[Federal Register Volume 84, Number 81 (Friday, April 26, 2019)]
[Notices]
[Pages 17897-17899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08399]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85699; File No. SR-MSRB-2019-08]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend Certain MSRB Rules To Update Cross-References to the
Rules of Other Self-Regulatory Organizations, To Amend Rules With
Grammatical or Typographical Errors and To Delete Certain Sections of
MSRB Rules That Are Outdated or No Longer Relevant
April 22, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on April 10, 2019 the Municipal Securities
Rulemaking Board (``MSRB'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III 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 amend
certain MSRB rules to update cross-references to the rules of other
self-regulatory organizations (SROs), to amend rules with grammatical
or typographical errors and to delete certain sections of MSRB rules
that are outdated or no longer relevant given the expiration or passing
of time limitations set forth therein (the ``proposed rule change'').
The MSRB is filing the proposed rule
[[Page 17898]]
change under Section 19(b)(3)(A)(iii) \3\ of the Act and Rule 19b-
4(f)(6) \4\ thereunder, as a noncontroversial rule change that renders
the proposal effective upon receipt of this filing by the Commission.
The operative date of the proposed rule change will be June 3, 2019.
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\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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The text of the proposed rule change is available on the MSRB's
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2019-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 has been conducting a retrospective review of its rules in
an effort to ensure the rules are effective in their principal goal of
protecting investors, issuers and the public interest. The
retrospective review also seeks to ensure that MSRB rules are not
overly burdensome, are clear and harmonized with the rules of other
regulators, as appropriate, and are reflective of current market
practices.
In its review, the MSRB identified several instances where cross
references to the rules of other SROs are incorrect. In addition, the
MSRB has identified two rule sections with date references that are no
longer valid. Finally, the MSRB has identified several places where
grammatical or typographical corrections are needed. The proposed rule
change would make non-substantive changes to address these issues.
Cross-References to Other SRO Rules
The Financial Industry Regulatory Authority (FINRA) is an SRO
providing regulatory oversight of brokers and dealers doing business in
the United States. It was formed by the consolidation of the member
regulation, enforcement and arbitration operations of the New York
Stock Exchange, NYSE Regulation, Inc. and the National Association of
Securities Dealers (NASD). Prior to this consolidation, the NASD served
as a predecessor SRO to FINRA. As a result, many of the MSRB's rules
continue to cross-reference outdated NASD rules that have since been
updated with the creation of the FINRA rulebook.\5\ The proposed rule
change would update incorrect NASD rule references in the MSRB rulebook
to the correct FINRA rule, by amending:
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\5\ In some instances, a single NASD rule subsequently became
multiple FINRA rules (e.g., NASD Rule 3010 became FINRA Rules 3110
and 3170). The proposed rule change only references those FINRA
rules that are relevant to the particular MSRB rule being amended.
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Rule G-20, on gifts, gratuities, non-cash compensation and
expenses of issuance, to change the reference in subsection (b)(iv)
from NASD Rule 2830 to FINRA Rule 2341.
Rule G-27, on supervision, to change references in
subsection (g)(vi) from NASD Rules 2110, 2120, 2310, 2330, 2440, 3010
(failure to supervise only), 3310 and 3330 to FINRA Rules 2010, 2020,
2111, 2150, 2121, 3110 (failure to supervise only), 5210 and 5230,
respectively.
Rule G-35, on arbitration, to delete reference to ``the
Code of Arbitration Procedure of the National Association of Securities
Dealers, Inc. (``NASD''),'' ``NASD's Code of Arbitration Procedure,''
and ``NASD'' and to change these reference as follows:
[cir] Code of Arbitration Procedure of the National Association of
Securities Dealers, Inc. (``NASD'') would be changed to ``the Financial
Industry Regulatory Authority's (FINRA) Code of Arbitration Procedure
for Customer Disputes and Code of Arbitration Procedure for Industry
Disputes, as appropriate,''
[cir] NASD's Code of Arbitration Procedure would be changed to
``FINRA's Code of Arbitration Procedure for Customer Disputes and Code
of Arbitration Procedure for Industry Disputes, as appropriate,'' and
[cir] NASD would be changed to ``FINRA''.
