[Federal Register Volume 89, Number 23 (Friday, February 2, 2024)]
[Notices]
[Pages 7424-7429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02069]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99444; File No. SR-MSRB-2023-06]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Suspension of and Order Instituting Proceedings To Determine 
Whether To Approve or Disapprove a Proposed Rule Change To Establish 
the 2024 Rate Card Fees for Dealers and Municipal Advisors Pursuant to 
MSRB Rules A-11 and A-13

January 29, 2024.

I. Introduction

    On November 30, 2023, 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'' or ``Exchange Act'') \1\ and 
Rule 19b-4 thereunder,\2\ a proposed rule change (File No. SR-MSRB-
2023-06) to establish the 2024 Rate Card Fees for Dealers and Municipal 
Advisors.\3\ The proposed rule change was immediately effective upon 
filing with the Commission pursuant to Section 19(b)(3)(A) of the 
Act.\4\ The proposed rule change was published for comment in the 
Federal Register on December 12, 2023.\5\ Pursuant to Section 
19(b)(3)(C) of the Act,\6\ the Commission is hereby temporarily 
suspending File No. SR-MSRB-2023-06 and instituting

[[Page 7425]]

proceedings to determine whether to approve or disapprove File No. SR-
MSRB-2023-06.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-99096 (December 6, 
2023), 88 FR 86188 (December 12, 2023) (``Notice'').
    \4\ 15 U.S.C. 78s(b)(3)(A). A proposed rule change may take 
effect upon filing with the Commission if it is designated by the 
SRO as ``establishing or changing a due, fee, or other charge 
imposed by the self-regulatory organization on any person, whether 
or not the person is a member of the self-regulatory organization.'' 
15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ See Notice 88 FR at 86188.
    \6\ 15 U.S.C. 78s(b)(3)(C).
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II. Description of the Proposed Rule Change

    The MSRB filed with the Commission the proposed rule change to 
amend, consistent with the MSRB's annual rate-setting process (``Annual 
Rate Card Process''): \7\ (i) Supplementary Material .01 to Rule A-11 
to modify the rate of assessment for the annual rate card fees on 
municipal advisors for covered professionals under Rule A-11(b) (the 
``Municipal Advisor Professional Fee''); and (ii) Supplementary 
Material .01 to Rule A-13 to modify the rate of assessments for the 
annual rate card fees on brokers, dealers, and municipal securities 
dealers (collectively, ``dealers'') for certain underwriting fees under 
Rule A-13(b), transaction fees under Rule A-13(d)(i) and (ii), and 
trade count fees under Rule A-13(d)(iv)(a) and (b) (collectively, the 
``Market Activity Fees'' and, together with the Municipal Advisor 
Professional Fee, the ``Rate Card Fees'').\8\
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    \7\ See Notice 88 FR at 86188. See also Exchange Act Release No. 
95417 (Aug. 3, 2022), 87 FR 48530 (Aug. 9, 2022), File No. SR-MSRB-
2022-06 (establishing the MSRB's Annual Rate Card Process with 
respect to the setting of certain fee rates each calendar year (an 
``Annual Rate Card'') and setting the initial Rate Card Fees through 
December 31, 2023) (the ``Annual Rate Card Process Notice'').
    \8\ See Notice 88 FR at 86188. The proposed amendments to 
Supplementary Material .01 to Rule A-11 and Supplementary Material 
.01 to Rule A-13 collectively make up the ``proposed rule change.''
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    In July 2023, the board of directors of the MSRB approved an annual 
expense budget of approximately $47.4 million for Fiscal Year 2024, 
which represents a 4.8% increase over the prior fiscal year, and 
established the baseline revenue that the MSRB will need to operate 
(i.e., the ``Operational Funding Level'').\9\ To achieve this 
Operational Funding Level, the MSRB proposed Rate Card Fees in its 
proposed rule change allocated based on the following contribution 
targets: underwriting fee at 30%; transaction fee at 41%; trade count 
fee at 21%; and Municipal Advisor Professional Fee at 8%.\10\ This 
resulted in Proportional Contribution Amounts as follows for Fiscal 
Year 2024: underwriting fee of $12.15 million; transaction fee of 
$16.61 million; trade count fee of $8.51 million; and Municipal Advisor 
Professional Fee of $3.24 million.\11\ The proposed rule change would 
establish the Municipal Advisor Professional Fee specified in Rule A-11 
and the Market Activity Fees specified in Rule A-13 in accordance with 
the chart below.\12\
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    \9\ See Notice 88 FR at 86188; MSRB Fiscal Year 2024 Budget, 
available at https://www.msrb.org/sites/default/files/2023-09/MSRB-FY-2024-Budget-Summary.pdf.
    \10\ See Notice 88 FR at 86189.
    \11\ Id. According to the MSRB, these contribution targets were 
determined by averaging the distribution of revenue assessed for 
Rate Card Fees over the past two fiscal years (Fiscal Year 2022 and 
Fiscal Year 2023) and the distribution of revenue assessed for Rate 
Card Fees over the past five fiscal years (Fiscal Year 2019 through 
Fiscal Year 2023). These two periods of time were used to reflect a 
balance of current market conditions and a longer-term historical 
precedent. To make the data comparable across fiscal years, the 
calculations were completed using the Market Activity Fee rates that 
were in place prior to the 2023 Rate Card, excluding the impact of 
the temporary fee reductions, and calculated as if the Municipal 
Advisor Professional Fee rate of $1,000 per covered professional 
that was in place for Fiscal Years 2021 and 2022 had been in place 
for all Fiscal Years used in the calculations. Resulting 
contribution targets were rounded to the nearest whole percent. See 
also MSRB Fiscal Year 2024 Budget, available at https://www.msrb.org/sites/default/files/2023-09/MSRB-FY-2024-Budget-Summary.pdf.
    \12\ See Notice 88 FR at 86190.

