46890 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Notices 

1See Docket No. RM2018–3, Order Adopting 

Final Rules Relating to Non-Public Information, 

June 27, 2018, Attachment A at 19–22 (Order No. 

4679). 

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

2 17 CFR 240.19b–4. 

3Under MSRB Rule D–9, a ‘‘customer’’ means 

‘‘any person other than a broker, dealer, or 

municipal securities dealer acting in its capacity as 

such or an issuer in transactions involving the sale 

by the issuer of a new issue of its securities.’’ 

4See Exchange Act Release No. 79801 (January 

13, 2017), 82 FR 7898 (January 23, 2017) (File No. 

SR–MSRB–2016–15). The 2017 amendments 

created similar obligations for municipal advisors to 

provide their municipal advisory clients with 

certain notifications. The text of the amendments 

addressed the scope of Rule G–10 obligations for 

municipal advisors by specifically defining 

‘‘municipal advisory client’’ for purposes of Rule 

G–10 to include ‘‘either a municipal entity or 

obligated person for whom the municipal advisor 

engages in municipal advisory activities, as defined 

in rule G–42(f)(iv), or a broker, dealer, municipal 

securities dealer, municipal advisor, or investment 

adviser (as defined in section 202 of the Investment 

Advisers Act of 1940) on behalf of whom the 

municipal advisor undertakes a solicitation of a 

municipal entity or obligated person, as defined in 

Rule 15Ba1–1(n), 17 CFR 240.15Ba1–1(n), under the 

Act.’’ 

5See Exchange Act Release No. 24764 (July 31, 

1987), 52 FR 29459 (August 7, 1987) (File No. SR– 

MSRB–87–6). 

(Public Representative). Section II also 

establishes comment deadline(s) 

pertaining to each request. 

The public portions of the Postal 

Service’s request(s) can be accessed via 

the Commission’s website (http://

www.prc.gov). Non-public portions of 

the Postal Service’s request(s), if any, 

can be accessed through compliance 

with the requirements of 39 CFR 

3011.301.1

The Commission invites comments on 

whether the Postal Service’s request(s) 

in the captioned docket(s) are consistent 

with the policies of title 39. For 

request(s) that the Postal Service states 

concern market dominant product(s), 

applicable statutory and regulatory 

requirements include 39 U.S.C. 3622, 39 

U.S.C. 3642, 39 CFR part 3030, and 39 

CFR part 3040, subpart B. For request(s) 

that the Postal Service states concern 

competitive product(s), applicable 

statutory and regulatory requirements 

include 39 U.S.C. 3632, 39 U.S.C. 3633, 

39 U.S.C. 3642, 39 CFR part 3035, and 

39 CFR part 3040, subpart B. Comment 

deadline(s) for each request appear in 

section II. 

II. Docketed Proceeding(s) 

1. Docket No(s).: MC2021–126 and 

CP2021–130; Filing Title: USPS Request 

to Add Priority Mail Contract 720 to 

Competitive Product List and Notice of 

Filing Materials Under Seal; Filing 

Acceptance Date: August 13, 2021; 

Filing Authority: 39 U.S.C. 3642, 39 CFR 

3040.130 through 3040.135, and 39 CFR 

3035.105; Public Representative: 

Christopher C. Mohr; Comments Due: 

August 23, 2021. 

This Notice will be published in the 

Federal Register. 

Erica A. Barker, 

Secretary. 

[FR Doc. 2021–17828 Filed 8–19–21; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92677; File No. SR–MSRB– 

2021–04] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing of a Proposed 

Rule Change Consisting of 

Amendments to Rule G–10, on Investor 

and Municipal Advisory Client 

Education and Protection, and Rule G– 

48, on Transactions With Sophisticated 

Municipal Market Professionals, To 

Amend Certain Dealer Obligations 

August 16, 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 August 2, 2021 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. 

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 consisting of 

amendments to MSRB Rule G–10, on 

investor and municipal advisory client 

education and protection, and MSRB 

Rule G–48, on transactions with 

sophisticated municipal market 

professionals (‘‘SMMPs’’) (collectively, 

the ‘‘proposed rule change’’). The 

proposed rule change would clarify the 

scope of the requirements for brokers, 

dealers and municipal securities dealers 

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

required notifications under Rule G–10 

to those customers who would best be 

served by the receipt of the information 

and make accompanying amendments 

to Rule G–48 to exclude SMMPs from 

certain requirements under Rule G–10.3

If the Commission approves the 

proposed rule change, the MSRB will 

announce the effective date of the 

proposed rule change no later than 10 

days following Commission approval. 

The effective date will be no later than 

30 days following Commission 

approval. 

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 

Background 

In 2017, the MSRB amended Rule G– 

10 with the goal of, among other things, 

modernizing the rule and extend the 

rule’s application to municipal 

advisors.4 Prior to that time, the rule 

only applied to dealers and required 

dealers to provide a customer with a 

paper copy of the MSRB’s investor 

brochure after a customer had made a 

complaint to the dealer.5 Recognizing 

this requirement did not afford 

customers the best use of the 

information in a timely manner, the 

2017 amendments replaced the postVerDate Sep<11>2014 17:27 Aug 19, 2021 Jkt 253001 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 E:\FR\FM\20AUN1.SGM 20AUN1

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Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Notices 46891 

6See MSRB’s ‘‘Information for Municipal 

Securities Investors,’’ available at https://

www.msrb.org/∼/media/Files/Resources/MSRBInvestor-Brochure.ashx?la=en and ‘‘Information for 

Municipal Advisory Clients,’’ available at https://

www.msrb.org/∼/media/Files/Resources/MSRB-MAClients-Brochure.ashx?la=. 

