Document ID: SEC-2008-1682-0001
Agency: sec
Document Type: Rule
Title: Amendment to Municipal Securities Disclosure
Posted Date: 2008-12-15T05:00Z

[Federal Register: December 15, 2008 (Volume 73, Number 241)]
[Rules and Regulations]               
[Page 76103-76133]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de08-16]                         

[[Page 76103]]

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Part II

Securities and Exchange Commission

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17 CFR Part 240

Amendment to Municipal Securities Disclosure; Rule

[[Page 76104]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-59062; File No. S7-21-08]
RIN 3235-AK20

 
Amendment to Municipal Securities Disclosure

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is 
adopting amendments to a rule under the Securities Exchange Act of 1934 
(``Exchange Act'') relating to municipal securities disclosure. This 
final rule amends certain requirements regarding the information that 
the broker, dealer, or municipal securities dealer acting as an 
underwriter in a primary offering of municipal securities must 
reasonably determine that an issuer of municipal securities or an 
obligated person has undertaken, in a written agreement or contract for 
the benefit of holders of the issuer's municipal securities, to 
provide. Specifically, the amendments require the broker, dealer, or 
municipal securities dealer to reasonably determine that the issuer or 
obligated person has agreed: To provide the information covered by the 
written agreement to the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board''), instead of to multiple nationally recognized 
municipal securities information repositories (``NRMSIRs'') and state 
information depositories (``SIDs''); and to provide such information in 
an electronic format and accompanied by identifying information as 
prescribed by the MSRB. The Commission's rulemaking is intended to 
improve the availability of information about municipal securities to 
investors, market professionals, and the public generally. 
Concurrently, we have approved a companion proposal by the MSRB 
relating to its Electronic Municipal Market Access (``EMMA'') system 
for municipal securities disclosures. Finally, we are withdrawing 
proposed amendments to the Rule, issued in 2006, that would have 
eliminated the MSRB as a location to which issuers could submit certain 
municipal disclosure documents.

DATES: Effective Date: July 1, 2009.

FOR FURTHER INFORMATION CONTACT: Martha Mahan Haines, Assistant 
Director and Chief, Office of Municipal Securities, at (202) 551-5681; 
Nancy J. Burke-Sanow, Assistant Director, Office of Market Supervision, 
at (202) 551-5620; Mary N. Simpkins, Senior Special Counsel, Office of 
Municipal Securities, at (202) 551-5683; Rahman J. Harrison, Special 
Counsel, Office of Market Supervision, at (202) 551-5663; David J. 
Michehl, Special Counsel, Office of Market Supervision, at (202) 551-
5627; and Steven Varholik, Attorney, Office of Market Supervision, at 
(202) 551-5615, Division of Trading and Markets, Securities and 
Exchange Commission, 100 F Street, NE., Washington, DC 20549-6628.

SUPPLEMENTARY INFORMATION: We are adopting amendments to Rule 15c2-12 
\1\ under the Exchange Act.\2\
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    \1\ 17 CFR 240.15c2-12.
    \2\ 15 U.S.C. 78a et seq.
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I. Executive Summary

