[Federal Register Volume 67, Number 64 (Wednesday, April 3, 2002)]
[Notices]
[Pages 15844-15848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8041]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45652; File No. SR-MSRB-2002-03]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Municipal Securities Rulemaking Board Relating to 
Professional Qualifications of Municipal Fund Securities Limited 
Principals

March 26, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') and Rule 19b-4 thereunder,\1\ notice is hereby given 
that on March 21, 2002, the Municipal Securities Rulemaking Board 
(``MSRB'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change (File No. SR-MSRB-2002-03) 
(``proposed rule change'') described in Items, I, II, and III below, 
which Items have been prepared by the 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) and 17 CFR 240.19b-4 thereunder.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The MSRB has filed with the Commission a proposed rule change 
consisting of an amendment to Rule G-3, on professional qualifications. 
Additions are italicized; deletions are bracketed. The proposed rule 
change is as follows:
    Rule G-3--Classification of Principals and Representatives; 
Numerical Requirements; Testing; Continuing Education Requirements
    (a) No change.
    (b) Municipal Securities Principal; Municipal Fund Securities 
Limited Principal.
    (i) No change.
    (ii) Qualification Requirements.
    (A) No change.
    (B) Any person seeking to become qualified as a municipal 
securities principal in accordance with subparagraph (b)(ii)(A) of this 
rule[,] must, prior to being qualified as a municipal securities 
principal:
    (1) Have been duly qualified as either a municipal securities 
representative or a general securities representative; provided, 
however, that any person who qualifies as a municipal securities 
representative solely by reason of subparagraph (a)(ii)(C) shall not be 
qualified to take the Municipal Securities Principal Qualification 
Examination on or after October 1, 2002; or
    (2) No change.
    (C)-(D) No change.
    (iii) No change.
    (iv) Municipal Fund Securities Limited Principal.
    (A) Definition. The term ``municipal fund securities limited 
principal'' means a natural person (other than a municipal securities 
principal or municipal securities sales principal), associated with a 
broker, dealer or municipal securities dealer that has filed with the 
Board in compliance with rule A-12, who is directly engaged in the 
functions of a municipal securities principal as set forth in paragraph 
(b)(i), but solely as such activities relate to transactions in 
municipal fund securities.
    (B) Qualification Requirements.
    (1) Every municipal fund securities limited principal shall take 
and pass the Municipal Fund Securities Limited Principal Qualification 
Examination prior to being qualified as a municipal fund securities 
limited principal. The passing grade shall be determined by the Board.
    (2) Any person seeking to become qualified as a municipal fund 
securities limited principal in accordance with clause (b)(iv)(B)(1) of 
this rule must, as a condition to being qualified as a municipal fund 
securities limited principal:
    (a) have been duly qualified as either a general securities 
principal or an investment company/variable contracts limited 
principal; or
    (b) have taken and passed either the General Securities Principal 
Qualification Examination or the Investment Company and Annuity 
Principal Qualification Examination.
    (3) Any person who ceases to act as a municipal fund securities 
limited principal for two or more years at any time after having 
qualified as such shall meet the requirements of clauses (b)(iv)(B)(1) 
and (2) prior to being qualified as a municipal fund securities limited 
principal.
    (4) For the first 90 days after becoming a municipal fund 
securities limited principal, the requirements of clauses (b)(iv)(B)(1) 
and (2) shall not apply to any person who is qualified as a general 
securities representative, investment company/variable contracts 
limited representative, general securities principal or investment 
company/variable contracts limited principal, provided, however, that 
such person shall meet the requirements of clauses (b)(iv)(B)(1) and 
(2) within that period.
    (C) Actions as Municipal Securities Principal. Any municipal fund 
securities limited principal may undertake all actions required or 
permitted under any Board rule to be taken by a municipal securities 
principal, but solely with respect to activities related to municipal 
fund securities.
    (D) Numerical Requirements. Any broker, dealer or municipal 
securities dealer whose municipal securities activities are limited 
exclusively to municipal fund securities may count any municipal fund 
securities limited principal toward the numerical requirement for 
municipal securities principal set forth in paragraph (b)(iii).
    (E) [(iv)] Temporary Provisions for Municipal Fund Securities 
Limited Principal. Notwithstanding any other provision of this rule, 
until December 31, 2002, [Until July 31, 2002,] the following 
provisions shall apply to any broker, dealer or municipal securities 
dealer whose municipal securities activities are limited exclusively to 
municipal fund securities:
    [(A)] (1) [notwithstanding the provisions of paragraph (b)(ii),] 
the broker, dealer or municipal securities dealer may designate any 
person who