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                                                                                   Current rate    Proposed rate
                                                              Basis                  for 2023        for 2024
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Underwriting Fee..............................  Per $1,000 Par Underwritten.....         $0.0297         $0.0371
Transaction Fee...............................  Per $1,000 Par Transacted.......          0.0107          0.0091
Trade Count Fee...............................  Per Trade.......................            1.10            0.57
Municipal Advisor Professional Fee............  Per Covered Professional........           1,060           1,160
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    The MSRB designated the proposed rule change for immediate 
effectiveness.\13\ The new Rate Card Fees reflected in the proposed 
rule change became effective as of January 1, 2024.\14\
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    \13\ Id. at 86188.
    \14\ Id.
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III. Summary of Comments Received to the Proposed Rule Change

    The Commission received four comment letters \15\ on the proposed 
rule change during the comment period. The Commission's Office of 
Municipal Securities also held a meeting with representatives of the 
American Securities Association (``ASA''), Bond Dealers of America 
(``BDA''), National Association of Municipal Advisors (``NAMA''), and 
the Securities Industry and Financial Markets Association (``SIFMA'' 
and, collectively with ASA, BDA, and NAMA, the ``Joint 
Commenters'').\16\ The Commission received an additional, supplemental 
comment letter from SIFMA and BDA after the comment period had 
ended.\17\ On January 26, 2024, the MSRB responded to the comment 
letters.\18\
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    \15\ See Letter from Leslie M. Norwood, Managing Director, 
Associate General Counsel, Securities Industry and Financial Markets 
Association, dated January 2, 2024 (``SIFMA Letter''); Letter from 
Susan Gaffney, Executive Director, National Association of Municipal 
Advisors, dated January 2, 2024 (``NAMA Letter''); Letter from 
Michael Decker, Senior Vice President, Research and Public Policy, 
Bond Dealers of America, dated January 2, 2024 (``BDA Letter''); 
Letter from Jessica Giroux, General Counsel and Head of Fixed Income 
Policy, American Securities Association; Michael Decker, Senior Vice 
President for Research and Public Policy, Bond Dealers of America; 
Susan Gaffney, Executive Director, National Association of Municipal 
Advisors; and Leslie Norwood, Managing Director, Associate General 
Counsel, and Head of Municipal Securities, Securities and Financial 
Markets Association, dated January 2, 2024 (``Joint Letter'').
    \16\ See Memorandum from the Office of Municipal Securities 
regarding a December 11, 2023 meeting with representatives of the 
American Securities Association (ASA), Bond Dealers of America 
(BDA), National Association of Municipal Advisors (NAMA), and 
Securities Industry and Financial Markets Association (SIFMA), dated 
December 11, 2023 (``OMS Memo'').
    \17\ See Letter from Michael Decker, Senior Vice President, Bond 
Dealers of America and Leslie Norwood, Managing Director and 
Associate General Counsel, Securities and Financial Markets 
Association, dated January 24, 2024 (``Supplemental Letter'').
    \18\ See Letter from Ernesto A. Lanza, Chief Regulatory and 
Policy Officer, Municipal Securities Rulemaking Board, dated January 
26, 2024 (``MSRB Letter'').
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    The Joint Commenters expressed concern with the proposed rule 
change.\19\ Among other things, the Joint Commenters expressed concern 
``about the lack of transparency in the Municipal Securities Rulemaking 
Board's budget and its budgeting process, and the need for MSRB's 
resources to be directed toward areas within its statutory authority.'' 
\20\ The Joint Commenters described the MSRB's budgeting and rate-
setting strategy as ``alarmingly opaque and troubling'' and lacking 
detail, particularly in instances where expenses are not directly tied 
to projects aligned with its congressional mandate.\21\ For example, 
the Joint Commenters cited a portion of the

[[Page 7426]]

