[Federal Register Volume 82, Number 239 (Thursday, December 14, 2017)]
[Notices]
[Pages 59148-59151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26909]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82238; File No. SR-MSRB-2017-08]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Order Granting Approval of a Proposed Rule Change To Amend MSRB 
Form G-45 To Collect Additional Data About the Transactional Fees 
Primarily Assessed by Programs Established To Implement the ABLE Act

December 8, 2017.

I. Introduction

    On October 13, 2017, the Municipal Securities Rulemaking Board (the 
``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (the ``SEC'' or ``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 amend MSRB Form G-45 
under MSRB Rule G-45, on reporting of information on municipal fund 
securities,\3\ to collect additional data about the transactional fees 
primarily assessed by programs established to implement the Stephen 
Beck, Jr., Achieving a Better Life Experience Act of 2014 (the ``ABLE 
Act'' and an ``ABLE program'') (the ``proposed rule change'').\4\ The 
proposed rule change

[[Page 59149]]

was published for comment in the Federal Register on October 27, 
2017.\5\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Form G-45 is an electronic form on which submissions of the 
information required by Rule G-45 are made to the MSRB.
    \4\ The ABLE Act was enacted on December 19, 2014 as part of The 
Tax Increase Prevention Act of 2014 (Pub. L. 113-295).
    \5\ Securities Exchange Act Release No. 81921 (October 23, 2017) 
(the ``Notice of Filing''), 82 FR 49908 (October 27, 2017).
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    The Commission received one comment letter on the proposed rule 
change.\6\ On December 1, 2017, the MSRB responded to the comments 
received by the Commission.\7\
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    \6\ See Letter to Secretary, Commission, from Leslie Norwood, 
Managing Director and Associate General Counsel, and Bernard Canepa, 
Vice President and Assistant General Counsel, Securities Industry 
and Financial Markets Association (``SIFMA''), dated November 17, 
2017 (the ``SIFMA Letter'').
    \7\ See Letter to Secretary, Commission, from Pamela K. Ellis, 
Associate General Counsel, MSRB, dated December 1, 2017 (the ``MSRB 
Response Letter''), available at https://www.sec.gov/comments/sr-msrb-2017-08/msrb201708-2743045-161576.pdf .
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II. Description of Proposed Rule Change

    In the Notice of Filing, the MSRB stated that the proposed rule 
change would amend Form G-45 to collect additional information relating 
to fees and expenses to help ensure that the MSRB continues to receive 
comprehensive information regarding ABLE programs and 529 college 
savings plans.\8\ The MSRB stated that this data would enhance the 
MSRB's understanding of the markets for ABLE programs and 529 college 
savings plans, including the differences among such programs or 
plans.\9\ Further, the MSRB stated that the additional fee and expense 
information would assist the MSRB in fulfilling its investor protection 
mission.\10\ The MSRB also stated that the information about fees and 
expenses would continue to be submitted in a format that is consistent 
with the disclosure principles of the College Savings Plan Network 
(``CSPN''), an affiliate of the National Association of State 
Treasurers, which, the MSRB added, commenters on previous MSRB 
rulemaking proposals relating to MSRB Form G-45 have stated is the 
industry norm.\11\
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    \8\ See Notice of Filing.
    \9\ Id.
    \10\ Id.
    \11\ Id.
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    As further described by the MSRB in the Notice of Filing, under the 
proposed rule change, an underwriter to an ABLE program or a 529 
college savings plan would be required to submit data on Form G-45 
about the following additional fees and expenses, as applicable:
     account opening fee;
     investment administration fee;
     change in account owner fee;
     cancellation/withdrawal fee;
     change in investment option/transfer fee;
     rollover fee;
     returned excess aggregate contributions fee;
     rejected ACH or EFT fee;
     overnight delivery fee;
     in-network ATM fee;
     out-of-network ATM fee;
     ATM mini statement fee;
     international POS/ATM transaction fee;
     foreign transaction fee;
     overdraft fee;
     copy of check or statement fee (per request);
     copy of check images mailed with monthly statement fee;
     check fee (i.e., fee for blank checks);
     returned check fee;
     checking account option fee;
     re-issue of disbursement check fee;
     stop payment fee;
     debit card fee;
     debit card replacement fee;
     outgoing wire fee;
     expedited debit card rush delivery fee;
     paper fee; and
     miscellaneous fee (to address any miscellaneous 
transactional fee that is not otherwise specified on Form G-45).\12\
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    \12\ Id.
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    In addition, under the proposed rule change, the MSRB stated that 
it would collect data about any variance in the annual account 
maintenance fee due to the residency of the account owner.\13\ The MSRB 
also stated that the proposed rule would apply to underwriters to ABLE 
programs as well as to underwriters to 529 college savings plans.\14\ 
The MSRB, however, stated that it anticipates that most of the data 
that would be collected by the proposed rule change would relate to 
ABLE programs.\15\ The MSRB also noted that it believes that 529 
college savings plans generally do not assess the fees and charges that 
are the subject of this proposed rule change.\16\
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    \13\ Id.
    \14\ Id.
    \15\ Id.
    \16\ Id.
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    The MSRB requested in the Notice of Filing that the proposed rule 
change be approved with an effective date of June 30, 2018.\17\
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    \17\ Id.
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III. Summary of Comments Received and MSRB's Responses to Comments

