interpretive guidance regarding fair pricing.
Changes to Existing Fair-Pricing Requirements
Comment: WFA believes that any move by the MSRB to revise its
existing fair-pricing requirements should be accompanied by a
demonstration that market conditions have changed in a manner that
makes it necessary and appropriate to impose a different standard.
MSRB Response: The proposed rule merely codifies the substance of
existing requirements and does not impose any different standard.
Although no substantive change is made here, we note that substantive
changes can become necessary or appropriate for reasons other than
changes in market conditions.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period of up to 90 days (i) as
the Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml; or
Send an email to [email protected]. Please include
File Number SR-MSRB-2014-01 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2014-01. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the MSRB. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-MSRB-2014-01 and should be
submitted on or before March 12, 2014.
[[Page 9563]]
For the Commission, pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03566 Filed 2-18-14; 8:45 am]
BILLING CODE 8011-01-P