[Federal Register Volume 64, Number 2 (Tuesday, January 5, 1999)]
[Notices]
[Pages 544-548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-73]
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SECURITIES AND EXCHANGE COMMISSION
[Release No 34-40848; File No. SR-MSRB-98-12]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Municipal Securities
Rulemaking Board Consisting of an Interpretative Notice Regarding
Electronic Delivery and Receipt of Information by Brokers, Dealers and
Municipal Securities Dealers
December 28, 1998.
On November 20, 1998, 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-98-12) pursuant to Section 19(b)(1) of the Securities Exchange
Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The proposed
rule change is described in Items, I, II, and III below, which Items
have been prepared by the Board. The Board has designated this proposed
rule change as constituting a stated policy, practice, or
interpretation with respect to the meaning, administration, or
enforcement of an existing rule of the Board under Section 19(b)(3)(A)
\3\ of the Act, which renders the proposed rule change 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. 28s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Board is filing herewith a proposed rule change consisting of
an interpretive notice regarding electronic delivery and receipt of
information by brokers, dealers and municipal securities dealers (the
``Notice''). The interpretive notice is as follows:
Notice Regarding Electronic Delivery and Receipt of Information by
Brokers, Dealers and Municipal Securities Dealers
On May 9, 1996, the Commission issued an interpretative release
expressing its views on the use of electronic media for a delivery
of information by, among others, brokers and dealers.\4\ The
Commission stated that brokers, dealers and others may satisfy their
delivery obligations under federal securities laws by using
electronic media as an alternative to paper-based media within the
framework established in the Commission's October 1995 interpretive
release on the use of electronic media for delivery purposes.\5\ The
Commission also indicated that an electronic communication from a
customer to a broker or dealer generally would satisfy the
requirements for written consent or acknowledgment under the federal
securities laws.
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\4\ See Securities Act Release No. 7288, Exchange Act Release
No. 37182 (May 9, 1996), 61 FR 24644 (May 15, 1996) (the ``1996
Release'').
\5\ See Securities Act Release No. 7233, Exchange Act Release
No. 36345 (October 6, 1995), 60 FR 53458 (October 13, 1995) (the
``1995 Release'' and, together with the 1996 Release, the
``Commission Releases'').
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The Board is publishing this notice to address the use of
brokers, dealers and municipal securities dealers (``dealers'') of
electronic media to a deliver and receive information under Board
rules.\6\ The Board will permit dealers to transmit documents
electronically that they are required or permitted to furnish to
customers under Board rules provided that they adhere to the
standards set forth in the Commission Releases and summarized
below.\7\ Dealers also may receive consents and acknowledgments from
customers electronically in satisfaction of required written
consents and acknowledgments. Furthermore, the Board believes that
the standards applied by the Commission by communications with
customers should also apply to communications among dealers and
between dealers and issuers. However, although it is the Board's
goal ultimately to permit dealers to make required submissions of
materials to the Board electronically if possible, this notice does
not affect existing requirements for the submission of materials to
the Board, its designees and certain other entities to which
information is required to be delivered under Board rules.\8\
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\6\ The Commission has approved similar interpretive notices
filed by the National Association of Securities Dealers, Inc. and
the New York Stock Exchange, Inc. See Securities Exchange Act
Release No. 39356 (November 25, 1997), 62 FR 64421 (December 5,
1997) (Notice of Members of the National Association of Securities
Dealers, Inc.); Securities Exchange Act Release No. 38731 (June 10,
1997), 62 FR 32848 (June 17, 1997) (Memo of the New York Stock
Exchange).
\7\ The Board also reminds dealers that the Commission indicated
in the 1996 Release that dealers may fulfill their obligation to
deliver to customers, upon request, preliminary official statements
and final official statement in connection with primary offering of
municipal securities subject to Commission Rule 15c2-12 by
electronic means, subject to the guidelines set forth in the 1996
Release. See 1996 Release, supra note 4 at n. 47.