7On December 7, 2020, the MSRB issued MSRB 

Request for Input on Strategic Goals and Priorities, 

available at https://www.msrb.org/∼/media/Files/ 

Regulatory-Notices/RFCs/2020-19.ashx??n=1, with 

a comment period deadline of January 11, 2021. 

Two commenters recommended changes to certain 

dealer obligations under Rule G–10. See Letter from 

Mike Nicholas, Chief Executive Officer, Bond 

Dealers of America (BDA), dated January 11, 2021. 

See also Letter from Leslie Norwood, Managing 

Director and Associate General Counsel and 

Bernard Canepa, Vice President and Assistant 

General Counsel, Securities Industry and Financial 

Markets Association (SIFMA), dated January 11, 

2021. 

8 In order for a customer to be deemed an SMMP, 

MSRB Rule D–15 requires dealers to determine the 

nature of the customer, the customer’s 

sophistication level, and also requires a customer 

affirmation, as specified in the rule. 

9The proposed rule change promotes regulatory 

consistency with section (b)(2) of FINRA Rule 2267, 

on Investor Education and Protection, which 

Continued 

complaint delivery requirement with 

more timely delivery requirements. 

Rule G–10, as designed, serves to 

educate and protect investors and 

municipal advisory clients by providing 

them with information about the MSRB 

rules designed to protect them and the 

process for filing a complaint with the 

appropriate regulatory authority. The 

rule currently requires dealers and 

municipal advisors (collectively, 

‘‘regulated entities’’) to provide certain 

notifications to customers and 

municipal advisory clients, respectively, 

once every calendar year. More 

specifically, Rule G–10 requires 

regulated entities to provide, in writing, 

which may be made electronically, the 

following information (‘‘required 

notifications’’): 

(i) A statement that the regulated 

entity is registered with the SEC and the 

MSRB; 

(ii) The website address for the MSRB; 

and 

(iii) A statement as to the availability 

to the customer or municipal advisory 

client of a brochure that is available on 

the MSRB’s website that describes the 

protections that may be provided by 

MSRB rules, and how to file a complaint 

with an appropriate regulatory 

authority.6

Given there has been a reasonable 

implementation period to allow the 

MSRB time to obtain meaningful insight 

on the operation of the rule, the MSRB 

conducted a retrospective review of the 

obligations under Rule G–10. The MSRB 

identified an opportunity to reduce 

certain compliance burdens by reevaluating the potential benefits of the 

rule to better align the scope of the 

rule’s application. The proposed rule 

change is specific to the dealer 

obligations under Rule G–10 and the 

MSRB is not proposing to modify 

municipal advisors’ obligations under 

the rule because the obligation 

municipal advisors have under Rule G– 

10 is already limited in scope in that a 

municipal advisor must provide the 

required notifications promptly after the 

establishment of a municipal advisory 

relationship, as defined in MSRB Rule 

G–42(f)(v), or promptly, after entering 

into an agreement to undertake a 

solicitation, as defined in Rule 15Ba1– 

1(n), 17 CFR 240.15Ba1–1(n), under the 

Act, and then no less than once each 

calendar year thereafter during the 

course of that agreement. The obligation 

dealers currently have under Rule G–10 

is broader in that each dealer must 

provide the required notifications to all 

customers, including SMMPs, even if 

those customers have not effected any 

transaction in municipal securities and 

may never effect a transaction in 

municipal securities.7 Recognizing that 

MSRB Rule G–48 underscores the 

differences between dealer obligations 

to non-SMMP customers and SMMP 

customers, the MSRB also assessed 

whether a modification to Rule G–48 

was warranted. 

Proposed Amendments to Rules G–10 

and G–48: Dealer Obligation To Make 

Required Notifications 

I. Customer Receipt of Required 

Notifications 

The proposed amendment to Rule G– 

10(a), would require dealers to provide 

the notifications to those customers for 

whom a purchase or sale of a municipal 

security was effected and to each 

customer who holds a municipal 

securities position. Narrowing the scope 

to those customers that engage in 

municipal securities transactions would 

reduce the burden of remitting the 

notifications unnecessarily to all 

customers, while ensuring that dealers 

remit the notifications to customers who 

would most benefit from receiving 

them. Customers who do not receive the 

notifications directly pursuant to Rule 

G–10(a) will still have access to them as 

section (b) of Rule G–10 would require 

each dealer to have the required 

notifications available on its website for 

the benefit of such customers. As a 

result, the MSRB does not believe there 

is a detrimental impact to such 

customers and believes that not 

receiving the notifications may avoid 

confusion for customers who currently 

receive such notifications even though 

they have not effected a municipal 

securities transaction or hold municipal 

securities. 

