[Federal Register Volume 62, Number 13 (Tuesday, January 21, 1997)]
[Pages 3069-3070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1303]


[Release No. 34-38162; File No. SR-MSRB-96-13]

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-12(h) on Close-

January 13, 1997.
    On December 23, 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-96-13), pursuant to Section 19(b)(1) of the Securities Exchange 
Act of 1934 (``Act'').\1\ 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.

    \1\ 15 U.S.C. 78s(b)(1).

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Board is filing an interpretive notice concerning rule G-12(h) 
on Close-Outs (hereinafter referred to as ``the proposed rule 
change''). The rule currently requires that a dealer taking action in a 
close-out must provide telephonic notice to the appropriate party, 
followed no later than the next business day with a written notice.\2\ 
The rule further requires that written notices be sent ``return receipt 
requested.'' The Board previously has interpreted this provision to 
allow the use of certified mail, registered mail, messenger services, 
and Depository Trust Company's Participant Exchange Service (``PEX'') 
system. Use of these procedures allows the sender to obtain 
acknowledgement of delivery of the notice from the recipient.

    \2\ Telephonic and written notices are required when dealers (i) 
originate a close-out; (ii) retransmit a close-out; (iii) extend 
delivery dates; and (iv) execute a close-out. The Board's Manual on 
Close-Out Procedures contains a detailed explanation of the 
procedures required by rule G-12(h).

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 
text of these statements may be examined at the places specified in 
Item IV, below. The Board 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
    Dealers have asked whether the use of a facsimile transmission 
would satisfy the requirement in the rule that written notices be sent 
``return receipt requested.'' The Board has determined that the 
requirements of the rule would be satisfied by the facsimile 
transmission of written notices as long as the facsimile transmission 
provides the sender with an acknowledgment of successful delivery of 
the notice. The Board emphasizes that, prior to the sending of written 
notices, dealers are required to notify the appropriate parties by 
telephone of their intention to take action under Board rule G-12(h) on 
(2) Statutory Basis
    The Board believes the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act,\3\ which provides that the Board's 
rules shall:

    \3\ 15 U.S.C. 78o-4(b)(2)(C).

    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

[[Page 3070]]

market in municipal securities, and, in general, to protect 
investors and the public interest * * *.

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.

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

    The Board has not solicited or received comments on the proposed 
rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change constitutes a stated policy, practice or 
interpretation with respect to the meaning, administration, or 
enforcement of the Board's existing rule G-12(h), and therefore, has 
become effective pursuant to Section 19(b)(3)(A) of the Act \4\ and 
subparagraph (e) of Rule 19b-4 \5\ thereunder. At any time within 60 
days of filing of the proposed 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.

    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4.

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, 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-96-13 and should be 
submitted by February 11, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\6\

    \6\ 17 CFR 200-30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-1303 Filed 1-17-97; 8:45 am]