    On August 7, 2008, the Commission published for comment amendments 
to Rule 15c2-12 to provide for a single centralized repository for the 
electronic collection and availability of information about municipal 
securities outstanding in the secondary market.\3\ The comment period 
for the proposed amendments expired on September 22, 2008. The proposed 
amendments would require the Participating Underwriter to reasonably 
determine that the issuer or obligated person has undertaken in its 
continuing disclosure agreement to provide continuing disclosure 
documents: (1) Solely to the MSRB; and (2) in an electronic format and 
accompanied by identifying information, as prescribed by the MSRB. We 
received twenty-three comment letters in response to our proposed 
amendments from a wide range of commenters.\4\ The respondents included 
an issuer; a mutual fund complex; NRMSIRs; SIDs; the MSRB; trade 
organizations representing broker-dealers, investment advisors, 
financial analysts, government financial officials, and bond lawyers; 
and individual investors. The majority of commenters supported the 
proposed amendments and believed that the Commission's proposal would 
help improve disclosure for municipal securities, protect investors, 
restore confidence in the market, assist investors in making informed 
investment decisions, and make it easier for issuers and other 
obligated persons to comply with their continuing disclosure 
agreements. Of the comment letters we received, twenty expressed their 
support of the proposed amendments,\5\ two NRMSIRs opposed the 
amendments \6\ and one commenter neither expressed its support of nor 
opposition to the proposed amendments.\7\ In addition, a number of 
commenters offered suggestions relating to the implementation and 
operation of the proposed disclosure system.\8\
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    \3\ See Securities Exchange Act Release No. 58255 (July 30, 
2008), 73 FR 46138 (August 7, 2008) (``Proposing Release'').
    \4\ Exhibit A, which is attached to this release, contains the 
full title of each comment letter cited herein and the citation key 
for these letters. Copies of all comments received on the proposed 
amendments are available on the Commission's Internet Web site, 
located at http://www.sec.gov/comments/s7-21-08/s72108.shtml, and in 
the Commission's Public Reference Room at its Washington, DC 
headquarters.
    \5\ See Busby Letter, GFOA Letter, Vanguard Letter, SIFMA 
Letter, MSRB Letter, NABL Letter, IAA Letter, Treasurer of the State 
of Connecticut Letter, e-certus Letter, Texas MAC Letter, NASACT 
Letter, OMAC Letter, ICI Letter, NAHEFFA Letter, Multiple-Markets 
Letter, NFMA Letter, EDGAR Online Letter, Dickman Letter, Mooney 
Letter, Grant Letter.
    \6\ See SPSE Letter and DPC DATA Letter.
    \7\ See DAC Letter.
    \8\ See, e.g., GFOA Letter, NABL Letter, IAA Letter, e-certus 
Letter, NAHEFFA Letter, Multiple-Markets Letter, NFMA Letter, and 
EDGAR Online Letter.
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    In general, commenters supported the use of a single repository for 
receiving continuing disclosures and believed that such an arrangement 
would be more efficient than the current decentralized system.\9\ 
Commenters generally expressed their support for the MSRB as the single 
repository and believed that the MSRB would be a logical operator of 
the proposed disclosure system.\10\ Commenters also expressed their 
support for the use of an entirely electronic format for submissions to 
the single repository, with some commenters stating that paper copies 
should not be permitted.\11\ In addition, commenters supported the 
indexing of information to be submitted to the single repository but 
had a variety of opinions on the scope of the information to be 
included in such indexing.\12\ Some commenters expressed concern about 
access to information submitted to the single repository and the fees 
that could result from the use of such repository,\13\ with

[[Page 76105]]