The proposed rule change would also 

amend Rule G–48 to modify a dealer’s 

obligation under Rule G–10. 

Specifically, the proposed amendment 

to add section (f) to Rule G–48 would 

allow a dealer to make the notifications 

available on its website rather than 

remit the notifications to an SMMP 

pursuant to Rule G–10(a).8 The MSRB 

believes that customers who meet the 

definition of SMMPs under Rule D–15 

are sophisticated in their understanding 

of the municipal market. In the event 

that an SMMP is seeking the 

information found in the required 

notifications, including the MSRB’s 

website address, dealer registration 

status and how to file a complaint with 

the appropriate regulatory agency, a 

sophisticated customer is likely to know 

the information, or seek access to it from 

the dealer’s or MSRB’s website. The 

proposed amendment to Rule G–48 

balances the burden on dealers to remit 

the required notifications to SMMPs 

against the usefulness of SMMPs 

receiving such notifications when the 

information is otherwise readily 

available. This modified obligation 

dealers have with respect to SMMPs is 

proposed section (f) of Rule G–48, in 

keeping with the placement of other 

modified obligations for transactions 

with SMMPs under Rule G–48. 

II. Exception for Dealers Subject to 

Carrying Agreements 

The proposed amendments to Rule G– 

10 would apply to all dealers, with two 

general exceptions: (i) A dealer that 

does not have customers, or (ii) a dealer 

that is a party to a carrying agreement 

in which the carrying dealer has agreed 

to comply with the requirement to 

provide notifications under the rule. 

The proposed amendment to section (c) 

of Rule G–10 would provide that any 

dealer that does not have customers, or 

who is a party to a carrying agreement 

in which the carrying dealer has agreed 

to comply with the required notification 

requirements, would be exempt from 

the Rule G–10(a) requirements. The 

MSRB recognizes that customer 

accounts may be held at other dealers, 

subject to a carrying agreement, and that 

the carrying dealers are responsible for 

providing account statements and trade 

confirmations. Therefore, the proposed 

amendment to Rule G–10(c) is meant to 

acknowledge common business 

practices and facilitate carrying dealers’ 

compliance with the requirement to 

provide notifications under the rule, on 

behalf of other dealers.9 Additionally, 


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46892 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Notices 

provides that any member that does not have 

customers or is a party to a carrying agreement 

where the carrying firm member complies with the 

rule is exempt from the requirements of the rule. 

10A dealer may, of course, elect to provide the 

required notification more frequently than a rolling 

12-month basis. 

11 15 U.S.C. 78o–4(b)(2). 

12 15 U.S.C. 78o–4(b)(2)(C). 

13 15 U.S.C. 78o–4(b)(2)(C). 14See Policy on the Use of Economic Analysis in 

MSRB Rulemaking, available at http://msrb.org/ 

Rules-and-Interpretations/Economic-AnalysisPolicy.aspx. In evaluating whether there was a 

burden on competition, the Board was guided by its 

principles that required the Board to consider costs 

and benefits of a rule change, its impact on capital 

formation and the main reasonable alternative 

regulatory approaches. 

the proposed amendments would 

expressly clarify that the dealer would 

not be subject to the notifications 

requirement, under Rule G–10(a), in 

cases where dealers conduct a limited 

business and are not considered to have 

customers. 

III. Supplementary Material to Rule G– 

10 

The proposed rule change would 

include supplementary material under 

Rule G–10 that would provide clarity on 

the timeframe for delivery of the 

required notifications. Supplementary 

Material .01 of Rule G–10 would make 

clear that the obligation to provide the 

required notifications once each 

calendar year to applicable customers 

would be deemed satisfied if dealers 

deliver the required notifications at a 

given point in each calendar year so 

long as any customers that effected a 

transaction in municipal securities or 

held municipal securities after that 

given date in each calendar year receive 

the notifications within the following 

rolling 12-month period. More 

explicitly, after a dealer provides the 

required notifications to the applicable 

customers, the ensuing notifications 

must be provided within 12 months 

from the date of the preceding 

notifications, but may be provided 

within a shorter time period.10 The 

MSRB believes that the proposed 

amendments would foster greater 

flexibility with respect to the timing of 

the required notifications, and would 

also ensure that each applicable 

customer receives the required 

notification within a rolling 12-month 

period; and thereby, ease operational 

concerns. 

For example, assume a dealer opts to 

remit the required notifications on June 

30, 2022, and in September 2002 a nonSMMP customer who has never held 

municipal securities effects a 

transaction in municipal securities for 

the first time. The dealer would not be 

required to remit the notifications to 

that customer in calendar year 2022, but 

the dealer would be obligated to remit 

the notification to that customer, and all 

other applicable customers, on or before 

June 30, 2023. In no event may a dealer 

exceed 12 months without remitting the 

notifications to a non-SMMP customer 

who has effected a transaction in 

municipal securities or who holds 

municipal securities. 

The proposed rule change makes 

technical amendments to streamline the 

required notifications by deleting the 

current provision (a)(ii) of Rule G–10 

and placing the reference to the website 

address for the Municipal Securities 

Rulemaking Board within the proposed 

amended provision that re-numbers 

provision (a)(iii) of Rule G–10 to 

provision (a)(ii). The proposed 

amendments also re-numbers the 

remainder of Rule G–10, accordingly. 

