Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Notices 13593 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(2). 

12 15 U.S.C. 78s(b)(2)(B). 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

above, the program has not incented 

Market Makers to increase participation 

in manual executions on the Exchange. 

In addition, because only those Market 

Makers that increased their Manual 

volume by specified amounts were 

eligible for discounted rates under the 

Step-Up Program, the proposed 

elimination of the program would 

remove a potential burden on 

competition in that it would level the 

playing field for all Market Makers 

operating on the Exchange. 

The Exchange operates in a highly 

competitive market in which market 

participants can readily favor one of the 

16 competing option exchanges. In such 

an environment, the Exchange must 

continually adjust its fees and rebates to 

remain competitive with other 

exchanges and to attract order flow to 

the Exchange. The Exchange believes 

that the proposed rule change reflects 

this competitive environment because it 

removes an unutilized program that did 

not achieve its intended purpose of 

attracting order flow. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 10 of the Act and 

subparagraph (f)(2) of Rule 19b–4 11

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 12 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

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 rule-comments@

sec.gov. Please include File Number SR– 

NYSEAMER–2021–12 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–NYSEAMER–2021–12. 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 Exchange. 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–NYSEAMER–2021–12, and 

should be submitted on or before March 

30, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–04792 Filed 3–8–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91247; File No. SR–MSRB– 

2021–02] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Reduce the Rates of 

Assessment for Certain Underwriting, 

Transaction, and Technology Fees 

Under MSRB Rule A–13 

March 3, 2021. 

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 1, 2021 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. 

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 MSRB 

Rule A–13, on underwriting and 

transaction assessments for brokers, 

dealers, and municipal securities 

dealers (collectively, ‘‘dealers’’), to 

temporarily reduce the rate of 

assessment for certain underwriting, 

transaction, and technology fees 

(collectively, ‘‘market activity fees’’) on 

dealers with respect to assessable 

activity that occurs on April 1, 2021 

through September 30, 2022 (the 

‘‘proposed rule change’’). 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) 3 of the Act and Rule 19b– 

4(f)(2) 4 thereunder, which renders the 

proposed rule change effective upon 

filing with the Commission. The 


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5For the reasons discussed herein, underwriting 

assessments charged pursuant to Rule A–13(c)(ii) to 

certain dealers acting as underwriters of municipal 

fund securities are not included in the temporary 

fee reduction. 

6The term ‘‘regulated entities’’ is used here as 

defined below in the first full sentence of the 

following paragraph (i.e., dealers and municipal 

advisors). 

7See Section 15B(b) of the Exchange Act (15 

U.S.C. 78o–4(b)). 

8See note 5 supra (clarifying that such fees are 

not included in the temporary fee reduction). 

9Fine revenue became a new revenue source as 

first provided in 2010 under the Dodd-Frank Wall 

Street Reform and Consumer Protection Act (the 

‘‘Dodd-Frank Act’’). See 15 U.S.C. 78o–4(c)(9). 

10The MSRB charges data subscription service 

fees for subscribers, including dealers, municipal 

advisors, and non-regulated entities, seeking direct 

electronic delivery of municipal trade data and 

disclosure documents associated with municipal 

bond issues. Notably, however, this information is 

available without direct electronic delivery on the 

EMMA website without charge. 

11For example, fine-sharing revenue amounted to 

approximately 3.3 percent of the MSRB’s overall 

revenue in Fiscal Year 2020 (∼$1.5 million) and 0.4 

percent in Fiscal Year 2019 (∼$150,000). See MSRB 

2020 Annual Report, available at http://msrb.org/∼/ 

media/Files/Resources/MSRB-2020-AnnualReport.ashx?la=en. 

12With the extension of the MSRB’s jurisdiction 

to regulate municipal advisors in the Dodd-Frank 

Act, this class of regulated entity began contributing 

to the cost of MSRB regulation in 2014. See Release 

No. 34–72019 (Apr. 25, 2014), 79 FR 24798 (May 

1, 2014) (File No. SR–MSRB–2014–03). See also 

Release No. 34–81841 (Oct. 10, 2017), 82 FR 48135, 

48138 (Oct. 16, 2017) (File No. SR–MSRB–2017–07) 

(increasing the municipal advisor professional fee 

from $300 to $500) and Release No. 34–87075 (Sept. 