[[Page 15845]]

has taken and passed the General Securities Principal Qualification 
Examination or Investment Company and Annuity Principal Qualification 
Examination as a municipal fund securities limited principal.
    [(B)] (2) any municipal fund securities limited principal 
designated as provided in clause [subparagraph] (b)(iv)[(A)] (E)(1) may 
undertake all actions required or permitted under any Board rule to be 
taken by a municipal securities principal to the same extent as set 
forth in subparagraph (b)(iv)(C).
    [(C)] (3) the broker, dealer or municipal securities dealer may 
count [one] any municipal fund securities limited principal designated 
as provided in clause (b)(iv)(E)(1) toward the numerical requirement 
for municipal securities principal to the same extent as set forth in 
subparagraph (b)(iv)(D). [set forth in paragraph (b)(iii); provided 
that, if such broker, dealer or municipal securities dealer is only 
required to have one municipal securities principal, such broker, 
dealer, or municipal securities dealer may count one municipal fund 
securities limited principal toward the numerical requirement only if 
the broker, dealer or municipal securities dealer is described in 
subparagraph (b)(iii)(B).]
    (4) On and after January 1, 2003, all municipal fund securities 
limited principals (including any municipal fund securities limited 
principals designated as provided in clause (b)(iv)(E)(1)) must be 
qualified as provided in subparagraph (b)(iv)(B).
    (c)-(f) No change.
    (g) Waiver of Qualification Requirements.
    (i) The requirements of paragraphs (a)(ii), (a)(iii), (b)(ii), 
(b)(iv)(B) and (c)(ii) may be waived in extraordinary cases for any 
associated person of a broker, dealer or municipal securities dealer 
who demonstrates extensive experience in a field closely related to the 
municipal securities activities of such broker, dealer or municipal 
securities dealer. Such waiver may be granted by
    (A)-(B) No change.

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 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 
text of these statements may be examined at the places specified in 
Item IV below. The 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

