[Federal Register Volume 73, Number 64 (Wednesday, April 2, 2008)]
[Notices]
[Pages 18022-18026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-6837]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57577, File No. SR-MSRB-2007-06]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Amendment Nos. 1 and 2 and Order Granting 
Accelerated Approval of Proposed Rule Change as Modified by Amendment 
Nos. 1 and 2 Thereto Relating to an Amendment to the Municipal 
Securities Information Library[supreg] System To Establish a Pilot 
System for Consolidated Dissemination of Disclosure Documents and 
Related Information Through an Internet-Based Public Access Portal

March 28, 2008.

I. Introduction

    On November 15, 2007, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board''), filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to establish a pilot system (the 
``pilot

[[Page 18023]]

portal'') for the consolidated dissemination, through an Internet-based 
public access portal, of disclosure documents and related information 
that the MSRB currently receives through its existing facilities. The 
proposed rule change was published for comment in the Federal Register 
on December 28, 2007.\3\ The Commission directly received one comment 
letter regarding the proposal.\4\ On January 30, 2008, the MSRB filed 
Amendment No. 1 to the proposal.\5\ On March 7, 2008, the MSRB filed 
Amendment No. 2 to the proposal.\6\ The text of Amendment Nos. 1 and 2 
is available on the MSRB's Web site (http://www.msrb.org), at the 
MSRB's principal office, and at the Commission's Public Reference Room. 
This order provides notice of the proposed rule change as modified by 
Amendment Nos. 1 and 2 and approves the proposed rule change as amended 
on an accelerated basis.
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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. 57004 (December 20, 
2007), 72 FR 73941 (December 28, 2007) (``Commission's Notice'').
    \4\ See letter from Peter J. Schmitt, CEO, DPC DATA Inc. (``DPC 
DATA''), dated January 23, 2008. The MSRB forwarded to the 
Commission a comment letter it received on this rule filing. See 
supra note 5. The Commission considered both comment letters.
    \5\ In Amendment No. 1, the MSRB stated that ``the pilot portal 
would be established and operated pending establishment of a 
permanent Internet-based public access system to be known as the 
Electronic Municipal Market Access system (``EMMA''),'' and amended 
Exhibit 2 of the proposed rule change by submitting a comment letter 
about the proposed rule received by the MSRB from Philip Moyer, CEO, 
EDGAR Online, Inc. (``EDGAR Online''), to Ernesto A. Lanza, Senior 
Associate General Counsel, MSRB, dated December 17, 2007. The 
Commission notes that a proposal to establish any permanent system 
would be required to be submitted to the Commission for Commission 
consideration as a proposed rule change pursuant to Section 19(b) of 
the Act.
    \6\ In Amendment No. 2, the MSRB partially amended the text of 
the proposed rule change to clarify that the pilot portal would be 
implemented as a service of EMMA as a pilot facility within the MSIL 
system. In addition, the MSRB discusses the comment letter included 
in Amendment No. 1 (the EDGAR Online letter), together with the 
comment letter received by the Commission in response to the 
Commission's Notice (the DPC DATA Inc. letter). Finally, Amendment 
No. 2 requests that the Commission approve an operational date for 
the pilot portal of March 31, 2008.
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II. Description of the Proposal

