Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Notices 48135 

29 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

investors and the marketplace. As noted 

above, the Exchange has in place 

surveillance procedures relating to 

trading in the Shares of the Fund and 

may obtain information via ISG from 

other exchanges that are members of ISG 

or with which the Exchange has entered 

into a comprehensive surveillance 

sharing agreement. In addition, as noted 

above, investors will have ready access 

to information regarding the Fund’s 

holdings, the PIV, the Disclosed 

Portfolio for the Fund, and quotation 

and last sale information for the Shares 

of the Fund. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. The Exchange 

notes that the proposed rule change will 

facilitate the listing and trading of an 

additional type of actively-managed 

exchange-traded product that holds 

fixed income securities, equity 

securities and derivatives and that will 

enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

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 

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. 

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– 

NYSEArca–2017–87 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–NYSEArca–2017–87. 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 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 

10:00 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; 

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– 

NYSEArca–2017–87 and should be 

submitted on or before November 6, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–22263 Filed 10–13–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81841; File No. SR–MSRB– 

2017–07] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change to MSRB Rule A–11, on 

Assessments for Municipal Advisor 

Professionals, To Amend the Annual 

Municipal Advisor Professional Fee 

October 10, 2017. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 

19b–4 thereunder,2 notice is hereby 

given that on September 29, 2017 the 

Municipal Securities Rulemaking Board 

(‘‘MSRB’’ or ‘‘Board’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) 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–11, on assessments for 

municipal advisor professionals, to 

increase the annual municipal advisor 

professional fee from $300 to $500 and 

make other technical changes (the 

‘‘proposed rule change’’). The MSRB has 

designated the proposed rule change for 

immediate effectiveness. The MSRB will 

send the first invoice at the new fee 

level to firms in April 2018 for payment 

by April 30, 2018. 

The text of the proposed rule change 

is available on the MSRB’s Web site at 

www.msrb.org/Rules-andInterpretations/SEC-Filings/2017- 

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 


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3Public Law No. 111–203, 124 Stat. 1376 (2010). 

4See 15 U.S.C. 78o–4(b)(2)(J). 5 In furtherance of this framework, the MSRB 

developed a professional qualification exam, 

adopted new rules for municipal advisors and 

extended existing rules to municipal advisors that 

previously applied only to brokers, dealers and 

municipal securities dealers (collectively, 

‘‘dealers.’’) These include, but are not limited to: 

Rule G–44 regarding the supervisory and 

compliance obligations of municipal advisors, see 

Release No. 34–73415 (October 23, 2014), 79 FR 

64423 (October 29, 2014) (File No. SR–MSRB– 

2014–06) (SEC order approving Rule G–44); Rule G– 

42 regarding the duties of non-solicitor municipal 

advisors, see Release No. 34–76753 (December 23, 

2015), 80 FR 81614 (December 30, 2015) (File No. 

SR–MSRB–2015–03) (SEC order approving Rule G– 

42); amendments to Rule G–20, on gifts, gratuities 

and non-cash compensation, to extend provisions of 

the rule to municipal advisors, see Release No. 34– 

76381 (November 6, 2015), 80 FR 70271 (November 

13, 2015) (File No. SR–MSRB–2015–09) (SEC order 

approving amendments to Rule G–20); amendments 

to Rule G–37, on political contributions and 

prohibitions on municipal securities business, to 

extend its provisions to municipal advisors, see 

Release No. 34–76763 (December 23, 2015), 80 FR 

81710 (December 30, 2015) (File No. SR–MSRB– 

2015–14) (Notice of filing of proposed amendments 

to Rule G–37); and amendments to Rule G–3 to 

establish registration and professional qualification 

requirements for municipal advisors, see Release 

No. 34–74384 (February 26, 2015), 80 FR 11706 

(March 4, 2015) (File No. SR–MSRB–2014–08) (SEC 

order approving registration and professional 

qualification requirements for municipal advisor 

representatives and municipal advisor principals). 

6While the MSRB has designated the proposed 

rule change for immediate effectiveness, by its 

terms, the assessment at the $500 per covered 

person rate would be based on covered persons as 

of January 31 of each year. As noted above, the 

MSRB will send the first invoice at the new fee 

level (measured as of January 31, 2018) to firms in 

April 2018 for payment by April 30, 2018. 