MSRB's budget that highlights technology initiatives, but that lacks 
specificity regarding those initiatives, including their costs and 
their alignment with the MSRB's role as a repository for disclosure 
documents.\22\ Without such information, it is difficult, the Joint 
Commenters believe, for regulated entities to assess whether the fees 
assessed in the proposed rule change are ``reasonable'' as required 
under the Exchange Act.\23\
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    \19\ Joint Letter at 1-2.
    \20\ Id. at 1.
    \21\ Id.
    \22\ Id.
    \23\ Id.
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    BDA expressed concern over the MSRB's approach to fee setting, and 
believes that the Board's budget process is opaque with little to no 
outside oversight over the MSRB's spending.\24\ BDA stated that it 
would like to see the MSRB provide more transparency into its budgeting 
process and setting budget priorities, particularly regarding the 
MSRB's focus on IT development and maintenance, which comprises 56 
percent of the MSRB budget.\25\ BDA is also concerned that the MSRB has 
provided no justification in its proposed rule change for imposing fee 
increases that BDA believes impose a ``heavy'' burden on dealers.\26\
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    \24\ BDA Letter at 1.
    \25\ Id. at 2-3.
    \26\ Id. at 1-2.
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    NAMA expressed concern with the MSRB's approach to budgeting and 
rate setting to accommodate its budget.\27\ In particular, NAMA noted 
that ``it is difficult to know if MSRB fees are set at a reasonable 
rate (a MSRB responsibility within SEC Rule 15B) when the MSRB's budget 
is so opaque.'' \28\ As one example, NAMA cited the lack of cost 
information and sufficient detail in the MSRB's budget to demonstrate 
whether its emphasis on technology systems supports its congressional 
mandate.\29\ NAMA believes there is ``insufficient detail within the 
budget to allow regulated parties (who pay for these activities) the 
opportunity to appropriately evaluate, address or question the fees 
assessed to meet the MSRB's budget needs.'' \30\
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    \27\ NAMA Letter at 1-2.
    \28\ Id. at 1.
    \29\ Id. at 1-2.
    \30\ Id. at 2.
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    SIFMA expressed concern that the proposed rule change does not 
provide adequate transparency on the MSRB's rate setting process, 
reflects significant fee volatility, and fails to address flaws in the 
rate setting process that could create market harms.\31\ Regarding fee 
volatility, SIFMA noted that the underwriting fee has been increased 
25% and the trade count fee reduced by 48%, yet the MSRB failed to 
explain why it believes this volatility in fee rates will not be 
repeated in subsequent years.\32\ Regarding transparency, SIFMA 
expressed concern that the MSRB's proposed rule change includes 
``significant and material changes'' to its fee structure, yet the MSRB 
gave regulated entities its first official description of the amount of 
those changes a mere three weeks before they became effective.\33\ 
Regarding market harms, SIFMA noted that the MSRB is proposing to 
increase underwriting fees even as new issuance has decreased this past 
year, which could hurt the viability of the municipal marketplace.\34\
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    \31\ SIFMA Letter at 1.
    \32\ Id. at 2.
    \33\ Id. at 3.
