[Federal Register Volume 79, Number 42 (Tuesday, March 4, 2014)]
[Notices]
[Pages 12254-12256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-04681]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71616; File No. SR-MSRB-2013-09]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Granting Approval of Proposed Rule Change, as Modified by
Amendment No. 1, Consisting of Amendments to MSRB Rules A-12, on
Initial Fee, G-14, on Reports of Sales or Purchases, and the Facility
for Real-Time Transaction Reporting and Price Dissemination (``RTRS
Facility''); Deletion of Rules A-14, on Annual Fee, A-15, on
Notification to the Board of Change in Status or Change of Name or
Address, and G-40, on Electronic Mail Contacts; Deletion of References
to RTRS Testing Requirements Under G-14(b)(v), G-14(c), on RTRS
Procedures, and in the RTRS Facility; Elimination of MSRB Forms RTRS
and G-40, and Adoption of a Single, Consolidated Electronic
Registration Form, New Form A-12
February 26, 2014.
I. Introduction
On December 24, 2013, the Municipal Securities Rulemaking Board
(the ``MSRB'' or ``Board'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC''), pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (the ``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change consisting of amendments to MSRB
Rules A-12, on initial fee, G-14, on reports of sales or purchases, and
the Facility for Real-Time Transaction Reporting and Price
Dissemination (``RTRS Facility''); deletion of Rules A-14, on annual
fee, A-15, on notification to the Board of change in status or change
of name or address, and G-40, on electronic mail contacts; deletion of
references to RTRS Testing Requirements under G-14(b)(v), G-14(c), on
RTRS Procedures, and in the RTRS Facility; elimination of MSRB Forms
RTRS and G-40, and adoption of a single, consolidated electronic
registration form, new Form A-12. On
[[Page 12255]]
January 7, 2014, the Board submitted Amendment No. 1 to the proposed
rule change. The proposed rule change, as modified by Amendment No. 1,
was published for comment in the Federal Register on January 14,
2014.\3\ The Commission received one comment letter on the proposed
rule change.\4\ This order approves the proposed rule change, as
modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 71255 (January 8,
2014), 79 FR 2483 (``Notice'').
\4\ See letter to Elizabeth M. Murphy, Secretary, Commission,
from Jeanine Rodgers Caruso, President, National Association of
Independent Public Finance Advisors (``NAIPFA''), dated February 1,
2014 (``NAIPFA Letter'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The MSRB proposes to amend Rule A-12 to create new registration
procedures for MSRB-regulated brokers, dealers and municipal securities
dealers (``dealers''), and municipal advisors, which procedures would
be incorporated into a new Form A-12. The MSRB states in the Notice
that the proposed rule change would consolidate the MSRB registration
process in Rule A-12 and delete the rule language under Rules A-14, A-
15, and G-40, eliminate Forms RTRS and G-40, and amend Rule G-
14(b)(iv).\5\
---------------------------------------------------------------------------
\5\ See Notice, supra note 3, at 2484.
---------------------------------------------------------------------------
In addition to consolidating the MSRB registration process, the
proposed rule change includes new changes to the existing registration
process. For example, the proposed rule change would require
registrants to provide contact information (name, title, phone number,
address, and email address) for several new contact persons on Form A-
12. The proposed rule change would provide a waiver of the annual fee
for dealers and municipal advisors that register in the last month of
MSRB's fiscal year. The proposed rule change would impose a late fee on
those regulated entities that fail to pay MSRB assessments in a timely
manner. The proposed rule change would eliminate the requirement for
registrants who submit transaction data to the MSRB to test their
ability to interface with MSRB systems.
Rule A-12
Rule A-12(a) would require each dealer, prior to engaging in
municipal securities activities, and each municipal advisor, prior to
engaging in municipal advisory activities, to register with the
MSRB.\6\ Rule A-12(a) also would require registrants to notify, as
appropriate, a registered securities association or appropriate
regulatory agency\7\ of their intent to engage in municipal securities
and/or municipal advisory activities and provide the MSRB, on their
Form A-12, with a written statement evidencing such notification.\8\
Registration with the MSRB would be effective only after the MSRB
notifies a registrant that its Form A-12 is complete and all fees have
been received and processed.
---------------------------------------------------------------------------
\6\ As noted by the MSRB, prior to registration with the MSRB,
each dealer and municipal advisor must first register with and
receive approval from the Commission. See Notice, supra note 3, at
2484.