7As of September 12, 2017, only an associated 

person of a municipal advisor firm who has passed 

the Series 50 exam may engage in municipal 

advisory activities on behalf of the municipal 

advisor firm. Additionally, municipal advisor 

principals must likewise qualify as a municipal 

advisor representative by passing the Series 50 

exam. See MSRB Notice 2017–09, MSRB Reminds 

Municipal Advisors that the Series 50 Exam 

Deadline is September 12, 2017 (May 8, 2017). 

Because all municipal advisor principals must also 

qualify as a municipal advisor representative, the 

$500 assessment would equally apply to municipal 

advisor principals. 

8This late fee would be in addition to a late fee 

on the total overdue balance based on the Prime 

Rate. 

9See Release No. 34–81264 (July 31, 2017), 82 FR 

36472, n. 18 (August 4, 2017) (File No. SR–MSRB– 

2017–05) (Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change to Assess 

an Underwriting Fee on Dealers That Are 

Underwriters of Primary Offerings of Plans). 

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 increase the existing annual 

municipal advisor professional fee 

assessment to help defray the costs and 

expenses of operating and administering 

the MSRB, particularly the MSRB’s 

regulatory and related activities in 

connection with municipal advisors. In 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 

(‘‘Dodd-Frank Act’’),3 Congress charged 

the Commission and the MSRB with the 

regulation of municipal advisors and 

specifically granted the MSRB authority 

to charge municipal advisors reasonable 

fees to defray the costs of the operation 

of the MSRB.4 In its exercise of 

authority granted by Congress, the 

MSRB has since developed a 

comprehensive regulatory framework 

for municipal advisors.5 To help defray 

the costs of this and related activities, in 

2014, the MSRB adopted Rule A–11, on 

assessments for municipal advisor 

professionals. 

Pursuant to Rule A–11, each 

municipal advisor firm that is registered 

with the Commission is required to pay 

to the Board a recurring annual fee 

equal to $300 for each Form MA–I filed 

with the Commission by such municipal 

advisor as of January 31 of each year. 

Rule A–11 also provides for late fees on 

assessments that are not paid in full, 

and includes a transitional provision 

that, at the time of Rule A–11’s 

adoption, was necessary to take into 

account the timing of the phased-in 

compliance period for the SEC’s 

permanent municipal advisor 

registration process. 

The proposed rule change would 

amend Rule A–11(a) to provide that 

each municipal advisor that is registered 

with the Commission shall pay to the 

Board a recurring annual fee, equal to 

$500 for each person associated with the 

municipal advisor who is qualified as a 

municipal advisor representative in 

accordance with Rule G–3 and for 

whom the municipal advisor has on file 

with the Commission a Form MA–I as 

of January 31 of each year (‘‘covered 

persons’’).6 Amended Rule A–11(a) 

would increase the amount of the 

current assessment from $300 to $500 

and delete a now-outdated reference to 

the fiscal year for which the annual 

municipal advisor professional fee first 

became due. In addition, a minor 

amendment to section (a) would help 

streamline the rule by deleting the 

unnecessary clause ‘‘and shall be 

payable’’ from the final sentence in that 

section. Lastly, amendments to Rule A– 

11(a) would provide that the assessment 

payable would be determined based on 

the number of Form MA-Is on file with 

the Commission (as it is currently 

determined) and based on the number of 

associated persons qualified as a 

municipal advisor representative in 

accordance with Rule G–3. A person is 

qualified as a municipal advisor 

representative in accordance with Rule 

G–3(d) when such person has taken and 

passed the Municipal Advisor 

Representative Qualification 

Examination (the ‘‘Series 50 exam’’).7

An amendment to Rule A–11(b) 

would provide that a municipal advisor 

that fails to timely pay in full ‘‘the total’’ 

annual municipal advisor professional 

fee due under section (a) shall pay a 

monthly late fee equal to $25 for such 

failure, while another amendment 

would delete the reference to the 

monthly fee being payable ‘‘for each 

$300 assessment not paid in full.’’ 

Together, these amendments to section 

(b) are intended to make clear that a 

separate $25 monthly late fee would not 

be due for each covered person for 

which the $300 fee was not timely paid. 