    MSRB Rule G-36 requires that a broker, dealer or municipal 
securities dealer that acts as managing or sole underwriter for most 
primary offerings of municipal securities send the official statement 
(``OS'') and Form G-36(OS) to the Municipal Securities Information 
Library[supreg] or ``MSIL'' system.\7\ In addition, if the offering is 
an advance refunding and an escrow deposit agreement or other advance 
refunding document (``ARD'') has been prepared, the ARD and Form G-
36(ARD) also must be sent to the MSIL system by the managing or sole 
underwriter. OSs and ARDs collected by the MSIL system currently are 
made available in paper form, subject to copying charges, at the MSRB's 
public access facility in Alexandria, Virginia, and electronically by 
paid subscription on a daily over-night basis and by purchase of annual 
back-log collections.
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    \7\ Municipal Securities Information Library and MSIL are 
registered trademarks of the MSRB. The MSIL system's OS/ARD system 
was initially approved by the Commission in 1991 and amended in 2001 
to establish the current optional electronic submission system. See 
Securities Exchange Act Release No. 29298 (June 13, 1991), 56 FR 
28194 (June 19, 1991) (SR-MSRB-1990-2); Securities Exchange Act 
Release No. 44458 (June 20, 2001), 66 FR 34495 (June 28, 2001) (SR-
MSRB-2001-03).
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    The proposed rule change would establish, on a pilot basis, an 
Internet-based public access portal to provide free access to OSs and 
ARDs received by the MSRB under Rule G-36. Copies of all such OSs and 
ARDs received by the MSRB on or after implementation of the pilot 
portal will be made available to the public as portable document format 
(PDF) files for viewing, printing and downloading at the pilot portal 
promptly after acceptance and processing, and will remain publicly 
available for the life of the municipal securities. The pilot portal 
will provide on-line search functions utilizing the MSIL system 
computer to ensure that users of the pilot portal are able to readily 
identify and access documents that relate to specific municipal 
securities based on a broad range of search parameters. The pilot 
portal will be designed to provide a user searching for a particular 
municipal security with a comprehensive display of relevant information 
concerning such security available from the MSRB's various information 
systems on a single screen or related set of screens. The pilot portal 
will provide basic identifying information for the security, direct 
access to the OS submitted by the underwriter to the MSIL system, price 
information from the MSRB's Real-Time Transaction Reporting System 
(``RTRS'') for the most recent trades in such security (as well as 
historical price information), and, if the security has been advance 
refunded by a refunding issue, any ARDs submitted by the underwriter to 
the MSIL system in connection with such advance refunding.
    The proposed rule change consists of an amendment to the MSRB's 
existing Official Statement and Advance Refunding Document (OS/ARD) 
system of the MSIL system, under which the MSRB proposes to establish 
and operate the pilot portal while it develops a proposal to establish 
a permanent Internet-based public access system (the ``permanent 
system'').\8\ The MSRB requests approval of the pilot portal for a 
period of one year from the date it becomes operational, subject to 
earlier termination upon Commission consideration and approval, 
pursuant to Section 19(b) of the Act, of a permanent system. The pilot 
portal would operate for a limited period of time for electronic 
submissions of all OSs and ARDs to the MSRB and free public access to 
such documents through a centralized Internet-based portal.\9\
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    \8\ Proposed rule changes to establish a permanent system were 
not included by the MSRB in this filing regarding the pilot portal. 
The establishment of a permanent system would be considered by the 
Commission following a proposed rule change filing by the MSRB 
pursuant to Section 19(b) of the Act.
    \9\ The MSRB has stated it is developing an ``access equals 
delivery'' standard for OS dissemination under Rule G-32, concerning 
disclosures in connection with new issues. Neither the ``access 
equals delivery'' standard nor any kind of permanent system were 
included by the MSRB in the filing subject to this order. Such 
issues would be considered by the Commission following a filing by 
the MSRB pursuant to Section 19(b) of the Act.
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    The MSRB requests that the Commission find good cause, pursuant to 
Section 19(b)(2) of the Act, for approving Amendment Nos. 1 and 2 prior 
to the thirtieth day after publication of notice of filing of Amendment 
Nos. 1 and 2 in the Federal Register. The MSRB believes that the 
Commission has good cause for granting accelerated approval of 
Amendment Nos. 1 and 2 because the amendments do not substantively 
alter the original proposed rule change.
    A full description of the proposal is contained in the Commission's 
Notice.