24, 2019), 82 FR 51698 (Sept. 30, 2019) (File No. 

SR–MSRB–2019–11) (increasing the municipal 

advisor professional fee from $500 to $1,000 over 

the course of two years). 

implementation date for the proposed 

rule change’s temporary fee reduction is 

April 1, 2021. 

The text of the proposed rule change 

is available on the MSRB’s website at 

www.msrb.org/Rules-andInterpretations/SEC-Filings/2021- 

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 purpose of the proposed rule 

change is to temporarily reduce the rate 

of assessment for the Board’s 

underwriting, transaction, and 

technology fees under MSRB Rule A–13 

with respect to assessable activity that 

occurs on April 1, 2021 through 

September 30, 2022.5 The proposed rule 

change is designed to promote the 

collection of reasonable fees and charges 

as are necessary or appropriate to defray 

the costs and expenses of operating and 

administering the Board. The Board 

believes that the proposed rule change 

achieves such reasonable fees and 

charges because it will rightsize the 

Board’s reserves position, in 

conformance with a prudently 

established and reasonable target, by 

forgoing a portion of market activity fees 

over an eighteenth month period. In 

effect, the Board intends to utilize its 

excess reserves to offset the forgone 

revenue resulting from the temporary 

fee reduction and, thereby, reasonably 

reduce the fees of the class of MSRB 

regulated entities 6 whose prior fee 

payments directly contributed to the 

MSRB being in excess of its reserves 

target. 

Background on MSRB Fee Structure 

The Board discharges its statutory 

mandate under the Exchange Act by 

establishing rules for dealers and 

municipal advisors (together with 

dealers, ‘‘regulated entities’’), collecting 

and disseminating market information, 

coordinating with other regulatory 

authorities, and conducting outreach to 

external stakeholders.7 The Board 

assesses fees on regulated entities to 

generate funds for these activities. The 

current fees assessed on regulated 

entities are the: 

1. Municipal Advisor Professional Fee 

(MSRB Rule A–11): A fee of $1,000 for 

each person associated with the 

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 SEC a Form MA–I as of 

January 31 of each year; 

2. Initial Registration Fee (MSRB Rule 

A–12): A $1,000 one-time registration 

fee to be paid by each dealer to register 

with the MSRB before engaging in 

municipal securities activities and by 

each municipal advisor to register with 

the MSRB before engaging in municipal 

advisory activities; 

3. Annual Registration Fee (MSRB 

Rule A–12): A $1,000 annual fee to be 

paid by each dealer and municipal 

advisor registered with the MSRB; 

4. Late Fee (MSRB Rule A–11 and 

MSRB Rule A–12): A $25 monthly late 

fee and a late fee on the overdue balance 

(computed according to the prime rate) 

until paid on balances not paid within 

30 days of the invoice date by the dealer 

or municipal advisor; 

5. Underwriting Fee (MSRB Rule A– 

13): A fee amount of $.0275 per $1,000 

of the par value paid by a dealer, on all 

municipal securities purchased from an 

issuer by or through such dealer, 

whether acting as principal or agent as 

part of a primary offering; 

6. Municipal Funds Underwriting Fee 

(MSRB Rule A–13): A fee amount of 

$.005 per $1,000 of the total aggregate 

assets for the reporting period (i.e., the 

529 savings plan fee on underwriters), 

in the case of an underwriter (as defined 

in MSRB Rule G–45) of a primary 

offering of certain municipal fund 

securities; 8

7. Transaction Fee (MSRB Rule A–13): 

A fee amount of .001% ($.01 per $1,000) 

of the total par value to be paid by a 

dealer, except in limited circumstances, 

for inter-dealer sales and customer sales 

reported to the MSRB pursuant to MSRB 

Rule G–14(b), on transaction reporting 

requirements; 

8. Technology Fee (MSRB Rule A–13): 

A fee of $1.00 paid per transaction by 

a dealer for each inter-dealer sale and 

for each sale to customers reported to 

the MSRB pursuant to MSRB Rule G– 

14(b); and 

9. Examination Fee (MSRB Rule A– 

16): A $150 test development fee 

assessed per candidate for each MSRB 

examination. 