    (a) Rule G-3, on professional qualifications, requires that a 
broker, dealer or municipal securities dealer (``dealer'') have at 
least one municipal securities principal (and in some cases two 
municipal securities principals), even if the dealer's only municipal 
securities transactions are sales of municipal fund securities.\2\ In 
order to provide small dealers seeking to enter the market for 
municipal fund securities relief from the requirement to immediately 
obtain a municipal securities principal, the MSRB amended Rule G-3 in 
July 2001 to provide a temporary alternative method for qualification 
of principals in connection with municipal fund securities.\3\ Under 
this temporary provision, until July 31, 2002, if a dealer's municipal 
securities activities are limited exclusively to municipal fund 
securities and the dealer has fewer than 11 associated persons engaged 
in such activities, it may fulfill its obligation to have a municipal 
securities principal by designating a general securities or investment 
company/variable contracts limited principal to act as a limited 
principal.\4\ During this period, any designated limited principal has 
all of the powers and responsibilities of a municipal securities 
principal under MSRB rules with respect to transactions in municipal 
fund securities. Under the current transition provision, on and after 
August 1, 2002, dealers effecting transactions in municipal fund 
securities are required to comply with the same municipal securities 
principal requirements applicable to all other dealers effecting 
transactions in municipal securities.
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    \2\ A municipal fund security is defined in MSRB's Rule D-12 as 
a municipal security issued by an issuer that, but for Section 2(b) 
of the Investment Company Act of 1940 (the ``Investment Company 
Act''), would constitute an investment company within the meaning of 
the Investment Company Act. Section 2(b) exempts states and 
political subdivisions, and agencies, authorities, and 
instrumentalities thereof, from the Investment Company Act.
    \3\ See SR-MSRB 2001-05; Exchange Act Release No. 44584 (July 
23, 2001); 66 FR 39541 (July 31, 2001).
    \4\ Dealers that have 11 or more associated persons engaged in 
municipal fund securities activities may also designate a general 
securities or investment company/variable contracts limited 
principal to act as a limited principal. If a dealer is required to 
have two municipal securities principals under Rule G-3(b)(iii), 
then it may count one such limited principal toward this numerial 
requirement but must still have one municipal securities principal 
qualified other than by reason of being a general securities or 
investment company/variable contracts limited principal. If any 
dealer having 11 or more associated persons engaged in municipal 
fund securities activities is permitted to have only one municipal 
securities principal by virtue of Rule G-3(b)(iii)(A), the numerical 
requirements may not be satisfied by designation of a limited 
principal.
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    The MSRB understands that many dealers that wish to participate in 
the market for municipal fund securities do not currently, and do not 
plan to, engage in any municipal securities activities other than with 
respect to municipal fund securities. Since these dealers will not 
participate in the market for municipal debt securities and the 
features of municipal fund securities differ significantly from those 
of debt securities, the MSRB believes that no investor protection 
purpose is served by requiring principals responsible for supervision 
of such firms' municipal fund securities activities to demonstrate 
their understanding of the application of MSRB rules other than with 
respect to municipal fund securities.
    Thus, the MSRB is proposing the creation of a new category of 
principals to serve permanently as municipal fund securities limited 
principals. Qualification as a municipal fund securities limited 
principal would be by an examination consisting of questions on the 
broad range of MSRB-specific topics that are relevant to municipal fund 
securities activities.\5\ The examination would require that the 
individual taking it have previously or concurrently taken and passed 
the general securities principal qualification examination (Series 24) 
or investment company and annuity principal qualification examination 
(Series 26) administered by the National Association of Securities 
Dealers, Inc. (``NASD''). The qualification examination for municipal 
fund securities limited principals is scheduled to become available on 
October 1, 2002. MSRB staff is currently in the process of developing 
the qualification examination and will file the study outline and 
specifications with the Commission under separate cover.
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    \5\ Since the qualification examination would be tailored 
specifically to the application of MSRB rules to municipal fund 
securities, rather than to all types of municipal securities, the 
MSRB expects that this examination would not be as lengthy as the 
existing qualification examination for municipal securities 
principals (Series 53).
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    An individual qualified as a municipal fund securities limited 
principal would be permitted to supervise only the municipal fund 
securities activities of the dealer and would have no authority to 
supervise the activities of the dealer with respect

[[Page 15846]]