2. Statutory Basis 

Section 15B(b)(2)(C) of the Exchange 

Act 30 provides 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. 

The MSRB believes that the proposed 

rule change is consistent with Sections 

15B(b)(2) 11 and 15B(b)(2)(C) 12 of the 

Exchange Act. Rule G–10 would 

continue to be designed to prevent 

fraudulent and manipulative acts and 

the proposed rule change does not 

diminish such protections. The 

proposed rule change would help 

promote just and equitable principles of 

trade, and protect investors, municipal 

entities, obligated persons and the 

public interest by ensuring that 

customers who have effected a 

transaction in municipal securities or 

hold a municipal securities position, 

during the requisite period, receive 

information that would be useful to 

them in understanding the regulatory 

framework. The proposed rule change 

may also avoid confusion because 

dealers would not have to provide 

notifications to customers who have not 

effected any municipal securities 

transactions. More specifically, the 

proposed rule change is designed to 

ensure that applicable customers receive 

beneficial information, through the 

MSRB’s investor brochure, on how to 

file a complaint about dealers with the 

appropriate regulatory authority and an 

overview of the investor protections 

provided by MSRB rules. The required 

notifications, which would be provided 

once each calendar year, are in support 

of curbing potential fraudulent and 

manipulative practices, by creating an 

awareness amongst customers of the 

SEC and MSRB. 

Additionally, for all other customers, 

including SMMPs, while dealers will 

not have to provide the required 

notifications pursuant to Rule G–10(a), 

such dealers would have to make the 

required notifications available on their 

websites in accordance with the rule, 

and other applicable MSRB rules and 

federal securities laws, which is in 

furtherance of the public interest. The 

MSRB believes that the proposed 

amendments to Rule G–48 to effectuate 

the exemption for remitting 

notifications to SMMPs, so long as the 

SMMPs have access to such 

notifications on a dealer’s website, will 

facilitate transactions in municipal 

securities and help perfect the 

mechanism of a free and open market in 

municipal securities by avoiding the 

imposition of regulatory burdens upon 

dealers where they appear to be 

unnecessary. The MSRB currently 

understands that SMMPs are generally 

knowledgeable about the registration 

status of a dealer and how to file a 

complaint if warranted and can access 

the information on a dealer’s website as 

needed. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Section 15B(b)(2)(C) of the Exchange 

Act 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.13 The 

MSRB has considered the economic 

impact associated with the proposed 

rule change, including a comparison to 

reasonable alternative regulatory 

approaches, relative to the baseline.14

The MSRB does not believe that the 

proposed rule change would impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act. 

The purpose of amending Rule G–10 

is to better refine the requirement for 

dealers to provide the required 

notifications to specified customers. 

Rule G–10 was originally designed to 

protect investors by providing them 

with the information necessary through 

the investor brochure to file a complaint 

about their dealers with the appropriate 


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15See supra note 4. 

16Under Rule G–15(a)(i)(D)(4), the dealer is 

required to provide a hyperlink to EMMA® for 

publicly available information on a specific 

security. 

17Letter from Leslie M. Norwood, Managing 

Director and Associate General Counsel, the 

Securities Industry and Financial Markets 

Association (‘‘SIFMA Letter’’ or ‘‘SIFMA’’) dated 

June 28, 2021: ‘‘SIFMA members state that their 

estimated percentage of customers that effect a 

municipal securities transaction that have not 

previously effected a transaction in municipal 

securities is anecdotally reported to be less than 

1%.’’ 

regulatory authority. As discussed 

above, prior to the 2017 rule 

amendments, Rule G–10 only required 

dealers to send a paper copy of the 

brochure outlining protections under 

MSRB rules to investors who had 

already complained to a dealer. The 

2017 amendments replaced the postcomplaint delivery requirement with an 

annual written notification requirement 

to all customers of a dealer regardless of 

whether a customer ever effects a 

municipal securities transaction or 

owns municipal securities in the 

account.15 To reduce the compliance 

burden on dealers and ensure the 

greatest utility to customers receiving 

the notifications, the MSRB proposes to 

amend Rule G–10(a) to narrow the 

obligation of dealers to provide the 

required notifications to only customers 

who traded municipal securities or held 

a municipal securities position at the 

dealer during each calendar year. For all 

other customers, dealers would be 

permitted to make such notifications 

available on their websites in 

accordance with the rule. Similarly, the 

MSRB is proposing related amendments 

to Rule G–48, so that all SMMPs would 

be exempt as long as dealers make such 

notifications available on their websites. 

The MSRB assessed other regulatory 

alternatives and determined that the 

proposed amendments to Rule G–10 and 

Rule G–48 are superior to these 

alternatives. One alternative would be to 

revert the rule back to the pre-2017 

version that contained a post-complaint 

delivery requirement and adding the 

electronic delivery option. By rolling 

back the 2017 changes, a dealer would 

no longer have to provide the 

notifications to all customers, regardless 

of whether they transacted in municipal 

securities or own municipal securities. 