\8\ For example, this notice does not apply to any requirements
that dealers supply the Board with written information pursuant to
Board Rules A-12, A-14, A-15, G-36, G-37 and G-38. The Board has
begun the planning process for electronic submission or information
required under Rule A-15 and of Form G-37/G-38 under Rules G-37 and
G-38. At such time as electronic submission becomes available, the
Board will publish notice thereof and of the procedures to be used
for such submission. Although submission of Forms G-36(OS) and G-
36(ARD) under Rule G-36 could also be made electronically by means
similar to those which the Board may develop for Form G-37/G-38,
such electronic submission is complicated by the requirement that
Forms G-36(OS) and G-36(ARD) be accompanied by an official statement
or advance refunding document, as appropriate. Given the current
debate and lack of consensus among the various sectors of the
municipal securities industry regarding electronic formatting of
disclosure materials, and since the Board does not have the
authority to dictate the format of issuer documents, the Board
believes that any further action regarding electronic submissions
under Rule G-36 should await resolution of these issues. Finally,
the Board does not at this time anticipate permitting electronic
submission of information required under Rules A-12 and A-14 since
such information must be accompanied by payment of certain required
fees.
Electronic submission of information under Rule G-14 will
continue to be governed by Rule G-14 and associated Transaction
Reporting Procedures. In addition, this notice does not alter the
current submission standards applicable to the Board's Continuing
Disclosure Information (CDI) System of the Municipal Securities
Information Library (MSIL) system. The
Municipal Securities Information Library and MSIL are registered
trademarks of the Board.
Furthermore, submission of information to the Board's designees
or certain other designated entities under Board rules must continue
to be done in accordance with the procedures established by such
designees or other entities. Board rules in which such requirements
currently appear include Rule G-7 (with respect to information
required to be filed with the appropriate enforcement agencies), G-
12 and G-15 (with respect to information to be submitted to
registered clearing agencies and registered securities
depositories), G-26 (with respect to customer account transfer
instructions (other than Form G-26) required by registered clearing
agencies), G-34 (with respect to information to be submitted to the
Board's designee for assignment of CUSIP numbers and to registered
securities depositories) and G-37 (with respect to application to
the appropriate enforcement agencies for exemptions from the ban on
municipal securities business).
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[[Page 545]]
Dealers are urged to review the Commission Releases in their
entity to ensure that they comply with all aspects of the
Commission's electronic delivery requirements. Although the examples
provided in the Commission Releases are based on Commission rules,
the examples nonetheless provide important guidance as to the
intended application of the standards set out by the Commission with
respect to electronic communications.
Electronic Communications From Dealers to Customers
General. According to the standards established by the
Commission, dealers may use electronic media to satisfy their
delivery obligations to customers under Board rules, provided that
the electronic communication satisfies the following principles:\9\
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\9\ Dealers that structure their deliveries in accordance with
the principles set forth in this notice can be assured, except where
otherwise noted, that they have satisfied their delivery obligations
under Board rules. However, as the Commission stated in the 1995
Release, the three enumerated principles are not the only factors
relevant to determining whether the legal requirements pertaining to
delivery of documents have been satisfied. Consistent with the
Commission's view, the Board believes that, if a dealer develops a
method of electronic delivery that differs from the principles
discussed herein, but provides assurance comparable to paper
delivery that the required information will be delivered, that
method may satisfy delivery obligations. See 1995 Release, supra
note 5 at n.22 and accompanying text. For example, a dealer can
satisfy its obligation to send a confirmation to a customer under
Rule G-15 by electronic means in a manner that meets the principles
set forth in this notice. In addition, dealers may continue to
deliver confirmations electronically through the OASYS Global system
established by Thomson Financial Services, Inc. on the conditions
described in the Board's Notice Concerning Use of the OASYS Global
Trade Confirmation System to Satisfy Rule G-15(a), dated June 6,
1994, without specifically complying with the principles described
in this notice. See MSRB Reports, Vol. 14, No. 3 (June 1994) at 37.
See also 1996 Release, supra note 4 at n.38; 1995 Release, supra
note 5 at n.12. Also, Rule G-29 provides that dealers must make
available to customers for examination promptly upon request a copy
of the Board's rules required to be kept in their offices. Dealers
may continue to comply with the requirement by giving customers
access to the rules either in printed form or by viewing the rules
on screen from the Board's Internet web site (www.msrb.org) or from
software products produced by other companies. See Interpretive
Notice on Availability of Board Rules, dated May 20, 1998, in MSRB
Reports, Vol. 18, No. 2 (August 1998) at 37.