The Board also receives revenues 

from certain other sources, such as 

regulatory fine-sharing 9 and MSRB data 

subscription fees.10 These revenue 

sources contribute a smaller portion to 

the overall MSRB funding.11

Historically, the vast majority of the 

MSRB’s revenue has been derived from 

fees on regulated entities, in particular 

dealers who pay market activity fees 

pursuant to MSRB Rule A–13(c)(i) and 

(d), as discussed in more detail below.12

Overview of MSRB Budget and Reserves 

As a self-funded regulatory 

organization, MSRB revenue comes 

primarily from its regulated entities, and 

the MSRB does not receive any taxpayer 

dollars. The Board is responsible for 

independently managing and 

monitoring the MSRB’s financial 

position on an ongoing basis and 

ensuring that the MSRB has sufficient 

reserves to maintain the MSRB’s 

operations without interruption, even in 


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13See MSRB Funding Policy, available at http:// 

msrb.org/About-MSRB/Financial-and-OtherInformation/Financial-Policies/ 

Funding%20Policy.aspx. The MSRB publishes its 

annual audited financial statements, annual fiscal 

year budgets, and key financial policies on its 

website. The Board believes that this transparency 

provides municipal market participants and other 

stakeholders insight into, and a clearer 

understanding of, how the Board utilizes its 

resources in fulfillment of the MSRB’s statutory 

mandate. 

14 Id (these four categories are identified in the 

discussion under ‘‘Reserves Considerations’’). 

15See MSRB Fiscal Year 2021 Budget for a further 

discussion of the MSRB’s budget and reserves, 

available at http://msrb.org/∼/media/Files/ 

Resources/MSRB-FY-2021-BudgetSummary.ashx?la=en. 

16For example, in 2010, after several years of 

heavy investment in the technological 

infrastructure needed to launch the MSRB’s 

Electronic Municipal Market Access (EMMA®) 

website, the MSRB’s financial reserves levels had 

dropped below the then reserves target that the 

MSRB had previously established. As a result, 

replenishing the MSRB’s reserves became a priority. 

The following year, the MSRB increased the 

transaction fee under Rule A–13 and began 

assessing a new technology fee for dealers under the 

same rule. See Release No. 34–63621 (Dec. 29, 

2010), 76 FR 604 (Jan. 5, 2011) (File No. SR–MSRB– 

2010–10). 

17For example, the Board has designated excess 

reserves for one-time investments to fund major 

technological initiatives to benefit the market, 

including migrating all MSRB market transparency 

systems to the cloud, which was completed in 

Fiscal Year 2020. Also, in Fiscal Year 2020, the 

Board designated $10 million of reserves for a 

multi-year strategic investment to modernize its 

market transparency systems to leverage the power 

of the cloud. See, e.g., MSRB Holds Final Quarterly 

Board Meeting of FY 2019 (July 29, 2019), available 

at http://msrb.org/News-and-Events/Press-Releases/ 

2019/MSRB-Holds-Final-Quarterly-Board-Meetingof-FY-2019.aspx; and see also MSRB FY 2021 

Budget Reflects Priorities of Modernizing EMMA®

and Reducing Compliance Burdens (Oct. 1, 2020), 

available at http://msrb.org/News-and-Events/PressReleases/2020/MSRB%20FY%202021

%20Budget%20Priorities.aspx. 

18See MSRB 2020 Annual Report (link at note 11 

supra). See also discussion of the MSRB’s ‘‘Sources 

and Uses of Funding,’’ available at http://msrb.org/ 

About-MSRB/Financial-and-Other-Information/ 

Sources-and-Uses-of-Funding.aspx (outlining 

organizational reserves as compared to the Boardapproved target over multiple years). 

19 Id. 

20See MSRB Fiscal Year 2021 Budget for a further 

discussion of the MSRB’s reserves (link at note 15 

supra). 

21While it is premature to presume any particular 

outcome of the Board’s review, the Board’s 

objectives will include maintaining a fair and 

equitable balance of fees among regulated entities, 

evaluating whether the impact of market-based fees, 

and their inherent volatility, as a contributor to the 

growth of excess reserves can be mitigated, and 

ensuring funding is sufficient to address expected 

structural operating deficits projected in future 

years under the current fee structure. The Board is 

cognizant of the temporary fee reductions it has 

adopted as a mechanism to address excess reserves 

in recent years and has developed these objectives 

for its review considering the factors that led to the 

use of such temporary fee reductions. 

22The Board filed a proposed rule change 

amending Rule A–13 to temporarily reduce market 

activity fees for Fiscal Year 2019. See Release No. 