This alternative would alleviate the 

burden to dealers of sending out 

thousands of notifications to investors 

but would still not solve the problem of 

providing investors with more timely 

access to information about how to file 

a complaint and the protections 

provided under MSRB rules. Another 

alternative would be to amend Rule G– 

10 to eliminate the annual notifications 

delivery requirement. The MSRB 

already requires dealers to communicate 

certain information to investors under 

Rule G–15, on customer 

confirmations.16 By amending Rule G– 

10 to require dealers to also provide a 

hyperlink to MSRB.org and a statement 

that the dealer is registered with the 

SEC and the MSRB, dealers would be 

able to minimize their direct outreach to 

investors by utilizing an existing 

required form of communication (i.e., 

customer confirmations). However, with 

this alternative, only customers who 

have recently transacted in a municipal 

security would be notified of the 

information, but not customers who 

hold municipal securities in their 

accounts. 

Benefits and Costs 

The MSRB believes by amending the 

rule to limit the scope of the delivery 

obligation to customers who either held 

or transacted in municipal securities 

during a 12-month period, compliance 

burdens to dealers would be lessened. 

The volume of notifications sent by 

dealers to customers, many of those who 

do not own or transact in municipal 

securities, and therefore receive no 

utility from such notifications, would be 

reduced. Additionally, other customers 

of dealers who do not own or transact 

in municipal securities would not be 

subjected to receipt of additional 

unnecessary communications, which 

could create noise and confusion for 

these customers. Furthermore, in 

striving to focus communications that 

are appropriate to the customer, the 

resulting effect may be that customers 

pay more attention to communications 

from dealers. Finally, dealers may incur 

savings from sending out less 

correspondence to customers due to the 

narrowed scope of the dealers’ 

obligations; and due to the flexibility 

provided pursuant to the rule and 

related proposed amendments to Rule 

G–48 that exempt other customers and 

SMMPs. 

To evaluate the potential costs to 

customers, the MSRB divided all dealer 

customers into four segments to 

separately compare the future expected 

state to the current baseline state of each 

group. 

• Customers who currently hold 

municipal securities and plan to 

transact again in the future. These 

customers would not be impacted by the 

proposed amendments to Rule G–10 

since they are expected to receive the 

required notifications the same way as 

they receive the notifications now; 

• Customers who have never held 

municipal securities and do not plan to 

transact in them in the foreseeable 

future. These customers are currently 

receiving the notifications even though 

they do not hold any municipal 

securities nor effect any municipal 

securities transactions. The proposed 

amendments to Rule G–10 would not 

impact these customers since the 

notifications are, likely, not relevant to 

these customers; 

• New customers of a dealer. These 

customers are currently receiving the 

notifications by the end of each calendar 

year irrespective of their holding of 

municipal securities or effecting a 

transaction in municipal securities. The 

proposed amendments to Rule G–10 

would impact these customers, as they 

would not receive a notification unless 

they effected a transaction in municipal 

securities or held municipal securities 

at the time the dealer remitted the 

notifications that calendar year. 

However, these customers would 

receive the notification the next 

calendar year and in no event more than 

12 months from the time such 

customers effected a transaction in 

municipal securities or held municipal 

securities; 

• Existing customers who have never 

transacted in municipal securities 

before but may do so in the future. 

These customers currently receive 

notifications even though they have not 

transacted or held a position in 

municipal securities. Under the 

proposed amendments to Rule G–10, 

these customers would not receive the 

notifications, required to be delivered 

once every calendar year, until such 

time as they have a municipal securities 

transaction or hold a position in 

municipal securities. The MSRB has 

been careful to balance the stated 

objective of utility of information to 

customers against the slight risk that 

could be born out of not providing such 

required notifications to all customers, 

once every calendar year. The MSRB 

notes that such customers would be able 

to avail themselves of the information 

provided in the notifications by 

reviewing a dealer’s website. The MSRB 

also notes that the anecdotal evidence 

provided by a commenter shows less 

than one percent of all existing 

customers who had previously not 

transacted or owned any municipal 

security would effect a transaction in 

municipal securities; 17 and lastly, 

• SMMPs who have traded municipal 

securities or hold a municipal securities 

position. All SMMPs currently receive 

annual notifications, but under the 

proposed amendments to Rule G–48, 

these customers would not receive the 

notifications; instead, SMMPs would 


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18See Letter from Christopher A. Iacovella, Chief 

Executive Officer, American Securities Association 

(‘‘ASA Letter’’ or ‘‘ASA’’), dated June 28, 2021; 

Letter from Michael Decker, Senior Vice President, 

Bond Dealers of America (‘‘BDA Letter’’ or ‘‘BDA’’), 

dated June 28, 2021; SIFMA Letter; and Letter from 

Jennifer Szaro (‘‘Szaro Letter’’ or ‘‘Szaro’’), dated 

May 17, 2021. 

19The MSRB did solicit feedback in the RFC on 

whether Rule G–10 should require dealers to 

provide notifications to issuer clients at the earliest 

stage of the underwriter’s relationship with such 

issuer client when an issuer client has not 

otherwise engaged a municipal advisor. A summary 

of the comments received in response to this 

question is discussed in Section C. below. 