Rather, a municipal advisor firm would 

be required to pay only one $25 

monthly late fee (regardless of the 

number of its covered persons for which 

the per professional fee was not timely 

paid) if it fails timely to pay in full the 

total fee due under section (a).8 Finally, 

the proposed rule change would delete 

Rule A–11(c) because that provision 

pertains to a transitional municipal 

advisor professional fee that no longer 

has application. A related minor 

technical amendment to Rule A–11(b) 

would delete a reference to Rule A– 

11(c). 

The MSRB believes that the proposed 

fee increase reflected in the proposed 

amendments to Rule A–11(a) is 

reasonable as well as necessary and 

appropriate to help defray the costs of 

operating and administering the MSRB. 

It is also a step towards achieving the 

MSRB’s strategic goal of promoting 

long-term financial stability by assessing 

fair and equitable fees, and diversifying 

funding sources. The MSRB believes the 

proposed rule change will help the 

organization provide for assessments 

that are increasingly more fairly and 

equitably apportioned among all 

registrants. The MSRB notes that, 

consistent with the Board’s longstanding prohibition on charging or 

otherwise passing through to issuers the 

fees required under Rule A–13,9

municipal advisors similarly would be 

prohibited from charging or otherwise 

passing through the fees required under 

Rule A–11 to issuers. 


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10See Section 15B(b)(2) of the Act (15 U.S.C. 78o– 

4(b)(2)) (in relevant part, requiring the Board to 

propose and adopt rules for municipal advisors 

with respect to municipal financial products, the 

issuance of municipal securities and solicitations of 

municipal entities or obligated persons undertaken 

by brokers, dealers, municipal securities dealers, 

and municipal advisors). 

11 15 U.S.C. 78o–4(b)(2)(J). 

12Beginning in May 2018, the Board will invoice 

underwriters of a primary offering of certain 

municipal fund securities for the assessments due. 

See Release No. 34–81264 (July 31, 2017), 82 FR 

36472 (August 4, 2017) (File No. SR–MSRB–2017– 

05) (Notice of Filing and Immediate Effectiveness of 

a Proposed Rule Change to Assess an Underwriting 

Fee on Dealers That Are Underwriters of Primary 

Offerings of Plans). 

13 In addition, the MSRB charges data 

subscription and service fees for subscribers, 

including regulated entities, seeking direct 

electronic delivery of municipal trade data and 

disclosure documents associated with municipal 

bond issues. However, this information is available 

without direct electronic delivery on the EMMA 

Web site without charge. 

14See Release No. 34–72019 (April 25, 2014), 79 

FR 24798, 24798 (May 1, 2014) (File No. SR– 

MSRB–2014–03) (Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change Consisting 

of New Rule A–11, on Assessments for Municipal 

Advisor Professionals); see also MSRB Notice 2014– 

09, MSRB to Implement New MSRB Rule A–11 

Establishing Fees for Municipal Advisor 

Professionals (April 17, 2014). 

15See Rule G–17, Conduct of Municipal 

Securities and Municipal Advisory Activities; Rule 

G–20, Gifts Gratuities, Non-Cash Compensation and 

Expenses of Issuance; and Rule G–37, Political 

Contributions and Prohibitions on Municipal 

Securities Business and Municipal Advisory 

Business available at http://msrb.org/Rules-andInterpretations/MSRB-Rules.aspx. 

16See Rule G–42, Duties of Non-Solicitor 

Municipal Advisors; Rule G–44, Supervisory and 

Compliance Obligations of Municipal Advisors 

available at http://msrb.org/Rules-andInterpretations/MSRB-Rules.aspx. 

17See Rule G–8, Books and Records to be Made 

by Brokers, Dealers, and Municipal Securities 

Dealers and Municipal Advisors; and Rule G–10, 

Investor and Municipal Advisory Client Education 

and Protection available at http://msrb.org/Rulesand-Interpretations/MSRB-Rules.aspx. Effective 

October 13, 2017, current Rule G–10, Delivery of 

Investor Brochure, will be replaced in its entirety 

by new Rule G–10. 