34–83713 (July 26, 2018), 83 FR 37538 (Aug. 1, 

2018) (File No. SR–MSRB–2018–06); see also 

Release No. 34–85400 (Mar. 22, 2019), 84 FR 11841 

(Mar. 28, 2019) (File No. SR–MSRB–2019–06) 

(providing for an additional temporary fee 

reduction in Fiscal Year 2019). 

economic downturns and other 

unforeseen disruptions.13

Establishing the Reserves Target. The 

Board establishes a reserves target to 

ensure that the organization maintains a 

prudent level of liquid funds to fund 

operations and ensure the long-term 

financial sustainability of the 

organization, taking into consideration a 

range of reasonably foreseeable market 

conditions and expected expenditures 

over a three-year time horizon. The 

reserves target is determined after 

conducting a detailed and 

comprehensive analysis of the liquidity 

needs in four categories: (1) Working 

capital, (2) risk reserves, (3) strategic 

investment reserves, and (4) regulatory 

reserves.14 The Board refines the 

reserves target on an annual basis, being 

vigilant of the dynamic impact of 

market activity on the MSRB’s financial 

position and cognizant of the variability 

of such future market activity.15

Monitoring and Management of 

Reserves. The Board monitors the actual 

reserves balance on an ongoing basis, 

and MSRB staff actively manages the 

financial position of the organization in 

accordance with the Board-approved 

target. As necessary or appropriate, the 

Board is prepared to approve the use of 

reserves to mitigate unforeseen revenue 

fluctuations and otherwise maintain 

funding for services essential to the 

efficiency of the municipal market.16

Conversely, when actual revenue 

exceeds expenses, the MSRB generates 

additional reserves. In the 

circumstances of such an operating 

surplus, the Board balances the need to 

maintain sufficient reserves in relation 

to ongoing funding demands, while also 

examining the fair and equitable balance 

of its fee structure and opportunities for 

strategic organizational investments in 

furtherance of the MSRB’s statutory 

mandate.17

Market Activity in Fiscal Year 2020 and 

Effects on Reserves 

The MSRB began Fiscal Year 2020 

with reserves above target.18 The Board 

anticipated funding a budgeted 

operating deficit for Fiscal Year 2020, an 

investment to migrate MSRB market 

transparency systems to the cloud, and 

projected deficits in out-year pro forma 

budgets using these excess reserves. 

However, the market activity occurring 

during MSRB Fiscal Year 2020 exceeded 

the budget established by the Board, due 

in large part to the COVID–19 pandemic 

driving increased market volatility and 

high levels of primary market issuance. 

While the Board intended its Fiscal Year 

2020 budget to result in a deficit and 

thereby spend excess reserves, the 

market activity resulting from the 

pandemic drove unexpected revenues in 

the collection of market activity fees. All 

in all, market activity fees paid by 

dealers exceeded the MSRB’s budget by 

$4.9 million in Fiscal Year 2020. Over 

the same period, the MSRB’s financial 

results also benefited from expense 

savings, including savings associated 

with operating remotely during the 

pandemic, and, consequently, the 

MSRB’s excess reserves continued to 

grow beyond their target instead of 

being reduced as planned. 

Board Determination on the Need to 

Rightsize Reserves 

The additional market activity fee 

revenue generated in Fiscal Year 2020 

built upon the Board’s existing excess 

reserves position.19 As a result, the 

Board prioritized the evaluation of 

organizational reserves levels at the 

beginning of Fiscal Year 2021. Based on 

this evaluation, the Board has 

determined that it is necessary and 

appropriate to temporarily reduce 

certain fees with the objective of 

rightsizing its reserves to the target level 

over an eighteen-month period. The 

MSRB projects that the proposed rule 

change will result in approximately 

$18.8 million of forgone revenue and 

serve to reduce the MSRB’s reserves to 

the target level over the eighteen-month 

period of the temporary fee reduction, 

which the Board has determined is 

appropriate and consistent with prudent 

fiscal management.20

The Board desires to address its 

excess reserves by providing a 

temporary fee reduction to the class of 

regulated entities that directly 

contributed to the excess reserves 

position. During the eighteen-month 

temporary fee reduction period, the 

Board will evaluate the organization’s 

fee structure with a view towards the 

MSRB’s long-term financial positioning 

in relation to its fee structure.21 For this 

reason, the Board believes it is 

reasonable and appropriate to utilize the 

temporary fee reduction mechanism 

already established and effectively used 

in Fiscal Year 2019 while it proceeds 

with a broader review of its fee 

structure.22

Board Determination to Temporarily 

Reduce Market Activity Fees 

While all regulated entities contribute 

to the MSRB’s revenue base, market 

activity fees constitute the vast majority 

of budgeted revenue, a total of 

approximately 77 percent in Fiscal Year 


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23See MSRB Fiscal Year 2021 Budget (link at note 

