[Federal Register Volume 69, Number 176 (Monday, September 13, 2004)]
[Notices]
[Pages 55201-55202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2163]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50323; File No. SR-MSRB-2004-03]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change and Amendment No. 1 Thereto Consisting of Technical Amendments 
to Rule G-3 Relating to Professional Qualifications

September 7, 2004.
    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 August 4, 2004, the Municipal Securities Rulemaking Board (``MSRB'' 
or ``Board'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the MSRB. The MSRB has 
filed the proposed rule change pursuant to Section 19(b)(3)(A) of the 
Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. On August 25, 2004, the MSRB 
filed Amendment No. 1 to the proposed rule change.\5\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
    \5\ See letter from Jill C. Finder, Assistant General Counsel, 
MSRB, to Katherine A. England, Assistant Director, Division of 
Market Regulation, Commission, dated August 25, 2004. Amendment No. 
1 replaced the original rule filing in its entirety. For purposes of 
calculating the 60-day abrogation period, the Commission considers 
the proposal to have been filed on August 25, 2004, the date the 
MSRB filed Amendment No. 1. See Rule 19b-4(f)(2), 17 CFR 240.19b-
4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB proposes to make technical amendments to MSRB Rule G-3 
relating to professional qualifications. The text of the proposed rule 
change is set forth below. Proposed new language is in italics; 
proposed deletions are in [brackets].

Rule G-3. Classification of Principals and Representatives; Numerical 
Requirements; Testing; Continuing Education Requirements

    No broker, dealer or municipal securities dealer or person who is a 
municipal securities representative, municipal securities principal, 
municipal securities sales principal or financial and operations 
principal (as hereafter defined) shall be qualified for purposes of 
rule G-2 unless such broker, dealer or municipal securities dealer or 
person meets the requirements of this rule.
    No change.
    (a) Municipal Securities Principal; Municipal Fund Securities 
Limited Principal.
    (i)-(iii) No change.
    (iv) Municipal Fund Securities Limited Principal.
    (A)-(B) No change.
    (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, and shall be subject to all provisions of Board rules 
applicable to municipal securities principals except to the extent 
inconsistent with this paragraph (b)(iv).
    (D) No change.
    [(E) Temporary Provisions for Municipal Fund Securities Limited 
Principal. Notwithstanding any other provision of this rule, until 
March 31, 2003, the following provisions shall apply to any broker, 
dealer or municipal securities dealer whose municipal securities 
activities are limited exclusively to municipal fund securities:
    (1) The broker, dealer or municipal securities dealer may designate 
any person who 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.
    (2) Any municipal fund securities limited principal designated as 
provided in clause (b)(iv)(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).
    (3) The broker, dealer or municipal securities dealer may count 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).
    (4) On and after April 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)-(h) 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, as 
amended, 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. 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

1. Purpose
    MSRB Rule G-3, on professional qualifications, currently includes a 
temporary transition period provision, which expired on March 31, 2003. 
During the transition period, Series 24 general securities principals 
and Series 26 investment company/variable contracts limited principals, 
without further qualification, were able to supervise the activities of 
a broker, dealer or municipal securities dealer (collectively referred 
to as ``dealers'') relating to municipal fund securities. Since April 
1, 2003, the MSRB has required that every dealer have either a 
municipal fund securities limited principal (Series 51) or a municipal 
securities principal (Series 53), as appropriate, to supervise the 
dealer's activities relating to municipal fund securities even if these 
are the dealer's only municipal securities activities. Accordingly, the 
MSRB is deleting the expired transition period provision from MSRB Rule 
G-3.
    MSRB Rule G-3 also provides that any municipal fund securities 
limited principal (Series 51) may undertake all actions required or 
permitted to be

[[Page 55202]]

taken by a traditional municipal securities principal (Series 53) under 
MSRB rules, but solely with respect to activities relating to municipal 
fund securities. Implicit in this authorization to act as a municipal 
securities principal is the reciprocal duty to comply with all 
obligations imposed by MSRB rules on municipal securities principals. 
The MSRB is amending MSRB Rule G-3 to make explicit this duty to comply 
with MSRB rules.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act, which authorizes the MSRB to adopt 
rules that shall:

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

    The MSRB believes that the proposed rule change is consistent with 
these provisions in that it provides guidance to dealers that will 
facilitate their understanding of, and compliance with, existing MSRB 
rules by deleting an expired provision from MSRB Rule G-3 and by making 
explicit that Series 51 municipal fund securities limited principals 
are subject to all provisions of MSRB rules applicable to Series 53 
municipal securities principals.

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 Act.

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

    The MSRB has neither solicited nor received comments on the 
proposed rule change.

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

    The MSRB has designated this proposed rule change as constituting a 
stated policy, practice or interpretation with respect to the meaning, 
administration, or enforcement of an existing MSRB rule under Section 
19(b)(3)(A)(ii) of the Act, which renders the proposed rule change 
effective upon receipt of this filing by the Commission. At any time 
within 60 days of the filing of the proposed rule change, the 
Commission may summarily abrogate such 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.\6\
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    \6\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the proposal to have been filed on August 
25, 2004, the date the MSRB filed Amendment No. 1.
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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, as amended, is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-MSRB-2004-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-MSRB-2004-03. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 also will be available for inspection and copying at the 
principal offices of the MSRB. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-MSRB-2004-03 and should be submitted on or before 
October 4, 2004.

    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. E4-2163 Filed 9-10-04; 8:45 am]
BILLING CODE 8010-01-P