to any other type of municipal securities. However, an individual 
qualified as a municipal securities principal (Series 53) would 
continue to be qualified to supervise all municipal securities 
activities of the dealer, including activities relating to municipal 
fund securities. Thus, an individual wishing to supervise municipal 
fund securities activities could qualify to do so either (i) by 
becoming a municipal securities principal through the municipal 
securities principal qualification examination (Series 53) or (ii) by 
becoming a municipal fund securities limited principal through this new 
qualification examination if the individual is already or concurrently 
becomes a general securities or investment company/variable contracts 
limited principal.
    If a dealer's municipal securities activities are limited to 
municipal fund securities, the proposed rule change also would count 
all municipal fund securities limited principals toward the numerical 
requirement for principals regardless of the number of associated 
persons engaging in such activities. Thus, any dealer that does not 
engage in any municipal securities activities other than with respect 
to municipal fund securities could fully discharge its obligation with 
respect to municipal securities principals with individuals qualified 
as municipal fund securities limited principals.
    Further, existing rule language indirectly permits investment 
company/variable contracts limited representatives (Series 6) to take 
the Series 53 examination to become qualified as municipal securities 
principals.\6\ Although this was appropriate when there was no other 
provision under Rule G-3 for qualifying a principal to supervise 
municipal fund securities activities, the proposed rule change 
discontinues this method of qualification on October 1, 2002 when the 
new municipal fund securities limited principal qualification 
examination becomes available.\7\ An investment company/variable 
contracts limited representative would be able to qualify as a 
municipal fund securities limited principal by taking both the Series 
26 examination and the new municipal fund securities limited principal 
examination.
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    \6\ Rule G-3 permits an investment company/variable contracts 
representative to act as a municipal securities representative 
solely with respect to municipal fund securities.
    \7\ Qualification of an investment company/variable contracts 
limited representative as a full municipal securities principal 
allows that individual to supervise any securities activities, 
including debt securities. The MSRB is concerned that an individual 
who is solely qualified as an investment company/variable contracts 
limited representative prior to becoming a municipal securities 
principal may not have an adequate understanding of municipal debt 
securities to provide effective supervision under all circumstances.
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    In addition, the proposed rule change extends the existing 
temporary provision permitting general securities principals and 
investment company/variable contracts limited principals to supervise 
municipal fund securities activities from July 31, 2002 to December 31, 
2002 in order to provide dealers with an adequate opportunity to 
prepare potential candidates for the new examination. During this 
extended transition period, the numerical requirement with respect to 
principals would be simplified so that all dealers, not just those with 
fewer than 11 associated persons engaged in municipal fund securities 
activities, could fully meet their principal requirements with 
principals acting in the temporary capacity permitted under the 
transition provisions. The proposed rule change makes clear that, 
beginning on January 1, 2003, all municipal fund securities limited 
principals (including general securities principals and investment 
company/variable contracts limited principals supervising municipal 
fund securities activities under the temporary transition period who 
wish to continue such supervisory activities after December 31, 2002) 
must be qualified by taking the new qualification examination.
    Finally, the proposed rule change would give the NASD or any other 
appropriate regulatory agency the power to waive qualification 
requirements with respect to municipal fund securities limited 
principals, as with all other qualification categories. As provided in 
Rule G-3(g)(i), such waivers are to be granted solely in extraordinary 
cases.
    (b) The MSRB believes that the proposed rule change is consistent 
with Section 15B(b)(2)(A) of the Exchange Act, which provides that it 
is the MSRB's responsibility to propose and adopt rules which:

provide that no municipal securities broker or municipal securities 
dealer shall effect any transaction in, or induce or attempt to 
induce the purchase or sale of, any municipal security unless * * * 
such municipal securities broker or municipal securities dealer and 
every natural person associated with such municipal securities 
broker or municipal securities dealer meets such standards of 
training, experience, competence, and such other qualifications as 
the Board finds necessary or appropriate in the public interest or 
for the protection of investors.

    Section 15B(b)(2)(A) of the Exchange Act also provides that the 
MSRB may appropriately classify municipal securities brokers and 
municipal securities dealers and their associated personnel and require 
persons in any such class to pass tests prescribed by the MSRB.

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

    The MSRB 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 Exchange Act.

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

    On December 19, 2001, the MSRB published for comment a draft 
amendment designed to establish a permanent category of municipal fund 
securities limited principals and to establish permanent professional 
qualification requirements for dealers that limit their municipal 
securities activities to municipal fund securities. A municipal fund 
securities limited principal would have the same authority as a 
municipal securities principal under MSRB rules, but only with respect 
to municipal fund securities activities. A general securities principal 
or an investment company/variable contracts limited principal could 
qualify as a municipal fund securities limited principal by passing a 
new qualification examination relating specifically to municipal fund 
securities.\8\ The draft amendment would allow any dealer that limits 
its municipal securities activities to municipal fund securities, 
regardless of size, to comply with Rule G-3's numerical requirement for 
principals solely with municipal fund securities limited principals 
that have passed the new exam. In addition, the draft amendment would 
make explicit an existing provision that implicitly allows an 
investment company/variable contracts limited representative to take 
the Series 53 exam without first taking the municipal securities 
representative qualification examination (Series 52).
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    \8\ A general securities representative (Series 7) or investment 
company/variable contracts limited representative (Series 6) also 
could qualify as a municipal fund securities limited principal by 
simultaneously passing the new qualification examination and either 
the general securities principal or investment company principal 
examination.
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    The MSRB received comments from seven commentators.\9\ After 
reviewing

