[Federal Register Volume 80, Number 184 (Wednesday, September 23, 2015)]
[Notices]
[Pages 57410-57412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24059]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75934; File No. SR-MSRB-2015-10]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Revise the Effective Date of New Rule G-18, on Best Execution 
of Transactions in Municipal Securities, and Amendments to Rule G-48, 
on Transactions With Sophisticated Municipal Market Professionals, and 
Rule D-15, on the Definition of Sophisticated Municipal Market 
Professional

September 17, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 3, 2015, the Municipal Securities Rulemaking Board 
(the ``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II 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).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB filed with the Commission a proposed rule change to revise 
the effective date of new Rule G-18, on best execution of transactions 
in municipal securities, and amendments to Rule G-48, on transactions 
with sophisticated municipal market professionals (``SMMPs''), and Rule 
D-15, on the definition of SMMP (``proposed rule change'').\3\ The MSRB 
has designated the proposed rule change for immediate effectiveness. 
The new effective date of Rule G-18 and the related amendments to Rules 
G-48 and D-15 (``related amendments'') will be 120 days from the date 
of publication by the MSRB of implementation guidance on those rules, 
but no later than April 29, 2016. Upon publication of the 
implementation

[[Page 57411]]

guidance, the MSRB will announce the resulting specific effective date.
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    \3\ The Commission approved new Rule G-18 and amendments to Rule 
G-48 and Rule D-15 on December 5, 2014, which were previously 
scheduled to become effective on December 7, 2015. See Exchange Act 
Release No. 73764 (Dec. 5, 2014), 79 FR 73658 (Dec. 11, 2014) (SR-
MSRB-2014-07) (``SEC Approval Order'').
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    The text of the proposed rule change is available on the MSRB's Web 
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2015-Filings.aspx, at the MSRB's principal office, and at the Commission's 
Public Reference Room.

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

1. Purpose
    The MSRB proposes to revise the effective date of Rule G-18 and the 
related amendments. On December 5, 2014, the Commission approved Rule 
G-18 and the related amendments with an effective date of one year 
after Commission approval, which is December 7, 2015.\4\ The core 
provision of Rule G-18 generally will require dealers, in any 
transaction for or with a customer or a customer of another dealer, to 
use reasonable diligence to ascertain the best market for the subject 
security and to buy or sell in that market so that the resultant price 
to the customer is as favorable as possible under prevailing market 
conditions.
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    \4\ Id.
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    In its 2012 Report on the Municipal Securities Market,\5\ the 
Commission recommended that the MSRB consider buttressing existing 
fair-pricing standards by establishing a best-execution obligation and 
providing guidance to dealers on how best-execution concepts would be 
applied to municipal securities transactions. After the final terms of 
the new obligation were established through the Commission's approval 
of Rule G-18 and the related amendments on December 5, 2014, the MSRB 
began an initiative to develop implementation guidance consistent with 
the Commission's additional recommendation. As previously indicated 
during the rulemaking process, the MSRB has planned to publish the 
implementation guidance prior to Rule G-18 and the related amendments 
becoming effective \6\ and to coordinate with the Financial Industry 
Regulatory Authority (``FINRA'') with the aim to establish consistent 
guidance, as appropriate, on the application of best-execution 
standards in both the municipal securities and corporate debt 
markets.\7\ Also as publicly announced, the Commission committed to 
work closely with the MSRB and FINRA as they work together to provide 
guidance on best-execution obligations under their respective rules.\8\ 
Throughout the initiative to develop implementation guidance, the MSRB 
has coordinated with the Commission and FINRA and, currently, this 
process continues.
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    \5\ SEC Report on the Municipal Securities Markets (July 31, 
2012), 149-50, available at http://www.sec.gov/news/studies/2012/munireport073112.pdf.
    \6\ See the MSRB's proposed rule change, available at http://
www.msrb.org/~/media/Files/SEC-Filings/2014/MSRB-2014-07.ashx?la=en; 
Exchange Act Release No. 72956 (September 2, 2014), 79 FR 53236, 
53245 (September 8, 2014) (SR-MSRB-2014-07), available at  http://
www.msrb.org/~/media/Files/SEC-Filings/2014/MSRB-2014-07-Fed-Reg-
Notice.ashx?la=en; MSRB response to comments, available at http://www.sec.gov/comments/sr-msrb-2014-07/msrb201407-8.pdf; SEC Approval 
Order at 73662; MSRB Notice 2014-22, available at http://
www.msrb.org/~/media/Files/Regulatory-Notices/Announcements/2014-
22.ashx?n=1 (``Approval Notice'').
    \7\ See MSRB response to comments (SR-MSRB-2014-07), SEC 
Approval Order, and Approval Notice.
    \8\ See Mary Jo White, Chair, Securities and Exchange 
Commission, Intermediation in the Modern Securities Markets: Putting 
Technology and Competition to Work for Investors (June 20, 2014) 
(``[T]o assure that brokers are subject to meaningful obligations to 
achieve the best executions for investors in both corporate and 
municipal bond transactions, we will be working closely with . . . 
FINRA and the MSRB as they work together to provide practical 
guidance on how brokers might effectively achieve best 
execution.'').
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    The MSRB has intended, in part based on dialogue with market 
participants, to publish the implementation guidance approximately four 
months in advance of the effective date to provide dealers sufficient 
time to review the guidance and utilize it, for example, in their 
development or revision of policies and procedures necessary to comply 
with Rule G-18 and the related amendments. Accordingly, the MSRB 
submits this proposed rule change to revise the effective date of Rule 
G-18 and the related amendments to be 120 days from the date the 
implementation guidance is published by the MSRB, but no later than 
April 29, 2016. The proposed rule change is designed to afford dealers 
four months with the use of the published implementation guidance to 
prepare to comply with the requirements of Rule G-18 and the related 
amendments, as the MSRB has intended and believes to be sufficient.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act,\9\ which provides that the MSRB's 
rules shall:
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    \9\ 15 U.S.C. 78o-4(b)(2)(C).

