[Federal Register Volume 63, Number 138 (Monday, July 20, 1998)]
[Notices]
[Pages 38868-38869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19181]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40195; File No. SR-MSRB-98-7]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Municipal Securities 
Rulemaking Board Relating to Fee for Backlog Document Collection of its 
Official Statement/Advance Refunding Document Subsystem of the 
Municipal Securities Information Library

July 13, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 16, 1998, the Municipal Securities Rulemaking Board (``Board'' 
or ``MSRB'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change is described in Items I, II, 
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.
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    \1\ 15 U.S.C. 78s(b)(1) (1994).
    \2\ 17 CFR 240.19b-4 (1997).
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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 to change 
certain fees relating to the operation of its Official Statement/
Advance Refunding Document (``OS/ARD'') subsystem of the Municipal 
Securities Information Library (``MSIL'') 
system.\3\ The Board is establishing a price of $8,000 (plus delivery 
or postage charges) of each of its annual ``backlog'' collections of 
official statements and refunding documents.
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    \3\ Municipal Securities Information Library and MSIL are 
registered trademarks of the Board. The MSIL system, which 
was approved in Securities Exchange Act Release No. 29298 (June 13, 
1991), 56 FR 28194 (June 19, 1991, is a central facility through 
which information about municipal securities is collected, stored 
and disseminated.
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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 purposed 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. The U.S. 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 Purposed Rule Change

1. Purpose
    The OS/ARD subsystem is a central electronic facility through which 
information collected and stored pursuant to MSRB Rule G-36 is made 
available electronically and in paper form to market participants and 
information vendors.\4\ The annual subscription fee for daily 
electronic images of current year documents from the OS/ARD system 
currently is $14,000.\5\ The fees for backlog document collections are 
substantially less than fees for an annual subscription because an 
annual subscription requires the Board to send electronic media to the 
subscriber each business day, but a backlog collection requires fewer 
resources.\6\
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    \4\ Rule G-36 requires underwriters to provide copies of final 
official statements and advance refunding documents within certain 
specified time frames for most new issues issued since January 1, 
1990.
    \5\ Securities Exchange Act Release No. 37361 (June 25, 1996), 
61 FR 34463 (July 2, 1996).
    \6\ The backlog fee plus delivery costs for 1996 if $7,000; 1995 
is $9,000; 1994 is $7,000; 1993 is $9,000; 1992 is $7,000; 1991 is 
$8,000; 1990 is $6,000. See Securities Exchange Act Release No. 
38694 (May 29, 1997), 62 FR 30919 (June 5, 1997) (1996 fee); 
Securities Exchange Act Release No. 37361 (June 25, 1996), 61 FR 
34463 (July 2, 1996) (1995 fee); Securities Exchange Act Release No. 
35848 (June 14, 1995), 60 FR 32187 (June 20, 1995) (1994 Fee); 
Securities Exchange Act Release No. 34602 (Aug. 25, 1994), 59 FR 
45319 (Sept. 1, 1994) (1993 and 1991 fees); and Securities Exchange 
Act Release No.32482 (June 16, 1993), 58 FR 34115 (June 23, 1993) 
(1992 and 1990 fees). The fees for the backlog collections vary 
based on the number of documents received and processed in any given 
year.
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    As of January 1, 1998, the Board terminated its contract with its 
imaging contractor and began operating the Board's own imaging 
subsystem. Part of this change was to begin storing OS/ARD images on 
CD-ROM instead of

[[Page 38869]]

magneto-optical disk or digital audio tape (DAT). This change in media 
has made the cost of selling annual backlog collections more even. 
Thus, the Board is establishing a price of $8,000 (plus delivery or 
postage charges) for each annual backlog collection.\7\
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    \7\ This price would apply to all prior backlog collections as 
well as the annual backlog collection for 1997 and future annual 
backlog collections. Telephone conversation with Ernesto A. Lanza, 
Assistant General Counsel, Board, and Karl Varner, Attorney, SEC, on 
July 2, 1998.
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    In its prior filings with the Commission, the Board stated that it 
intends to use its general revenues to help fund collecting, indexing 
and storing the OS/ARD subsystem's documents. However, the Board stated 
its intention that the costs of producing paper and electronic copies 
would be completely covered by user fees.\8\ The Board is changing the 
fees for the annual backlog collectiuons to defray its cost of 
disseminating the electronic collections in a manner that reflects the 
change in cost to the Board resulting from the use of new media and in-
house imaging. This is consistent with the Commission's policy that 
self-regulatory organizations' fees be based on expenses incurred in 
providing information to the public. The Board believes that employing 
cost-based prices is in the public interest since it will ensure that a 
complete collection of vital information will be available, at fair and 
responsible prices, for the life of the municipal securities.
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    \8\ Securities Exchange Act Release No. 28197 (July 12, 1990), 
55 FR 29436 (July 19, 1990).
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2. Statutory Basis
    The Board believes the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act,\9\ which requires, in pertinent part, 
that the Board's rules:

    \9\ 15 U.S.C. 78o(b)(2)(C).
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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 free and open market in 
municipal securities, and, in general, to protect investors and the 
public interest.

    The MSIL system 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 official information about that 
issue. The Board believes the new annual backlog fee is fair and 
reasonable in light of the costs associated with disseminating the 
information and the services provided by the MSIL system 
are available on reasonable and nondiscriminatory 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.

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 rule change became effective on June 16, 1998, pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\10\ because the proposal 
establishes a fee. At any time within sixty days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
change if its 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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.\11\ 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. Sec. 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-
7 and should be submitted by August 10, 1998.

    \11\ In reviewing this proposal, the Commission has considered 
the proposed rule change's 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.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-19181 Filed 7-17-98; 8:45 am]
BILLING CODE 8010-01-M