Document ID: SEC-2014-0797-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Municipal Securities Rulemaking Board
Posted Date: 2014-05-14T04:00Z

[Federal Register Volume 79, Number 93 (Wednesday, May 14, 2014)]
[Notices]
[Pages 27662-27666]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11033]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72129; File No. SR-MSRB-2014-01]

Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Amendment No. 1 and Order Granting 
Accelerated Approval of a Proposed Rule Change, as Modified by 
Amendment No. 1, Consisting of Proposed Revisions to MSRB Rule G-30, on 
Prices and Commissions and the Deletion of Rule G-18, on Execution of 
Transactions

May 8, 2014.

I. Introduction

    On January 29, 2014, the Municipal Securities Rulemaking Board (the 
``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (the ``SEC'' or ``Commission''), pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ a proposed rule change consisting of proposed 
revisions to MSRB Rule G-30, on prices and commissions and the deletion 
of Rule G-18, on execution of transactions. The proposed rule change 
was published for comment in the Federal Register on February 19, 
2014.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 71536 (February 12, 
2014), 79 FR 9558.
---------------------------------------------------------------------------

    The Commission received two comment letters on the proposal.\4\ On 
April 29, 2014, the MSRB submitted a response to these comments \5\ and 
filed Amendment No. 1 to the proposed rule change.\6\ The Commission is 
publishing

[[Page 27663]]

this notice to solicit comments on Amendment No. 1 to the proposed rule 
change from interested persons and is approving the proposed rule 
change, as modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------

    \4\ See Letter to Elizabeth M. Murphy, Secretary, Commission, 
from David L. Cohen, Managing Director and Associate General 
Counsel, Securities Industry and Financial Markets Association 
(``SIFMA''), dated March 12, 2014 (the ``SIFMA Letter''); and Letter 
from Seth M. Yarmis, dated March 14, 2014 (the ``Individual Investor 
Letter'').
    \5\ See Letter to Secretary, Commission, from Michael L. Post, 
Deputy General Counsel, MSRB, dated April 29, 2014 (the ``MSRB 
Response Letter''), available at http://www.sec.gov/comments/sr-msrb-2014-01/msrb201401-4.pdf.
    \6\ See Letter to Secretary, Commission, from Michael L. Post, 
Deputy General Counsel, MSRB, dated April 29, 2014 (the ``MSRB 
Amendment Letter''), available at http://www.sec.gov/comments/sr-msrb-2014-01/msrb201401-3.pdf. In Amendment No. 1, the MSRB 
partially amended the text of the original proposed rule change to 
(i) revise Supplemental Material .05 of Rule G-30 to reference MSRB 
Rule G-48 (Transactions with Sophisticated Municipal Market 
Professionals) rather than MSRB Rule G-17; (ii) amend the text of 
MSRB Rule G-48(b) to reference MSRB Rule G-30 rather than Rule G-18; 
(iii) preserve rule number G-18 for possible future rulemaking; and 
(iv) insert a clarifying clause into Supplementary Material .02(b) 
of Rule G-30. The MSRB also requested that the proposed rule change 
be made effective 60 days after Commission approval.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The MSRB states that the purpose of the proposed rule change is to 
codify the substance of existing fair-pricing obligations of brokers, 
dealers, and municipal securities dealers (collectively, ``dealers'') 
and further streamline the MSRB's Rule Book.\7\ Fair-pricing provisions 
are currently organized in two separate rules, Rules G-18 and G-30, 
with interpretive guidance under Rule G-30 as well as under a third 
rule, Rule G-17, on fair dealing.\8\
---------------------------------------------------------------------------

    \7\ See supra note 3.
    \8\ Id.
---------------------------------------------------------------------------

    According to the MSRB, the proposed rule change will achieve this 
purpose by consolidating Rules G-18 and G-30 into a single fair-pricing 
rule, and consolidating the existing interpretive guidance under Rules 
G-17 and G-30 \9\ and codifying that guidance in the same rule.\10\ The 
MSRB states that it will archive the past interpretive guidance, 
current as of January 1, 2013, on its Web site.\11\ The MSRB states 
that, to the extent that the past interpretive guidance does not 
conflict with any MSRB rules or interpretations thereof, it remains 
potentially applicable, depending on the facts and circumstances of a 
particular case.\12\
---------------------------------------------------------------------------