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 and 
municipal financial products, to remove impediments to and perfect 
the mechanism of a free and open market in municipal securities and 
municipal financial products, and, in general, to protect investors, 
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municipal entities, obligated persons, and the public interest.

    The proposed rule change does not alter any rule language but 
revises the effective date of Rule G-18 and the related amendments, 
which were previously approved by the Commission. By providing a period 
of four months from the date the implementation guidance is published 
by the MSRB (ending no later than April 29, 2016), the MSRB believes 
the proposed rule change will promote compliance with the new best-
execution rule and will further the stated purposes of Rule G-18 and 
the related amendments to promote just and equitable principles of 
trade, facilitate transactions in municipal securities, remove 
impediments to and perfect the mechanism of a free and open market in 
municipal securities and protect investors. In addition, by generally 
making the effective date a function of the publication of the 
implementation guidance by the MSRB, the revision provides the 
municipal securities industry with greater certainty regarding the 
length and adequacy of the implementation period.

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

    Section 15B(b)(2)(C) of the Act \10\ requires that MSRB rules be 
designed not to impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The MSRB does 
not believe that the proposed rule change will impose any burden on 
competition not necessary or appropriate in furtherance of the Act. The 
proposed rule change will not alter any rule language and will, 
instead, only revise the effective date of Rule G-18 and the

[[Page 57412]]

related amendments to be 120 days after the publication of the 
implementation guidance by the MSRB, but no later than April 29, 2016.
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    \10\ Id.
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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 on the 
proposed rule change.

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

    Pursuant to Section 19(b)(3)(A) \11\ of the Act and Rule 19b-
4(f)(6) \12\ thereunder, the MSRB has designated the proposed rule 
change as one that effects a change that: (i) Does not significantly 
affect the protection of investors or the public interest; (ii) does 
not impose any significant burden on competition; and (iii) by its 
terms, does not become operative for 30 days after the date of the 
filing, or such shorter time as the Commission may designate. A 
proposed rule change filed under Rule 19b-4(f)(6) normally does not 
become operative until 30 days after the date of filing.\13\ However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest.\14\ The MSRB has requested that the Commission 
designate the proposed rule change operative upon filing, as specified 
in Rule 19b-4(f)(6)(iii), which would make the proposed rule change 
operative on September 3, 2015.\15\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ Id.
    \14\ In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its 
intent to file a proposed rule change, along with a brief 
description and text of such proposed rule change, at least five 
business days prior to the date of filing, or such shorter time as 
designated by the Commission. The Commission has designated a 
shorter time for delivery of such written notice.
    \15\ See SR-MSRB-2015-10 (September 3, 2015).
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    According to the MSRB, the proposed rule change is designed to 
afford dealers four months with the use of the published implementation 
guidance to prepare to comply with the requirements of new Rule G-18 
and the related amendments. The MSRB believes the proposed rule change 
provides dealers with sufficient time to review such guidance and 
utilize it, for example, in their development or revision of policies 
and procedures necessary to comply with new Rule G-18 and the related 
amendments. The MSRB also stated that the proposed rule change provides 
the municipal securities industry with greater certainty regarding the 
length and adequacy of the implementation period. The Commission 
believes the proposed rule change is consistent with the protection of 
investors and the public interest because it will help promote 
consistent and accurate compliance and further the stated purposes of 
new Rule G-18 and the related amendments. In addition, the proposed 
rule change does not alter any rule language and will, instead, only 
revise the effective date of new Rule G-18 and the related amendments, 
which were previously approved by the Commission. Therefore, the 
Commission hereby designates the proposed rule change operative upon 
filing.
    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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.

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. 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 email to [email protected]. Please include 
File Number SR-MSRB-2015-10 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2015-10. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the 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-2015-10 and should be 
submitted on or before October 14, 2015.

    For the Commission, pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-24059 Filed 9-22-15; 8:45 am]
 BILLING CODE 8011-01-P