15 supra). Notably, this amount is generally 

consistent with recent prior fiscal years. 

24Although the organization’s revenue sources 

have become modestly more diversified since the 

initial enactment of the Dodd-Frank Act—when 

market activity fees accounted for 90 percent or 

more of the Board’s annual revenue in certain fiscal 

years—market activity fees paid by dealers still 

accounted for approximately 80 percent of actual 

revenue in Fiscal Year 2018 (∼$33.5 million), 72 

percent in Fiscal Year 2019 (∼$24.4 million), and 77 

percent in Fiscal Year 2020 (∼$36.6 million). The 

MSRB’s Financial Statements for these years are 

available at http://msrb.org/About-MSRB/Financialand-Other-Information/Annual-Reports.aspx. 

25 Id. 

26 Id. 

27See, e.g., MSRB Regulatory Notice 2017–20 

(Sept. 29, 2017) (‘‘The MSRB will continue to 

review and evaluate its fees over time to ensure that 

fees are allocated fairly and equitably across all 

regulated entities.’’) 

28As noted, and for the reasons otherwise 

discussed herein, underwriting assessments 

charged pursuant to Rule A–13(c)(ii) to dealers 

acting as underwriters of municipal fund securities 

are not included in the temporary fee reduction. 

29The 40 percent is relative to the existing market 

activity fees respectively specified in MSRB Rule 

A–13(c)(i) and MSRB Rule A–13(d). Note, however, 

that the proposed rule change would amend the 

temporary fee reduction language of MSRB Rule A– 

13(h) and would not change the text of MSRB Rule 

A–13(c)(i) or MSRB Rule A–13(d). 

30 Dealers are typically billed for these fees after 

the relevant month end. Specifically, the 

underwriting fee is billed immediately after the 

respective month end, while the transaction and 

technology fees are billed thirty days in arrears. 

31 15 U.S.C. 78o–4(b)(2)(J). 

32 Id. 

33See note 22 supra and related discussion 

regarding prior temporary fee reductions in Fiscal 

Year 2019. See also Release No. 34–75751 (Aug. 24, 

2015), 80 FR 52352 (Aug. 28, 2015) (File No. SR– 

MSRB–2015–08) (amending the underwriting fee, 

among other amendments). 

34See note 17 supra and related discussion 

(identifying examples of such investments). 

2021.23 Market activity fees are driven 

by market dynamics and are inherently 

unpredictable. Because of this 

unpredictability, the amount of market 

activity fees collected by the MSRB 

historically has exceeded the amount 

budgeted.24 Therefore, the Board has 

determined that market activity fees 

paid by dealers have uniquely and 

directly contributed to the MSRB’s 

excess reserves position while other fees 

collected from regulated entities have 

not. Specifically, the other fees collected 

by the MSRB have provided a relatively 

smaller portion of the MSRB’s actual 

revenue, in comparison to market 

activity fees, and, at the same time, the 

other fees have not exceeded their 

respective budgeted amounts as 

consistently and to the same degree as 

market activity fees, if at all.25 Thus, 

unlike market activity fees, the Board 

has determined that these other fees on 

regulated entities have not contributed 

to the MSRB’s excess reserves 

position.26

As the Board has considered and 

revisited the reasonable fees and charges 

necessary or appropriate to defray the 

costs and expenses of operating and 

administering the MSRB, the Board has 

continually strived to have a fair and 

equitable balance of fees among 

regulated entities.27 Accordingly, the 

Board has determined that the market 

activity fees that directly contributed to 

the excess reserves position should be 

the fees that are targeted for a temporary 

reduction, and so market activity fees 

paid by dealers are the subject of the 

proposed rule change. 