20See Rule D–15 on the definition of the term 

‘‘Sophisticated Municipal Market Professional.’’ In 

order to deem a customer an SMMP, a dealer is 

required to determine the nature of the customer 

and the customer’s sophistication level, and also 

requires the customer’s affirmation, as specified in 

Rule D–15. In addition, this determination must be 

reasonable, including an analysis of the amount or 

type of securities owned or under management by 

the customer. See Rule D–15, Supplementary 

Material .01. 

still be able to avail themselves of the 

information provided in the 

notifications by reviewing a dealer’s 

website. Since SMMPs affirm to having 

a level of sophistication, knowledge and 

familiarity with the municipal securities 

market, these notifications add little 

benefit for SMMPs, if any. By exempting 

the requirement to send notifications to 

SMMPs, the proposed amendments 

would reduce the time and cost burdens 

for dealers with minimal reduction in 

benefits for SMMPs. 

In addition to any costs to customers, 

dealers would likely incur some minor 

costs, relative to the baseline state, to 

meet the standards of conduct and 

duties contained in the proposed rule 

change. These changes may include a 

one-time upfront cost related to revising 

policies and procedures, as well as 

ongoing costs such as compliance costs 

associated with limiting the receipt to 

only the relevant municipal securities 

customers for targeted communication 

outreach. However, the MSRB believes 

these costs would be minimal, as firms 

would be able to leverage their existing 

customer database to swiftly identify the 

relevant pool of customers eligible for 

the required notifications under the 

proposed rule change. 

As to the overall scale of cost 

reduction to dealers, as well as potential 

costs to some customers who may no 

longer receive the notifications unless 

they initiate a transaction in municipal 

securities, the MSRB is currently unable 

to quantify these economic effects 

precisely because not all the 

information necessary to provide a 

reasonable estimate is available. For 

example, the MSRB is interested in the 

percentage of dealers’ customers who 

trade or hold municipal securities for a 

given calendar year, which would be 

helpful for the MSRB to assess the 

impact of the draft rule amendments. 

The MSRB sought the data during the 

Request for Comment process but was 

unable to obtain it. Therefore, the MSRB 

has considered these benefits and costs 

in qualitative terms. 

Effect on Competition, Efficiency, and 

Capital Formation 

The MSRB believes that the proposed 

rule change would neither impose a 

burden on competition nor hinder 

capital formation, as the proposed rule 

change would reduce burdens to dealers 

of remitting the notifications to all 

customers by narrowing the scope of the 

application of the rule. The MSRB 

believes that the proposed rule change 

would improve the municipal securities 

market’s operational efficiency by 

clarifying existing regulatory 

obligations, further promoting fair 

dealings between market participants. 

The MSRB does not expect that the 

proposed rule change would change the 

competitive landscape of the municipal 

securities dealer community, as the 

proposed amendments to Rule G–10 and 

Rule G–48 would be applicable to all 

dealers; therefore, the expected benefits 

and minor costs would be proportionate 

to the size and business activities of 

each dealer. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

As previously noted, on May 14, 

2021, the MSRB published a Request for 

Comment, which sought comment on 

the matters included in the proposed 

rule change for a period of 45 days. The 

MSRB received four comment letters.18

These comments, along with the 

MSRB’s responses, are discussed below. 

Narrowing the Scope of Customers 

Receiving the Dealer Notifications 

The MSRB sought comment on 

whether to narrow the scope of 

customers who receive the required 

notifications once every calendar year to 

include only those customers of the 

dealer who have effected transactions in 

municipal securities within the prior 

one-year or who hold a municipal 

securities position. All four commenters 

noted that the MSRB’s draft 

amendments would ensure that the 

customers who would most benefit from 

receiving the required information 

would receive the notifications. 

Commenters also noted that no longer 

requiring dealers to provide such 

notifications unnecessarily to other 

customers would mitigate the 

compliance burden on dealers. 

One commenter, BDA, recommended 

that the MSRB exempt dealers from 

providing issuers the required 

notifications, stating that ‘‘issuers are 

financial professionals who understand 

the municipal market well enough to 

know about the MSRB and do not 

require additional annual reminders.’’ 

As a threshold matter, the MSRB does 

not agree with the premise that all 

issuers have the same level of market 

sophistication and should have a 

wholesale exclusion. Pursuant to Rule 

D–9, an issuer is a ‘‘customer’’ except in 

the case of a sale by the issuer of a new 

issue of its securities. Therefore, in 

these instances, dealers would not be 

required to provide the required 

notifications to an issuer.19 If an issuer 

is otherwise a customer, a dealer would 

continue to be obligated to provide the 

notifications pursuant to Rule G–10(a) 

unless the issuer customer is an SMMP, 

which would be determined based on 

the nature of the issuer, a determination 

of sophistication by the dealer and an 

affirmation by the issuer.20 As noted 

above, with respect to an SMMP, the 

proposed amendment to Rule G–48 

would allow a dealer to make the 

notifications available on its website 

rather than remit the notifications to an 

SMMP pursuant to Rule G–10(a). 