some commenters opposing a system that would impose fees on issuers, 
obligated persons or investors.\14\ One commenter believed that the 
exemptive provision in paragraph (d)(2) of the Rule, which generally is 
used by smaller issuers, should be retained in its current form.\15\ A 
number of comment letters addressed both the proposed amendments and 
the MSRB's companion proposal to establish a continuing disclosure 
service within its EMMA system.\16\ This release describes and 
addresses only those portions of the comment letters that are relevant 
to the proposed amendments; the portions of the comment letters 
pertaining to the continuing disclosure component of the MSRB's EMMA 
system are considered separately in the Commission's order approving 
the MSRB's proposal, which we also are issuing today.\17\
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    \9\ See, e.g., OMAC Letter, NFMA Letter, and Treasurer of the 
State of Connecticut Letter.
    \10\ See, e.g., GFOA Letter, Vanguard Letter, SIFMA Letter, 
NASACT Letter, ICI Letter, and NFMA Letter.
    \11\ See, e.g., Vanguard Letter, at 3, and Multiple-Markets 
Letter, at 2.
    \12\ See, e.g., GFOA Letter, Vanguard Letter, ICI Letter, OMAC 
Letter, NAHEFFA Letter, Multiple-Markets Letter, NFMA Letter, Edgar 
Online Letter, and DAC Letter. Neither the proposed nor the final 
Rule 15c2-12 amendments address the specific information to be 
indexed. Indexing information is addressed in the MSRB's proposed 
rule change and the Commission's approval order relating to the EMMA 
system and is considered separately. See Securities Exchange Act 
Release Nos. 58256 (July 30, 2008), 73 FR 46161 (August 7, 2008) 
(SR-MSRB-2008-05) (``MSRB EMMA Proposal'') and 59061 (December 5, 
2008)(order approving MSRB EMMA Proposal) (``MSRB Approval Order'').
    \13\ See, e.g., NFMA Letter, GFOA Letter, Vanguard Letter, IAA 
Letter, ICI Letter, and SPSE Letter.
    \14\ See, e.g., GFOA Letter, Vanguard Letter, IAA Letter, ICI 
Letter, and NAHEFFA Letter.
    \15\ See NABL Letter, at 2.
    \16\ See MSRB EMMA Proposal, supra note 12.
    \17\ See MSRB Approval Order, supra note 12.
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    We have carefully considered all the comments we received regarding 
the proposed amendments and, as discussed below, are adopting the 
amendments, as proposed. In adopting these amendments, we are 
furthering our intent to deter fraud and manipulation in the municipal 
securities market by improving the availability of information about 
municipal securities outstanding in the secondary market.

