[Federal Register Volume 61, Number 236 (Friday, December 6, 1996)]
[Notices]
[Pages 64782-64783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31016]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37998; File No. SR-MSRB-96-10]


Self-Regulatory Organizations; Order Granting Approval to 
Proposed Rule Change by the Municipal Securities Rulemaking Board 
Relating to Reports of Sales and Purchases, Pursuant to Rule G-14

November 29, 1996.

I. Introduction

    On August 29, 1996, 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-96-10), pursuant to Section 19(b)(1) of the Securities Exchange 
Act of 1934 (``Act''), 15 U.S.C. 78s(b)(1), to expand its transparency 
program. The proposed rule change was published for comment in the 
Federal Register on October 30, 1996.1 No comments were received 
on the proposal.
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    \1\ Securities Exchange Act Release No. 37859 (October 23, 
1996), 61 FR 56072.
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II. Description of the Proposal

    The MSRB proposed to amend Board rule G-14 concerning reports of 
sales and purchases, and to amend Rule G-14 Transaction Reporting 
Procedures. The purpose of the proposed rule change is to increase 
transparency in the municipal securities market by adding retail and 
institutional customer transaction information to the inter-dealer 
transactions currently included in the Board's Transaction Reporting 
Program (``Program''). Under the proposed rule change, aggregate data 
about inter-dealer and customer market activity, and certain volume and 
price information about all transactions in frequently traded 
securities, would be disseminated to promote investor confidence in the 
market and its pricing mechanisms. The Program is designed to 
accomplish two objectives. The first is to increase the amount of 
information available about the market value of individual municipal 
securities. The second purpose of the Program is to provide a 
centralized audit trail of municipal securities transactions by making 
available to the National Association of Securities Dealers, Inc.

[[Page 64783]]

(``NASD''), the Commission, and other enforcement agencies a computer 
database reflecting all municipal securities transactions reported to 
the Board.
    The proposed rule change would require brokers, dealers and 
municipal securities dealers to (1) obtain an executing broker symbol, 
if one has not already been assigned, from the NASD, within thirty days 
after Commission approval of the proposed rule change; (2) provide the 
Board, on or before July 1, 1997, with the name and telephone number of 
a person responsible for testing the dealer's capabilities to report 
customer transaction information; (3) test its capabilities to report 
such information, between July and December 1997; and (4) report to the 
Board each day its municipal securities transactions with customers by 
January 1, 1998. Under the rule proposal, the Program would be fully 
effective by January 1, 1998.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change generally is consistent with the requirements of the Act and the 
rules and regulations thereunder. In particular, the Commission 
believes the proposal is consistent with Section 15B(b)(2)(C) of the 
Act, which requires that the Board's rules be designed to prevent 
fraudulent and manipulative acts and practices, promote just and 
equitable principals of trade, and protect investors and the public 
interest.
    The proposed rule change will enhance price transparency in the 
municipal securities market by providing trade information on 
frequently traded securities. The principle of transparency is a 
fundamental aspect of investor protection and efficient markets. There 
are many benefits associated with enhanced market transparency. First, 
transparency enhances investor protection and encourages greater 
investor participation in the markets. Second, by encouraging investor 
participation in the municipal securities market, transparency promotes 
liquidity. Third, transparency fosters the efficiency of securities 
markets by facilitating price discovery and open competition, and 
counteracting the effects of fragmentation. Each of these benefits in 
turn promotes the fairness of the markets.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-MSRB-96-10) is approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-31016 Filed 12-5-96; 8:45 am]
BILLING CODE 8010-01-M