BDA also requested that the MSRB 

eliminate the annual requirement to 

provide notifications to customers who 

do not hold a municipal securities 

position at the dealer at calendar yearend. BDA stressed that modifying the 

proposed rule language in such a way 

would diminish the burden on dealers 

of looking through stock records to 

identify municipal securities customers 

for whom dealers no longer hold 

positions because they were either 

transferred, sold or matured entirely 

prior to the stock record review. The 

MSRB believes that the proposed rule 

change requiring the notifications to 

those customers who effected 

transactions in municipal securities or 

who hold a municipal securities 

position, coupled with the 

supplementary material on the 

sequencing of such notifications, strikes 

the right balance in providing investor 

protections and reducing regulatory 

burdens. The MSRB does not believe the 

rule should be narrowed further as BDA 

suggests. 

Additionally, BDA suggested that 

municipal advisors should not be 

obligated to provide municipal advisory 

clients with the required notifications 

promptly after the establishment of a 

municipal advisory relationship or 


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Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Notices 46895 

21See supra note 4. 

22See supra note 7. 

23SIFMA suggested extending website-only 

notifications delivery to municipal advisory clients. 

As previously mentioned, the MSRB limited the 

scope of the RFC to dealer obligations to their 

customers and is not modifying municipal advisor’s 

obligations under the Rule G–10. 

24See FAQs on MSRB Rules on Investor and 

Municipal Advisory Client Education and 

Protection (September 2017). 

entering into an agreement to undertake 

a solicitation and annually thereafter 

during the course of the agreement. BDA 

asserts that municipal advisors are 

already providing such notifications as 

part of the municipal advisor 

engagement letter. While this comment 

is outside the scope of the current 

proposal, MSRB notes the MSRB’s 

municipal advisory client brochure 

summarizes key principles of the MSRB 

rules designed to protect municipal 

advisory clients as well as information 

on how on how to file a complaint 

against a municipal advisor with the 

appropriate federal regulatory 

authority—information that is not 

customarily provided as part of the 

municipal advisor engagement letter. 

The MSRB continues to believe that 

requiring municipal advisors to provide 

the Rule G–10 notifications to 

municipal advisory clients creates an 

awareness of the protections afforded by 

the regulatory framework governing 

municipal advisory activities. 

Exclusion of SMMPs 

The MSRB sought comment on 

whether to exclude SMMPs from 

receiving the required notifications, so 

long as dealers provide such 

notifications on their websites 

(‘‘website-only notifications’’). Both 

ASA and SIFMA specifically expressed 

support for the draft amendments, 

indicating that the placement of the 

notifications on dealers’ websites is also 

in keeping with the modern approach to 

seek and find electronic resources on 

dealers’ websites, and provides 

adequate notice to SMMPs. SIFMA 

remarked that SMMPs are, by definition, 

sophisticated investors that should not 

require ‘‘hand-holding’’ in order to find 

information on the investor brochure on 

the dealer’s website, or elsewhere, or to 

otherwise require guidance as to how to 

file a complaint with the appropriate 

regulatory authority. SIFMA also noted 

that placement of the customer 

notifications on dealers’ websites 

provides adequate notice to SMMPs that 

have engaged in a municipal securities 

transaction or that maintain a municipal 

securities position. 

The MSRB has had the opportunity to 

evaluate the implementation of the 

requirement to provide notifications 

once every calendar year, which was 

adopted in 2017,21 has considered these 

comments as well as recent stakeholder 

comments,22 and has determined that 

allowing dealers to make the required 

notifications available on their websites 

is appropriate for SMMP customers. 

Dealer Notifications to Issuer Clients 

Who Are Not Represented by Municipal 

Advisors 

The MSRB sought comment on 

whether an issuer in transactions 

involving the sale by the issuer of a new 

issue of its securities who are not 

otherwise represented by a municipal 

advisor should receive the required 

notifications from dealers. BDA and 

SIFMA commented, arguing strongly 

against providing such notifications to 

such issuers, noting that dealer 

disclosures to issuers in transactions 

involving the sale by the issuer of a new 

issue of its securities are made in the 

Bond Purchase Agreement and 

engagement letters and that requiring 

the annual notifications will add to the 

complexity of dealer compliance 

without greater benefit to such issuer. 

SIFMA further opined that any such 

required notifications should be made 

in the context of underwriter 

disclosures, under Rule G–17. After 

review of the comments, the MSRB has 

determined not to place the additional 

requirement on dealers to provide the 

required notifications to such issuers 

who are not otherwise represented by 

municipal advisors. 

529 Plan Customers 

The MSRB sought comment on 

whether to provide an exception to the 

notifications requirement that excludes 

investors in 529 savings plans from 

receipt of ongoing notifications after 

their initial purchase of units in a 529 

savings plan. SIFMA indicated support 

for the draft amendments to exclude 

ongoing notifications to investors of 529 

savings plan. The Szaro letter noted that 

providing the required notifications to 

such customers entails dealer work and 

expenses that are not balanced 

proportionately to the benefit to a 

customer in receiving the information. 

SIFMA and Szaro both favored websiteonly notifications as a sensible and 

reasonable option for dealers who have 

websites. Given that 529 savings plans 

(and other municipal fund securities) 

are offered and serviced as a benefit to 

customers that typically hold other 

securities in their brokerage accounts, 

unintended operational challenges may 

be introduced by establishing a different 

requirement for the delivery of the 

required notifications for municipal 

fund securities. In reviewing the 

comments received, the MSRB does not 

believe there is compelling information 

to warrant a change from the current 

requirements under Rule G–10. 