The Board’s Holistic Review of MSRB 

Fees 

The MSRB assesses dealers and 

municipal advisors (collectively, 

‘‘regulated entities’’) various fees 

designed to defray the costs of its 

operations and administration, 

including rulemaking, market 

transparency, and educational and 

market outreach initiatives that fulfill its 

Congressional mandate to, among other 

things, protect investors, state and local 

governments and other municipal 

entities, obligated persons and the 

public interest and promote a fair and 

efficient municipal securities market.10

Section 15B(b)(2)(J) of the Act 11

provides, in pertinent part, that each 

regulated entity shall pay to the Board 

such reasonable fees and charges as may 

be necessary or appropriate to defray the 

costs of operating and administering the 

Board, and that the MSRB shall have 

rules specifying the amount of such 

fees. The current fees so specified by 

MSRB rules are: 

1. Municipal Advisor Professional Fee 

(Rule A–11) 

$300 annually per Form MA–I on file 

with the SEC by the municipal advisor; 

2. Late Fee (Rules A–11 and A–12) 

$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; 

3. Initial Registration Fee (Rule A–12) 

$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; 

4. Annual Registration Fee (Rule A–12) 

$1,000 annual fee to be paid by each 

dealer and municipal advisor registered 

with the MSRB; 

5. Underwriting Fee (Rule A–13) 

$.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, except in limited 

circumstances; and in the case of an 

underwriter (as defined in Rule G–45) of 

a primary offering of certain municipal 

fund securities, $.005 per $1,000 of the 

total aggregate assets for the reporting 

period; 12

6. Transaction Fee (Rule A–13) 

.001% ($.01 per $1,000) of the total 

par value to be paid by a dealer, except 

in limited circumstances, for interdealer sales and customer sales reported 

to the MSRB pursuant to Rule G–14(b), 

on transaction reporting requirements; 

7. Technology Fee (Rule A–13) 

$1.00 paid by a dealer per transaction 

for each inter-dealer sale and for each 

sale to customers reported to the MSRB 

pursuant to Rule G–14(b); and 

8. Professional Qualification 

Examination Fee (Rule A–16) 

$150 test development fee assessed 

per candidate for each MSRB 

professional qualification 

examination.13

Initiated in 2015, the Board’s holistic 

review of fees that the Board assesses on 

regulated entities continues. The Board 

evaluates those fees with the goal of 

better aligning revenue sources with 

operating expenses and all capital 

needs. The Board strives to diversify 

funding sources among regulated 

entities and other entities that fund 

MSRB activities in a manner that 

ensures long-term sustainability, while 

continuing to strike an equitable balance 

among regulated entities and a fair 

allocation of the expenses of the 

regulatory activities, systems 

development and operational activities 

undertaken by the MSRB. In 

determining the fair allocation of the 

cost of MSRB regulation to regulated 

entities, the Board considers, among 

other things: Registration to engage in 

municipal securities or municipal 

advisory activities; the level of dealer 

market activity; and the number of 

associated persons engaged in 

municipal advisory activities on behalf 

of a municipal advisor. Recognizing that 

in any given year there could be more 

or less activity by a particular class of 

regulated entities, the Board, as it has 

historically, seeks to maintain a fee 

structure that results in a balanced and 

reasonable contribution over time from 

all regulated entities to defray costs and 

expenses of operating and administering 

the MSRB. 

As part of the Board’s ongoing review 

and examination of fees, the Board 

reviewed the amount of the $300 per 

professional fee charged under Rule A– 

11. This fee was originally established 

in 2014 as a reasonable initial starting 

amount to help defray the costs and 

expenses of operating and administering 

the MSRB, particularly the MSRB’s 

regulatory and related activities in 

connection with municipal advisors.14

These regulatory activities include the 

development and implementation of a 

comprehensive regulatory framework 

for municipal advisors, including: The 

extension to municipal advisors of rules 

that previously only applied to dealers 

on the subject of fair dealing and 

specified forms of conflicts of interest; 15

the adoption of new rules for municipal 

advisors that establish the core 

standards of conduct for non-solicitor 

municipal advisors and that establish 

supervisory and compliance obligations 

for municipal advisor firms; 16 the 

creation of new municipal advisor 

recordkeeping requirements and 

municipal advisory client education and 

protection provisions; 17 and the 

development and implementation of 

professional standards for municipal 

advisors to help ensure that all 


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18See Rule G–2, Standards of Professional 

Qualification; and Rule G–3, Professional 

Qualification Requirements available at http://

msrb.org/Rules-and-Interpretations/MSRBRules.aspx. 