[[Page 15847]]

these comments, the MSRB approved the draft amendment, with certain 
modifications, for filing with the Commission.\10\ The comments and the 
MSRB's responses are discussed below.
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    \9\ Letter from Erich Sokolower, Repex & Co., Inc. (``Repex''), 
to the MSRB, dated January 11, 2002; letter from Tamara K. Reed, 
Associate Counsel, Investment Company Institute (``ICI''), to 
Ernesto A. Lanza, Senior Associate General Counsel of the MSRB, 
dated January 15, 2002; letter from Gabriel Borthwick, Compliance 
Consultant and Molly Diggins, Attorney, Metropolitan Life Insurance 
Company (``MetLife''), to Ernesto A. Lanza, dated January 18, 2002; 
letter from Vincent S. Comperatore, Principal, VBC Securities, LLC 
(``VBC''), to Ernesto Lanza, dated January 23, 2002; letter from E. 
Allen Cole, VP--Compliance Counsel, A.G. Edwards & Sons, Inc. (``AG 
Edwards''), to Ernesto A. Laza and Jill C. Finder, Assistant General 
Counsel of the MSRB, dated January 24, 2002; letter from Warren A. 
Forest, President, Forest Brokerage Advisers, Inc. (``Forest''), to 
Ernie Lanza, dated January 25, 2002; and letter from John M. Ramsey, 
The Bond Market Association (``TBMA''), To Ernesto A. Lanza, dated 
January 28, 2002.
    \10\ After reviewing the comments and further considering 
existing professional qualification provisions under Rule G-3, the 
MSRB modified the draft amendment by (i) establishing a time frame 
for implementing the new municipal fund securities limited principal 
qualification examination, (ii) extending the temporary transition 
period to December 31, 2002 and simplifying the numerical 
requirement to permit dealers to make appropriate preparations for 
qualification under the new category, (iii) phasing out the ability 
of investment company/variable contracts limited representatives to 
take the Series 53 examination, and (iv) allowing waivers of the 
qualification requirements for this category in extraordinary cases.
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    AG Edwards, ICI and TBMA support the draft amendment. ICI commends 
the MSRB for ``continuing to tailor its regulatory requirements 
applicable to municipal fund securities in a manner that recognizes the 
differences between such securities and traditional municipal 
securities.'' TBMA states that the draft amendment ``appropriately 
tailors registration requirements to the nature of the business 
conducted and provides firms with needed flexibility in adapting their 
compliance programs as their business evolves.'' AG Edwards states, 
``the new limited principal category is an appropriate vehicle whereby 
persons whose activities are limited to the supervision of municipal 
fund securities activities may be qualified to supervise those 
activities.''
    However, both AG Edwards and TBMA are concerned that the draft 
amendment might suggest that municipal securities sales principals 
(Series 8 or Series 9/10) may not supervise sales activities with 
respect to municipal fund securities and request clarification to the 
contrary. The MSRB wishes to make clear that it does not intend to 
limit the power of municipal securities sales principals to supervise 
sales activities with respect to municipal fund securities by creating 
the new municipal fund securities limited principal classification. 
However, municipal securities sales principals may undertake only 
certain limited types of supervisory functions relating to sales 
activities in satisfaction of MSRB rules. Many supervisory 
responsibilities under MSRB rules must be undertaken by municipal 
securities principals or, in the case of municipal fund securities 
activities, by municipal fund securities limited principals.
    Forest, MetLife, Repex and VBC oppose the draft amendment. MetLife 
argues that the differences between municipal fund securities and 
registered investment company securities that justify the need for 
regulation in this market should be addressed by issuer regulation 
rather than dealer regulation. MetLife states that ``guiding issuers 
toward thorough documentation of unique aspects of their municipal fund 
offerings would help to better educate both the selling agents and the 
purchasers as to differences among plans--a result that we believe 
would ultimately be more effective than the addition of a back-office 
limited principal.'' MetLife further states, ``these issues are better 
addressed by the selling agent or by field office series 26 or 24 
registered principals who are closer to the point of sale, with more 
applicable knowledge to lend to the review process.'' MetLife 
recommends that ``the MSRB not create a limited municipal securities 
principal category to address issues that . . . would be better 
resolved at the issuer level.''
    The MSRB understands MetLife's concern that some issues relating to 
municipal fund securities might best be resolved through issuer 
regulation. However, the MSRB has no authority with respect to issuers; 