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1. Notice--The electronic communication should provide timely
and adequate notice to customers that the information is available
electronically.\10\ Since certain forms of electronic delivery may
not always provide a likelihood of notice that recipients have
received information that they may wish to review, dealers should
consider supplementing such forms of electronic communication with a
separate communication, providing notice similar to that provided by
delivery in paper through the postal mail, that information has been
sent electronically that the recipients may wish to review.\11\
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\10\ See 1996 Release, supra note 4 at n.20 and accompanying
text.
\11\ See 1996 Release, supra note 4 at n.21 and accompanying
text; 1995 Release, supra note 5 at n.23 and accompanying text. The
Commission notes, for example, that if information is provided by
physically delivering material (such as a diskette or CD-ROM) or by
electronic mail, such communication itself generally should be
sufficient notice. However, if information is made available
electronically through a passive delivery system, such as an
Internet web site, separate notice would be necessary to satisfy the
delivery requirements unless the dealer can otherwise evidence that
delivery to the customer has been satisfied. See 1996 Release, supra
note 4 at n.21.
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2. Access--Customers who are provided information through
electronic delivery should have access to that information
comparable to the access that would be provided if the information
were delivered in paper form.\12\ The use of a particular electronic
medium should not be so burdensome that intended recipients cannot
effectively access the information provided.\13\ A recipient should
have the opportunity to retain the information through the selected
medium (e.g., by downloading or printing the information) or have
ongoing access equivalent to personal retention.\14\ Also, as a
matter of policy, the Commission believes that a person who has a
right to receive a document under the federal securities laws and
chooses to receive it electronically should be provided with a paper
version of the document upon specific request or if consent to
receive documents electronically is revoked.\15\
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\12\ The Commission states that, regardless of whether
information is delivered in paper form or by electronic means, it
should convey all material and required information. For example, if
a paper document is required to present information in a certain
order, then the information delivered electronically should be in
substantially the same order. See 1996 Release, supra note 4 at n.14
and accompanying text.
\13\ The Commission notes, for example, that if a customer must
proceed through a confusing series of ever-changing menus to access
a required document so that it is not reasonable to expect that
access would generally occur, this procedure would likely be viewed
as unduly burdensome. In that case, the Commission would deem
delivery not to have occurred unless delivery otherwise could be
shown. See 1995 Release, supra note 5 at n.24.
\14\ See 1996 Release, supra note 4 at n.22 and accompanying
text; 1995 Release, supra note 5 at ns.25-26 and accompanying text.
\15\ See 1996 Release, supra note 4 at n.17 and accompanying
text, and 1995 Release, supra note 5 at n.27 and accompanying text.
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3. Evidence to Show Delivery--Dealers must have reason to
believe that electronically delivered information will result in the
satisfaction of the delivery requirements under the federal
securities laws. Dealers should consider the need to establish
procedures to ensure that applicable delivery obligations are met,
including recordkeeping procedures to evidence such
satisfaction.\16\ Such procedures should also be designed to ensure
the integrity and security of information being delivered so as to
ensure that it is the information that was intended to be
delivered.\17\ Dealers may be able to evidence satisfaction of
delivery obligations, for example, by:
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\16\ See 1996 Release, supra note 4 at n.23; 1995 Release, supra
note 5 at n.22 and n.28 and accompanying text. The Board is of the
view that dealers that choose to deliver information to customers
electronically should consider establishing systems and procedures
for providing paper copies or using alternate electronic means in a
timely manner should the primary electronic media fail for any
reason.
\17\ See 1996 Release, supra note 4 at n.25 and accompanying
text; 1995 Release, supra note 5 at n.22 and accompanying text.
Dealers also should consider the need for systems and procedures to
deter or detect misconduct by firm personnel in connection with the
delivery of information, whether by electronic or paper means. See
1996 Release, supra note 4 at n.16 and accompanying text.
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(1) obtaining the intended recipient's informed consent \18\ to
delivery through a specified electronic medium and ensuring that the
recipient has appropriate notice and access;
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\18\ In order for a consent to be an informed consent, the
Commission has stated that the consent should specify the electronic
medium or source through which the information will be delivered and
the period during which the consent will be effective, describe the
information that will be delivered using such means, and disclose
the potential for the customer to incur costs in accessing the
information. See 1996 Release, supra note 4 at n.23; 1995 Release,
supra note 5 at n.29.