The Board continually seeks to strike 

the right balance in fee assessments to 

maintain sufficient reserves to ensure 

fiscal sustainability, while providing 

relief to regulated entities that have 

contributed to the excess reserves 

position. The temporary eighteen-month 

fee reduction for certain market activity 

fees assessed on dealers would continue 

these ongoing efforts, allowing the 

Board to take timely action to provide 

relief and reduce reserves to target 

levels while undertaking a longer-term 

effort to assess and potentially develop 

a revised fee structure to be 

implemented at the conclusion of the 

temporary fee reduction period.28

Proposed Rule Change 

The proposed rule change would 

enact a temporary fee reduction on 

market activity fees by amending 

section MSRB Rule A–13(h) to reduce 

by 40 percent the fees for assessable 

activity that occurs on April 1, 2021 

through September 30, 2022.29

• Amended MSRB Rule A–13(h)(i) 

would provide that the underwriting 

assessment for certain primary offerings 

during this period would be .00165% of 

the par value ($0.0165 per $1,000), a 

reduction of 40 percent from .00275% of 

the par value ($.0275 per $1,000) 

assessed under MSRB Rule A–13(c)(i). 

• Amended MSRB Rule A–13(h)(ii) 

would provide that the transaction 

assessment during this period would be 

.0006% of the par value ($0.006 per 

$1,000), a reduction of 40 percent from 

.001% ($.01 per $1,000) assessed under 

MSRB Rule A–13(d)(i) and MSRB Rule 

A–13(d)(ii). 

• Amended MSRB Rule A–13(h)(iii) 

would provide that the technology 

assessment during this period would be 

$0.60 per transaction, a reduction of 40 

percent from $1.00 per transaction 

assessed under MSRB Rule A–13(d)(iv). 

The temporarily reduced rates would be 

for assessable activity that occurs during 

this eighteen-month period, inclusive of 

activity occurring on the beginning date 

of April 1, 2021 and the end date of 

September 30, 2022.30 Effective October 

1, 2022, the rates of assessment for these 

market activity fees would revert to 

current levels on assessable activity 

occurring on and after that date. 

2. Statutory Basis 

The MSRB believes that the proposed 

rule change is consistent with Section 

15B(b)(2)(J) of the Act,31 which states 

that the MSRB’s rules shall: 

. . . provide that each municipal securities 

broker, municipal securities dealer, and 

municipal advisor shall pay to the Board 

such reasonable fees and charges as may be 

necessary or appropriate to defray the costs 

and expenses of operating and administering 

the Board. Such rules shall specify the 

amount of such fees and charges, which may 

include charges for failure to submit to the 

Board, or to any information system operated 

by the Board, within the prescribed 

timeframes, any items of information or 

documents required to be submitted under 

any rule issued by the Board. 

The MSRB believes that its rules 

provide for reasonable dues, fees, and 

other charges among regulated entities. 

The MSRB believes that the proposed 

rule change is necessary and 

appropriate to fund the operation and 

administration of the Board and satisfies 

the requirements of Section 

15B(b)(2)(J),32 achieving a more 

reasonable fee structure, a more 

equitable balance of fees among 

regulated entities, and a fairer allocation 

of the expenses of the MSRB. 

As described above, the MSRB’s 

reserves position currently exceeds its 

target. This surplus has continued 

despite prior efforts undertaken by the 

Board to address the MSRB’s financial 

position, such as budgeting operating 

deficits, providing for prior fee 

reductions,33 and making strategically 

significant investments in market 

transparency systems.34 Accordingly, 

the Board has determined to seek this 

additional temporary fee reduction for 

market activity fees after considerable 

analysis and deliberation, particularly 

regarding the advantages, disadvantages, 

and outcomes of its prior activities. Both 

in light of the impact of the COVID–19 

pandemic on the MSRB’s Fiscal Year 

2020 financial results and also when 

considered in conjunction with its 

planned broader examination of the 

MSRB’s fee structure, the Board believes 

that the proposed rule change resulting 

in the temporary fee reductions is 

preferable at this time to address the 

excess reserves position instead of, for 

example, funding anticipated future 

operating deficits over a number of 

years until excess reserves are depleted. 

In this way, the Board’s determination 

to seek the proposed rule change’s 


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Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Notices 13597 

35As a general illustration of this point, the 

MSRB believes that a dealer firm that only 

occasionally engages in underwriting business is 

more likely to receive a benefit from a fee reduction 

occurring over an eighteenth-month period than, for 

example, a fee reduction occurring over a six-month 

period. 

