[Federal Register Volume 63, Number 3 (Tuesday, January 6, 1998)]
[Notices]
[Pages 585-586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-159]
[[Page 585]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39495; File No. SR-MSRB-97-18]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Municipal Securities
Rulemaking Board Relating to Transaction Reporting Procedures
December 29, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on December
23, 1997, the Municipal Securities Rulemaking Board (``Board'' or
``MSRB'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') a proposed rule change (File No. SR-MSRB-
97-18). The proposed rule change is described in Items I, II, and III
below, which Items have been prepared by the Board. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Rule G-14--Reports of Sales or Purchases \1\
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\1\ Italics indicate additions; [brackets] indicate deletions.
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No change.
Rule G-14 Transaction Reporting Procedures
(a) Inter-Dealer Transactions
No change.
(b) Customer Transactions
(i) Each broker, dealer and municipal securities dealer shall
report to the Board all transactions with customer effected after
[January 1, 1998] March 1, 1998, except as described in paragraph (iii)
of this section (b). A broker, dealer or municipal securities dealer
shall report a transaction by submitting or causing to be submitted to
the Board, by midnight of trade date, the customer transaction
information specified in paragraph (ii) of this section (b) in such
format and manner specified in the current User's Manual for Customer
Transaction Reporting. The broker, dealer or municipal securities
dealer shall promptly report cancellation of the trade or corrections
to any required data items.
(ii)-(iv) No change.
II. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
In its filing with the Commission, the Board 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
texts of these statements may be examined at the places specified in
Item IV below. The board has prepared summaries, set forth in Section
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
The proposed rule change changes the effective date for the
beginning of the customer transaction phase of the Board's Transaction
Reporting Program. The customer transaction phase of the program was
filed by the Board and approved by the Commission in 1996, with an
effective date for system operations of January 1, 1998. The addition
of customer transactions to the existing transaction reporting system
for inter-dealer transactions will allow the Board to include customer
data in the daily reports of price and volume activity and in the
surveillance database that the Board makes available to regulators.\2\
The Commission also approved the Board's plan to conduct a mandatory
testing program.\3\ The testing program is designed to ensure that
modifications to dealer computer systems necessary for customer
transaction reporting have occurred and that links between dealer
systems that submit data and Board computer systems for processing data
are coordinated and are operating correctly. The start date for the
testing program was set for July 1, 1997.
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\2\ A complete description of the program is found in the
Board's filing with the Commission on the customer phase of the
program and the Commission's Approval Order. See Securities Exchange
Act Release No. 37998 (November 29, 1996).
\3\ See Rule G-14 Transaction Reporting Procedures, section
(b)(iv).
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The proposed rule change consists of two parts: (i) An amendment to
the language of Rule G-14 Transaction Reporting Procedures, changing
the effective date of dealers' obligations to report data correctly and
accurately to the Board's Transaction Reporting Program from January 1,
1998, to March 1, 1998 (the ``operational start date''); and (ii) a
notice to the industry that explains, notwithstanding the delay in the
operational start date, dealers are responsible under rule G-14 to
continue to test their transaction reporting capabilities with the
Board prior to the new operational start date. The notice states that,
once initial testing protocols have been successfully completed, the
testing program requires that dealers continue to submit live test data
to the Board. This will allow the Board and dealers to resolve possible
problems in reporting of certain types of transactions prior to the
operational start date for the system. It also will provide the Board
with information about the market that will help the Board to design
the daily price and volume reports that will include customer
transaction data.
The Board has determined that it is necessary to delay full system
operations and to extend the testing period from January 1, 1998 to
March 1, 1998, because of technical difficulties encountered in the
development of computer systems that will operate the Program. The
Board plans to complete computer system design and construction in time
to place the Program on an operational basis for trades occurring on or
after March 1, 1998. At its February 1998 meeting, the Board plans to
review the status of system development and construction. At that time,
the Board intends to review test data that has been submitted thus far
and to decide how best to structure the daily price and volume reports
that will reflect the customer transaction activity that is occurring
in the market.
The Board believes the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act, which provides that the Board'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, to remove
impediments to and perfect the mechanism of a free and open market
in municipal securities, and, in general, to protect investors and
the public interest.
The Board believes that the proposed rule change is necessary so
that initial operations of the customer transaction reporting phase of
the Transaction Reporting Program can begin as soon as possible and so
that the Board's production of daily price/volume reports can reflect
customer transaction data as soon as possible. The Board believes that
the operation of the Transaction Reporting Program, in general, will
facilitate the statutory purposes noted above because the Program will
provide an additional
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degree of price transparency in the municipal securities market and
will provide a surveillance audit trail that may be used by market
regulators in furtherance of their regulatory purposes.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Board does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act since it would apply equally to
all brokers, dealers and municipal securities dealers and merely delays
the start-up date for a program that previously has been approved by
the Commission.
C. Self-Regulatory Organization's Statement of Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change is merely a technical correction
of rule language, the Board has designated this proposed rule change as
constituting a stated policy, practice, or interpretation with respect
to the meaning, administration, or enforcement or an existing Board
rule under Section 19(b)(3)(A) of the Act, which renders the proposed
rule change effective upon receipt of this filing by the Commission. At
any time within sixty days of the filing of the proposed rule change,
the Commission may summarily abrogate 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
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 inspection and copying in the
Commission's Public Reference Room. Copies of the filing will also be
available for inspection and copying at the Board's principal offices.
All submissions should refer to File No. SR-MSRB-97-18 and should be
submitted by January 27, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-159 Filed 1-5-98; 8:45 am]
BILLING CODE 8010-01-M