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(2) obtaining evidence that the intended recipient actually
received the information, such as by an electronic mail return-
receipt \19\ or by confirmation that the information was accessed,
downloaded, or printed; or
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\19\ To the extent that material is distributed as an attachment
to an electronic mail transmission, dealers must have a reasonable
basis for believing that the attachment will in fact be transmitted
along with the electronic mail transmission and that the attachment
will be received by the recipient in an accessible format.
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(3) disseminating information through certain facsimile methods
(e.g., faxing information to a customer who has requested the
information and has provided the telephone number for the fax
machine).
Personal Financial Information. The Commission has noted, and
the Board agrees, that special precautions are appropriate when
dealers are delivering information to customers that is specific to
that particular customer's personal financial information, including
but not limited to information contained on confirmations and
account statements.\20\ In transmitting such personal financial
information, dealers should consider the following factors:
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\20\ In addition, the Board believes that other information that
is privileged or confidential, regardless of whether such
information is financial in nature, should be accorded the same
precautions as are accorded personal financial information.
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1. Confidentiality and Security--Dealers sending personal
financial information
[[Page 546]]
through electronic means or in paper form should take reasonable
precautions to ensure the integrity, confidentiality, and security
of that information. Dealers transmitting personal financial
information electronically must tailor those precautions to the
medium used in order to ensure that the information is reasonably
secure from tampering or alteration.
2. Consent.--Unless a dealer is responding to a request for
information that is made through electronic media or the person
making the request specifies delivery through a particular
electronic medium, the dealer should obtain the intended recipient's
informed consent prior to delivering personal financial information
electronically. The customer's consent may be made either by a
manual signature or by electronic means.
Electronic Communications From Customers to Dealers
Consistent with the position taken by the Commission, dealers
may rely on consents and acknowledgements received from customers by
electronic means for purposes of Board rules. In relying on such
communications from customers, dealers must be cognizant of their
responsibilities to prevent, and the potential liability associated
with, unauthorized transactions. In this regard, the Commission
states, and the Board agrees, that dealers should have reasonable
assurance that the communication from a customer is authentic.
Electronic Transmission of Non-Required Communications
The 1996 Release states that the above standards are intended to
permit dealers to comply with their delivery obligations under
federal securities laws when using electronic media. While
compliance with the guidelines is not mandatory for the electronic
delivery of non-required information that, in some cases, is being
provided voluntarily to customers, the Board believes adherence to
the guidelines should be considered, especially with respect to
delivery of personal financial information.
Electronic Communications Among Dealers and Between Dealers and Issuers
The Board believes that the standards applied by the Commission
to communications with customers should also apply to mandated
communications among dealers and between dealers and issuers. Thus,
a dealer that undertakes communications required under Board rules
with other dealers and with issuers in a manner that conforms with
the principles stated above relating to customer communications will
have met its obligations with respect to such communications. In
addition, a dealer may rely on consents and acknowledgements
received from other dealers or issuers by electronic means for
purposes of Board rule, provided that the dealer should have
reasonable assurance that the communication from such other party is
authentic. However, any Board rule that explicitly requires that a
dealer enter into a written agreement with another party will
continue to require that such agreement be in written form.\21\
Financial information, as well as other privileged or confidential
information, relating to another dealer or an issuer (or relating to
another person or entity contained in a transmission between a
dealer and another dealer or an issuer) should be transmitted using
precautions similar to those used by a dealer in transmitting
personal financial information to a customer.
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\21\ For example, the written agreements required under Rules G-
20(c), G-(23) C and G-38(b) must continue to be entered into in
paper form.
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Rules to Which This Notice Applies
Set forth below is a list of current Board rules to which
dealers may apply the guidance provided in this notice. The Board
believes that the list sets forth all of the rules that require or
permit communications among dealers and between dealers and
customers and issuers.\22\ The summaries provided of the delivery
obligations under the listed rules is intended for ease of reference
only and are not intended to be complete statements of all the
requirements under such rules.
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\22\ Unless otherwise provided in connection with the adoption
by the Board of any new rules or amendments to existing rules that
require or permit communications among dealers and between dealers
and customers, issuers, and others, the guidance provided in this
notice would also apply to any such communications.