    As noted previously, the Commission received one comment letter on 
the proposed rule change, as well as the MSRB Response Letter. The 
commenter, SIFMA, stated that it was ``supportive of the MSRB's efforts 
to fully understand the ABLE programs and 529 college savings plans 
market and fulfill its mission'' but believed that municipal securities 
dealers who underwrite ABLE programs and 529 college savings plans 
``should only be required to submit the information required by Form G-
45 to the extent it is within their possession, custody, or 
control''.\18\ SIFMA also stated that the MSRB should be mindful of the 
possibility that additional regulatory requirements such as the 
proposed rule change could increase costs to investors in dealer-sold 
529 college savings plans and ABLE programs versus direct-sold programs 
that are not regulated by the MSRB.\19\ The MSRB stated that it 
believes the proposed rule change is consistent with its statutory 
mandate and has responded to the comments, as discussed below.\20\
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    \18\ See SIFMA Letter.
    \19\ Id.
    \20\ See MSRB Response Letter.
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1. Submission of Information Within Custody of Dealer

    SIFMA stated that some of the information about fees that 
underwriters would be required to submit on MSRB Form G-45, under the 
proposed rule change, may be contained in ABLE program or 529 college 
savings plan disclosure documents and suggested that those underwriters 
could provide hyperlinks to those documents to the MSRB.\21\ The MSRB 
responded by stating that even if some of the information required to 
be submitted on MSRB Form G-45 were contained in those ABLE program or 
529 college savings plan disclosure documents, that the information 
would not be published in a uniform electronic format that would allow 
for the MSRB's efficient analysis or comparison of such 
information.\22\ The MSRB noted that, at this time, there is no 
requirement that state issuers prepare those disclosure documents in a 
uniform format and, unlike for 529 college savings plans, there are not 
even voluntary disclosure principles for state issuers in the 
preparation of their disclosure documents that are applicable to ABLE 
programs.\23\ As result, the MSRB stated, it is even more likely that 
the information in the ABLE program disclosure documents would not be 
presented in a uniform format that would allow the MSRB to readily 
analyze and compare ABLE programs.\24\ In addition, the MSRB stated 
that referencing the ABLE program or 529

[[Page 59150]]

college savings plan disclosure documents would not meet the MSRB's 
regulatory need because the data provided to the MSRB must be in a 
uniform electronic format that can be aggregated and analyzed.\25\ The 
MSRB acknowledged that the proposed rule change would result in some 
up-front costs to underwriters due to technical changes to 
underwriters' reporting systems, but the MSRB stated that those costs 
should mostly be one-time only costs and that the cumulative benefits 
of receiving data in a uniform electronic format should exceed the 
upfront costs over time.\26\
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    \21\ See SIFMA Letter.
    \22\ See MSRB Response Letter.
    \23\ Id.
    \24\ Id.
    \25\ Id.
    \26\ Id.
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2. Applicability of Proposed Rule Change to Advisor-Sold and Direct-
Sold ABLE Programs and 529 College Savings Plans

    SIFMA suggested that the duty to submit information about the fees 
assessed by ABLE programs and 529 college savings plans on MSRB Form G-
45 would create an undue burden because, in SIFMA's view, the MSRB's 
jurisdiction is limited to underwriters to dealer-sold ABLE programs or 
529 college savings plans.\27\ The MSRB responded by stating that such 
an undue burden on competition would not exist because the MSRB 
believes it has jurisdiction over all underwriters of ABLE programs and 
529 college savings plans.\28\ The MSRB stated that it has jurisdiction 
over underwriters to all 529 college savings plans, regardless of the 
marketing channel through which such plans are sold (whether sold with 
the advice of a dealer, i.e., ``advisor-sold,'' or without the advice 
of a dealer, i.e., ``direct-sold''), and this view has equal 
application to similar ABLE programs.\29\ The MSRB also stated that it 
has previously discussed the application of Rule G-45 to dealers, and 
in doing so has said that the activities of an entity may cause that 
entity to be within the definition of dealer and/or underwriter set 
forth in the Act or rules thereunder and thus subject to MSRB Rule G-
45.\30\ The MSRB stated that, for example, the activities of a program 
manager to an ABLE program or 529 college savings plan, or its 
affiliates or contractors, could include direct contact with investors 
through the development and distribution of ABLE program or 529 college 
savings plan advertising sales literature, or maintaining ABLE program 
or 529 college savings plan websites, including processing enrollment 
funds.\31\ The MSRB stated that those activities could, depending on 
the facts and circumstances, cause one or more of those entities to be 
underwriters under Rule G-45.\32\ The MSRB also noted that it believed 
the Commission has agreed with the MSRB that each entity must make its 
own determination about whether its activity would qualify as 
``underwriting'' activity as that term is defined in SEC Rule 15c2-
12(f)(8) under the Act.\33\ In addition, the MSRB stated that, 
beginning in 2015, the MSRB has received data from underwriters to 529 
college savings plans under Rule G-45.\34\ The MSRB stated that it has 
every reason to believe that there is widespread compliance by those 
underwriters with their reporting obligations under Rule G-45.\35\ 
Consequently, the MSRB stated, it does not believe that the requirement 
to submit fee information, as would be required under the proposed rule 
change, on MSRB Form G-45 would unduly burden competition between 
underwriters to advisor-sold ABLE programs or 529 college savings plans 
versus underwriters to direct-sold ABLE programs or 529 college savings 
plans.\36\
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    \27\ See SIFMA Letter.
    \28\ See MSRB Response Letter.
    \29\ Id.
    \30\ Id.
    \31\ Id.
    \32\ Id.
    \33\ Id.
    \34\ Id.
    \35\ Id.
    \36\ Id.
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3. Underwriter Reporting Obligation