19For example, the MSRB supports regulatory 

compliance by municipal advisors by providing 

resources about MSRB requirements, as well as 

more general educational material. Municipal 

advisors may access these resources and others, 

including the Municipal Advisor Review, the 

MSRB’s quarterly newsletter for municipal advisors 

at http://www.msrb.org/Regulated-Entities/ 

Resources.aspx. In addition, the MSRB has 

published several regulatory notices for municipal 

advisors to help keep market participants informed 

of regulatory changes and to provide guidance on 

the application of existing rules. See e.g., MSRB 

Notice 2017–08, Application of MSRB Rules to 

Solicitor Municipal Advisors (May 4, 2017); MSRB 

Notice 2017–13, MSRB Provides Guidance on 

Duties of Non-Solicitor Municipal Advisors in 

Conduit Financing Scenarios (July 13, 2017). 

20For example, the MSRB provides free 

education and training webinars on municipal 

market topics, regulatory and compliance issues, 

and the use of MSRB market transparency systems. 

Municipal advisors may register for new webinars 

and access on-demand webinars, including some 

webinars that provide CPE credit at http://

www.msrb.org/Regulated-Entities/Webinars.aspx. 

21Once the Series 54 exam is permanently 

available, municipal advisor principals will be 

required to take the Series 54 exam in addition to 

the Series 50 exam. See FAQs on Municipal 

Advisor Professional Qualification and Examination 

Requirements, at n. 1 available at http://

www.msrb.org/msrb1/pdfs/FAQ-MSRB-Series-50- 

Exam.pdf. 

22See Release No. 34–75751 (August 24, 2015), 

80 FR 52352, 52355 (August 28, 2015) (File No. SR– 

MSRB–2015–08) (Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change Consisting 

of Amendments to MSRB Rule A–12, on 

Registration, and MSRB Rule A–13, on 

Underwriting and Transaction Assessments for 

Brokers, Dealers and Municipal Securities Dealers). 

23The MSRB expects that the municipal advisor 

professional fee, at the dollar amount set forth in 

the proposed rule change, would generate 

approximately 4% of the MSRB’s Fiscal Year 2018 

revenue. The MSRB will release and make publicly 

available its budget for Fiscal Year 2018 in October 

2017. See MSRB Monthly Update (September 2017) 

available at https://content.govdelivery.com/ 

accounts/VAORGMSRB/bulletins/1b497b6. 

24 15 U.S.C. 78o–4(b)(2)(J). 

25 Id. 26See n. 23 and accompanying text. 

municipal advisors are competent and 

qualified.18 As part of the 

implementation of this latter category of 

rules, the MSRB also established the 

Series 50 exam, a baseline test of a 

municipal advisor’s competency and 

knowledge of applicable rules. 

To assist municipal advisors in 

understanding and complying with this 

new regulatory framework, the MSRB 

has undertaken considerable education, 

outreach and compliance activities. 

These include, but are not limited to: 

The creation of educational documents, 

resources and compliance-oriented 

notices and communications; 19 the 

development of educational webinars 

and the organization of, and 

participation in, outreach events; 20 and 

the launch of an expanded on-demand 

education program, MuniEdPro®, which 

was designed, in part, to serve the 

education needs of regulated entities. 

Looking forward to Fiscal Year 2018, 

the MSRB expects to continue its many 

activities relating to municipal advisors, 

including its significant education, 

outreach and compliance initiatives. 

The MSRB will also be developing a 

new municipal advisor principal-level 

professional qualification 

examination—the Series 54—for 

anticipated availability as a pilot in 

2019.21

In an August 2015 fee filing 

associated with the Board’s holistic 

review of fees,22 the MSRB explained 

that, at that time, it was not modifying 

the $300 municipal advisor per 

professional fee to provide municipal 

advisors with additional time for the 

municipal advisor regulations and 

business models to more fully develop. 

