Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Notices 54673 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(2). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62827; File No. SR–MSRB– 

2010–08] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing of Amendments 

to Rule A–3, on Membership on the 

Board To Comply With the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act 

September 1, 2010. 

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 August 

27, 2010, the Municipal Securities 

Rulemaking Board (‘‘Board’’ or ‘‘MSRB’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by the MSRB. The 

MSRB has requested accelerated 

effectiveness pursuant to Section 

19(b)(2) of the Act.3 The Board seeks 

accelerated effectiveness of the rule 

change in order to implement the Board 

composition requirements of Section 

975 of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, 

Public Law 111–203, 124 Stat. 1376 

(2010) (the ‘‘Dodd-Frank Act’’), which 

has an effective date of October 1, 2010. 

The rule change must be effective prior 

to the effective date of the relevant 

provision of the Dodd-Frank Act so that 

the Board may elect a new Board for the 

2011 fiscal year that complies with the 

Board composition provisions of the 

Dodd-Frank Act. 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 is filing with the SEC a 

proposed rule change consisting of 

amendments to Rule A–3, on 

membership on the Board, in order to 

facilitate the change in the composition 

of the Board to comply with the DoddFrank Act. The MSRB has requested that 

the proposed rule change be made 

effective on an accelerated basis. 

The text of the proposed rule change 

is available on the MSRB’s Web site at 

http://www.msrb.org/Rules-andInterpretations/SEC-Filings/2010- 

Filings.aspx 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 Board has 

prepared summaries, set forth in Section 

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 make such changes to 

MSRB Rule A–3 as are necessary and 

appropriate prior to the election of new 

Board members for the fiscal year 

commencing on October 1, 2010 (fiscal 

year 2011), in order to comply with the 

Dodd-Frank Act and, more specifically, 

those provisions of the Dodd-Frank Act 

governing the nomination, election, and 

composition of the Board. On July 21, 

2010, the Dodd-Frank Act was signed 

into law by President Obama. This 

comprehensive financial reform 

legislation contains various provisions 

that affect the governance and mandate 

of the MSRB. The effective date of these 

provisions is October 1, 2010, which 

coincides with the first day of the 

MSRB’s 2011 fiscal year. 

The Dodd-Frank Act provides that the 

number of public representatives of the 

Board shall at all times exceed the total 

number of regulated representatives, 

that the membership must be as evenly 

divided in number as possible between 

public and regulated representatives, 

and that the members be knowledgeable 

of matters related to the municipal 

securities markets. 

As for the public members, at least 

one must be representative of 

institutional or retail investors in 

municipal securities, at least one must 

be representative of municipal entities 

and at least one must be a member of 

the public with knowledge of or 

experience in the municipal industry. 

As for regulated representatives, at least 

one must be associated with and 

representative of broker-dealers, at least 

one must be associated with and 

representative of bank dealers, and at 

least one must be associated with a 

municipal advisor. For the first time, the 

MSRB has been authorized to 

promulgate rules governing the conduct 

of municipal advisors who must be 

fairly represented on the Board. 

Although Section 975(b) of the DoddFrank Act provides that the Board shall 

be composed of 15 members, the same 

section permits the Board to increase 

the number of Board members, so long 

as the total membership is an odd 

number. It also requires that the public 

members be independent, as defined by 

the Board, of entities regulated by the 

MSRB. 

In order to implement these terms of 

the Dodd-Frank Act by the effective date 

of October 1, 2010, the MSRB proposes 

a rule change to add sections (h) and (i) 

to Rule A–3. Section (h) defines certain 

terms consistent with the Dodd-Frank 

Act, including the term ‘‘independent of 

any municipal securities broker, 

municipal securities dealer, or 

municipal advisor,’’ which is similar to 

the independence definition used by 

other self-regulatory organizations. The 

term ‘‘independent of any municipal 

securities broker, municipal securities 

dealer, or municipal advisor’’ would 

mean that the individual has ‘‘no 

material business relationship’’ with any 

municipal securities broker, municipal 

securities dealer, or municipal advisor. 

The term ‘‘no material business 

relationship,’’ in turn, would mean that, 

at a minimum, the individual is not and, 

within the last two years, was not 

associated with a municipal securities 

broker, municipal securities dealer, or 

municipal advisor, and that the 

individual does not have a relationship 

with any municipal securities broker, 

municipal securities dealer, or 

municipal advisor, whether 

compensatory or otherwise, that 

reasonably could affect the independent 

judgment or decision making of the 

individual. The Board, or by delegation 

its Nominating Committee, may 

determine that additional circumstances 

involving the individual constitute a 

‘‘material business relationship’’ with a 

municipal securities broker, municipal 

securities dealer, or municipal advisor. 