    \34\ Id. at 4.
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    In their Supplemental Letter, SIFMA and BDA argued that although 
they have raised concerns about the MSRB's budgeting and fee setting 
processes, the Commission should allow the proposed rule change to take 
effect without any changes.\35\ SIFMA and BDA expressed concern that 
suspending the proposed rule change could be ``operationally 
disruptive'' for dealers and would leave transactional fees ``in 
limbo'' until a 2024 Rate Card is approved.\36\ SIFMA and BDA noted 
that they have had preliminary conversations with the MSRB about its 
budget and fee setting processes and will continue to press the MSRB as 
it works on its 2025 Budget.\37\
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    \35\ Supplemental Letter at 1.
    \36\ Id.
    \37\ Id.
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    The MSRB argued that its 2024 Budget ``provides sufficient basis to 
evaluate the reasonableness of the 2024 Rate Card Fees'' and urged the 
Commission not to suspend the proposed rule change.\38\ The MSRB also 
outlined its plan for an ongoing process of ``engagement'' which would 
include: (i) a retrospective review of the Rate Card Process; (ii) 
instituting certain financial transparency enhancements, including more 
granular details regarding key technology services and initiatives; and 
(iii) developing avenues to provide municipal market participants an 
opportunity to offer input to the MSRB in advance of finalization of 
annual budgets.\39\
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    \38\ MSRB Letter at 10.
    \39\ Id. at 1-2.
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    The MSRB stated that its retrospective review of the Rate Card 
Process will consider the appropriateness of instituting caps on fee 
changes more broadly or other means to limit the magnitude of year-to-
year fee changes.\40\ The retrospective review also ``could 
reconsider'' a revenue-based or transaction volume-based fee assessment 
model.\41\
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    \40\ Id. at 3-4.
    \41\ Id. at 4-5.
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    Regarding financial transparency, the MSRB cited Section IV of its 
2024 Budget Summary as an example of its ``granular breakdown'' of 
program expenditures and stated that it will seek feedback on whether 
this ``additional information'' is responsive to commenters' requests 
for greater detail about the MSRB's budget areas and initiatives.\42\ 
The MSRB stated that it would develop ``reasonable allocation 
assumptions'' to aid in the understanding of its technology system-
related expenses.\43\ The MSRB also stated that it will ``explore other 
possible avenues'' for improving the transparency of its technology 
initiatives and priorities and believes that all such expenditures are 
within the MSRB's legal authority.\44\
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    \42\ Id. at 5-6.
    \43\ Id. at 6-7.
    \44\ Id. at 7-8.
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    Regarding input from market participants, the MSRB stated that it 
``looks to provide'' opportunities for market participants to provide 
input and ``could consider'' a more formalized survey of market 
participants during the rate setting process.\45\
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    \45\ Id. at 8-9.
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IV. Suspension of the Proposed Rule Change