III. Summary of Comments and the MSRB's Response

    As previously noted, the MSRB received one comment letter from 
EDGAR Online relating to this proposed rule change, which it forwarded 
to the Commission. The Commission directly received one comment letter 
from DPC DATA regarding the proposed rule change.\10\ In its comment 
letter, EDGAR Online strongly supported the MSRB's proposed rule 
change, stating that the proposed portal will encourage transparency in 
the municipal securities market and create a healthy ecosystem of 
information that will ultimately benefit both the investment community 
and the municipalities that seek access

[[Page 18024]]

to public markets. Although EDGAR Online recommended that the 
Commission build a publicly accessible storage and dissemination system 
for all municipal filings, EDGAR Online strongly supported the MSRB's 
proposed rule change.
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    \10\ Comment letter submitted by Peter J. Schmitt, CEO of DPC 
DATA Inc., dated January 23, 2008, http://www.sec.gov/comments/sr-msrb-2007-06/msrb200706-1.htm.
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    In commenting on this proposed rule change, DPC DATA, a Nationally 
Recognized Municipal Securities Information Repository (NRMSIR), 
expressed concerns about the proposed portal.\11\ It stated that the 
MSRB's plans for its proposed MSIL-based Web portal go well beyond its 
organizational mandate as stated in Section 15B(b)(2)(C) of the Act. It 
indicated a belief that some of the proposed features, such as nine-
digit CUSIP searches, are well in excess of those provided by the 
Commission's EDGAR system. Further, it expressed concern that ``by 
providing value-added content and features on its proposed Web portal, 
the MSRB will not only effectively take over the business of providing 
value-added content to commercial firms, but it will fund this activity 
with fees collected from broker/dealers.'' DPC DATA urged the 
Commission to restrain the MSRB from offering what it viewed as value-
added content and features that, in its view, will necessarily inflict 
economic harm on existing data vendors, and inflict the harm unevenly.
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    \11\ DPC Data also expressed a number of concerns about other 
aspects of the MSRB's plans for the EMMA system, such as the 
inclusion of continuing disclosure documents, that are not the 
subject of this proposed rule change. Only the comments about the 
subject of this proposed rule change are discussed in this order.
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    In Amendment No. 2, the MSRB stated that it has carefully reviewed 
the statements made by EDGAR Online and DPC DATA and continues to 
believe that the proposal is consistent with its statutory mandate 
under the Act. The MSRB concluded that developing the pilot portal 
through the adaptation and upgrading of existing internal MSRB 
systems--including but not limited to the MSIL system, the Real-Time 
Transaction Reporting System, and the MSRB's in-house access control 
systems--combined with the creation of a custom user interface designed 
for use by retail investors, is the most prudent and efficient manner 
of achieving the MSRB's goal of ensuring equal access for all market 
participants to the critical disclosure information needed by investors 
in the municipal securities market.
    In addition, the MSRB continues to believe that the proposal, 
including the functionalities thereof, will not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. The MSRB represented that documents and information 
provided through the portal will be available to all persons on an 
equal basis. The MSRB also stated in Amendment No. 2 that it will 
continue to make the full collection of documents available by 
subscription on an equal basis without imposing restrictions on 
subscribers from re-disseminating such documents or from otherwise 
offering value-added services and products based on such documents on 
terms determined by each subscriber. The MSRB believes that any 
incidental impact on commercial enterprises would not create an unequal 
burden among such enterprises. The MSRB also believes that the 
experience of private enterprises involved in the dissemination of 
EDGAR materials and related value-added services, such as those 
described by EDGAR Online, supports the MSRB's conclusion that EMMA 
will not have an inappropriate impact on the marketplace for such 
services and in fact may very well promote further growth and 
innovation in this area.
    The MSRB believes that EMMA's functionalities further its core 
mission by modernizing the dissemination of documents and are needed 
for the purposes for which the pilot portal is being created, and that 
such functionalities are not inconsistent with any statutory 
limitations placed on MSRB activities. The MSRB believes that none of 
these functionalities constitute value-added services that compete 
inappropriately with the private sector. Rather, the MSRB believes that 
these functionalities are critical for EMMA's operation as an assured, 
free centralized source of information for retail investors that 
provides investors with the necessary tools to find the information for 
which they are searching and to understand such information once it is 
found.