    \9\ The formal fair-pricing guidance under current Rule G-30 
that is to be codified was not filed with the Commission, and is as 
follows: Review of Dealer Pricing Responsibilities (Jan. 26, 2004) 
(``2004 Notice''); Interpretive Notice on Commissions and Other 
Charges, Advertisements and Official Statements Relating to 
Municipal Fund Securities (Dec. 19, 2001); Republication of 
September 1980, Report on Pricing (Oct. 3, 1984); Interpretive 
Notice on Pricing of Callable Securities (Aug. 10, 1979); 
Interpretive Letter--Rules G-21, G-30 and G-32 (Dec. 11, 2001); and 
Factors in Pricing (Nov. 29, 1993). The formal fair-pricing guidance 
under Rule G-17 that is to be codified that was not filed with the 
Commission is as follows: Guidance on Disclosure and Other Sales 
Practice Obligations to Individual and Other Retail Investors in 
Municipal Securities (Jul. 14, 2009); MSRB Reminds Firms of their 
Sales Practice and Due Diligence Obligations When Selling Municipal 
Securities in the Secondary Market (Sept. 20, 2010); and Bond 
Insurance Ratings--Application of MSRB Rules (Jan. 22, 2008). The 
formal guidance under Rule G-17 that is to be codified that was 
filed with the Commission is contained in Restated Interpretive 
Notice Regarding the Application of MSRB Rules to Transactions with 
Sophisticated Municipal Market Professionals (Jul. 9, 2012).
    \10\ See supra note 3.
    \11\ Id.
    \12\ Id.
---------------------------------------------------------------------------

    The MSRB believes the proposed rule change will significantly 
enhance regulated entities' ability to understand and comply with their 
fair-pricing obligations by organizing them together in a single 
location.\13\ Further, the MSRB believes the relevant information from 
the existing interpretive guidance will be succinctly stated in the new 
rule.\14\ The MSRB believes this could be particularly beneficial for 
new municipal market entrants, which would be in a position to focus, 
with respect to fair-pricing obligations, on the new, consolidated 
rule.\15\ The MSRB states that the proposed rule change will ease 
burdens on dealers and reduce costs by clarifying dealer 
obligations.\16\
---------------------------------------------------------------------------

    \13\ Id.
    \14\ Id.
    \15\ Id.
    \16\ Id.
---------------------------------------------------------------------------

1. Proposed Changes to Rule G-30

    Following is a summary of the provisions and the supplementary 
material comprising the proposed changes to Rule G-30:
Rule Language
    Proposed revised Rule G-30(a) applies to principal transactions and 
states that a dealer can only purchase municipal securities for its own 
account from a customer, or sell municipal securities for its own 
account to a customer, at an aggregate price (including any mark-up or 
mark-down) that is fair and reasonable.\17\
---------------------------------------------------------------------------

    \17\ Proposed revised Rule G-30(a) is substantially similar to 
the first clause of existing Rule G-30(a).
---------------------------------------------------------------------------

    Proposed revised Rule G-30(b) applies to agency transactions. 
Subsection (i) states that when a dealer executes a transaction in 
municipal securities for or on behalf of a customer, the dealer must 
make a reasonable effort to obtain a price for the customer that is 
fair and reasonable in relation to prevailing market conditions.\18\ 
Subsection (ii) states a dealer cannot purchase or sell municipal 
securities for a customer for a commission or service charge in excess 
of a fair and reasonable amount.\19\
---------------------------------------------------------------------------

    \18\ Subsection (i) of proposed Rule G-30(b) is derived from 
current Rule G-18.
    \19\ Subsection (ii) of proposed Rule G-30(b) is derived from 
the first clause of existing Rule G-30(b).
---------------------------------------------------------------------------

Supplementary Material
    Supplementary Material .01 specifies five general principles 
concerning the fair-pricing requirements: (a) That a dealer, whether 
effecting a trade on an agency or principal basis, must exercise 
diligence in establishing the market value of the security and the 
reasonableness of the compensation received on the transaction; (b) 
that a dealer effecting an agency transaction must exercise the same 
level of care as it would if acting for its own account; (c) that a 
``fair and reasonable'' price bears a reasonable relationship to the 
prevailing market price of the security; (d) that dealer compensation 
on a principal transaction is considered to be a mark-up or mark-down 
that is computed from the inter-dealer market price prevailing at the 
time of the customer transaction; \20\ and (e) that reasonable 
compensation differs from fair pricing.\21\
---------------------------------------------------------------------------

