[Federal Register Volume 85, Number 241 (Tuesday, December 15, 2020)]
[Notices]
[Pages 81248-81250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27482]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90611; File No. SR-MSRB-2020-08]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Order Granting Approval of a Proposed Rule Change To Amend MSRB 
Form G-32

December 9, 2020.

I. Introduction

    On October 13, 2020, 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-32 to 
clarify that brokers, dealers, and municipal securities dealers 
(collectively, ``dealers'' and, individually, each a ``dealer'') acting 
as underwriters in the primary offering of municipal securities are 
obligated to manually complete three data fields (collectively, the 
``Amended Data

[[Page 81249]]

Fields'') on Amended Form G-32 when such fields are applicable to a 
primary offering (the ``proposed rule change'').\3\ The proposed rule 
change was published for comment in the Federal Register on October 28, 
2020.\4\ In the Notice of Filing, the MSRB requested that the proposed 
rule change become effective on March 31, 2021.\5\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ MSRB Form G-32 is an electronic form on which submissions of 
the information required by Rule G-32 are made to the MSRB.
    \4\ Securities Exchange Act Release No. 34-90248 (October 22, 
2020) (the ``Notice of Filing''), 85 FR 68395 (October 28, 2020).
    \5\ See Notice of Filing.
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    The Commission did not receive any comment letters on the proposed 
rule change.

II. Description of Proposed Rule Change

    In the Notice of Filing, the MSRB stated that the purpose of the 
proposed rule change is to clarify a prior rule filing submitted to the 
SEC on April 10, 2019 and that was subsequently approved by the SEC, as 
amended, on June 27, 2019 (the ``Primary Offering Practices 
Amendments'') that added new data fields to Form G-32.\6\ The proposed 
rule change seeks to clarify that the description within the Primary 
Offering Practices Amendments that describes the Amended Data Fields 
for three specific data fields as generally being ``auto-populated'' is 
incorrect and that these three data fields must be manually completed. 
The proposed rule change also describes the precise method by which 
underwriters must complete these new data fields.\7\
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    \6\ Securities Exchange Act Release No. 34-86219 (June 27, 
2019), 84 FR 31961 (July 3, 2019) (File No. SR-MSRB-2019-07). (The 
Primary Offering Practices Amendments authorized updates to Form G-
32 that will add the BQ Data Field, the PAC Bond Data Field, the Put 
Date Field, as well as the sixty-three other new data fields, upon 
their effective date of March 31, 2021.)
    \7\ See Notice of Filing.
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A. MSRB Form G-32 Data Fields Impacted by Proposed Rule

    The MSRB stated that the proposed rule change is meant to clarify 
that brokers, dealers, and municipal securities dealers acting as 
underwriters in the primary offering of municipal securities are 
obligated to manually complete three data fields on Amended Form G-32 
when such fields are applicable to a primary offering.\8\ Further, the 
MSRB stated that the proposed rule change would clarify the method of 
completing Amended Form G-32 for the following three data fields:
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    \8\ Id.
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    <bullet> Bank Qualified Flag (``BQ Data Field''): The proposed rule 
change would clarify the ``yes/no'' flag on amended Form G-32 would, 
when applicable, need to be manually completed by an underwriter to 
indicate whether a bank can deduct a portion of the interest cost of 
the carry for the municipal securities, in accordance with applicable 
provisions of the code of the Internal Revenue Service.
    <bullet> Planned Amortization Class Bond Flag (``PAC Bond Data 
Field''): The proposed rule change would clarify that the ``yes/no'' 
flag on amended Form G-32 would, when applicable, need to be manually 
completed to indicate whether the offering is an asset-backed bond 
payable with a fixed sinking fund schedule.
    <bullet> Put End Date Entry (``Put Date Field''): The proposed rule 
change would clarify that data fields on Form G-32 relating to whether 
the offering is puttable would, when applicable, need to be manually 
completed to indicate when a put end date is defined at the time of 
issuance.\9\
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    \9\ Id.
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    The MSRB stated its belief that the proposed rule change is 
necessary to more clearly define the compliance obligation of an 
underwriter when completing one of the Amended Manual Fields on Amended 
Form G-32, and, thereby, would promote greater regulatory transparency 
in the municipal securities market.\10\ The MSRB noted that the 
proposed rule change is intended to put market participants on notice 
that, when applicable, the Amended Manual Fields will not auto-populate 
on Amended Form G-32 with information input into the New Issue 
Information Dissemination Service (``NIIDS''), and thus must be 
manually completed.\11\
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    \10\ Id.
    \11\ Id.
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B. Overview of MSRB Form G-32 Submission Process