Website-Only Notifications for All 

Customers 

The proposed amendments to Rule G– 

10 exclude the required notifications to 

customers that have not, and may never, 

engage in municipal securities 

transactions, so long as the dealer has 

the notifications available to such 

customers on its website. Szaro and 

ASA suggested removing the 

requirement for the notifications to be 

remitted to customers of the dealer who 

effected a transaction in municipal 

securities or who held a municipal 

securities position in favor of making 

such notifications available to all 

customers by having the notifications 

available only on the dealer’s website. 

Szaro and ASA stated that customers 

today prefer to review information about 

dealers from dealers’ websites and that 

individualized annual notifications 

could be eliminated without threatening 

investor protections. 

The MSRB believes that the proposed 

rule change strikes the correct balance 

by requiring the notifications only to 

those customers who would most 

benefit by their receipt (i.e., customers 

of the dealer who effected a transaction 

in municipal securities or who hold a 

municipal securities position) and 

permitting the notifications to be 

available to all customers on a dealer’s 

website. Moreover, the MSRB believes 

that receipt of such push notifications is 

in furtherance of investor protection, 

and that such information would not be 

as easily ascertained by a customer 

having to undergo a search for the 

information on a dealer’s website.23

Clarify Timeframe for Delivery of 

Notifications 

SIFMA and BDA stated that the MSRB 

should clarify the timeframe for delivery 

of the annual notifications by modifying 

the draft proposed rule language from 

‘‘once every calendar year’’ to prescribe 

that delivery of such notifications 

should be made ‘‘at least annually’’ or 

‘‘at least once a year.’’ BDA noted that 

the change in the delivery timeframe 

would reduce dealer printing burdens as 

they may couple these notifications 

with other required disclosures. 

The MSRB acknowledges that it has 

previously indicated in the form of 

FAQs 24 that the obligation to provide 


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46896 Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Notices 

25 17 CFR 200.30–3(a)(12). 

the required notifications ‘‘once every 

calendar year’’ has meant by the end of 

each calendar year. The MSRB does not 

propose to move away from the current 

rule text that states the required 

notifications must be made ‘‘once every 

calendar year,’’ because this language is 

consistent with the language governing 

the obligations of municipal advisors to 

provide the same required notifications 

to municipal advisory clients. The 

MSRB believes that proposed 

amendments will provide clarification 

and flexibility on the sequencing of the 

required notifications. Specifically, 

proposed Supplementary Material .01 

allows a dealer to provide the 

notifications to the applicable customers 

at any given point in each calendar year, 

but also recognizes that there may be 

additional customer(s) that effect a 

purchase or sale of a municipal security 

or hold a municipal security after the 

notifications have been delivered that 

calendar year. Accordingly, 

Supplementary Material .01 allows such 

customers to receive the notifications 

within the following rolling 12-month 

period. The MSRB would revise existing 

compliance resources, including the 

FAQs, as necessary to be aligned with 

the proposed rule change. 

Permitting Notifications by Clearing 

Firms Per Agreement 

The MSRB sought comment on draft 

amendments that proposed to exclude a 

dealer that is a party to a carrying 

agreement, where the carrying dealer 

provides such required notifications, 

from the requirements under Rule G–10. 

Both SIFMA and BDA generally 

supported this provision but suggested 

clarifying language to reflect the 

agreement to undertake the obligation to 

provide the required notifications. The 

MSRB is clarifying the proposed rule 

language to reflect firms’ agreement 

about which party will undertake the 

Rule G–10 notifications obligation. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period of 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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– 

MSRB–2021–04 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–2021–04. 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–2021–04 and should 

be submitted on or before September 10, 

2021. 

For the Commission, pursuant to delegated 

authority.25

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–17830 Filed 8–19–21; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #17087 and #17088; 

Montana Disaster Number MT–00143] 

Presidential Declaration of a Major 

Disaster for Public Assistance Only for 

the State of Montana 

AGENCY: U.S. Small Business 

Administration. 

SUMMARY: This is a Notice of the 

Presidential declaration of a major 

disaster for Public Assistance Only for 

the State of Montana (FEMA–4608–DR), 

dated 08/13/2021. 

ACTION: Notice. 

Incident: Straight-line Winds. 

Incident Period: 06/10/2021. 

DATES: Issued on 08/13/2021. 

Physical Loan Application Deadline 

Date: 10/12/2021. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 05/13/2022. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street SW, Suite 6050, 

Washington, DC 20416, (202) 205–6734. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

President’s major disaster declaration on 

08/13/2021, Private Non-Profit 

organizations that provide essential 

services of a governmental nature may 

file disaster loan applications at the 

address listed above or other locally 

announced locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties: Dawson, Garfield, 

Mccone, Richland, Roosevelt. 

The Interest Rates are: 

Percent 

For Physical Damage: 

Non-Profit Organizations with 

Credit Available Elsewhere ... 2.000 

Non-Profit Organizations without Credit Available Elsewhere ..................................... 2.000 

For Economic Injury: 


khammond on DSKJM1Z7X2PROD with NOTICES