    Pursuant to Section 19(b)(3)(C) of the Act,\46\ at any time within 
60 days of the date of filing of an immediately effective proposed rule 
change pursuant to Section 19(b)(1) of the Act,\47\ the Commission 
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') 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. As described below, the Commission believes a temporary 
suspension of the proposed rule change is necessary or appropriate to 
allow for additional analysis of the proposed rule change's consistency 
with the Act and the rules thereunder.
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    \46\ 15 U.S.C. 78s(b)(3)(C).
    \47\ 15 U.S.C. 78s(b)(1).
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    When SROs file their proposed rule changes with the Commission, 
including fee filings like the MSRB's present proposed rule change, 
they are required to provide a statement supporting the proposed rule 
change's basis under the Act and the rules and regulations thereunder 
applicable to the

[[Page 7427]]

SRO.\48\ The instructions to Form 19b-4, on which SROs file their 
proposed rule changes, specify that such statement ``should be 
sufficiently detailed and specific to support a finding that the 
proposed rule change is consistent with [those] requirements.'' \49\
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    \48\ See 17 CFR 240.19b-4 (Item 3 entitled ``Self-Regulatory 
Organization's Statement of the Purpose of, and Statutory Basis for, 
the Proposed Rule Change'').
    \49\ See id.
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    Among other things, the MSRB's proposed rule change is subject to 
Section 15B(b)(2)(J) of the Exchange Act,\50\ which states that the 
MSRB's rules shall provide that each municipal securities broker, 
municipal securities dealer, and municipal advisor shall pay to the 
MSRB such reasonable fees and charges as may be necessary or 
appropriate to defray the costs and expenses of operating and 
administering the MSRB.\51\ Such rules must specify the amount of such 
fees and charges, which may include charges for failure to submit to 
the MSRB, or to any information system operated by the MSRB, within the 
prescribed timeframes, any items of information or documents required 
to be submitted under any rule issued by the MSRB.\52\ The MSRB's 
proposed rule change also is subject to Section 15B(b)(2)(C) of the 
Exchange Act,\53\ which states, among other things, that the MSRB's 
rules shall be designed, in general, to protect investors, municipal 
entities, obligated persons, and the public interest.
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    \50\ 15 U.S.C. 78o-4(b)(2)(J).
    \51\ Id.
    \52\ Id.
    \53\ 15 U.S.C. 78o-4(b)(2)(C).
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    In support of its proposed rule change, the MSRB stated that the 
proposed rule change satisfies the requirements of Section 15B(b)(2)(J) 
``through a reasonable fee structure that ensures (i) an equitable 
balance of necessary and appropriate fees among regulated entities and 
(ii) a fair allocation of the burden of defraying the costs and 
expenses of the MSRB.'' \54\ Specifically, the MSRB believes that the 
2024 Rate Card ``will achieve reasonable fees to be paid by regulated 
entities that (i) are necessary and appropriate to sustain the 
operation and administration of the MSRB by defraying the MSRB's 
anticipated Fiscal Year 2024 operating and administrative expenses; 
(ii) reasonably and appropriately allocate fees among firms by 
equitably distributing fees in accordance with each individual firm's 
overall market activities; and (iii) reasonably and appropriately 
adjust for the annual fluctuations in the volume of market activity as 
compared to budget expectation by incorporating the actual amounts of 
Market Activity Fees and Municipal Advisor Professional Fees collected 
as compared to budget into this and future rate-setting processes.'' 
\55\ The MSRB provided additional support for the reasonableness of the 
proposed rule change in the MSRB Letter.\56\ However, due to the date 
of receipt of the MSRB Letter (i.e., late afternoon one business day 
before the suspension deadline), the Commission has not had sufficient 
time to evaluate the material included therein. Temporary suspension 
will allow for additional analysis of whether the MSRB Fiscal Year 2024 
Budget is reasonable and whether the proposed rule change provides for 
reasonable fees and charges that satisfy the standards under the Act 
and the rules thereunder.
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    \54\ Notice 88 FR at 86191.
    \55\ Id.
    \56\ MSRB Letter.
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    In temporarily suspending the MSRB's proposed rule change, the 
Commission intends to further consider whether the proposed fees and 
charges are consistent with the statutory requirements applicable to 
the MSRB under the Act. Among other things, the Commission will 
consider whether the proposed rule change provides for reasonable fees 
and charges that satisfy the standards under the Act and the rules 
thereunder.\57\ The Commission will also consider whether the fees and 
charges in the proposed rule change are necessary or appropriate to 
defray the costs and expenses of operating and administering the 
MSRB,\58\ including whether such costs and expenses, as set forth in 
the MSRB's Fiscal Year 2024 Budget, are themselves reasonable. 
Additionally, the Commission will consider whether the fees and charges 
in the proposed rule change are in the public interest.\59\
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    \57\ 15 U.S.C. 78o-4(b)(2)(J).
    \58\ Id.
    \59\ 15 U.S.C. 78o-4(b)(2)(C).
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    Therefore, the Commission finds that it is necessary or appropriate 
in the public interest, for the protection of investors, and otherwise 
in furtherance of the purposes of the Act, to temporarily suspend the 
proposed rule change.\60\
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    \60\ For purposes of temporarily suspending the proposed rule 
change, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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V. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Change