    \20\ This language was added to address comments the MSRB 
received in response to its August 6, 2013, request for comment on a 
draft of the proposed rule change.
    \21\ Supplementary Material .01 is derived from the 2004 Notice.
---------------------------------------------------------------------------

    Supplementary Material .02 provides a non-exhaustive list of 
relevant factors in determining the fairness and reasonableness of 
prices.\22\
---------------------------------------------------------------------------

    \22\ Supplementary Material .02(a) is derived from the 2004 
Notice. Supplementary Material.02(b) is derived from Rule G-30(a), 
the 2004 Notice, the MSRB Interpretive Letter --Rule s G-21, G-30 
and G-32 (Dec. 11, 2001), the MSRB Interpretive Letter--Factors in 
Pricing (Nov. 29, 1993), the Republication of September 1980, Report 
on Pricing (Oct. 3, 1984); and the Interpretive Notice on Pricing of 
Callable Securities (Aug. 10, 1979).
---------------------------------------------------------------------------

    Supplementary Material .03 provides a non-exhaustive list of 
relevant factors in determining the fairness and reasonableness of 
commissions or service charges.\23\ According to the MSRB, the proposed 
rule change makes it easier for market participants to find these 
relevant factors.
---------------------------------------------------------------------------

    \23\ Supplementary Material .03 is derived from existing Rule G-
30(b), the 2004 Notice and Republication of September 1980, Report 
on Pricing (Oct. 3, 1984). Supplementary Material .03(a)(viii) 
refers to Rule 2830 of the National Association of Securities 
Dealers, Inc. (``NASD''), which provides a sales charge schedule for 
registered investment company securities, and remains in effect in 
the Financial Industry Regulatory Authority, Inc. rulebook. The MSRB 
has stated it recognizes that, due to the limitations of Section 
15B(b)(2)(C) of the Act, it could not, by rule or interpretation, 
``impose any schedule or fix rates of commissions, allowances, 
discounts, or other fees to be charged'' by dealers for the sale of 
municipal fund securities. The MSRB believes, however, that the 
charges permitted by FINRA under NASD Rule 2830 may, depending upon 
the totality of the facts and circumstances, be a significant factor 
in determining whether a dealer selling municipal fund securities is 
charging a commission or other fee that is fair and reasonable.
---------------------------------------------------------------------------

    Supplementary Material .04 discusses the application of fair-
pricing requirements to some of the situations that may create large 
intra-day price differentials.\24\
---------------------------------------------------------------------------

    \24\ Supplementary Material .04 is derived from the 2004 Notice.
---------------------------------------------------------------------------

    Supplementary Material .05 discusses the general duty under 
proposed revised Rule G-30(b)(i) of dealers operating alternative 
trading systems to act to investigate any alleged pricing

[[Page 27664]]

irregularities on their systems brought to their attention, which duty 
applies equally to transactions effected for SMMPs.\25\
---------------------------------------------------------------------------

    \25\ Supplementary Material .05 is derived from interpretive 
guidance that was previously filed with the Commission and recently 
approved by the Commission to be generally codified in Rule G-48 
based on its relevance to SMMPs. See Restated Interpretive Notice 
Regarding the Application of MSRB Rules to Transactions with 
Sophisticated Municipal Market Professionals (Jul. 9, 2012) and 
Securities Exchange Act Release No. 71655 (Mar. 7, 2014), 79 FR 
14321 (Mar. 10, 2014). New MSRB Rule G-48 will become effective July 
5, 2014.
---------------------------------------------------------------------------

III. Summary of Comments Received and the MSRB's Response

    As noted previously, the Commission received two comment letters on 
the proposed rule change and a response letter from the MSRB.\26\ The 
comment letters each raised specific concerns discussed in more detail 
below.
---------------------------------------------------------------------------

    \26\ See supra notes 4 and 5.
---------------------------------------------------------------------------

1. SIFMA Letter

    As noted above, the Commission received a comment letter from SIFMA 
on the proposed rule change. SIFMA is generally supportive of the 
proposed rule change.\27\ At the same time, SIFMA expressed concerns 
about the timing of the proposed rule change and suggested that the 
MSRB modify the proposed rule change in some respects.\28\
---------------------------------------------------------------------------

    \27\ See SIFMA Letter at 1.
    \28\ See SIFMA Letter at 1, 3.
---------------------------------------------------------------------------