rather, the MSRB is charged with protecting investors through dealer 
regulation.\11\ Since MSRB rules do apply to dealers' municipal fund 
securities activities, the MSRB believes that the ultimate supervision 
of such activities must be conducted by someone who knows these rules. 
Contrary to MetLife's characterization of the municipal fund securities 
limited principal as a ``back-office limited principal,'' the municipal 
fund securities limited principal would provide dealers with a second 
(and in many cases easier) means of fulfilling the appropriate top-
level supervisory requirement established under MSRB rules which 
otherwise would be met by a municipal securities principal. With regard 
to personnel at the point of sale, dealers are permitted under Rule G-3 
to use investment company/variable contracts limited representatives to 
sell municipal fund securities and sales principals to directly 
supervise such sales activities.
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    \11\ Because issuers of municipal fund securities are state or 
local governmental entities, the Commission has restricted 
regulatory authority over such issuers under the Securities Act of 
1933, the Exchange Act and the Investment Company Act. The NASD's 
dealer rules also do not apply to municipal fund securities because 
they are issued by state or local governmental entities.
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    Forest, Repex and VBC believe that the draft amendment would 
increase their regulatory burden. VBC mistakenly believes that its 
general securities principals are currently qualified to supervise 
municipal securities activities and should also be qualified to 
supervise municipal fund securities activities. VBC states that the 
``new proposal would require more testing and sure to follow CE 
credits. This is unjust, too time consuming and unnecessary.'' Repex 
views the qualification provisions as an ``absolutely new burden on 
industry & reps: entirely unnecessary'' and believes that ``more of 
these rules will force more of the smaller firms to leave the 
business.'' Forest argues that dealers conducting business in municipal 
fund securities should not be required to become members of the MSRB, 
noting that dealers that are ``not currently approved to conduct 
municipal securities business, would have to enter into a Membership 
Continuance Request under NASDR Membership Rule 1017. This is an 
arduous, time consuming and expensive process that would be especially 
felt by smaller Broker/Dealers.'' Forest also argues that dealers 
selling securities similar to municipal fund securities, such as mutual 
fund IRA accounts and municipal bond mutual funds, are not required to 
be registered with the MSRB.
    The MSRB believes that the proposed rule change would in fact 
decrease dealers' regulatory burden. Without the amendment, dealers 
would be required to use fully qualified municipal securities 
principals to meet their Rule G-3 principal requirement. As stated 
above, the creation of the municipal fund securities limited principal 
category provides dealers with an alternative means of meeting this 
requirement. For dealers that do not otherwise engage in municipal 
securities activities, allowing their general securities principals or 
investment company principals to take a shorter, more focused 
examination than the Series 53 exam in order to qualify as a municipal 
fund securities principal should be less burdensome. The further 
reduction in regulatory burden that these commentators most likely 
desire--i.e., no MSRB qualification requirements--is inappropriate 
since activities regulated

[[Page 15848]]

by MSRB rules require ultimate supervision by someone who knows these 
rules.
    The fact that MSRB rules apply at all results, of course, from the 
Exchange Act and not because the MSRB has sought to regulate municipal 
fund securities. Dealers selling mutual fund IRA accounts and municipal 
bond mutual funds are not required to comply with MSRB rules because 
these securities are not municipal securities and are instead subject 
to regulation under other regulatory schemes. In contrast, municipal 
fund securities are municipal securities and therefore are subject to 
MSRB rules and exempt from most other provisions of federal securities 
laws (such as the Securities Act and the Investment Company Act).

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

    Within 35 days of the publication of this notice in the Federal 
Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
is consistent with the Exchange Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 
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. Copies of the filing will also be 
available for inspection and copying at the MSRB's principal offices. 
All submissions should refer to File No. SR-MSRB-2002-03 and should be 
submitted by April 24, 2002.

    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. 02-8041 Filed 4-2-02; 8:45 am]
BILLING CODE 8010-01-U