\7\ According to the MSRB, the term ``appropriate regulatory
agency,'' as used in proposed Rule A-12(a), means the Comptroller of
the Currency, Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, or SEC as defined in 15
U.S.C. 78c(a)(34)(A).
\8\ This requirement would only be applicable to dealers or
municipal advisors first registering on or after April 28, 2014. As
stated in the Notice, registrants would have the flexibility to
submit any form of documentation, such as a letter on company
letterhead, evidencing notice to a registered securities association
or appropriate regulatory agency, as applicable, of their intent to
engage in municipal securities and/or municipal advisory activities.
---------------------------------------------------------------------------
Rule A-12(b) would provide for the amount and method of payment of
the initial registration fee. New registrants would continue to be
required to pay the initial fee of $100 to the MSRB in the manner
prescribed by the MSRB Registration Manual.\9\ Rule A-12(c) would
provide that the annual registration fee would continue to be $500 and
would be paid in accordance with the method described in the MSRB
Registration Manual. The annual fee would continue to be due by October
31 each year, but proposed Rule A-12 would provide that a regulated
entity that registers in September and pays an annual fee at the time
of registration need not pay the annual fee for the following fiscal
year, beginning October 1.
---------------------------------------------------------------------------
\9\ The MSRB represents that the MSRB Registration Manual would
not contain any substantive requirements not contained in MSRB rules
or fairly and reasonably implied from those rules. See Notice, supra
note 3, at 2485. The Commission notes that, if the MSRB Registration
Manual contains any substantive requirements not provided in MSRB
rules, the MSRB Registration Manual would have to be filed with, or
filed with and approved by, the Commission.
---------------------------------------------------------------------------
Rule A-12(d) would establish late fees for any assessment due under
Rules A-12 or A-13. Any registrant that fails to pay any fee due under
Rules A-12 or A-13 (underwriting, transaction or technology fee) would
be assessed a monthly late fee computed based on the overdue balance
and the prime rate plus an additional $25 per month, until paid.
Rule A-12(e) would permit registrants to use the designation ``MSRB
registered'' when referencing their registrant status.
Rule A-12(f), rather than the current requirement to provide only a
primary electronic mail contact, would require the provision of a
primary regulatory contact, master account administrator, billing
contact, compliance contact, and primary data quality contact. MSRB
registrants could also provide an optional regulatory contact, data
quality contact and technical contact. For dealers, the primary
regulatory contact would be required to be a registered principal. It
would be the responsibility of the primary regulatory contact to
receive official communications from the MSRB, similar to the role of
the primary electronic mail contact under current Rule G-40.
Rule A-12(g) would require dealers, prior to registering with the
MSRB, to provide trade reporting information so that their trade
reports can be processed correctly, or notify the MSRB that they are
exempt from the trade reporting requirements.
Rule A-12(h) would require dealers and municipal advisors to
comply, within 15 days or such longer period as may be agreed to by the
requesting authority, with any request from the MSRB, a registered
securities association or other appropriate regulatory authority, for
information required as a function of their registration with the MSRB.
Sections (i)-(k) of proposed Rule A-12 would establish the
requirements for completing, updating, and annually affirming the
information on new electronic Form A-12, as further described below
under ``Form A-12.'' The proposed rule provides for an annual
affirmation process, similar to the current process under Rule G-40(c),
which would require registrants to review, update and affirm the
information on Form A-12 during the first seventeen business days of
each calendar year. Similar to the current requirement in Rule A-15,
registrants would be required to update Form A-12, within 30 days, if
any information on the form becomes inaccurate or the firm ceases to be
engaged in municipal securities or municipal advisory activities either
voluntarily or involuntarily through a regulatory or judicial bar,
suspension or otherwise. Registrants that involuntarily cease to be
engaged in municipal securities or municipal advisory activities would
be required to provide a written explanation, on their Form A-12, of
the circumstances that lead to, and resulted in, the involuntary
cessation of such activities. Finally, regulated entities would be
required to inform the MSRB of the types of municipal securities and
municipal advisory activities engaged in
[[Page 12256]]
by such firms. Currently, the MSRB collects similar information from
municipal advisor registrants on Form G-40, and from dealers on Form
RTRS. Finally, MSRB registrants would be able to withdraw their
registration, either fully or partially, by amending Form A-12.
Section (l) of Rule A-12 refers to the MSRB Registration Manual as
the source of specifications for the reporting of information required
under Rule A-12, the instructions for submitting Form A-12, and other
information relevant to payments and reporting under Rule A-12.