However, the MSRB explained that the 

targeted revenue to be generated from 

the municipal advisor professional fee 

of approximately $2 million at that time, 

or approximately 5% of total MSRB 

revenues, was not yet being met and the 

per professional fee would need to be 

increased in the future. The proposed 

rule change is the next step towards 

moving closer to that revenue target.23

2. Statutory Basis 

The MSRB believes that the proposed 

rule change is consistent with Section 

15B(b)(2)(J) of the Act 24 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, as 

amended by the proposed rule change, 

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).25 The MSRB believes the 

proposed rule change is necessary 

because it will help defray the costs of 

the Board’s significant rulemaking, 

market transparency, educational and 

market outreach initiatives, market 

leadership, professional qualifications 

examination development and other 

activities relating to municipal advisors. 

As discussed above, the MSRB has 

engaged in significant rulemaking to put 

into place a regulatory framework for 

municipal advisors and has engaged in 

considerable activities to assist 

municipal advisors in understanding 

their obligations and comply with the 

applicable rules. In addition, because 

the MSRB does not have any 

examination or enforcement authority, 

the MSRB has enhanced its 

coordination with the regulatory 

authorities charged with the authority to 

examine for compliance with and 

enforce MSRB rules. The MSRB 

frequently provides rule interpretations, 

training related to the market and MSRB 

rules, and access to municipal market 

information in support of the municipal 

advisor examination and enforcement 

activities of these regulatory authorities. 

The MSRB expects to continue its many 

activities relating to municipal advisors, 

with a focus on education, outreach and 

compliance. In addition, as noted above, 

the MSRB will be working to develop 

the Series 54 professional qualification 

exam. The proposed rule change will 

assist in defraying some of the costs 

associated with these activities and will 

help ensure the MSRB is funding these 

regulatory activities in a financially 

responsible way. 

The MSRB believes the proposed rule 

change is appropriate because it moves 

towards a more equitable balance of fees 

among regulated entities and hence a 

fairer allocation of the expenses of the 

regulatory activities, systems 

development, and operational activities 

undertaken by the MSRB. However, 

even with the fee increase in the 

proposed rule change, the proposed fees 

would only defray a small portion of the 

MSRB’s overall costs of operating and 

administering the MSRB—generating 

approximately 4% of Fiscal Year 2018 

revenue.26

MSRB operations are funded 

primarily by assessments and fees on 

regulated entities. In fact, 80% of the 

Fiscal Year 2018 budgeted revenue is 

based on market activity (that is, 

municipal securities trading and 

underwriting volume). Due to the 

accumulated historical variances 

between actual and budgeted revenue, 

the MSRB has excess reserves. This is 

largely due to the MSRB’s appropriately 

conservative approach to budgeting 

revenues that are primarily marketbased and inherently volatile. While the 

MSRB’s current reserve levels exceed 

targets, the MSRB budget for Fiscal Year 

2018 has a deficit, as do the pro forma 


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27 15 U.S.C. 78o–4(b)(2)(C). 

28 15 U.S.C. 78o–4(b)(2)(L)(iv). 

29The 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 for which the MSRB seeks 

immediate effectiveness, the MSRB usually focuses 

its examination exclusively on the burden on 

competition of regulated entities. 

30For example, FINRA’s annual registration fee 

and new member application fee assessments for 

broker-dealers are based on the number of branch 

offices and the number of registered persons, the 

PCAOB’s annual fee assessment is based on the 

number of issuer audit clients and the number of 

personnel within each public accounting firm, 

NFA’s annual member dues for swap dealers and 

Forex dealers are based on the tier size of member 

firms, and FASB’s accounting support fees are 

allocated based on the average market capitalization 

of each issuer. 

31The MSRB understands that the Form MA–I on 

file should be withdrawn for any person who fails 

to qualify as a municipal advisor representative in 

accordance with Rule G–3. See Registration of 

Municipal Advisors Frequently Asked Questions at 

Question 16.1, available at https://www.sec.gov/ 

info/municipal/mun-advisors-faqs.shtml. 

32 15 U.S.C. 78s(b)(3)(A). 

33 17 CFR 240.19b–4(f). 

budgets for Fiscal Years 2019 through 

2020. The MSRB anticipates that in the 

future, based on assumptions reviewed 

and agreed upon by the MSRB, excess 

reserves will be eroded by Fiscal Year 

2020 (even with the increased 

municipal advisor professional fee and 

new underwriting fee on underwriters 

of 529 college savings plans). Further, 

the MSRB’s budget for Fiscal Year 2018 

anticipates that the MSRB will 

strategically spend some of its reserves. 

