Document ID: SEC-2016-0939-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Municipal Securities Rulemaking Board
Posted Date: 2016-06-01T04:00Z

[Federal Register Volume 81, Number 105 (Wednesday, June 1, 2016)]
[Notices]
[Pages 35111-35115]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12789]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77903; File No. SR-MSRB-2016-07]

Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of a Proposed Rule Change Consisting of 
Proposed Amendments to MSRB Rule G-12, on Uniform Practice, Regarding 
Close-Out Procedures for Municipal Securities

May 25, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on May 11, 2016, the Municipal Securities 
Rulemaking Board (the ``MSRB'' or ``Board'') filed with the Securities 
and Exchange Commission (the ``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 proposed amendments to Rule G-12, on uniform practice, 
regarding close-out procedures for municipal securities (``proposed 
rule change'').
    The text of the proposed rule change is available on the MSRB's Web 
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2016-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
    Rule G-12(h) \3\ and the MSRB's Manual on Close-Out Procedures \4\ 
provide optional procedures that can be used by brokers, dealers, or 
municipal securities dealers (``dealers'') to close out open inter-
dealer fail transactions. The rule currently allows the purchasing 
dealer to issue a notice of close-out to the selling dealer on any 
business day from five to 90 business days after the scheduled 
settlement date.\5\ Rule G-12(h) currently does not

[[Page 35112]]