IV. Commission Discussion of Comments and the MSRB's Responses

    In its evaluation of the proposed rule changes and the MSRB's 
responses to the comments received by the Commission, the Commission 
has carefully considered DPC DATA's and EDGAR Online's comments. In its 
evaluation of DPC DATA's comments, the Commission has particularly 
noted DPC DATA's statement that the proposed pilot portal and the 
MSRB's planned permanent system \12\ should not compete with vendors in 
offering value-added features and services related to the handling of 
disclosure documents and that the proposed rule change would impose an 
unequal burden on competition.
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    \12\ Again, the Commission notes that the proposed rule change 
before it concerns only the pilot portal proposed to be implemented 
within MSIL. Accordingly, the specific features of any permanent 
system to be proposed by the MSRB would be subject to Commission 
review, including notice and comment pursuant to Section 19(b), at 
such time as the MSRB files it as a proposed rule change.
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    Section 15B(b)(2)(C) of the Act requires that, before approving 
Board rules, the Commission find that the proposed rules do not impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. Pursuant to current MSRB Rule G-36, which 
was approved \13\ by the Commission after notice and comment pursuant 
to Section 19(b) of the Act, and as a result of the establishment of 
the MSIL system, also approved \14\ by the Commission after notice and 
comment pursuant to Section 19(b), the MSRB has collected and 
disseminated official statements, advance refunding documents, and 
associated indexing information for many years. OSs and ARDs collected 
by the MSIL system currently are made available in paper form, subject 
to copying charges, at the MSRB's public access facility in Alexandria, 
Virginia, and electronically by paid subscription on a daily over-night 
basis and by purchase of annual back-log collections. By making use of 
the Internet for access to OSs and ARDs, the pilot portal would 
modernize the method of delivery of such documents to investors and 
others, and make them more readily accessible by investors and others, 
but not alter the availability of such documents to commercial vendors 
or their ability to disseminate such information, together with 
whatever value-added products they may wish to provide.
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    \13\ Securities Exchange Act Release No. 28081 (June 1, 1990), 
55 FR 23333 (June 7, 1990) (SR-MSRB-89-9).
    \14\ Securities Exchange Act Release No. 29298 (June 13, 1991), 
56 FR 28194 (June 19, 1991) (SR-MSRB-90-2).
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    The MSRB has proposed for the pilot portal to provide on-line 
search functions utilizing its existing MSIL system computer index to 
ensure that users of the pilot portal are able to readily identify and 
access documents that relate to specific municipal securities based on 
a broad range of search parameters. The Commission includes a variety 
of search methods in its EDGAR system and believes that a search 
function is an important component of an information system, such as 
the pilot portal, because without it users could have significant 
difficulty

[[Page 18025]]

