[Federal Register Volume 59, Number 132 (Tuesday, July 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16752]


[[Page Unknown]]

[Federal Register: July 12, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34310; File No. SR-MSRB-94-8]

 

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Municipal Securities 
Rulemaking Board Relating to Interpretation of Rule G-15(a) on Customer 
Confirmations

July 5, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``ACT''),\1\ notice is hereby given that on June 7, 1994, the 
Municipal Securities Rulemaking Board (``MSRB'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared primarily by 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) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    MSRB has filed an interpretation regarding Rule G-15(a). The new 
interpretation of the rule allows dealers under certain circumstances 
to satisfy the Rule G-15(a)'s requirement that municipal securities 
customers be provided a ``written'' confirmation by using the Thomson 
Financial Services, Inc. (``TFS'') OASYS Global System.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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 
texts of these statements may be examined at the places specified in 
Item IV, below. 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

    MSRB's rule change allows the requirement of Rule G-15(a), that 
customers be provided ``written'' confirmation at or before the 
completion of a transaction in municipal securities, to be satisfied by 
a contract confirmation message (``CCM'') sent through the TFS OASYS 
Global System. The following conditions must be met before the OASYS 
Global System may be used: (i) The customer and dealer have both agreed 
to use the OASYS Global system for purposes of confirmation delivery; 
(ii) the CCM includes all information required by Rule G-15(a); and 
(iii) all other applicable requirements and conditions concerning the 
OASYS Global system expressed in the Commission's October 8, 1993, no-
action letter concerning Securities Exchange Act Rule 10b-10 must 
continue to be met.\2\
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    \2\The no-action letter of October 8, 1993, stated that the 
Commission staff will not recommend enforcement action to the 
Commission if broker-dealers rely on the OASYS Global system's CCMs 
to satisfy the requirements of a confirmation of Rule 10b-10 of the 
Act provided (i) The CCMs can be printed or downloaded by the 
participants, (ii) the recipient of a CCM must respond through the 
system affirming or rejecting the trade, (iii), the CCMs will not be 
automatically deleted by the system, and (iv) the use of the system 
by the participants ensures that both parties to the transaction 
have the capacity to receive the CCMs. Letter from Catherine 
McGuire, Chief Counsel, Division of Market Regulation, SEC, to 
MariAnne Pisarri, Esq., Pickard and Djinis (October 8, 1993).
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    MSRB understands that TFS's OASYS Global system is not a registered 
securities clearing agency and is not linked with other registered 
securities clearing agencies for purposes of automated confirmation/
acknowledgment required under Rule G-15(d). Therefore, under these 
circumstances, use of the OASYS system will not constitute compliance 
with Rule G-15(d) regarding automated confirmation/acknowledgement.\3\
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    \3\MSRB Rule 15(d)(ii) states, among other things, that no 
broker, dealer, or municipal securities dealer who is or whose 
clearing agent is a participant in a clearing agency registered with 
the Commission shall effect a transaction in any municipal security 
to which a CUSIP number has been assigned on a delivery-versus-
payment basis or on a receipt-versus-payment basis for the account 
of a customer whose clearing agent with respect to such transfer is 
a participant in such a clearing agency or in a clearing agency 
interfaced or otherwise linked with such a clearing agency unless 
the facilities of such clearing agency or the facilities of a 
clearing agency interfaced or otherwise linked with such a clearing 
agency are used for the confirmation and acknowledgment of such 
transaction.
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    MSRB has adopted the rule change pursuant to Section 15B(b)(2)(C) 
of the Act, which provides that 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, 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.

B. Self-Regulatory Organization's Statement on Burden on Competition

    MSRB does not believe that the rule change will impose any burden 
on competition not necessary or appropriate in furtherance of the 
purposes of the Act because it will apply equally to all brokers, 
dealers, and municipal securities dealers. Moreover, the rule change 
only applies when dealers and customers agree between themselves to use 
TFS's OASYS Global system.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    MSRB has not solicited or received comments on the proposed rule 
change. MSRB's consideration of the proposed rule change was prompted 
by an interpretive inquiry from TFS regarding the interpretation of 
Rule G-15(a).

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)(i) of the Act and subparagraph (e)(1) of Rule 19b-4 
thereunder because it relates to the interpretation of the meaning of 
an existing rule. At any time within sixty days of filing of the rule 
change, the Commission may summarily abrogate the 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 people are invited to submit written data, views, and 
arguments concerning the foregoing. People making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. Copies 
of the submissions, 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, 450 Fifth Street NW., Washington, 
DC 20549. Copies of the filing will also be available for inspection 
and copying at MSRB's principal offices. All submissions should refer 
to File No. SR-MSRB-94-8 and should be submitted by August 2, 1994.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 94-16752 Filed 7-11-94; 8:45 am]
BILLING CODE 8010-01-M