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Rule G-8, on books and records to be made by dealers,
prohibits dealers from obtaining or submitting for payment a check,
draft or other form of negotiable paper drawn on a customer's
checking, savings, share or similar account without the customer's
express written authorization.
Rule G-10, on delivery of investor brochure, requires
dealers to deliver a copy of the investor brochure to a customer
upon receipt of a complaint by the customer.
Rule G-11, on sales of new issue municipal securities
during the underwriting period, requires certain communications
between senior syndicate managers and other members of the
syndicate.\23\
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\23\ Rule G-11 also requires that syndicate members furnish
certain information to others, upon request. The Board believes
that, solely for purposes of this requirement under Rule G-11, such
information may be provided to others by electronic means so long as
the standards established in this notice with respect to electronic
deliveries to customers are met.
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Rule G-12, on uniform practice, provides for
confirmation of inter-dealer transactions and certain other inter-
dealer communications.\24\
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\24\ See supra note 5 (regarding information to be submitted to
registered clearing agencies and registered securities
depositories).
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Rule G-15, on confirmation, clearance and settlement of
transactions with customers, provides for confirmation of
transactions with customers and the provision of additional
information to customers upon request.\25\
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\25\ See supra note 5 (regarding information to be submitted to
registered clearing agencies and registered securities
depositories). See also supra 6 (regarding alternate electronic
means previously reviewed by the Board).
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Rule G-19, on suitability of recommendations and
transactions and discretionary accounts, requires that dealers
obtain certain information from their customers in connection with
transactions and recommendations and also receive customer
authorizations with respect to discretionary account transactions.
Rule G-22, on control relationships, requires certain
disclosures from a dealer effecting a transaction for a customer in
municipal securities with respect to which such dealer has a control
relationship and customer authorization of such transaction with
respect to discretionary accounts.
Rule G-23, on activities of financial advisors,
requires that, under certain circumstances, dealers acting as
financial advisors to issuers provide various disclosures to issuers
and customers and receive certain consents and acknowledgments from
issuers.\26\
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\26\ See supra note 18 and accompanying text (regarding the
written agreement to be entered into between a dealer acting as
financial advisor and the issuer).
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Rule G-24, on use of ownership information obtained in
fiduciary or agency capacity, requires a dealer seeking to use for
its own purposes information obtained while acting in a fiduciary or
agency capacity for an issuer or other dealer to receive consents to
the use of such information.
Rule G-25, on improper use of assets, provides that put
options and repurchase agreements will not be deemed to be
guaranties against loss if their terms are provided in writing to
customers with or on the transaction confirmation.
Rule G-26, on customer account transfers, provides for
written notice from customers requesting account transfers between
dealers and the use of Form G-26 to effect such transfer.\27\
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\27\ See supra note 5 (regarding the use of customer account
transfer instructions other than Form G-26).
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Rule G-28, on transactions with employees and partners
of other municipal securities professionals, requires that a dealer
opening an account for a customer who is an employee or partner of
another dealer must provide notice and copies of confirmations to
such other dealer and permits such other dealers to provide
instructions for handling of transactions with such customer.
Rule G-29, on availability of Board rules, provides
that dealers must make available to customers for examination
promptly upon request a copy of the Board's rules required to be
kept in their offices.\28\
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\28\ See supra note 6 (regarding alternate electronic means
previously reviewed by the Board).
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Rule G-32, on disclosures in connection with new
issues, requires dealers selling new issue municipal securities to
customers to deliver official statements \29\ and certain other
information by settlement and requires
[[Page 547]]
selling dealers, managing underwriters and certain dealers acting as
financial advisors to deliver such materials to dealers purchasing
new issue municipal securities, upon request.\30\
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\29\ The Board believes that dealers must be particularly
cautious in delivering official statements by electronic means since
they may present special challenges in ensuring that they are
received by customers and other dealers without material omissions
or distortions in formatting (for example, tables in which data is
more than negligibly misaligned) that may cause such materials not
to meet the standard for electronically transmitted information
comparable to information delivered in paper form. See supra note 9
and accompanying text.