accessing all the documents and navigating the system.
    As noted above, the pilot portal would also integrate information 
from the MSRB's RTRS into the pilot system, and thereby provide price 
information for the most recent trades in a security (as well as 
historical price information), and, if the security has been advance 
refunded by a refunding issue, provide any ARDs submitted by the 
underwriter to the MSIL system in connection with such advance 
refunding. The MSRB imposes no restrictions on the redissemination of 
RTRS data. As a result, the Commission does not view the inclusion of 
RTRS information in the pilot portal to significantly alter the current 
competitive situation for information vendors, who may obtain this 
information and provide associated value-added products if they desire 
to do so.
    The MSRB has stated that documents provided through the pilot 
portal will be available to all persons on an equal basis and that the 
MSRB will continue to make the full collection of documents available 
by subscription on an equal basis without imposing restrictions on 
subscribers from re-disseminating such documents or from otherwise 
offering value-added service and products \15\ based on such documents 
on terms determined by each subscriber. For all of these reasons, the 
Commission believes that the proposed rule change does not impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.
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    \15\ The Commission notes that information vendors were able to 
provide value-added services with regard to the information obtained 
from EDGAR.
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    The Commission does not believe the proposal exceeds the Board's 
authority under Section 15B of the Act. As the Commission stated in its 
release approving Rule G-36,\16\ Section 15B(b)(2)(C) is a broad grant 
of authority to the Board to, among other purposes, 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.\17\ It is important for market professionals and investors to 
have access to complete and timely descriptive information about 
municipal securities and municipal securities issuers. The pilot portal 
should enhance access to information about new offerings of municipal 
securities. The Commission believes that the information contained in 
official statements and advance refunding documents is valuable to 
investors and should be widely available. Investors in municipal 
securities, municipal analysts, investment advisors, and the broker-
dealers who effect transactions in the municipal market would benefit 
from easier access to current OSs and ARDs. The Commission also 
believes that the proposed rule change does not implicate Section 
15B(d)(2) of the Act, commonly known as the Tower Amendment, because it 
imposes no requirements, directly or indirectly, on issuers--it instead 
enhances access to information already being provided by the MSRB. 
Further, the Commission believes that establishment of the pilot portal 
should help prevent fraudulent and manipulative acts and practices and 
protect investors and the public interest by enhancing the availability 
of disclosure information contained in OSs and ARDs.
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    \16\ Securities Exchange Act Release No. 28081 (June 1, 1990), 
55 FR 23333 (June 7, 1990) (SR-MSRB-89-9).
    \17\ 15 U.S.C. 78o-4(b)(2)(C).
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V. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to the MSRB \18\ and, in particular, the 
requirements of Section 15B(b)(2)(C) of the Act \19\ and the rules and 
regulations thereunder. Section 15B(b)(2)(C) of the Act requires, among 
other things, that the MSRB's rules 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.\20\
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    \18\ 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).
    \19\ 15 U.S.C. 78o-4(b)(2)(C).
    \20\ Id.
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    In particular, the Commission finds that the pilot facility will 
remove impediments to and help perfect the mechanisms of a free and 
open market in municipal securities, assist in preventing fraudulent 
and manipulative acts and practices, and will in general promote 
investor protection and the public interest by improving access for all 
market participants to the critical disclosure information needed by 
investors in the municipal securities market.
    The Commission also finds good cause to approve Amendment Nos. 1 
and 2 to the proposed rule change prior to the thirtieth day after the 
date of publication of notice of filing of the amendments in the 
Federal Register. The proposed rule change was published in the Federal 
Register on December 28, 2007.\21\ Amendment Nos. 1 and 2 do not 
substantively change the proposal as published in the Federal Register. 
The amendments included a comment letter on this proposal filed with 
the MSRB, responded to the comment letter filed with the MSRB and the 
comment letter filed with the Commission, provided a name for the 
public access portal and requested a delayed operational date for the 
pilot facility. The Commission finds that it is in the public interest 
to approve the proposed rule change as soon as possible to expedite its 
implementation.
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    \21\ See supra note 3.
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    Accordingly, the Commission believes good cause exists, consistent 
with Sections 15B(b)(2)(C) and 19(b) of the Act,\22\ to approve 
Amendment Nos. 1 and 2 to the proposed rule change on an accelerated 
basis. The Commission approves an operational date for the pilot portal 
of March 31, 2008, as requested by the MSRB.
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    \22\ 15 U.S.C. 78o-4(b)(2)(C), and 78s(b).
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VI. 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. 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-2007-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2007-06. 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

[[Page 18026]]

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, 100 F Street, NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal office 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-2007-06 and should be submitted on or before April 
23, 2008.

VII. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
in particular Section 15B(b)(2)(C) of the Act and the rules and 
regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\23\ that the proposed rule change (SR-MSRB-2007-06), as modified 
by Amendment Nos. 1 and 2, be, and it hereby is, approved on an 
accelerated basis from March 31, 2008 to March 31, 2009, subject to 
earlier termination upon Commission consideration and approval, 
pursuant to Section 19(b) of the Act, of a permanent system.
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    \23\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-6837 Filed 4-1-08; 8:45 am]
BILLING CODE 8011-01-P