Rule G-41, on anti-money laundering compliance programs,
to change the reference therein from NASD Rule 3011 to FINRA Rule 3310.
Outdated Date References
There are two MSRB rules that have date references that are
outdated or no longer necessary for purposes of compliance with the
rules. To eliminate these outdated or unnecessary references, the
proposed rule change would amend:
Rule G-38, on solicitation of municipal securities
business, to delete subsection (c) in its entirety, as this section
addresses transitional payments made for solicitation activities that
occurred ``on or prior to August 29, 2005.'' In particular, this
subsection requires a filing to be made ``by the last day of the month
following the end of each calendar quarter during which payments for
such solicitations are made or remain pending.'' The MSRB has not
received a Form G-38t filing for two years which would indicate
payments for solicitations pursuant to subsection (c) are no longer
occurring or pending. If such payments were still being made or were
pending for activity occurring prior to August 29, 2005, a Form G-38t
would have been filed indicating so. As a result, the MSRB believes
there is no longer a need for the requirements set forth in subsection
(c). The proposed rule change also would delete from section (a)
reference to section (c) for consistency.
Rule G-45, on reporting of information on municipal fund
securities, to delete subsection (e), which provides a transition
provision for reporting related to the Stephen Beck, Jr., Achieving a
Better Life Experience Act of 2014 (``ABLE program''). Rule G-45
requires reporting of information on Form G-45 to the MSRB of certain
primary offerings of municipal fund securities. Subsection (e)
indicates that for underwriters in primary offerings of an ABLE
program, the first submissions due pursuant to the rule ``will be for
the reporting period ending June 30, 2018.'' Because this deadline has
passed, the proposed rule change would delete this provision as it is
no longer necessary for compliance with the rule.
Typographical or Grammatical Errors
The proposed rule change would fix typographical or grammatical
errors by amending:
Rule G-12, on uniform practice, to delete duplicative
language from paragraph (h)(ii)(A) on close-out by seller.
Rule G-26, on customer account transfers, to change the
word ``affect'' to ``effect'' as it appears in Supplementary Material
.02 Written Procedures.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
the provisions of Section 15B(b)(2)(C) of the
[[Page 17899]]
Act,\6\ which provides that the MSRB's rules shall:
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\6\ 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 would promote just and equitable
principles of trade by ensuring that existing rule provisions are
accurate and understandable. While the proposed rule change affects
rules applicable to brokers, dealers and municipal securities
(``dealers''), it is meant to clarify existing MSRB rules and would not
impose additional burdens on dealers.
B. Self-Regulatory Organization's Statement on Burden on Competition
Section 15B(b)(2)(C) of the Exchange Act requires that MSRB rules
not be designed to impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act.\7\ The
MSRB does not believe that the proposed rule change would impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Exchange Act because it would apply
equally to all dealers.\8\
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\7\ Id.
\8\ The Board's policy on the use of economic analysis limits
its applications regarding those rules for which the Board seeks
immediate effectiveness. The scope of the Board's policy on the use
of economic analysis in rulemaking provides that: ``[t]his Policy
addresses rulemaking activities of the MSRB that culminate, or are
expected to culminate, in a filing of a proposed rule change with
the SEC under Section 19(b) of the Exchange Act, other than a
proposed rule change that the MSRB reasonably believes would qualify
for immediate effectiveness under Section 19(b)(3)(A) of the
Exchange Act if filed as such (e.g., fee filing or facility filing)
or as otherwise provided under the exception process of this
Policy.'' Policy on the Use of Economic Analysis in MSRB Rulemaking.
For those rule changes which the MSRB seeks immediate effectiveness,
the MSRB usually focuses exclusively its examination on the burden
of competition on regulated entities.
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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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Exchange Act \9\ and Rule 19b-4(f)(6) \10\
thereunder. 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.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
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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 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-2019-08 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-2019-08. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MSRB-2019-08 and should be submitted on
or before May 17, 2019.
For the Commission, pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-08399 Filed 4-25-19; 8:45 am]
BILLING CODE 8011-01-P