    On February 19, 2014, after the filing of the proposed rule change, 
the MSRB published a request for comment on a draft best-execution 
rule.\29\ SIFMA stated that the proposed rule change and the draft 
best-execution rule should be viewed together because of the interplay 
and practical effects between best execution and fair pricing.\30\ 
SIFMA requested that the SEC not move forward at this time to allow the 
MSRB to submit, and allow market participants to comment on, a single 
filing on dealer execution and fair pricing obligations.\31\
---------------------------------------------------------------------------

    \29\ See Request for Comment on Draft Best-Execution Rule, 
Including Exception for Transactions with Sophisticated Municipal 
Market Professionals, MSRB Notice 2014-02 (Feb. 19, 2014).
    \30\ See SIFMA Letter at 1, 3.
    \31\ Id.
---------------------------------------------------------------------------

    The MSRB responded that any potential interplay between a best-
execution rule and fair-pricing rules would be unchanged by this non-
substantive codification of the MSRB's existing fair-pricing 
requirements.\32\ The MSRB noted that any concerns about interplay can 
and should be raised and addressed in the context of any future 
rulemaking process for the proposed best-execution rule, which would 
involve substantive changes to dealers' existing obligations.\33\ In 
addition, the MSRB stated that delaying the review of the proposed rule 
change would not provide the SEC with any additional information that 
would aid its review or serve any other beneficial purpose that cannot 
be adequately served in any future rulemaking process for a best-
execution rule.\34\ The MSRB noted that a delay, however, would prolong 
the MSRB Rule Book consolidation initiative designed to ease the burden 
on market participants who are seeking to understand, comply with, and 
enforce fair-pricing requirements.\35\
---------------------------------------------------------------------------

    \32\ See MSRB Response Letter at 4.
    \33\ Id.
    \34\ Id.
    \35\ Id.
---------------------------------------------------------------------------

    SIFMA stated that all factors discussed in existing MSRB 
interpretive guidance which may be relevant in making pricing 
determinations should be listed in Supplementary Material .02.\36\ 
Specifically, SIFMA requested inclusion of the following factors: (i) 
Improved market conditions; and (ii) trading history, which could 
encompass such matters as the degree of market activity for the 
securities and the existence or non-existence of market-makers in the 
securities.\37\ SIFMA noted that its members' experience with 
enforcement regulators is that a factor listed in the rule is given 
more weight than an equally relevant, or arguably more relevant, factor 
that is not contained in the rule.\38\ SIFMA also requested that the 
first sentence of Supplementary Material .02(b) be amended as follows: 
``Other factors include (but are not limited to)'' (SIFMA's proposed 
additional language underlined).\39\
---------------------------------------------------------------------------

    \36\ See SIFMA Letter at 2.
    \37\ See SIFMA Letter at 2-3.
    \38\ See SIFMA Letter at 2.
    \39\ See SIFMA Letter at 3.
---------------------------------------------------------------------------

    The MSRB responded that the substance of the interpretive guidance 
is codified in the proposed amendments to Rule G-30.\40\ The MSRB noted 
that Supplementary Material .02(a) encompasses the concept of 
``improved market conditions.'' \41\ Specifically, Supplementary 
Material .02(a) refers to the ``yield on other securities of comparable 
quality, maturity, coupon rate, and block size then available in the 
market'' (emphasis added in MSRB Response Letter).\42\ As a more 
general matter, the MSRB has agreed with SIFMA's suggestion to amend 
the first sentence of Supplementary Material .02(b) by inserting a 
clarifying clause (i.e., ``but are not limited to''), and has filed 
Amendment No. 1 concurrently with the submission of its response.\43\ 
The MSRB stated that the existing rules and interpretive guidance do 
not purport to exhaustively identify all relevant factors.\44\ 
According to the MSRB, the list of factors in Supplementary Material 
.02(b) is (and was intended to be) non-exhaustive.\45\ The MSRB further 
stated that SIFMA's suggested clarification is consistent with the 
substance of the existing rules and guidance.\46\ Additionally, as the 
MSRB stated in the proposed rule change, the interpretive guidance that 
would be deleted from the MSRB Rule Book will be archived on the MSRB's 
Web site and, to the extent that past interpretive guidance does not 
conflict with any MSRB rules or interpretations thereof, it remains 
potentially applicable, depending on the facts and circumstances of a 
particular case.\47\ The MSRB concluded that, on these grounds, the 
potential relevance of the ``improved market conditions'' and ``trading 
history'' factors, if the proposed rule change as amended were 
approved, would remain unchanged.\48\
---------------------------------------------------------------------------

