[Federal Register Volume 74, Number 195 (Friday, October 9, 2009)]
[Notices]
[Pages 52292-52294]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-24354]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60783; File No. SR-MSRB-2009-15]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Amendments to 
Rule A-13, on Underwriting Assessments and Rule G-32, on Disclosures in 
Connection With Primary Offerings

October 2, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 30, 2009, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board''), filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the MSRB. 
The MSRB has designated the proposed rule change as changing a fee 
applicable to brokers, dealers and municipal securities dealers 
pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing amendments to Rule A-13, which provides for fee 
assessments based on underwriting activity and Rule G-32, by adding a 
definition of commercial paper. The proposed rule change would apply to 
primary offerings of municipal securities for which submission of Form 
G-32 under Rule G-32(b)(i)(A) is initiated on or after December 1, 
2009. The text of the proposed rule change is available on the MSRB's 
Web site at http://www.msrb.org/msrb1/sec.asp, 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 assess reasonable 
fees necessary to defray the costs and expenses of operating and 
administering the MSRB. The proposed rule change would partially 
accomplish this purpose by amending Rule A-13 to eliminate exemptions 
in Rule A-13 pertaining to underwriting assessments for primary 
offerings of municipal securities that: (i) Have an aggregate par value 
less than $1,000,000; (ii) have a final stated maturity of nine months 
or less, except commercial paper; (iii) at the option of the holder 
thereof, may be tendered to an issuer of such securities or its 
designated agent for redemption or purchase at par value or more at 
least as frequently as every nine months until maturity, earlier 
redemption, or purchase by an issuer or its designated agent; and (iv) 
have authorized denominations of $100,000 or more and are sold to no 
more than thirty-five persons each of whom the broker, dealer or 
municipal securities dealer (``dealer'') reasonably believes: (A) Has 
the knowledge and experience necessary to evaluate the merits and risks 
of the investment; and (B) is not purchasing for more than one account, 
with a view toward distributing the securities (``limited offering''). 
The underwriting fee for primary offerings of these securities will be 
$.03 per $1000 par value, which is the current underwriting fee for 
primary offerings of municipal bonds. Additionally, the proposed rule 
change will further harmonize the underwriting fees of notes and bonds 
by changing the underwriting fee on primary offerings in which all 
securities offered have a final stated maturity less than two years to 
the rate of $.03 per

[[Page 52293]]

$1000 par value. For purposes of the underwriting assessment under Rule 
A-13, a primary offering will be defined to mean a primary offering 
under Exchange Act Rule 15c2-12, but excludes subsequent remarketings 
after the initial issuance of the bonds or notes. Rule G-32 has also 
been amended to include a new definition of commercial paper.
    The MSRB currently levies three types of fees that are generally 
applicable to dealers. Rule A-12 provides for a $100 initial fee paid 
once by a dealer when it enters the municipal securities business. Rule 
A-13 provides for an underwriting fee of $.03 per $1000 par value of 
bonds and $.01 per $1000 par value of notes (with specified 
exceptions), and a transaction fee of $.005 per $1000 par value of sale 
transactions of specified securities. Rule A-14 provides for an annual 
fee of $500 from each dealer who conducts municipal securities 
activities.
    The underwriting and transaction fees in Rule A-13 assess fees that 
are generally proportionate to a dealer's activity within the industry. 
Historically, municipal notes were either exempt from underwriting fees 
or were subject to reduced underwriting fees ($.01 per $1000), and 
variable rate demand obligations, small issues, and limited offerings 
also were exempt from underwriting fees. The MSRB believes that such a 
fee structure has become increasingly inequitable as the volume of 
primary offerings in these categories (including in particular note 
issues) has grown, and the MSRB's resources have been devoted to 
supporting both notes and bonds. The elimination of exemptions for 
these categories of primary offerings will result in fees that are more 
fairly, reasonably and equitably allocated to reflect dealer 
participation in the overall municipal debt market.
    During the past five years, the Board's ongoing expenses have 
increased significantly due to increased regulatory activities and 
expanded market information products and services, including the new 
Electronic Municipal Market Access system (``EMMA'') to implement the 
new ``access equals delivery'' primary market disclosure service under 
MSRB Rule G-32 and the new continuing disclosure service to implement 
the Commission's amendments to Exchange Act Rule 15c2-12 as well as the 
Short-term Obligation Rate Transparency system (``SHORT'') for interest 
rate transparency for variable rate demand obligations and auction rate 
securities. These new systems and their associated rules greatly 
enhance the efficiency of the municipal securities market and provide 
critical information to dealers and investors. The proposed rule change 
is designed to better match the MSRB's revenues with the operating 
costs associated with these important new systems and the costs of 
regulating the municipal securities market.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
the requirements of Section 15B(b)(2)(J) of the Act,\5\ which requires, 
in pertinent part, that the MSRB's rules shall:
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    \5\ 15 U.S.C. 78o-4(b)(2)(J).

    Provide that each municipal securities broker and each municipal 
securities dealer 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 
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specify the amount of such fees and charges.

    The proposed rule change provides for reasonable fees, based on 
dealer involvement in the municipal securities market that are 
necessary to defray MSRB expenses. The proposed rule change will result 
in a more equitable distribution of fees among dealers in the municipal 
securities market based on their level of activity in the primary 
market for municipal bonds and notes.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB 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, since it would apply equally to all dealers 
and would be apportioned based on such dealers' level of participation 
in the municipal securities primary market.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) thereunder,\7\ in 
that the proposed amendments to Rule A-13 and Rule G-32 change fees 
applicable to brokers, dealers and municipal securities dealers. The 
proposed rule change would apply to primary offerings of municipal 
securities for which submission of Form G-32 under MSRB Rule G-
32(b)(i)(A) is initiated on or after December 1, 2009. At any time 
within 60 days of the filing of the proposed rule change, the 
Commission may summarily abrogate 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.\8\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
    \8\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#0371766f662e606c6e6e666d7770437066602d646c75"><span class="__cf_email__" data-cfemail="80f2f5ece5ade3efedede5eef4f3c0f3e5e3aee7eff6">[email protected]</span></a>. Please include 
File Number SR-MSRB-2009-15 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2009-15. This file 
number should be included on the subject line if e-mail 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 Web site (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 inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the MSRB. All

[[Page 52294]]

comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MSRB-2009-15 and should be 
submitted on or before October 30, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-24354 Filed 10-8-09; 8:45 am]
BILLING CODE 8011-01-P


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