[Federal Register Volume 89, Number 61 (Thursday, March 28, 2024)]
[Notices]
[Pages 21564-21566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06586]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99834; File No. SR-MSRB-2024-02]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Clarify the Calculation of the Annual Fee on Municipal 
Advisors Under MSRB Rule A-11

March 22, 2024.
    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 March 21, 2024, the Municipal Securities 
Rulemaking Board (``MSRB'' or ``Board'') 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 
Supplementary Material .01 to MSRB Rule A-11, on assessments for 
municipal advisor professionals (``Rule A-11''), to clarify that the 
calculation of the annual fee on municipal advisors for covered 
professionals \3\ under Rule A-11(b) (the ``Municipal Advisor

[[Page 21565]]

Professional Fee'') is based on the number of covered professionals as 
of January 31, 2024, rather than January 31, 2023, for the fees to be 
assessed in 2024, and as of January 31 of each subsequent year 
thereafter (the ``proposed rule change''). The MSRB has designated the 
proposed rule change for immediate effectiveness.\4\
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    \3\ As defined in Rule A-11(a), the term ``covered 
professional'' shall mean a person associated with a municipal 
advisor who is qualified as a municipal advisor representative in 
accordance with MSRB Rule G-3 and for whom the municipal advisor has 
on file with the Commission an active Form MA-I as of January 31 of 
each year.
    \4\ The MSRB has designated the proposed rule change as 
establishing or changing a due, fee, or other charge under section 
19(b)(3)(A)(ii) of the Exchange Act (15 U.S.C. 78s(b)(3)(A)(ii)) and 
Rule 19b-4(f)(2) (17 CFR 240.19b-4(f)(2)) thereunder. While the 
proposed rule change does not change the rate of the Municipal 
Advisor Professional Fee, the number of covered professionals is a 
necessary element of the calculation of the amount of Municipal 
Advisor Professional Fees assessed.
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    The text of the proposed rule change is available on the MSRB's 
website at https://msrb.org/2024-SEC-Filings, 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 purpose of the proposed rule change is to amend Supplementary 
Material .01, on Annual Rate Card Fee, to Rule A-11 to clarify that the 
calculation of the Municipal Advisor Professional Fee for 2024 would be 
based on the number of covered professionals as of January 31, 2024, 
rather than January 31, 2023, and as of January 31 of each subsequent 
year thereafter. This amendment makes the calculation of the Municipal 
Advisor Professional Fee for municipal advisors based on the number of 
covered professionals for whom the municipal advisor has on file with 
the Commission an active Form MA-I as of January 31 of each applicable 
year, consistent with the intent of Rule A-11(a), rather than as of 
January 31, 2023 without regard to the year for which the fees are to 
be assessed. Without this amendment, municipal advisors may pay an 
inaccurately high or low fee for municipal professionals whose status 
as covered professionals has changed since January 31, 2023.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
section 15B(b)(2)(J) of the Exchange Act,\5\ which states that the 
MSRB's rules shall provide that each 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. Such rules, among other things, must specify 
the amount of such fees and charges.\6\ The proposed rule change 
provides clarity regarding the specific amount of such fees and charges 
to be paid by municipal advisors based on the number of covered 
professionals in each applicable year. In addition, the MSRB believes 
that it is more reasonable for each year's fee to be calculated based 
on the number of covered professionals in that same year, rather than 
based on the number from a prior year. As a result, the MSRB believes 
that the proposed rule change satisfies the applicable requirements of 
section 15B(b)(2)(J) of the Exchange Act.\7\
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    \5\ 15 U.S.C. 78o-4(b)(2)(J).
    \6\ Id.
    \7\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 15B(b)(2)(C) of the Exchange Act \8\ 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. The 
MSRB has considered the economic impact of the proposed rule change.\9\ 
The MSRB does not believe the proposed rule change imposes any burden 
on competition, as it applies equitably and non-discriminatorily across 
all municipal advisors and ensures that municipal advisors pay the 
correct Municipal Advisor Professional Fee based on an accurate count 
of covered professionals as of each respective year for which such fees 
shall be paid, consistent with Rule A-11(a). Additionally, the proposed 
rule change does not unduly burden any municipal advisor, and in fact 
it would, in some cases, relieve the burden of overpaying for 
individuals whose status as a covered professional may have changed 
since January 31, 2023. Finally, the MSRB believes that the proposed 
rule change would not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act.
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    \8\ 15 U.S.C. 78o-4(b)(2)(C).
    \9\ See Policy on the Use of Economic Analysis in MSRB 
Rulemaking, available at https://www.msrb.org/Policy-Use-Economic-Analysis-MSRB-Rulemaking. In evaluating whether there was any burden 
on competition that is not necessary or appropriate in furtherance 
of the purposes of the Exchange Act, the MSRB was guided by its 
principles that required the MSRB to consider costs and benefits of 
a rule change, its impact on efficiency, capital formation and 
competition, and the main reasonable alternative regulatory 
approaches. For those rule changes which the MSRB files for 
immediate effectiveness under section 19(b)(3)(A) of the Exchange 
Act (15 U.S.C. 78s(b)(3)(A)), while not subject to the policy, the 
MSRB usually focuses its examination exclusively on the burden of 
competition on regulated entities.
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    Section 15B(b)(2)(L)(iv) of the Exchange Act \10\ requires that 
MSRB rules not impose a regulatory burden on small municipal advisors 
that is not necessary or appropriate in the public interest and for the 
protection of investors, municipal entities, and obligated persons, 
provided that there is robust protection of investors against fraud. 
The MSRB believes that the proposed rule change would not impose an 
unnecessary or inappropriate regulatory burden on small municipal 
advisors, as the fees assessed would be proportionate to the actual 
number of municipal advisors within each firm. The proposed rule change 
clarifies that the Municipal Advisor Professional Fee, payable by each 
municipal advisory firm under Rule A-11(b), is based on the number of 
covered professionals with Forms MA-I filed by a firm on January 31 of 
each applicable year, rather than January 31, 2023, as currently stated 
in Supplementary Material .01 to Rule A-11. By providing that the 
Municipal Advisor Professional Fee each year be based on an accurate 
covered professional count for the applicable year, the proposed rule 
change removes regulatory burdens stemming from payment of an 
inaccurate fee.
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    \10\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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    For the reasons noted above, the MSRB believes that the proposed 
rule change would not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act.\11\
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    \11\ 15 U.S.C. 78o-4(b)(2)(C).
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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. The MSRB previously included the amendment 
reflected in this proposed rule change in its withdrawn proposal to 
amend MSRB Rules A-11 and A-13 to establish the