mandate a purchasing dealer to initiate a close-out, or to execute a 
close-out notice it has initiated nor does it provide the selling 
dealer with the right to force a close-out of the transaction. If the 
purchasing dealer chooses not to initiate a close-out within 90 
business days of the original contract settlement date (and ultimately 
execute it) then that dealer loses its right to use the Rule G-12(h) 
procedure, and the transaction remains open until it is resolved by 
agreement of the parties or through arbitration. During this period, 
the selling dealer is subject to market risk for any increase in the 
price of the municipal securities. Rule G-12(h) provides the close-out 
options of substitution and mandatory repurchase because municipal 
securities often are not available for a buy-in within a reasonable 
period of time.
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    \3\ See MSRB Rule G-12.
    \4\ See Manual on Close-Out Procedures.
    \5\ The purchasing dealer may initiate a close-out within 15 
business days after a reclamation made under Rule G-12(g)(iii)(C) or 
G-12(g)(iii)(D), even though more than 90 business days have elapsed 
since the original settlement date.
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    If the selling dealer does not deliver the securities owed on the 
transaction within 10 business days after receipt of the close-out 
notice (15 business days for retransmitted notices), then the 
purchasing dealer may execute a close-out procedure using one of three 
options: (1) Purchase (``buy-in'') at the current market all or any 
part of the securities necessary to complete the transaction for the 
account and liability of the seller; (2) accept from the seller in 
satisfaction of the seller's obligation under the original contract 
(which shall be concurrently cancelled) the delivery of municipal 
securities that are comparable to those originally bought in quantity, 
quality, yield or price, and maturity, with any additional expenses or 
any additional cost of acquiring such substituted securities being 
borne by the seller; or (3) require the seller to repurchase the 
securities on terms that provide for the seller to pay an amount that 
includes accrued interest and bear the burden of any change in market 
price or yield.
    Rule G-12(h) includes a 90-business day time limit for close-outs 
to encourage dealers to resolve open transactions in a timely manner, 
but there is no requirement that open transactions be closed out within 
90 business days. Currently, a purchasing dealer is not required to 
initiate a close-out or to execute a close-out notice if one is 
initiated, nor does the selling dealer have a right to force a close-
out of the transaction. If the purchasing dealer chooses not to 
initiate a close-out within 90 business days of the original contract 
settlement date (and ultimately execute the close-out), then that 
dealer loses its right to use the Rule G-12(h) procedure and the 
transaction remains open until it is resolved by agreement of the 
parties or through arbitration. During this period, the selling dealer 
is subject to market risk for any increase in the price of the 
securities.
    Since Rule G-12(h) was last revised in 1983, evolutions in the 
municipal securities market have changed how securities are offered and 
modernized the manner in which inter-dealer transactions are cleared 
and settled. There are electronic alternative trading systems (``ATS'') 
and broker-dealers that serve in the role of a ``broker's broker'' in 
the municipal market, facilitating the ability of dealers to find 
securities for purchase. MSRB rules requiring use of the Depository 
Trust & Clearing Corporation (``DTCC'') automated comparison system and 
book entry settlement, as well as the shortening of the settlement 
cycle from T+5 to T+3, likewise have contributed to lowering the 
occurrence of inter-dealer fails since the rule's adoption. The 
initiative to move to T+2 settlement has received broad support from 
both the industry and the SEC,\6\ and is likely to further reduce the 
instances of inter-dealer fails.\7\ The MSRB believes that a more 
timely resolution of inter-dealer fails would ultimately benefit 
customers by providing greater certainty that their fully paid for 
securities are in fact owned in their account, not allocated to a firm 
short, and would benefit dealers by reducing the risk and costs 
associated with inter-dealer fails.
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    \6\ See Michael S. Piwowar, Commissioner, and Kara M. Stein, 
Commissioner, SEC, Statement Regarding Proposals to Shorten the 
Trade Settlement Cycle (June 29, 2015) available at http://www.sec.gov/news/statement/statement-on-proposals-to-shorten-the-trade-settlement-cycle.html.
    \7\ On April 29, 2016 the SEC approved amendments to MSRB Rules 
G-12, on uniform practice, and G-15 on confirmation, clearance, 
settlement and other uniform practice requirements with respect to 
transactions with customers, to define regular-way settlement for 
municipal securities transactions as occurring on a two-day 
settlement cycle (``T+2''). Exchange Act Release No. 77744 (April 
29, 2016), 81 FR 26851 (May 4, 2016), File No. SR-MSRB-2016-04.
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    MSRB Rule G-14 \8\ requires the use of National Securities Clearing 
Corporation's (``NSCC'') Real-Time Trade Matching (``RTTM'') for 
submitting or modifying data with respect to Inter-Dealer Transactions 
Eligible for Comparison. Additionally, dealers' almost universal use of 
DTCC's continuous net settlement (``CNS'') on a voluntary basis \9\ has 
resulted in inter-dealer transactions that are netted (or paired-off) 
with counterparties that may not have originally transacted together 
causing new settlement dates to be continually established. This 
scenario was not contemplated when Rule G-12(h) was originally adopted, 
thus making it unclear that firms should use the original contract 
settlement date pursuant to the rule today.\10\
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    \8\ See MSRB Rule G-14.
    \9\ As a key part of the CNS system, NSCC acts as the central 
counterparty for clearance and settlement for virtually all broker-
to-broker equity, corporate and municipal bond and unit investment 
trust trading in the United States. CNS processes include an 
automated book entry accounting system that centralizes settlement 
and maintains an orderly flow of security and money balances.
    \10\ In NSCC's CNS and RECAPS program, transactions are marked 
to market, and receive new settlement dates that may also serve for 
purposes of the SEC's net capital rules. This may reduce the 
dealer's net capital deductions for ``aged'' failed transactions, 
but does not always resolve the open transaction. If the dealer 
keeps the transaction open, it must use the original contract 
settlement date for purposes of the 90-day limit on close-outs.
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Proposal
    The proposed rule change to Rule G-12(h), regarding close-outs, 
would significantly compress the timing to initiate and complete a 
close-out by allowing a close-out notice to be issued the day after the 
purchaser's original settlement date, with the last day by which the 
purchasing dealer must complete a close-out on an open transaction 
being reduced to 20 calendar days.
    With the vast majority of municipal securities in book entry form 
and DTCC's continued efforts to promote dematerialization, the MSRB is 
proposing that firms should no longer have to provide a 10-day delivery 
window before implementing an execution period. The MSRB believes a 
three-day delivery window would be sufficient as the majority of inter-
dealer fails are resolved within days of the original settlement and/or 
a fail situation is known prior to the original settlement date.
    Additionally, the current rule requires that the earliest day that 
can be specified as the execution date is 11 days after telephonic 
notice. The proposed amendments would amend the current allowable 
execution time frame from 11 days to four days after electronic 
notification. Accelerating the execution date could improve a firm's 
likelihood of finding a security for a buy-in, lower overall counter-
party risk and may further reduce accrual, capital and other expenses.
    Under the proposed rule change, a purchasing dealer notifying the 
selling dealer of an intent to close out an inter-dealer fail would 
continue to prompt DTCC to ``exit'' the position from CNS and the two 
parties are responsible for effecting the close-out. Because a 
municipal security may not be available