36See note 21 supra. 

37The MSRB also understands that dealer firms 

receiving ‘‘rebates’’ and similar after-the-fact 

reimbursements for prior payments and historical 

activity may have difficulty in accurately 

calculating and appropriately redistributing money 

through or across organizations, particularly for 

underwriting syndicate participants. 

38 15 U.S.C. 78o–4(b)(2)(C). 

39The 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 or as otherwise 

provided under the exception process of this Policy. 

Policy on the Use of Economic Analysis in MSRB 

Rulemaking, available at http://msrb.org/Rules-andInterpretations/Economic-Analysis-Policy.aspx. 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. 

40 In round numbers, the proposed fee reduction 

would reduce an estimated $6 million fee for 

underwriting, $9 million fee for transaction, and $4 

million fee for technology. 

temporary fee reduction is informed by 

the MSRB’s prior experience in 

attempting to address its excess reserves 

position. For example, the Board 

continues to believe that a temporary 

reduction of market activity fees is a 

reasonable and appropriate mechanism 

for reducing its excess reserves position 

because, as a matter of fairness and 

equity among regulated entities who pay 

MSRB fees, it would temporarily 

decrease fees for those regulated entities 

that financially contributed to the 

excess reserves position. 

At the same time, the Board believes 

that the temporary fee reduction— 

which would be assessed over a 

relatively extended period of eighteenth 

months—is more prudent and equitable 

than other alternatives. Specifically, the 

Board believes that one of the 

advantages of extending the temporary 

fee reduction over the course of eighteen 

months, as opposed to a shorter period, 

is that the proposed rule change will 

capture a larger, and likely more 

representative, segment of market 

activity than if the fee reduction was for 

a shorter duration.35

Additionally, stretching the duration 

of the fee reduction to eighteen months 

will allow the MSRB to progress toward 

its reserves target at a more measured 

pace of net-deficit spending than if, for 

example, the total percentage amount of 

the fee reduction was more aggressive. 

In addition, and as previously noted 

above, the Board believes that the 

eighteen-month duration of the 

temporary fee reduction is reasonable 

and appropriate because it will provide 

the Board requisite time to evaluate the 

organization’s fee structure thoughtfully 

and thoroughly and arrive at longer term 

conclusions about the MSRB’s financial 

positioning.36

Lastly, the Board believes that the 

mechanism of a temporary fee reduction 

is preferable to a rebate or similar return 

mechanisms that would more directly 

reimburse the regulated entities who 

paid the market activity fees that 

contributed to the excess reserves 

position. The MSRB understands that 

such direct fee rebates based on past fee 

payments may pose operational 

challenges to dealer firms.37 In contrast, 

the proposed rule change’s temporary 

fee reduction has the advantage of 

granting firms notice and time to 

operationalize the reduced fees into 

their business processes. 

For all the reasons discussed herein, 

the MSRB believes that the proposed 

rule change satisfies the applicable 

requirements of the Act and the Board 

has developed a reasonable and 

appropriate mechanism for addressing 

the excess reserves position generated 

by the MSRB’s current fee structure. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Section 15B(b)(2)(C) of the Act 38

requires that MSRB rules not be 

designed to impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. The MSRB believes 

that the proposed rule change does not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the act because the 

proposed rule change proportionately 

applies to each dealer firm that may pay 

market activity fees and, thereby, 

equitably benefits this class of regulated 

entity. Consequently, the MSRB believes 

that the proposed rule change will not 

impact competition in this regard. 

The Board’s policy on the use of 

economic analysis is not applicable to 

those rules for which the Board seeks 

immediate effectiveness.39 However, an 

internal analysis may still be conducted 

to gauge the economic impact, with an 

emphasis on the burden on competition 

involving regulated entities. In this 

regard, the Board believes the proposed 

rule change is necessary and 

appropriate to achieve the goal of 

reducing the MSRB’s reserves. Because 

the market activity fees that are the 

subject of the proposed rule change 

comprised a majority of MSRB’s 

revenue and contributed to the excess 

reserves, the Board believes that it is 

reasonable and appropriate to 

temporarily reduce these fees for the 

designated period to achieve this 

objective. Additionally, the MSRB 

believes that the duration of the 

proposed rule change’s temporary fee 

reduction is reasonable and appropriate 

in light of the MSRB’s excess reserves 

position and the Board’s ongoing review 

of the MSRB’s overall fee structure and 

goal of arriving at longer-term 

conclusions about the MSRB’s financial 

positioning. 