    \40\ See MSRB Response Letter at 2.
    \41\ Id.
    \42\ Id.
    \43\ See supra note 6.
    \44\ See MSRB Response Letter at 2.
    \45\ Id.
    \46\ Id.
    \47\ Id.
    \48\ Id.
---------------------------------------------------------------------------

    SIFMA stated that improvements should be considered whenever rules 
are being reviewed, amended, or created.\49\ SIFMA highlighted the 
extensive process required in rulemaking and noted that because rules 
are amended so infrequently, this is a lost opportunity especially in 
light of the MSRB's recent practice of including, within a rule itself, 
supplemental material that was historically issued in the form of 
interpretive guidance.\50\
---------------------------------------------------------------------------

    \49\ See SIFMA Letter at 3.
    \50\ Id.
---------------------------------------------------------------------------

    The MSRB stated that not all rulemaking activity requires 
consideration of substantive changes and the MSRB has discretion to 
define the scope of its individual rulemaking initiatives.\51\ The MSRB 
determined that the objective of this initiative was to codify, not 
substantively change, the existing fair-pricing requirements.\52\ The 
MSRB noted that the limited purpose of the proposed rule change is to 
improve the ability to locate, understand and comply with fair-pricing 
standards.\53\ The MSRB further stated that the request for comment, 
accordingly, apprised commenters of the limited

[[Page 27665]]

scope of the initiative.\54\ The MSRB also stated that, in another 
recent rulemaking initiative within the MSRB's same overall plan to 
streamline its Rule Book, the SEC approved the proposed rule change, 
which also had a limited scope.\55\ In such proposed rule change, the 
SEC believed that the MSRB, through its response, addressed commenters' 
concerns, other than those the MSRB determined were outside the scope 
of the proposal.\56\ The MSRB further stated that it values all 
comments that may be relevant to its statutory charge to improve its 
rules and the municipal securities market, and will take all of SIFMA's 
additional, substantive suggestions under advisement for future 
rulemaking initiatives.\57\
---------------------------------------------------------------------------

    \51\ See MSRB Response Letter at 3.
    \52\ Id.
    \53\ Id.
    \54\ Id.
    \55\ Id.
    \56\ See Exchange Act Release No. 71665 (Mar. 7, 2014), 79 FR 
14321 (Mar. 13, 2014).
    \57\ See MSRB Response Letter at 4.
---------------------------------------------------------------------------

2. Individual Investor Letter

    As noted above, the Commission received a comment letter from an 
individual investor on the proposed rule change. The individual 
investor expressed concerns about the pricing of municipal bonds by 
dealers and the mark-ups observed in municipal securities 
transactions.\58\ The individual investor described the mark-ups as 
inappropriate and abusive.\59\ The individual investor inquired about 
the possibility of establishing a centralized electronic trading 
platform for municipal securities.\60\
---------------------------------------------------------------------------

    \58\ See Individual Investor Letter.
    \59\ Id.
    \60\ Id.
---------------------------------------------------------------------------

    The MSRB stated that it appreciates input from individual investors 
and the commenter's letter touches on areas that the MSRB is 
monitoring.\61\ The MSRB noted that these comments, however, are 
outside the scope of the current rulemaking initiative to streamline 
the Rule Book by non-substantively codifying existing fair-pricing 
standards.\62\ The MSRB stated that it will take these comments under 
advisement for future rulemaking initiatives.\63\
---------------------------------------------------------------------------

    \61\ See MSRB Response Letter at 4.
    \62\ Id.
    \63\ Id.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change, 
as modified by Amendment No. 1, as well as the two comment letters 
received and the MSRB's response. The Commission finds that the 
proposed rule change, as amended, is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to the 
MSRB. In particular, the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act, which provides that the MSRB's rules 
shall be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in municipal securities and municipal 
financial products, to remove impediments to and perfect the mechanism 
of a free and open market in municipal securities and municipal 
financial products, and, in general, to protect investors, municipal 
entities, obligated persons, and the public interest.\64\
---------------------------------------------------------------------------