[[Page 35113]]

for purchase, incorporating the buy-in procedures of a registered 
clearing agency will often not solve the inter-dealer fail. The MSRB 
expects firms to not solely rely upon the CNS system or the services of 
a registered clearing agency to resolve inter-dealer fails and take 
prompt action to close out inter-dealer fails in a timely manner. Under 
the proposed rule change, regardless of the date the positions are 
exited from CNS, the inter-dealer fail must be resolved within 20 
calendar days of the purchasing dealer's original settlement date. The 
MSRB is also proposing to retire the Manual on Close-Out 
Procedures.\11\
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    \11\ See Manual on Close-Out Procedures. The Manual on Close-Out 
Procedures would be retired because such procedures would be 
outdated and, given the proposed rule change's overall simplicity, 
developing an updated version of the manual is not warranted.
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Proposed Amendments to MSRB Rule G-12(h)
    Rule G-12, on uniform practice, establishes uniform industry 
practices for processing, clearance and settlement of transactions in 
municipal securities between a broker, dealer or municipal securities 
dealer and any other broker, dealer or municipal securities dealer. The 
proposed amendments would amend Rule G-12(h) by requiring close-outs to 
be settled no later than 20 calendar days after the settlement date. 
The proposed amendments to G-12(h)(i)(B) would allow for the close-out 
process to continue to provide three options to the purchasing dealer. 
The three options include: (1) Purchase (``buy-in'') at the current 
market all or any part of the securities necessary to complete the 
transaction for the account and liability of the seller; (2) accept 
from the seller in satisfaction of the seller's obligation under the 
original contract (which shall be concurrently cancelled) the delivery 
of municipal securities that are comparable to those originally bought 
in quantity, quality, yield or price, and maturity, with any additional 
expenses or any additional cost of acquiring such substituted 
securities being borne by the seller; or (3) require the seller to 
repurchase the securities on terms which provide that the seller pay an 
amount which includes accrued interest and bear the burden of any 
change in market price or yield.
    Firms must coordinate internally to determine which of the three 
close-out options are appropriate for any given fail-to-deliver 
situation. While a buy-in may be the most preferred method, Rule G-
12(h) provides two other options to a purchaser in the event a buy-in 
is not feasible. Firms are reminded that, regardless of the option 
agreed upon by the counterparties, including a cancelation of the 
original transaction, the close-out transaction is reportable to the 
Real-time Transaction Reporting System (``RTRS'') as currently required 
pursuant to Rule G-14.
    Additionally, the proposed amendments to Rule G-12(h)(i)(A) would 
allow a purchaser to notify the seller of the purchaser's intent to 
close-out the transaction the first business day following the 
purchaser's original transaction settlement date, instead of waiting 
five business days as currently required in Rule G-12(h)(i)(A).
    Currently Rule G-12(h) references use of the telephone and mail as 
part of the notification process. The proposed amendments would update 
Rule G-12(h) throughout, to reflect modern communication methods and 
widely-used industry practices that would facilitate more timely and 
efficient close-outs. For example, DTCC's SMART/Track is available for 
use by any existing NSCC clearing firm or DTCC settling member, 
allowing users to create, retransmit, respond, update, cancel and view 
a notice.
    The proposed amendments to Rule G-12(h)(i)(D) would require sellers 
to use their best efforts to locate the securities that are subject to 
a close-out notice from a purchaser. The proposed amendments to Rule G-
12(h)(i)(E)(1) would also require the seller to bear any burden in the 
market price, with any benefit from any change in the market price 
remaining with the purchaser.
    The proposed amendments would also require a purchasing dealer that 
has multiple counterparties, to utilize the FIFO (first-in-first-out) 
method for determining the contract date for the failing quantity. 
Amendments to Rule G-12(h)(iv) would require dealers to maintain all 
records regarding the close-out transaction as part of the firm's books 
and records.
Compliance Date
    As part of implementation of the proposed amendments, the MSRB 
would allow for a 90-calendar day grace period for resolving all 
outstanding inter-dealer fails. The MSRB understands that many of the 
outstanding fails have been open for years and is concerned that such 
fails could continue to exist until maturity unless dealers are 
mandated to close-out all outstanding inter-dealer fails. While firms 
may be reluctant to seek a solution other than a buy-in, the proposed 
rule change provides alternative solutions that should be considered as 
part of an inter-dealer fail resolution.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Exchange Act,\12\ which provides that the 
MSRB's rules shall:
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    \12\ 15 U.S.C. 78o-4(b)(2)(C).

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, 
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municipal entities, obligated persons, and the public interest.

    The MSRB believes that the proposed rule change would benefit 
investors, dealers and issuers. Specifically, the MSRB believes that 
dealers may benefit from clarifications and revisions that more closely 
reflect actual market practices. In addition, dealers may be able to 
more quickly and efficiently resolve inter-dealer fails, which may 
reduce dealer risk, reduce the likelihood and duration that dealers are 
required to pay ``substitute interest'' to customers and reduce 
systemic risk. The MSRB believes that the proposed rule change may also 
reduce the likelihood and duration of firm short positions that 
allocate to customer long positions, reduce investor tax exposure and 
increase investor confidence in the market. Issuers and the market as a 
whole may benefit from increased investor confidence.