The MSRB does not believe that the 

proposed rule change would result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as it would 

temporarily decrease the market activity 

fees by the same percentage for all 

dealers subject to these fees. 

Consequently, the equal application of 

the fee reduction will not result in an 

impact on market competition. The 

proposed fee reduction utilizes the 

temporary fee reduction mechanism 

already established and effectively used 

in Fiscal Year 2019 while the MSRB 

proceeds with a broader review of its fee 

structure. Notably, this time the length 

of the reduction time period is eighteen 

months versus nine months in Fiscal 

Year 2019 and the rate of reduction is 

now 40 percent versus 33 percent in 

Fiscal Year 2019. Based on the current 

level of MSRB’s reserves and the 

Board’s target level, the Fiscal Year 2021 

budget and pro forma for Fiscal Year 

2022 (projected budget numbers 

between April 2021 and September 

2022), a 40 percent reduction of the fees 

assessed under Rule A–13(c)(i) and (d) 

would forgo revenue of, and thus reduce 

reserves by, an estimated $18.8 

million.40

The MSRB believes that the proposed 

rule change would not impose an 

unnecessary or inappropriate regulatory 

burden on dealers, as dealers with 

different levels of underwriting and 

trading activities would all benefit from 

the temporary fee reduction 

proportionately during the relevant 

period. For dealers engaging in primary 

market activity, a temporary 40 percent 

reduction in the underwriting 

assessment of the par value will benefit 

all dealers and the reduction amount 

will be proportionate to each dealer’s 

total underwriting par amount. 

Additionally, all dealers engaging in 

secondary market activity will be 

impacted by a 40 percent reduction of 

the transaction assessment on the par 


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13598 Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Notices 

41 15 U.S.C. 78s(b)(3)(A). 

42 17 CFR 240.19b–4(f). 

43 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Exchange notes that this includes Complex 

AIM (‘‘C–AIM’’), as set forth in proposed footnote 

26. 

4The term ‘‘customer’’ means a Public Customer 

or a broker-dealer. The term ‘‘Public Customer’’ 

means a person that is not a broker-dealer. See Rule 

1.1. 

value traded by each dealer and a 40 

percent reduction in the technology fee 

based on the number of trades 

conducted by each dealer. In summary, 

no firm would be unduly burdened as 

compared to another firm. Nor would a 

firm engaging in both underwriting and 

trading activities be unduly burdened as 

compared to singularly focused firms, as 

the proposed rule change would provide 

for a 40 percent reduction to each of the 

market activity fees. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Board did not solicit comment on 

the proposed rule change. Therefore, 

there are no comments on the proposed 

rule change received from members, 

participants or others. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 41 and paragraph (f) of Rule 

19b–4 42 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

MSRB–2021–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MSRB–2021–02. 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. 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–2021–02 and should 

be submitted on or before March 30, 

2021. 

For the Commission, pursuant to delegated 

authority.43

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–04793 Filed 3–8–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91252; File No. SR–CBOE– 

2021–012] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fees 

Schedule 

March 3, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b-4 thereunder,2

notice is hereby given that on February 

22, 2021, Cboe Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe Exchange, Inc. (the ‘‘Exchange’’ 

or ‘‘Cboe Options’’) proposes to amend 

its Fees Schedule. The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/ 

AboutCBOE/ 

CBOELegalRegulatoryHome.aspx), at 

the Exchange’s Office of the Secretary, 

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 

Exchange 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 

Exchange 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 Exchange proposes to amend its 

Fees Schedule to adopt surcharges in 

connection with the Exchange’s plan to 

activate the Automated Improvement 

Mechanism (‘‘AIM’’) Auction 3 for S&P 

500 Index (‘‘SPX’’) and SPX Weekly 

(‘‘SPXW’’) options while the Exchange 

is operating in its normal hybrid 

environment, effective February 22, 

2021. 

By way of background, AIM includes 

functionality in which a Trading Permit 

Holder (‘‘TPH’’) (an ‘‘Initiating TPH’’) 

may electronically submit for execution 

an order it represents as agent on behalf 

of a customer,4 broker dealer, or any 


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