    \64\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change is consistent 
with Section 15B(b)(2)(C) of the Act because it protects investors by 
preserving the substance of the current requirement that dealers must 
exercise diligence in establishing the market value of a security and 
the reasonableness of the compensation received on a transaction. The 
Commission also believes the proposed rule change will remove 
impediments to and perfect the mechanism of a free and open market by 
easing burdens on dealers and clarifying existing dealer obligations.
    In approving the proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, and 
capital formation.\65\ The Commission believes that the proposed rule 
change includes accommodations that help promote efficiency and legal 
certainty. Specifically, the MSRB's retention of its interpretative 
guidance and the continuing applicability of such guidance to the 
extent it does not conflict with any MSRB rules or interpretations 
provide continuity to dealers. Furthermore, the Commission does not 
believe that the proposed rule change would impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. The proposed rule change makes no substantive change to 
existing dealer obligations and, therefore, does not add any burden on 
competition. Moreover, the Commission believes that the proposed rule 
change will, by contrast, ease burdens on dealers by clarifying 
existing dealer obligations.
---------------------------------------------------------------------------

    \65\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    As noted above, the Commission received two comment letters on the 
filing. While commenters suggested means to improve the filing or 
opposed certain aspects of the proposal, the Commission notes that no 
commenters argued that the proposed rule change was inconsistent with 
the applicable provisions of the Act.
    For the reasons noted above, including those discussed in the MSRB 
Response Letter and MSRB Amendment Letter, the Commission believes that 
the proposed rule change, as amended by Amendment No. 1, is consistent 
with the Act.

V. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether Amendment No. 1 
to 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-2014-01 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-2014-01. 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

[[Page 27666]]

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-2014-01 and should be 
submitted on or before June 4, 2014.

VI. Accelerated Approval of Proposed Rule Change as Modified by 
Amendment No. 1

    The Commission finds good cause for approving the proposed rule 
change, as amended by Amendment No. 1, prior to the 30th day after the 
date of publication of notice in the Federal Register. As discussed 
above, Amendment No. 1 amends the proposed rule change by: (i) Revising 
Supplemental Material .05 of Rule G-30 to reference MSRB Rule G-48 
(Transactions with Sophisticated Municipal Market Professionals) rather 
than MSRB Rule G-17; (ii) amending the text of MSRB Rule G-48(b) to 
reference MSRB Rule G-30 rather than Rule G-18; (iii) preserving rule 
number G-18 for possible future rulemaking; and (iv) inserting a 
clarifying clause into Supplementary Material .02(b) of Rule G-30.\66\ 
The MSRB also requested that the proposed rule change be made effective 
60 days after Commission approval.\67\
---------------------------------------------------------------------------

    \66\ See MSRB Amendment Letter.
    \67\ Id.
---------------------------------------------------------------------------

    The MSRB has proposed the revisions included in items (i) and (ii) 
because, since the filing of the proposed rule change, other amendments 
to MSRB rules are being implemented that will make these existing 
references in Rules G-30 and G-48 no longer accurate.\68\ The MSRB has 
proposed item (iii) to preserve rule number G-18 for possible future 
rulemaking activities after its text is deleted by the proposed rule 
change.\69\ The MSRB has proposed item (iv) to clarify that the list of 
fair-pricing factors in Supplementary Material .02(b) of Rule G-30 is a 
non-exhaustive list of factors.\70\ Lastly, the MSRB requested that the 
proposed rule change be made effective 60 days after Commission 
approval because the original proposed rule change did not propose a 
specific effective date.
---------------------------------------------------------------------------

    \68\ Id.
    \69\ Id.
    \70\ Id.
---------------------------------------------------------------------------

    The Commission believes that Amendment No. 1 does not alter the 
substance of the original proposed rule change and clarifies the 
original proposed rule change to more accurately reflect existing MSRB 
rules and interpretive guidance. Accordingly, the Commission finds good 
cause for approving the proposed rule change, as modified by Amendment 
No. 1, on an accelerated basis, pursuant to Section 19(b)(2) of the 
Act.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\71\ that the proposed rule change (SR-MSRB-2014-01), as modified 
by Amendment No. 1, be, and hereby is, approved on an accelerated 
basis.
---------------------------------------------------------------------------

    \71\ 15 U.S.C. 78s(b)(2).

    For the Commission, pursuant to delegated authority.\72\
---------------------------------------------------------------------------

    \72\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-11033 Filed 5-13-14; 8:45 am]
BILLING CODE 8011-01-P