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

    Section 15B(b)(2)(C) of the Exchange Act \13\ 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 
determining whether these standards have been met, the MSRB was guided 
by the Board's Policy on the Use of Economic Analysis in MSRB 
Rulemaking.\14\ In accordance with this policy, the Board has evaluated 
the potential impacts on competition of the proposed rule change, 
including in comparison to reasonable alternative regulatory 
approaches, relative to the baseline. The MSRB also considered other 
economic

[[Page 35114]]

impacts of the proposed rule change and has addressed any comments 
relevant to these impacts in other sections of this document.
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    \13\ Id.
    \14\ Policy on the Use of Economic Analysis in MSRB Rulemaking, 
available at, http://www.msrb.org/About-MSRB/Financial-and-Other-Information/FinancialPolicies/Economic-Analysis-Policy.aspx.
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    According to DTCC, during the period December 16, 2015 through 
December 22, 2015, NSCC had an average of 500 end-of-day municipal 
security interdealer fails in CNS with an average total daily value of 
$54.0 million. Of that total, there were an average of 170 end-of-day 
inter-dealer fails with an average total daily market value of $6.3 
million that had been outstanding for more than 20 days.
    As discussed above, the MSRB believes that the proposed rule change 
would benefit investors, dealers and issuers.
    The MSRB believes that the proposed rule change may 
disproportionately impact some market participants including smaller 
selling dealers that may have more difficulty locating securities owed, 
selling dealers that frequently fail to deliver securities or who owe a 
large number of securities, purchasing dealers that frequently fail to 
resolve interdealer fails or do not have policies and procedures in 
place to monitor interdealer fails and clearing firms that do not 
regularly communicate fails to correspondents.
    The MSRB sought additional data that would support a quantitative 
evaluation of the magnitude of any of these, or any other potential 
burdens, but was unable to identify relevant data directly or through 
the comment process. Therefore, at present, the MSRB is unable to 
quantitatively evaluate the magnitude, if any, of any burden on 
competition. However, the qualitative analysis and review of comments 
received supports the MSRB's view that the proposed rule change will 
not impose any additional burdens on competition, relative to the 
baseline, that are not necessary or appropriate in furtherance of the 
purposes of the Exchange Act.