[[Page 21566]]

2024 rate card fees for dealers and municipal advisors. See Exchange 
Act Release No. 99096 (Dec. 6, 2023), 88 FR 86188 (Dec. 12, 2023), File 
No. SR-MSRB-2023-06 (the ``2024 Rate Card Filing'').\12\ Although the 
Commission received comment letters from four commenters on other 
aspects of the 2024 Rate Card Filing, none addressed the amendment 
reflected in this proposed rule change.\13\
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    \12\ On January 29, 2024, the Commission suspended the 2024 Rate 
Card Filing, which had gone into effect on January 1, 2024. See 
Exchange Act Release No. 99444 (Jan. 29, 2024), 89 FR 7424 (Feb. 2, 
2024) (File No. SR-MSRB-2023-06). On February 16, 2024, the MSRB 
withdrew the 2024 Rate Card Filing. See Exchange Act Release No. 
99577 (Feb. 21, 2024), 89 FR 14552 (Feb. 27, 2024) (File No. SR-
MSRB-2023-06).
    \13\ The comment letters are available at https://www.sec.gov/comments/sr-msrb-2023-06/srmsrb202306.htm.
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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 Act \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
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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-2024-02 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-2024-02. 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-2024-02 and should be submitted on 
or before April 18, 2024.

    For the Commission, pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-06586 Filed 3-27-24; 8:45 am]
BILLING CODE 8011-01-P