    SIFMA stated that it believed dealers that underwrite ABLE programs 
and 529 college savings plans should only be required to submit 
information required by MSRB Form G-45 to the extent that such 
information is within their possession, custody and control.\37\ The 
MSRB stated that, under the proposed rule change, and consistent with 
the MSRB's previous position on this issue, an underwriter to an ABLE 
program or 529 college savings plan would not be required to submit 
information on MSRB Form G-45 that the underwriter neither possesses 
nor has the legal right to obtain.\38\ The MSRB also noted that the 
legal right to obtain the information for purposes of the proposed rule 
change is not affected by a voluntary relinquishment, by contract or 
otherwise, of such right.\39\ Therefore, the MSRB stated, an 
underwriter may designate an affiliate or contractor to perform 
activities in the underwriter's stead in connection with the 
underwriting, but that the underwriter would be properly viewed as 
having the legal right to obtain all information.\40\
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    \37\ See SIFMA Letter.
    \38\ See MSRB Response Letter.
    \39\ Id.
    \40\ Id.
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IV. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change, 
the comment letter received, and the MSRB Response Letter. 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.
    In particular, the proposed rule change is consistent with Sections 
15B(b)(2)(C) of the Act.\41\ Section 15B(b)(2)(C) of the Act states 
that the MSRB's rules 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 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, municipal entities, obligated persons, and the 
public interest.\42\ The Commission believes the proposed rule change 
is consistent with Section 15B(b)(2)(C) and necessary and appropriate 
to help the MSRB receive complete and reliable information about ABLE 
programs and 529 college savings plans which it can use to monitor such 
programs and plans and detect potential investor harm. The Commission 
believes that, for that data set to be complete and reliable, such data 
should include the data about the fees and expenses associated with an 
investment in an ABLE program or a 529 college savings plan that are 
included in the proposed rule change. In addition, the Commission 
believes the proposed rule change is necessary for the MSRB to gather 
relevant data required to ensure the MSRB's regulatory scheme is 
sufficient and/or to determine whether additional rulemaking is 
necessary to protect investors and the public interest.
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    \41\ 15 U.S.C. 78o-4(b)(2)(C).
    \42\ 15 U.S.C. 78o-4(b)(2)(C).
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    The Commission believes that the proposed rule change would 
facilitate the MSRB's ability to better analyze the market for ABLE 
programs and 529 college savings plans as well as improve the MSRB's 
ability to evaluate trends and differences among ABLE programs and 529 
college savings plans. Further,

[[Page 59151]]

the Commission believes that the MSRB, as well as other financial 
regulators charged with enforcing the MSRB's rules, use (or will use) 
the information submitted on MSRB Form G-45 to enhance their 
understanding of, and ability to monitor, ABLE programs and 529 college 
savings plans.
    The Commission believes that the MSRB or other regulators could use 
the information submitted on MSRB Form G-45 to, among other things, 
determine if the disclosure documents or marketing materials prepared 
or reviewed by underwriters are consistent with the data submitted to 
the MSRB for regulatory purposes.
    In approving the proposed rule change, the Commission also has 
considered the impact of the proposed rule change on efficiency, 
competition, and capital formation.\43\ The Commission 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. The 
additional data that the proposed rule change would collect is 
understood by the Commission to be readily available and known to the 
underwriters of ABLE programs and 529 college savings plans. 
Additionally, the Commission understands that these underwriters are 
already required to submit certain information to the MSRB on MSRB Form 
G-45 on a semi-annual basis. Also, the Commission believes that the 
additional information required to be submitted by the proposed rule 
change would be submitted on an equal and non-discriminatory basis, and 
the requirement would apply equally to all dealers that serve as 
underwriters to ABLE programs and/or 529 college savings plans. 
Furthermore, the Commission believes that the potential burdens created 
by the proposed rule change are to be likely outweighed by the 
benefits.
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    \43\ 15 U.S.C. 78c(f).
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    For the reasons noted above, the Commission believes that the 
proposed rule change is consistent with the Act.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\44\ that the proposed rule change (SR-MSRB-2017-08) be, and hereby 
is, approved.
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    \44\ 15 U.S.C. 78s(b)(2).

    For the Commission, pursuant to delegated authority.\45\
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    \45\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26909 Filed 12-13-17; 8:45 am]
 BILLING CODE 8011-01-P