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

    The MSRB received four comment letters \15\ in response to the 
Request for Comment \16\ on the draft amendments to Rule G-12(h) and 
all four comment letters were in support of the shorter mandated 
timeframes for resolving inter-dealer fails. Overall, the four 
commenters were supportive of the Board's Request for Comment and the 
Board's efforts to update close-out procedures, underscoring that 
municipal securities may fail to settle due to operational or trading 
desk errors, customer-based execution errors, failure to receive a 
security, or a partial call between trade and settlement date. BDA, 
NSCC and SIFMA noted that the draft amendments would decrease the costs 
and risks associated with dealer fails, while providing investors 
greater certainty.
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    \15\ Comment letters were received in response to the Request 
for Comment from: Bond Dealers of America, Letter from Michael 
Nicholas, Chief Executive Officer, dated March 4, 2016 (``BDA''); 
Breena LLC: Email from Geraldine Lettieri dated January 6, 2016 
(``Breena''); National Securities Clearing Corporation, Letter from 
Murray C. Pozmanter, Managing Director, dated January 12, 2016 
(``NSCC''); and Securities Industry and Financial Markets 
Association, Letter from Leslie M. Norwood, Managing Director and 
Associate General Counsel, dated March 6, 2016 (``SIFMA'').
    \16\ MSRB Notice 2016-02, Request for Comment on Amendments to 
MSRB Rule G-12 on Close-Out Procedures (January 6, 2016) (``Request 
for Comment'').
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    None of the commenters objected to the proposed requirement to 
resolve all current outstanding transaction fails, though BDA requested 
a longer grace period. None of the commenters objected to settling 
money differences or expenses within five business days, with SIFMA 
specifically supporting this requirement. SIFMA also supported 
utilizing the FIFO method for determining which contract date to use 
for the failing quantity when the fail is a result of multiple 
transactions.
Shortening the Close-Out Period
    SIFMA and Breena suggested a tighter time frame to resolve a fail 
of 15 and 10 days respectively, significantly less than the proposed 
time frame of 30 calendar days, with SIFMA emphasizing that ``failed 
transactions don't get better with age.''
    While SIFMA supports an even shorter time frame for close-outs, 
they also suggest that the rule permit the buyer to grant the seller a 
one-time 15-day extension, for an aggregate total of 30 days to close-
out an inter-dealer fail. While the Board commends these industry 
participants on an aggressive time frame to resolve inter-dealer fails, 
the Board is concerned that shortening the 30 calendar day period to 15 
days may overburden smaller dealers who may not have the same resources 
that would be required to locate a security and effectively close-out a 
failed transaction in a shorter time frame. The MSRB believes it is 
better to provide all dealers a fixed time frame that is sufficient to 
complete the close-out process rather than a reduced time frame with an 
additional permissive 15-day extension as suggested by SIFMA. 
Therefore, the MSRB revised its original proposal in the Request for 
Comment; the proposed rule change would require firms to complete a 
close-out in 20 calendar days, which reflects not only the expressed 
commitment and desire of the industry to expedite a close-out, but also 
reduces the risk of placing an undue burden on smaller dealers.
Grace Period for Outstanding Fails
    Rather than the 90-day grace period proposed in the Request for 
Comment, BDA recommended a 180-day grace period to allow the industry 
ample time to resolve existing aged fails. As noted in the Request for 
Comment, NSCC had an average of 170 end-of-day inter-dealer fails 
outstanding for more than 20 days during the period December 15, 2015 
to December 22, 2015. The Board believes that the industry will have 
ample time to clean up the approximately 170 existing aged inter-dealer 
fails given that dealers with failed transactions could begin working 
on closing out those transactions immediately.
Documentation
    SIFMA requested guidance regarding the documentation needed for the 
situation where one dealer is trying to resolve a fail, but the other 
party is not willing to cooperate. The proposed rule change would 
mandate that dealers utilize an inter-dealer communication system of 
the registered clearing agency through which the transaction would be 
compared to ensure consistency and which would provide a clear audit 
trail. The MSRB does not believe any further guidance on documenting 
the inter-dealer interaction is necessary at this point.
Partial Deliveries
    SIFMA noted that a purchasing dealer should not be required to 
accept a partial delivery on an inter-dealer fail and would like to 
have further dialog with the MSRB and DTCC on this issue. Currently CNS 
will make a partial delivery if the full amount of securities is not 
available through CNS and a buyer in CNS is not able to reject a 
partial delivery from CNS and return the securities to CNS. According 
to DTCC, partial deliveries have been occurring in CNS for 20 years. 
The proposed rule change does not mandate acceptance of partial 
deliveries and the close-out process is done outside of the CNS process 
and the MSRB believes the comment was outside the scope of the proposed 
rule change.
More Onus Placed on the Failing Dealer
    SIFMA noted that some of their members feel consideration should be

[[Page 35115]]

given to a simpler rule in which more onus is placed on the dealer that 
fails to deliver the securities by forcing those dealers to take 
responsibility for resolving the short, even suggesting the seller 
break the trade or resolve a fail through a buy-back. Currently the 
rule places more emphasis on the buyer, allowing the buyer to control 
the execution and agree to the terms of the close-out in the event the 
seller does not resolve the fail. SIFMA noted that it is not uncommon 
for dealers to simply allow the delivery deadline to pass, thereby 
forcing the buyers to do all the ``heavy lifting.'' In response to this 
comment the proposed rule change would amend Rule G-12(h)(i)(D) to 
specifically address ``seller's responsibilities,'' which will further 
clarify that the seller is expected to use its best efforts to locate 
the securities referenced in the notice. Currently, the Manual on 
Close-out Procedures interprets any change in market price as 
attributable to the seller. The proposed amendments would further 
clarify that any financial burden as the result of the purchaser 
effecting a ``buy-in'' is borne by the seller, but any benefit remains 
with the purchaser.
Guidance for Customer Accounts
    SIFMA would like guidance on how to close-out a short position that 
results from an inter-dealer fail when that position is in a customer's 
self-directed account where the dealer may not have the discretion to 
sell or cancel a position in that account or purchase a comparable 
security for that account. The MSRB believes the guidance requested by 
SIFMA is outside the scope of the Request for Comments because the 
proposal does not impose an obligation on dealers to effect 
transactions in customer accounts in order to resolve inter-dealer 
fails and should a customer want to retain a position that effectively 
requires a dealer to pay substitute interest, that issue is one outside 
the scope of MSRB rules.

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-2016-07 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-2016-07. 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 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-2016-07 and should be 
submitted on or before June 22, 2016.

    For the Commission, pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-12789 Filed 5-31-16; 8:45 am]
 BILLING CODE 8011-01-P