[Federal Register Volume 79, Number 84 (Thursday, May 1, 2014)]
[Notices]
[Pages 24798-24800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-09919]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72019; File No. SR-MSRB-2014-03]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change Consisting of New Rule A-11, on Assessments for Municipal
Advisor Professionals
April 25, 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 April 17, 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 MSRB has designated the proposed rule change as
changing fees imposed by the MSRB under Section 19(b)(3)(A)(ii) of the
Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 new Rule A-11, on assessments for municipal advisor
professionals (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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The proposed rule change consists of new Rule A-11, on assessments
for municipal advisor professionals. In the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act''),\4\
Congress charged the SEC and MSRB with the regulation of municipal
advisors. The Dodd-Frank Act specifically amended the Exchange Act to
grant the MSRB authority to charge municipal advisors reasonable fees
to defray the costs of the operation of the MSRB. The purpose of the
proposed rule change is to assess a reasonable fee on municipal
advisors to help defray the costs and expenses of operating and
administering the MSRB, particularly the increased costs as a result of
the regulation of municipal advisors. New Rule A-11 will charge each
municipal advisor an annual fee of $300 for each Form MA-I on file with
the SEC in the relevant year.\5\ This fee is separate from the initial
$100 and annual $500 registration fees the MSRB charges all market
participants subject to MSRB regulation \6\ and is a step towards the
MSRB's goal to provide for assessments that are fairly and equitably
apportioned among all such registrants.\7\
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\4\ Public Law 111-203, 124 Stat. 1376 (2010).
\5\ See 17 CFR 240.15Ba1-2(b) (setting forth requirements to
file Form MA-I with the SEC).
\6\ See MSRB Rules A-12 and A-14. See also MSRB Notice 2014-05
(Feb. 27, 2014) (describing SEC-approved amendments to MSRB Rule A-
12 and deletion of Rule A-14 to consolidate MSRB registration
requirements in Rule A-12, which will become effective on May 12,
2014).
\7\ On July 26, 2011, the MSRB filed a proposed rule change with
the SEC that would have established an interim $300 per professional
assessment of municipal advisors and would have required municipal
advisors to complete a survey for the MSRB to use in establishing a
permanent assessment for municipal advisor professionals. This
filing was subsequently withdrawn due to the SEC's continuing
consideration of the definition of the term ``municipal advisor''
under the Act. See MSRB Notice 2011-51 (Sept. 12, 2011).
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Section (a) of Rule A-11 establishes an annual municipal advisor
professional fee. This section provides that, beginning with the MSRB's
fiscal year 2015 (which begins October 1, 2014), each municipal advisor
that is registered with the Commission will be required to pay a
recurring annual fee of $300 for each Form MA-I filed with the
Commission as of January 31 of the relevant year by the municipal
advisor. Section (a) further provides that the professional fee will be
due by April 30 of each year and will be payable in the manner provided
by the MSRB Registration Manual.
Section (b) of Rule A-11 provides for a late fee for any municipal
advisor that fails to pay timely in full any professional fee due under
section (a) or (c) of the proposed rule. The total late fee will equal
twenty-five dollars monthly for each $300 assessment not paid in full,
plus a late fee on the total overdue balance based on the prime rate as
provided for in the MSRB Registration Manual.
Section (c) of Rule A-11 provides for a transitional municipal
advisor professional fee. This transitional fee takes account of the
timing of the phased-in compliance period for the SEC's permanent
registration process, which begins in the second half of calendar year
2014, and which entails the first filings of Forms MA-I by municipal
advisors. Each municipal advisor registered, either temporarily or
permanently, with the SEC on or before September 30, 2014 (the last day
of the MSRB's fiscal year 2014), will be required to pay an assessment
of $300 for each Form MA-I filed with the SEC by the municipal advisor
in connection with its permanent registration. The transitional fee
will be payable in the manner provided by the MSRB
[[Page 24799]]
Registration Manual. The transitional fee will only be assessed upon
municipal advisors that are either temporarily or permanently
registered on or before September 30, 2014, and will help defray in
particular the costs of establishing a regulatory regime for municipal
advisors. Owing to the timing of the SEC's phased-in compliance period,
some municipal advisors will not pay this transitional fee until after
the start of the MSRB's 2015 fiscal year. Although these municipal
advisors will owe two assessments during the same MSRB fiscal year, the
MSRB believes this timing of the transitional fee minimizes the
administrative burden on municipal advisors by using the filing of
Forms MA-I as the basis of the fee, rather than requiring an additional
submission, analysis and categorization of professionals. Municipal
advisors paying this transitional fee will then pay their first annual
professional fee by April 30, 2015, according to Rule A-11(a).
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(J) of the Act, which provides that the MSRB's rules
shall
provide that each municipal securities broker, municipal securities
dealer, and municipal advisor shall pay to the Board such reasonable
fees and charges as may be necessary or appropriate to defray the
costs and expenses of operating and administering the Board.
In addition, Section 15B(b)(2)(L)(iv) of the Act requires that rules
adopted by the MSRB
not impose a regulatory burden on small municipal advisors that is
not necessary or appropriate in the public interest and for the
protection of investors, municipal entities, and obligated persons,
provided that there is robust protection of investors against fraud.
The proposed rule change will establish a fee for municipal
advisors that will help to defray the costs and expenses of operating
and administering the MSRB, particularly the MSRB's regulatory and
related activities in connection with municipal advisors. The total
amount of the assessment payable by each municipal advisor will be
dependent on the number of Forms MA-I filed by the municipal advisor
and, therefore, will result in relatively lower assessments for smaller
firms. Being based on the number of persons engaging in municipal
advisory activities on behalf of a firm, the total fee will bear a
reasonable relationship to the level of regulated municipal advisory
activities that are undertaken by each firm. Single-person firms filing
one Form MA-I will be charged only $300 annually under proposed Rule A-
11.\8\ The $300 fee will not be triggered by persons for whom the
municipal advisor is not required by the SEC to file a Form MA-I, such
as persons performing solely clerical, administrative, support or
similar functions.\9\ The MSRB believes that the reasonableness of the
fee is also supported by its simplicity of calculation. Rather than
establish a new category of professional for purposes of assessing this
fee, which would have required additional analysis and compliance
efforts, the fee leverages the existing categorization under the
Commission's rules and the analysis by firms already required by those
rules. The MSRB further believes, for all of these reasons, that the
assessment will not impose an unnecessary or inappropriate regulatory
burden on small municipal advisors.
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\8\ See 17 CFR 240.15Ba1-2(b)(2) (requiring a natural person
applying for registration with the SEC as a municipal advisor to
file a Form MA-I).
\9\ See Exchange Act Release No. 70462, at p. 636 (Sept. 20,
2013), 78 FR 67468, 67655 (Nov. 12, 2013) (Glossary of Terms).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act since it would apply equally to
all municipal advisors based on the number of Forms MA-I filed by each
firm.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act and paragraph (f) of Rule 19b-4 thereunder.
At any time within 60 days of the filing of the proposed rule change,
the Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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-2014-03 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2014-03. 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-2014-03 and should be
submitted on or before May 22, 2014.
[[Page 24800]]
For the Commission, pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09919 Filed 4-30-14; 8:45 am]
BILLING CODE 8011-01-P