[Federal Register Volume 68, Number 43 (Wednesday, March 5, 2003)]
[Notices]
[Pages 10559-10560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5083]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47395; File No. SR-MSRB-2002-15]


Self-Regulatory Organizations; Order Granting Approval of a 
Proposed Rule Change by the Municipal Securities Rulemaking Board 
Relating to Rule G-28, on Transactions with Employees and Partners of 
Other Municipal Securities Professionals

February 24, 2003.
    On December 20, 2002, the Municipal Securities Rulemaking Board 
(``MSRB'') filed with the Securities & Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change (File No. SR-MSRB-2002-15). The proposed rule 
change was published for notice and comment in the Federal Register on 
January 22, 2003.\3\ The Commission did not receive comment letters on 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 47189 (Jan. 15, 
2003), 68 FR 03073.
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I. Description of the Proposed Rule Change

    The MSRB's rule change creates an exemption from Rule G-28 for 
transactions and accounts involving municipal fund securities. Rule G-
28, on transactions with employees and partners of other municipal 
securities professionals, requires a broker, dealer or municipal 
securities dealer (``dealer'') that opens a municipal securities 
account for an employee of another dealer (or a spouse or child of such 
employee) to first provide written notice to such other dealer and to 
subsequently follow any instructions provided by the other dealer with 
respect to transactions for the employee. The transacting dealer is 
also required to provide copies of all confirmations to the other 
dealer. The rule was adopted to prevent an employee of a dealer from 
effecting transactions that are contrary to the interests of the dealer 
or from otherwise acting illegally or improperly with

[[Page 10560]]

respect to transactions in municipal securities.
    The MSRB proposed the exemption because it believes that 
transactions in municipal fund securities appear not to present the 
same potential for adverse impact on an employing dealer as might exist 
with respect to transactions in other types of municipal securities. 
Furthermore, fulfilling Rule G-28 requirements may impose an 
unnecessary burden in the context of municipal fund securities, 
particularly 529 college savings plans, without any countervailing 
benefit. The MSRB notes that transactions in registered mutual fund 
shares are currently exempted from similar requirements imposed under 
NASD Rule 3050. Since there is no trading market in municipal fund 
securities, the MSRB believes the safeguards provided by Rule G-28 are 
not needed in the context of this market.

II. Summary of Comments

    The Commission did not receive any comment letters relating to the 
MSRB's proposed rule change.

III. Discussion

    The Commission has reviewed carefully the proposed rule change and 
finds that the proposed rule change is consistent with the requirements 
of the Act and the rules and regulations thereunder, which govern the 
MSRB.\4\ The language of section 15B(b)(2)(C) of the Act requires that 
the MSRB's rules must be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principals of trade, to foster cooperation and coordination with 
persons engaged in regulating, settling, processing information with 
respect to, and facilitating transactions in 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.\5\ The rule change is consistent with the Act in that 
it amends an existing MSRB rule to accommodate the unique 
characteristics of municipal fund securities. Furthermore, the rule 
change removes impediments to a free and open market in such securities 
and promoting the protection of investors and the public interest.
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    \4\ Additionally, in approving this rule, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78o(b)(2)(C).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Exchange Act,\6\ that the proposed rule change (File No. SR-MSRB-2002-
15) be and hereby is, approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-5083 Filed 3-4-03; 8:45 am]
BILLING CODE 8010-01-P