    The MSRB stated that pursuant to MSRB Rule G-32, an ``underwriter'' 
in a primary offering of municipal securities is required to 
electronically submit to the MSRB certain primary offering disclosure 
documents and related information, including the data elements set 
forth on Form G-32.\12\ This submission is completed through the MSRB's 
Electronic Municipal Market Access Dataport system (``EMMA 
Dataport'').\13\ The MSRB noted that an underwriter's submission of 
Form G-32 in EMMA Dataport is commonly, but not always, preceded by the 
underwriter's (1) procurement of CUSIP numbers from CUSIP Global 
Services, (2) registration of the municipal securities for depository 
eligibility with the Depository Trust and Clearing Corporation 
(``DTCC''), and (3) submission of certain information about the 
characteristics of the offering to NIIDS, all generally pursuant to 
MSRB Rule G-34.\14\ As described in the Primary Offering Practices 
Amendments and prior amendments approved in 2012, Form G-32 
incorporates matching data fields relating to certain information 
submitted to NIIDS and CUSIP Global Services and, thereby, facilitates 
the MSRB's collection of market information utilized in various 
rulemaking and transparency activities.\15\
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    \12\ Id.
    \13\ Id.
    \14\ Id.
    \15\ Id.
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    The MSRB discussed in the Notice of Filing how the Primary Offering 
Practices Amendments described each of the New Data Fields added to 
Form G-32 as falling into one of two categories: (1) Data fields that 
generally would be auto-populated with information previously entered 
by an underwriter in NIIDS (collectively, the ``Auto-Populated 
Fields'') and (2) data fields that would be unique to Amended Form G-32 
and, when applicable, would need to be completed via manual data entry 
because they could not be auto-populated with matching NIIDS 
information (collectively, the ``Manual Fields'').\16\ The Primary 
Offering Practices Amendments identified fifty-seven Auto-Populated 
Fields and nine Manual Fields.\17\ The three Amended Manual Fields that 
are the subject of this proposed rule change were originally 
categorized as part of the fifty-seven Auto-Populated Fields, because 
the MSRB understood, at that time, that there was a corresponding data 
field match in NIIDS that would allow for the PAC Bond Data Field, the 
BQ Data Field, and the Put Date Field, respectively, to be auto-
populated in EMMA Dataport, when applicable.\18\ The MSRB stated that 
it now understands that, although DTCC's NIIDS system may allow for an 
underwriter to input information corresponding to the Amended Manual 
Fields, presently, this information is not disseminated by DTCC to the 
MSRB's EMMA Dataport.\19\ Consequently, under the current design of 
DTCC's system, the MSRB does not receive the electronic inputs 
necessary to auto-populate these three fields on Amended Form G-32. 
Thus, the MSRB determined it was

[[Page 81250]]

appropriate and necessary to provide guidance to filers clarifying the 
need to manually input information relating to the Amended Data Fields, 
when applicable, on Amended Form G-32.\20\
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    \16\ Id.
    \17\ See Primary Offering Practices Amendments, supra Note 6.
    \18\ See Notice of Filing.
    \19\ Id.
    \20\ Id.
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III. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change. 
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 Section 
15B(b)(2)(C) of the Act.\21\ 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.\22\ The Commission believes the proposed rule change 
is consistent with Section 15B(b)(2)(C) and necessary and appropriate 
to ensure the MSRB receives accurate and complete primary offering 
information in a timely manner. Further, the Commission notes that the 
clarification that underwriters are obligated to manually complete the 
three Amended Manual Fields on Amended Form G-32 applies to all 
applicable filers and ensures the accurate and timely completion of 
Amended Form G-32.
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    \21\ 15 U.S.C. 78o-4(b)(2)(C).
    \22\ Id.
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    The Commission believes the proposed rule change would promote just 
and equitable principles of trade by resolving potential regulatory 
ambiguities and making clear that, when the filing of Amended Form G-32 
is required in connection with a primary offering, an underwriter is 
effectively required to ensure that all applicable fields are complete 
and accurate, which may require manually completing these three fields 
on Amended Form G-32. The clarifications made by the proposed rule 
change would assist any dealer who acts, or may act, as an underwriter 
of a primary offering of municipal securities in completing Form G-32 
accurately.
    The Commission also believes the proposed rule change would foster 
cooperation and coordination with persons engaged in regulating and 
processing information with respect to transactions in municipal 
securities and municipal financial products. The Commission believes 
that the benefits of the proposed rule change will not only accrue to 
dealer firms, but also to regulated-entity examiners, other regulators, 
and data vendors by mitigating potential ambiguity and confusion. Just 
as it would be beneficial to dealer firms to have a uniform clarified 
understanding of the regulatory obligations associated with Amended 
Form G-32, the proposed rule change would similarly benefit these other 
market participants by ensuring that the data submitted on Amended Form 
G-32 is complete and accurate regardless of whether the dealer directly 
interfaces with NIIDS or utilizes the interface of a third-party 
vendor.
    In approving the proposed rule change, the Commission also has 
considered the impact of the proposed rule change on efficiency, 
competition, and capital formation.\23\ 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 
Commission understands the clarification will apply equally to all 
applicable underwriters without imposing an additional burden within 
the filing process. Moreover, since the proposed rule change is 
intended to increase regulatory transparency regarding the obligation 
of underwriters to manually complete the Amended Manual Fields, the 
Commission believes the proposed change should increase the efficiency 
of underwriters fulfilling their obligations under Rule G-32, as 
underwriters would be on notice of the lack of auto-population for 
these three fields on Amended Form G-32 and, thereby, may avoid certain 
costs associated with resolving a potentially ambiguous regulatory 
obligation. The Commission believes the proposed rule change will help 
market participants avoid the potential for regulatory 
misinterpretation and confusion, which promotes a fairer and more 
efficient municipal securities market.
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    \23\ 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.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\24\ that the proposed rule change (SR-MSRB-2020-08) be, and hereby 
is, approved.
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    \24\ 15 U.S.C. 78s(b)(2).

    For the Commission, pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27482 Filed 12-14-20; 8:45 am]
BILLING CODE 8011-01-P