    In addition to temporarily suspending the proposal, the Commission 
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C) 
\61\ and 19(b)(2)(B) \62\ of the Act to determine whether the proposed 
rule change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, as described below, the 
Commission seeks and encourages interested persons to provide comments 
on the proposed rule change to inform the Commission's analysis of 
whether to approve or disapprove the proposed rule change.
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    \61\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily 
suspends a proposed rule change, Section 19(b)(3)(C) of the Act 
requires that the Commission institute proceedings under Section 
19(b)(2)(B) to determine whether a proposed rule change should be 
approved or disapproved.
    \62\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\63\ the Commission is 
providing notice of the grounds for possible disapproval under 
consideration. The Commission is instituting proceedings to allow for 
additional analysis of whether the MSRB has sufficiently demonstrated 
how the proposed rule change is consistent with Sections 15B(b)(2)(J) 
and 15B(b)(2)(C) of the Act.\64\ Section 15B(b)(2)(J) of the Act states 
that the MSRB's rules shall provide that each municipal securities 
broker, municipal securities dealer, and municipal advisor shall pay to 
the MSRB such reasonable fees and charges as may be necessary or 
appropriate to defray the costs and expenses of operating and 
administering the MSRB.\65\ Such rules must specify the amount of such 
fees and charges, which may include charges for failure to submit to 
the MSRB, or to any information system operated by the MSRB, within the 
prescribed timeframes, any items of information or documents required 
to be submitted under any rule issued by the MSRB.\66\ Section 
15B(b)(2)(C) of the Exchange Act \67\ states, among other things, that

[[Page 7428]]