Finally, the MSRB believes, as a matter 

of principle, that it is inherently unfair 

to allow certain regulated entities to pay 

a disproportionate share of the cost of 

operating the MSRB. The MSRB 

therefore regularly evaluates fees and 

adjusts them, as needed, to ensure that 

all regulated entities that benefit from 

functioning in a fair, efficient and 

transparent market pay their fair share. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Section 15B(b)(2)(C) of the Act 27

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. In addition, Section 

15B(b)(2)(L)(iv) of the Act 28 provides 

that MSRB rules ‘‘not impose a 

regulatory burden on small municipal 

advisors that is not necessary or 

appropriate in the public interest and 

for the protection of investors, 

municipal entities, and obligated 

persons, provided that there is robust 

protection of investors against fraud.’’ 

The Board’s policy on the use of 

economic analysis in rulemaking 29

limits its application regarding those 

rules for which the Board seeks 

immediate effectiveness. However, an 

internal analysis is still conducted to 

gauge the economic impact, with an 

emphasis on the burden on competition 

involving regulated entities. Guided by 

these aspects of the policy, the Board 

has reviewed the proposed rule change. 

The Board believes the proposed rule 

change is necessary and appropriate to 

ensure that MSRB registrants that are 

municipal advisors equitably contribute 

to defraying the costs and expenses of 

operating and administering the MSRB. 

The MSRB has considered the economic 

impact of the proposed rule change. The 

MSRB does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act since it will 

apply equally to all municipal advisors 

based on the number of persons 

qualified as municipal advisor 

representatives associated with the 

municipal advisor and the number of 

Forms MA–I filed by each firm. 

The MSRB believes the current fee 

structure is fair and equitable among 

municipal advisors of differing size. The 

existing per firm annual fee ($1,000) 

helps cover the fixed costs of regulating 

any firm, regardless of size; while the 

existing annual professional fee 

assessment results in smaller municipal 

advisors paying less than larger 

municipal advisors. The proposed fee 

increase will further expand the current 

spread paid between large versus small 

firms. The MSRB notes that other selfregulatory organizations and 

independent oversight and rulemaking 

boards, such as the Financial Industry 

Regulatory Authority (‘‘FINRA’’), the 

Public Company Accounting Oversight 

Board (‘‘PCAOB’’), National Futures 

Association (‘‘NFA’’) and the Financial 

Accounting Standards Board (‘‘FASB’’), 

all have some annual fee assessment 

structure that is based on the size of 

firms under regulation.30

The MSRB believes that the fee 

increase will not impose an unnecessary 

or inappropriate regulatory burden on 

small municipal advisors. The total 

amount of the assessment payable by 

each municipal advisor will be 

dependent on the number qualified 

associated persons for whom Forms 

MA–I are filed by the municipal 

advisor 31 and, therefore, will result in 

lower relative assessments for smaller 

firms. Being based on the number of 

persons engaging in municipal advisory 

activities on behalf of a firm, the total 

fee will bear a reasonable relationship to 

the level of regulated municipal 

advisory activities that are undertaken 

by each firm. 

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 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 proposed rule change 

has become effective pursuant to 

Section 19(b)(3)(A) of the Act 32 and 

paragraph (f) of Rule 19b–4 

thereunder.33 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–2017–07 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–2017–07. 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 


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48140 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Notices 

34 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 ‘‘Priority Customer’’ means a person or entity 

that (i) is not a broker or dealer in securities, and 

(ii) does not place more than 390 orders in listed 

options per day on average during a calendar month 

for its own beneficial accounts(s). See Exchange 

Rule 100, including Interpretations and Policies .01. 

4 ‘‘Member’’ means an individual or organization 

that is registered with the Exchange pursuant to 

Chapter II of the Exchange Rules for purposes of 

trading on the Exchange as an ‘‘Electronic Exchange 

Member’’ or ‘‘Market Maker.’’ Members are deemed 

‘‘members’’ under the Exchange Act. See the 

Definitions Section of the Fee Schedule and 

Exchange Rule 100. 

5 ‘‘Excluded Contracts’’ means any contracts 

routed to an away market for execution. See the 

Definitions Section of the Fee Schedule. 

