[Federal Register Volume 60, Number 5 (Monday, January 9, 1995)]
[Notices]
[Pages 2412-2413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-426]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35181; File No. SR-MSRB-94-18]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Municipal Securities
Rulemaking Board Relating to Fees for Subscription to the Transaction
Reporting Pilot Program
December 30, 1994.
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
16, 1994, the Municipal Securities Rulemaking Board, Inc. (``MSRB'' or
``Board'') 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 by the self-regulatory
organization. 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
The MSRB is filing herewith a proposed rule change to establish a
fee for an annual subscription to a Service (the ``Service'') which
will provide daily reports of transaction data from the Board's
Transaction Reporting Pilot Program (``the Pilot Program''). The Board
will charge a fee for the Service equal to a yearly rate of $15,000.
The proposed fee is structured to defray the Board's cost of
disseminating the transaction data and to defray, in part, the cost of
collecting and compiling inter-dealer transaction data that will be
used in the Pilot Program both for the Service and for a comprehensive
surveillance database. The Board does not expect or intend to make a
profit from the Service, and will review the fee annually to determine
whether adjustments are necessary.
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 self-regulatory organization
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 self-regulatory organization
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
Background and Description of the Pilot Program. On November 9,
1994, the Commission approved the Board's plan for the Pilot Program
for collecting inter-dealer transaction data and the production and
sale of daily transaction reports containing certain summarized data
about the inter-dealer transactions.\1\ Operation of the Pilot Program
is planned to commence with reporting of inter-dealer trades on or
after January 2, 1995.\2\ As part of the Pilot Program, the Board also
will make information on all inter-dealer trades in municipal
securities available to the Commission and other regulatory agencies in
a ``surveillance database'' to assist in inspection and enforcement of
Board rules. This data on specific transactions, which will include the
identity of dealers, will not be publicly available and will not be
included in the Service.
\1\See Securities Exchange Act Release No. 34955 (November 9,
1994), 59 FR 59810.
\2\The Pilot Program is the first phase of a system in which the
Board ultimately intends to make available transaction information
which is both comprehensive and contemporaneous. In other phases,
information for institutional and retail customer transactions will
be added to the system. In a recent letter to the Commission, the
Board outlined the four-phase plan, of which the present fee filing
applies to phase one. See letter from Robert Drysdale, Chairman,
MSRB, to Arthur Levitt, Chairman, SEC, dated November 3, 1994. The
Board will submit to the Commission a proposed rule change prior to
the implementation of each planned phase.
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The Pilot Program will collect inter-dealer transaction data by
using data submitted to the automated comparison system for inter-
dealer municipal securities transactions. The transaction reports will
provide aggregate data about market volume on the previous business day
and will provide summary price and volume data about those issues that
were traded at or above a threshold number of times on that day. For
each of these issues, the report will provide high, low and average
prices of the transactions in the issue, along with the total par value
traded and the number of trades in the issue. The average prices (but
not the high and low prices) will be calculated based upon those trades
in a ``band'' of $100,000 to $1 million par value. The prices and par
values of individual transactions will not be included in the
transaction reports, but will be available to the enforcement agencies
in the surveillance database.
As part of the Service, the Board will provide the transaction
reports to the [[Page 2413]] subscribers for public use by
approximately 6:00 a.m. on the first business day after the trade. The
reports will be electronically disseminated to subscribers by computer
modem.\3\
\3\A paper copy of each transaction report will be made
available in the Board's Public Access Facility, located at 1640
King Street, Suite 300, Alexandria, Virginia. There will be no
charge for viewing the report. Documents in the Public Access
Facility can be copied at a cost of 20 cents per page plus sales
tax.
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The Service will be made available to all interested persons on
equal terms. In particular, the Board will ensure that interested
persons are provided access to the reports on a non-discriminatory
basis and in a manner that would not confer special or unfair economic
benefit to any person. The Board also will encourage and facilitate the
re-dissemination of the reports by private information vendors so that
the widest possible spectrum of market participants can be reached.
Cost and Fees. Total system development costs, hardware and
software acquisition, and other start-up expenses for the Pilot Program
are estimated to be $500,000 to $600,000. These costs include the
common computer system that will be used for generating and managing
the daily transaction reports as well as operation of the surveillance
database. Yearly operating costs, including the costs of producing and
disseminating the transaction reports and the costs of operating the
surveillance database are expected to approximate $500,000 to $600,000.
The Board estimates that it may have 20 subscribers to the Service,
which would generate $300,000 a year in revenue at the annual
subscription rate of $15,000. These revenues are expected to be
sufficient to pay the entire marginal costs of operating the Service,
including the cost of producing the transaction reports, and should
also cover a portion of the basic data processing costs for the Pilot
Program, i.e., the common computer hardware and software that is needed
to operate both the Service and the surveillance database. The Board
believes that this Plan will produce a fair allocation of Pilot Program
costs.
2. Statutory Basis
The Board believes the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act, which requires, in pertinent part,
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. * * *\4\
\4\15 U.S.C. 78O-4(b)(2)(C) (1988).
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The Pilot Program is designed to increase the integrity and
efficiency of the municipal securities market by, among other things,
helping to ensure that the price charged for an issue in the secondary
market reflects all available price information about that issue.
Moreover, the availability of aggregate data about market activity and
certain volume and price information about municipal securities will
promote investor confidence in the market and its pricing mechanisms.
The Board believes that the fee for the Service is fair and reasonable
in light of costs associated with compiling and disseminating the
information, and that the Service is available on reasonable and non-
discriminatory terms to any interested person.
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 the Service will be made
available to all interested persons on an equal basis and the fee will
be applied equally to all persons who wish to subscribe to the Service.
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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change establishes or changes a due, fee, or
other charge imposed by the MSRB and therefore has become effective
pursuant to Section 19(b)(3)(A) of the Act,\5\ and subparagraph (e) of
Rule 19b-4 thereunder.\6\ At any time within 60 days of the filing of
such 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.
\5\15 U.S.C. 78s(b)(3)(A) (1988).
\6\15 CFR 240.19b-4(e) (1994).
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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 at the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
MSRB. All submissions should refer to File No. SR-MSRB-94-18 and should
be submitted by January 30, 1995.
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. 95-426 Filed 1-6-95; 8:45 am]
BILLING CODE 8010-01-M