the MSRB's rules shall be designed, in general, to protect investors, 
municipal entities, obligated persons, and the public interest.
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    \63\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also 
provides that proceedings to determine whether to disapprove a 
proposed rule change must be concluded within 180 days of the date 
of publication of notice of the filing of the proposed rule change. 
See id. The time for conclusion of the proceedings may be extended 
for up to 60 days if the Commission finds good cause for such 
extension and publishes its reasons for so finding, or if the SRO 
consents to the longer period. See id.
    \64\ 15 U.S.C. 78o-4(b)(2)(J).
    \65\ Id.
    \66\ Id.
    \67\ 15 U.S.C. 78o-4(b)(2)(C).
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    As discussed in Section IV above, the Notice, and the MSRB Letter, 
the MSRB has made various arguments in support of the proposals, and 
the Commission received comment letters disputing the MSRB's arguments 
and expressing concerns regarding the proposals.\68\ In particular, 
commenters argued that the MSRB did not provide sufficient information 
to establish that the proposed fees and charges are consistent with the 
Act and the rules thereunder.\69\
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    \68\ See supra note 15.
    \69\ See discussion supra Section III.
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    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the [Act] 
and the rules and regulations issued thereunder . . . is on the [SRO] 
that proposed the rule change.'' \70\ The description of a proposed 
rule change, its purpose and operation, its effect, and a legal 
analysis of its consistency with applicable requirements must all be 
sufficiently detailed and specific to support an affirmative Commission 
finding,\71\ and any failure of an SRO to provide this information may 
result in the Commission not having a sufficient basis to make an 
affirmative finding that a proposed rule change is consistent with the 
Act and the applicable rules and regulations.\72\ Moreover, 
``unquestioning reliance'' on an SRO's representations in a proposed 
rule change would not be sufficient to justify Commission approval of a 
proposed rule change.\73\
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    \70\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR 
201.700(b)(3).
    \71\ See id.
    \72\ See id.
    \73\ See Susquehanna Int'l Group, LLP v. Securities and Exchange 
Commission, 866 F.3d 442, 446-47 (D.C. Cir. 2017) (rejecting the 
Commission's reliance on an SRO's own determinations without 
sufficient evidence of the basis for such determinations).
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    The Commission believes it is appropriate to institute proceedings 
to allow for additional consideration and comment on the issues raised 
herein, including as to whether the proposed fees and charges are 
consistent with the Act, any potential comments or supplemental 
information provided by the MSRB, and any additional independent 
analysis by the Commission.

V. Commission's Solicitation of Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
concerns and issues identified above, as well as any other relevant 
concerns. In particular, the Commission invites the written views of 
interested persons concerning whether the proposal is consistent with 
Section 15B(b)(2)(J), Section 15B(b)(2)(C), or any other provision of 
the Act, or the rules and regulations thereunder. The Commission asks 
that commenters address the sufficiency and merit of the MSRB's 
statements in support of the proposal, in addition to any other 
comments they may wish to submit about the proposed rule change. The 
Commission also invites the written views of interested persons on: (i) 
what process the MSRB should undertake to ensure that the fees assessed 
in its Rate Card filing and underlying Budget are both reasonable and 
capable of meaningful evaluation by the public, market participants, 
and the Commission; (ii) what specific data and information the MSRB 
should publicly disclose (that it does not currently publicly 
disclose); (iii) when the MSRB should file its Rate Card each year; 
(iv) whether the MSRB's representations about the cost, functionality, 
and evolution of the EMMA system have been consistent with actual 
practice in the years since EMMA was adopted; and (v) what general 
steps could be taken in the future to minimize the potential 
operational disruption caused by either the Commission suspending a 
Rate Card filing or a Rate Card otherwise not being effective on 
January 1 of the calendar year. Although there do not appear to be any 
issues relevant to approval or disapproval that would be facilitated by 
an oral presentation of views, data, and arguments, the Commission will 
consider, pursuant to Rule 19b-4, any request for an opportunity to 
make an oral presentation.\74\
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    \74\ Section 19(b)(2) of the Exchange Act, as amended by the 
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975), 
grants the Commission flexibility to determine what type of 
proceeding--either oral or notice and opportunity for written 
comments--is appropriate for consideration of a particular proposal 
by a self-regulatory organization. See Securities Act Amendments of 
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 
75, 94th Cong., 1st Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by February 23, 2024. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
March 8, 2024.
    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-2023-06 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2023-06. 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. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-MSRB-2023-06 and should be submitted on 
or before February 23, 2024. Rebuttal comments should be submitted by 
March 8, 2024.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(3)(C) of the 
Act,\75\ that File No. SR-MSRB-2023-06 be, and hereby is, temporarily 
suspended. In addition, the Commission is instituting proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \75\ 15 U.S.C. 78s(b)(3)(C).


[[Page 7429]]


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    For the Commission, pursuant to delegated authority.\76\
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    \76\ 17 CFR 200.30-3(a)(11) and (12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-02069 Filed 2-1-24; 8:45 am]
BILLING CODE 8011-01-P