\30\ The Board believes that, to the extent that Rule G-32(b)(i)
obligates a managing or sole underwriter to provide, upon request,
multiple copies of the official statement to a dealer with respect
to new issue municipal securities sold by such dealer to customers,
such obligation must continue to be met with paper copies of the
official statement unless the purchasing dealer has consented to
electronic delivery of the official statement in lieu of delivery of
multiple paper copies. See 1995 Release, supra note 5 at Section
II.D. example 11.
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Rule G-34, on CUSIP numbers and new issue requirements,
requires underwriters to communicate information regarding CUSIP
numbers and initial trade date to syndicate and selling group
members.\31\
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\31\ See supra note 5 (regarding information to be submitted to
the Board's designee with respect to CUSIP number assignment and to
registered securities depositories).
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Rule G-38, on consultants, requires dealers to provide
certain information to issuers regarding consulting
arrangements.\32\
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\32\ See supra note 18 and accompanying text (regarding the
written agreement to be entered into between a dealer and its
consultant). See also supra note 5 (regarding the submission of Form
G-37/G-38 to the Board).
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Rule G-39, on telemarketing, prohibits certain
telemarketing calls without the prior consent of the person being
called.\33\
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\33\ Although the person receiving such telemarketing call may
in many cases not be customer, the Board believes that, solely for
purposes of this provision of Rule G-39, such consent may be
accepted by the dealer by electronic means so long as the standards
established in this notice with respect to electronic communications
from customers to dealers are met.
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* * * * *
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 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 statement 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
On May 9, 1996, the Commission issued an interpretative release
expressing its views on the use of electronic media for delivery of
information by, among others, brokers and dealers.\34\ The Commission
stated that brokers, dealers and others may satisfy their delivery
obligations under federal securities laws by using electronic media as
an alternative to paper-based media within the framework established in
the Commission's October 1995 interpretive release on the use of
electronic media for delivery purposes.\35\ The Commission also
indicated that an electronic communication from a customer to a broker
or dealer generally would satisfy the requirements for written consent
or acknowledgment under the federal securities laws.
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\34\ See 1996 Release, supra note 4.
\35\ See 1995 Release, supra note 5.
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The Board has determined to publish the Notice to address the use
by dealers of electronic media to deliver and receive information under
Board rules in a manner consistent with the Commission releases.
Pursuant to the Notice, the Board will permit dealers to transmit
documents electronically that they are required or permitted to furnish
to customers under Board rules provided that they adhere to the
standards set forth in the Commission Releases and summarized on the
Notice. The Notice summarizes these standards, which address, among
other things, notice, access and evidence to show delivery. In
addition, the Notice discusses certain precautions that should be taken
when using electronic means to communicate personal financial
information.
The Notice also states that dealers may receive consents and
acknowledgements from customers electronically in satisfaction of
required written consents and acknowledgements. Furthermore, the Notice
sets forth the board's belief that the standards applied by the
Commission to communications with customers should also apply to
communications among dealers and between dealers and issuers.
The Notice contains a list of current Board rules to which dealers
may apply the guidance provided in the Notice. The Notice states that,
unless otherwise provided in connection with the adoption by the Board
of any new rules or amendments to existing rules that require or permit
communications among dealers and between dealers and customers, issuers
and others, the guidance provided in the Notice would also apply to any
such communications.
The Board believes that use of electronic media to satisfy delivery
requirements under Board rules will be beneficial to dealers customers
and issuers, particularly when conducted in accordance with Commission
standards.
The Board believes the proposed rule change in consistent with
Section 15B(b)(2)(C) of the Act.\36\ The Board believes that providing
standards that allow dealers to effectively and efficiently deliver and
receive required information under Board rules is consistent with the
Act.
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\36\ Section 15B(b)(20(C) states that the rules of the Board
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.
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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 because is would apply equally
to all brokers, dealers and municipal securities dealers.
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
The Board has designated this proposed rule change as constituting
a stated policy, practice, or interpretation with respect to the
meaning, administration, or enforcement of 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 60 days of the filing 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, including whether the proposed rule
change is consistent with the Act.\37\ Persons making written
submissions should file six copies thereof with the Secretary,
Securities and Exchange Commission, 450 Fifth Street, NW.,
[[Page 548]]
Washington, DC 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-98-12 and should be
submitted by January 26, 1999.
\37\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-73 Filed 1-4-99; 8:45 am]
BILLING CODE 8010-01-M