Form A-12
As stated in the Notice, the new Form A-12 would be required to be
submitted electronically by each registrant through a web portal
located on the MSRB's Web site. Form A-12 would require the submission
of the following categories of information: Registration categories;
general firm information (i.e., firm identifiers; evidence of intent to
engage in municipal securities and/or municipal advisory activities;
business information; and form of organization); types of business
activity; contact information for primary regulatory contact, master
account administrator, billing contact, compliance contact, data
quality contact, optional regulatory contact, optional data quality
contact, and optional technical contact; and trade reporting (i.e.,
submission information, including the manner of reporting transactions
to the MSRB; feedback information, including the method to receive and
respond to transaction status and error feedback messages from the
MSRB; and trade reporting identifiers). A full description of the
information required to be submitted on Form A-12 is contained in the
Notice.\10\
---------------------------------------------------------------------------
\10\ See Notice, supra note 3, at 2485-2487.
---------------------------------------------------------------------------
Rules A-14, A-15 and G-40
The MSRB proposes to delete the entire rule language for Rules A-
14, A-15 and G-40.
Forms RTRS and G-40
The MSRB proposes to discontinue Forms RTRS and G-40.
Rule G-14(b)(iv)
As stated in the Notice, the proposed amendments to Rule G-
14(b)(iv) would replace a requirement to provide a completed Form RTRS
with a provision exempting dealers from all of the requirements listed
in Rule G-14(b), related to trade reporting, if the dealer does not
effect any municipal securities transactions or if the dealer's
transactions in municipal securities are limited to (1) transactions in
securities without assigned CUSIP numbers, (2) transactions in
municipal fund securities, or (3) inter-dealer transactions for
principal movement of securities between dealers that are not inter-
dealer transactions eligible for comparison in a clearing agency
registered with the Commission.\11\ Furthermore, the amended rule would
require dealers to confirm that they qualified for the exemption as
provided in proposed Rule A-12(g).\12\
---------------------------------------------------------------------------
\11\ MSRB Rule G-14(b)(vi).
\12\ In connection with the proposed rules change, as a result
of the proposed deletion of Form RTRS, the MSRB proposes deleting
the following sentence in the description of the Facility for Real-
Time Transaction Reporting and Price Dissemination (the ``REAL-TIME
TRANSACTION REPORTING SYSTEM'' or ``RTRS''): ``The requirement for
testing and submission of a ``Form RTRS'' with the name of a contact
person is reflected in Rule G-14.''
---------------------------------------------------------------------------
Rule G-14(b)(v)
The MSRB proposes to delete the entire language from this section.
Rule G-14(c)
The MSRB proposes to delete the reference to testing procedures
contained in the RTRS Users Manual.
A full description of the proposal is contained in the Notice. The
MSRB requested an effective date for the proposed rule change of April
28, 2014.
III. Summary of Comments Received
As noted above, the Commission received one comment letter
regarding the proposed rule change.\13\ In its comment letter, the
commenter expressed general support for the proposed rule change.\14\
---------------------------------------------------------------------------
\13\ See NAIPFA Letter, supra note 4.
\14\ See id.
---------------------------------------------------------------------------
IV. Discussion and Commission Findings
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to the MSRB.\15\ Specifically, the Commission
finds that the proposed rule change is consistent with Section
15B(b)(2)(C) of the Act,\16\ which provides that the MSRB's rules shall
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.'' \17\
---------------------------------------------------------------------------
\15\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\16\ 15 U.S.C. 78o-4(b)(2)(C).
\17\ Id.
---------------------------------------------------------------------------
The Commission believes that the proposed rule change is consistent
with Section 15B(b)(2)(C) of the Act because it helps to remove
impediments to dealers and municipal advisors by streamlining the
registration process for new registrants and reduce burdens on
registrants who currently must complete multiple forms to register with
the MSRB. As noted by the MSRB, the consolidation into a single rule of
requirements currently located in multiple rules will help clarify and
simplify the identification of regulatory requirements. Also as noted
by the MSRB, the proposed rule change would allow the MSRB to collect
information on the business activities of registrants, which may assist
the MSRB and other appropriate regulatory authorities in regulating
dealers and municipal advisors.
V. Conclusion
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to the MSRB, and in
particular, Section 15B(b)(2)(C) of the Act.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-MSRB-2013-09), as modified
by Amendment No. 1, be, and hereby is, approved.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(2).
For the Commission pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-04681 Filed 3-3-14; 8:45 am]
BILLING CODE 8011-01-P