Section (i) is a transitional provision 

intended to effectuate the relevant 

governance provisions of the DoddFrank Act by increasing the Board from 

15 members to 21 members, who are 

knowledgeable of matters related to the 

municipal securities markets, 11 of 

whom will be independent, public 

representatives and 10 of whom will be 

regulated representatives, as of October 

1, 2010. Of the 11 public members, at 

least one will be representative of 

institutional or retail investors, at least 

one will be representative of municipal 

entities, and at least one will be a 

member of the public with knowledge of 

or experience in the municipal industry. 


jlentini on DSKJ8SOYB1PROD with NOTICES
54674 Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Notices 

4The MSRB published such additional notice on 

July 22, 2010, pursuant to which it received a 

number of additional recommendations for persons 

to serve as municipal advisor representatives on the 

Board. 

5The Commission believes that a 14-day 

comment period is reasonable, given the urgency of 

the matter. It will provide adequate time for 

comment. 

6 17 CFR 200.30–3(a)(12). 

Of the 10 regulated representatives, at 

least one will be associated with and 

representative of broker-dealers, at least 

one will be associated with and 

representative of bank dealers, and at 

least one, and not less than 30% of the 

total number of regulated 

representatives, will be associated with 

and representative of municipal 

advisors. The Board believes that such 

composition is fair to each regulated 

constituency and to the public. 

In order to achieve this composition, 

the Board must elect 11 new members— 

eight public representatives and three 

municipal advisor representatives— 

prior to the start of the 2011 fiscal year. 

Although the Board had previously 

published a notice under the existing 

provisions of paragraph (a)(iii)(c) of 

Rule A–3 soliciting nominations of 

Board candidates for fiscal year 2011, in 

order to ensure a fair nomination 

process, the transition rule provides for 

a second publication, on or after 

enactment of the Dodd-Frank Act, of a 

notice in a national financial journal 

soliciting nominations for municipal 

advisor candidates, with the 

Nominating Committee accepting 

recommendations pursuant to such 

notice for a period of at least 14 days 

from the date of publication.4

Finally, the rule change provides that, 

in fiscal year 2011, the Board will 

amend Rule A–3(c) and make other 

changes consistent with the Act and the 

Dodd-Frank Act. 

2. Statutory Basis 

The MSRB believes that the proposed 

rule change is consistent with Section 

15B(b) of the Act, as amended by the 

Dodd-Frank Act, in that it conforms the 

composition of the Board to the 

requirements of the Dodd-Frank Act as 

more fully described above. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Board 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 provides for 

fair representation on the Board of 

public representatives, broker dealer 

representatives, bank dealer 

representatives and municipal advisor 

representatives. 

C. Self-Regulatory Organization’s 

Statement on Comments Received on 

the Proposed Rule Change by Members, 

Participants, or Others 

Written comments were neither 

solicited nor received on the proposed 

rule change. 

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 

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 

the 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. The 

Commission seeks comments on all 

aspects of the MSRB’s proposed rule 

change, including the proposed 

composition of the MSRB Board and 

whether the number and proportion of 

public representatives, broker-dealer 

representatives, bank representatives, 

and advisor representatives is 

appropriate. Because the MSRB, under 

the Dodd-Frank Act, now will be 

proposing and adopting rules with 

respect to the activities of two distinct 

categories of market participants— 

municipal securities dealers and 

municipal securities advisors—is the 

proposed structure of the MSRB Board 

designed to assure that the interests of 

each are appropriately represented, and 

that a fair and effective regulatory 

regime will be implemented both for 

municipal securities dealers and 

municipal securities advisors? Are there 

alternative Board structures or other 

governance arrangements that would 

better achieve these goals? Is increasing 

the size of the MSRB Board the 

appropriate way to accommodate the 

new representation required by the 

Dodd-Frank Act, or should the new 

representation be accomplished by 

reconstituting the current Board? Will 

increasing the size of the MSRB Board 

negatively impact its ability to operate 

effectively? 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–MSRB–2010–08 on the 

subject line. 

Paper Comments 

• 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–2010–08. 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 Web site 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 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All 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– 

2010–08 and should be submitted on or 

before September 22, 2010.5

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–22414 Filed 9–7–10; 8:45 am] 

BILLING CODE 8010–01–P 


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