6 ‘‘TCV’’ means total consolidated volume 

calculated as the total national volume in those 

classes listed on MIAX PEARL for the month for 

which the fees apply, excluding consolidated 

volume executed during the period time [sic] in 

which the Exchange experiences an ‘‘Exchange 

System Disruption’’ (solely in the option classes of 

the affected Matching Engine (as defined below)). 

The term Exchange System Disruption, which is 

defined in the Definitions section of the Fee 

Schedule, means an outage of a Matching Engine or 

collective Matching Engines for a period of two 

consecutive hours or more, during trading hours. 

The term Matching Engine, which is also defined 

in the Definitions section of the Fee Schedule, is a 

part of the MIAX PEARL electronic system that 

processes options orders and trades on a symbolby-symbol basis. Some Matching Engines will 

process option classes with multiple root symbols, 

and other Matching Engines may be dedicated to 

one single option root symbol (for example, options 

on SPY may be processed by one single Matching 

Engine that is dedicated only to SPY). A particular 

root symbol may only be assigned to a single 

designated Matching Engine. A particular root 

symbol may not be assigned to multiple Matching 

Engines. The Exchange believes that it is reasonable 

and appropriate to select two consecutive hours as 

the amount of time necessary to constitute an 

Exchange System Disruption, as two hours equates 

to approximately 1.4% of available trading time per 

month. The Exchange notes that the term 

‘‘Exchange System Disruption’’ and its meaning 

have no applicability outside of the Fee Schedule, 

as it is used solely for purposes of calculating 

volume for the threshold tiers in the Fee Schedule. 

See the Definitions Section of the Fee Schedule. 

7 ‘‘Affiliate’’ means (i) an affiliate of a Member of 

at least 75% common ownership between the firms 

as reflected on each firm’s Form BD, Schedule A, 

or (ii) the Appointed Market Maker of an Appointed 

EEM (or, conversely, the Appointed EEM of an 

Appointed Market Maker). An ‘‘Appointed Market 

Maker’’ is a MIAX PEARL Market Maker (who does 

not otherwise have a corporate affiliation based 

upon common ownership with an EEM) that has 

been appointed by an EEM and an ‘‘Appointed 

EEM’’ is an EEM (who does not otherwise have a 

corporate affiliation based upon common 

ownership with a MIAX PEARL Market Maker) that 

has been appointed by a MIAX PEARL Market 

Maker, pursuant to the process described in the Fee 

Schedule. See the Definitions Section of the Fee 

Schedule. 

8The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

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 

10:00 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; 

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– 

2017–07 and should be submitted on or 

before November 6, 2017. 

For the Commission, pursuant to delegated 

authority.34

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–22262 Filed 10–13–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81844; File No. SR– 

PEARL–2017–34] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX 

PEARL Fee Schedule 

October 10, 2017. 

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 29, 2017, MIAX PEARL, LLC 

(‘‘MIAX PEARL’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) a 

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 

The Exchange is filing a proposal to 

amend the MIAX PEARL Fee Schedule 

(the ‘‘Fee Schedule’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’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 

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 the 

Add/Remove Tiered Rebates/Fees set 

forth in Section 1(a) of the Fee Schedule 

to increase the ‘‘Taker’’ fee in all Tiers 

assessable to all orders submitted by a 

Member for the account of a Priority 

Customer.3 The Exchange also proposes 

to make a number of non-substantive 

changes to its routing fee table set forth 

Section 1(b) of the Fee Schedule to 

reflect recent corporate name changes to 

some of the options exchanges listed in 

the table. 

Taker Fee Changes 

The Exchange currently assesses 

tiered transaction rebates and fees to all 

market participants which are based 

upon the total monthly volume 

executed by the Member 4 on MIAX 

PEARL in the relevant, respective origin 

type (not including Excluded 

Contracts) 5 expressed as a percentage of 

TCV.6 In addition, the per contract 

transaction rebates and fees are applied 

retroactively to all eligible volume for 

that origin type once the respective 

threshold tier (‘‘Tier’’) has been reached 

by the Member. The Exchange 

aggregates the volume of Members and 

their Affiliates.7 Members that place 

resting liquidity, i.e., orders resting on 

the book of the MIAX PEARL System,8

are paid the specified ‘‘maker’’ rebate 

(each a ‘‘Maker’’), and Members that 

execute against resting liquidity are 


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