II. Background

A. History of Rule 15c2-12

    We have long been concerned with improving the quality, timing, and 
dissemination of disclosure in the municipal securities markets. In an 
effort to improve the transparency of the municipal securities market, 
in 1989, we adopted Rule 15c2-12 (``Rule'' or ``Rule 15c2-12'') and an 
accompanying interpretation modifying a previously published 
interpretation of the legal obligations of underwriters of municipal 
securities.\18\ At the time of its adoption in 1989, Rule 15c2-12 
required, and still requires, an underwriter acting in a primary 
offering of municipal securities of $1,000,000 or more: (1) To obtain 
and review an official statement ``deemed final'' by an issuer of the 
securities, except for the omission of specified information, prior to 
making a bid, purchase, offer, or sale of municipal securities; (2) in 
non-competitively bid offerings, to send, upon request, a copy of the 
most recent preliminary official statement (if one exists) to potential 
customers; (3) to send, upon request, a copy of the final official 
statement to potential customers for a specified period of time; and 
(4) to contract with the issuer to receive, within a specified time, 
sufficient copies of the final official statement to comply with the 
Rule's delivery requirement, and the requirements of the rules of the 
MSRB.\19\
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    \18\ See Securities Exchange Act Release No. 26985 (June 28, 
1989), 54 FR 28799 (July 10, 1989) (``1989 Adopting Release'').
    \19\ 17 CFR 240.15c2-12.
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    While the availability of primary offering disclosure significantly 
improved following the adoption of Rule 15c2-12, there was a continuing 
concern about the adequacy of disclosure in the secondary market.\20\ 
To enhance the quality, timing, and dissemination of disclosure in the 
secondary municipal securities market, in 1994 we adopted amendments to 
Rule 15c2-12.\21\ Among other things, the 1994 Amendments placed 
certain requirements on brokers, dealers, and municipal securities 
dealers (``Dealers'' or, when used in connection with primary 
offerings, ``Participating Underwriters''). In adopting the 1994 
Amendments, we intended ``to deter fraud and manipulation in the 
municipal securities market'' by prohibiting the underwriting and 
subsequent recommendation of transactions in municipal securities for 
which adequate information was not available on an ongoing basis.\22\
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    \20\ In 1993, the Commission's Division of Market Regulation (n/
k/a the Division of Trading and Markets) conducted a comprehensive 
review of many aspects of the municipal securities market, including 
secondary market disclosure (``1993 Staff Report''). Findings in the 
1993 Staff Report highlighted the need for improved disclosure 
practices in both the primary and secondary municipal securities 
markets. The 1993 Staff Report found that investors need sufficient 
current information about issuers and significant obligors to better 
protect themselves from fraud and manipulation, to better evaluate 
offering prices, to decide which municipal securities to buy, and to 
decide when to sell. Moreover, the 1993 Staff Report found that the 
growing participation of individuals as both direct and indirect 
purchasers of municipal securities underscored the need for sound 
recommendations by brokers, dealers, and municipal securities 
dealers. See Securities and Exchange Commission, Division of Market 
Regulation (n/k/a Division of Trading and Markets), Staff Report on 
the Municipal Securities Market (September 1993) (available at 
http://www.sec.gov/info/municipal.shtml).
    \21\ See Securities Exchange Act Release No. 34961 (November 10, 
1994), 59 FR 59590 (November 17, 1994) (``1994 Amendments'').
    In light of the growing volume of municipal securities 
offerings, as well as the growing ownership of municipal securities 
by individual investors, in March 1994, the Commission published the 
Statement of the Commission Regarding Disclosure Obligations of 
Municipal Securities Issuers and Others. See Securities Exchange Act 
Release No. 33741 (March 9, 1994), 59 FR 12748 (March 17, 1994). The 
Commission intended that its statement of views with respect to 
disclosures under the federal securities laws in the municipal 
market would encourage and expedite the ongoing efforts by market 
participants to improve disclosure practices, particularly in the 
secondary market, and to assist market participants in meeting their 
obligations under the antifraud provisions. Id.
    \22\ See 1994 Amendments, supra note 21.
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    Specifically, under the 1994 Amendments, Participating Underwriters 
are prohibited, subject to certain exemptions, from purchasing or 
selling municipal securities covered by the Rule in a primary offering, 
unless the Participating Underwriter has reasonably determined that an 
issuer of municipal securities or an obligated person \23\ has 
undertaken in a written agreement or contract for the benefit of 
holders of such securities (``continuing disclosure agreement'') to 
provide specified annual information and event notices to certain 
information repositories. The information to be provided consists of: 
(1) Certain annual financial and operating information and audited 
financial statements (``annual filings''); \24\ (2) notices of the 
occurrence of any of eleven specific events (``material event 
notices''); \25\ and (3) notices of the failure of an issuer or other 
obligated person to make a submission required by a continuing 
disclosure agreement (``failure to file notices'').\26\ The 1994 
Amendments require the Participating Underwriter to reasonably 
determine that an issuer of municipal securities or an obligated person 
has undertaken in the continuing disclosure agreement to provide: (1) 
Annual filings to each NRMSIR; (2) material event notices and failure 
to file notices either to each NRMSIR or to the

[[Page 76106]]

MSRB; and (3) in the case of states that established SIDs, all 
continuing disclosure documents to the appropriate SID. Finally, the 
1994 Amendments revise the definition of ``final official statement'' 
to include a description of the issuer's or obligated person's 
continuing disclosure undertakings for the securities being offered, 
and of any instances in the previous five years in which the issuer or 
obligated person failed to comply, in all material respects, with 
undertakings in previous continuing disclosure agreements.
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    \23\ Obligated persons include persons, including the issuer, 
committed by contract or other arrangement to support payment of all 
or part of the obligations on the municipal securities to be sold in 
an offering. See 17 CFR 240.15c2-12(f)(10).
    \24\ 17 CFR 240.15c2-12(b)(5)(i)(A) and (B).
    \25\ 17 CFR 240.15c2-12(b)(5)(i)(C). The following events, if 
material, require notice: (1) Principal and interest payment 
delinquencies; (2) non-payment related defaults; (3) unscheduled 
draws on debt service reserves reflecting financial difficulties; 
(4) unscheduled draws on credit enhancements reflecting financial 
difficulties; (5) substitution of credit or liquidity providers, or 
their failure to perform; (6) adverse tax opinions or events 
affecting the tax-exempt status of the security; (7) modifications 
to rights of security holders; (8) bond calls; (9) defeasances; (10) 
release, substitution, or sale of property securing repayment of the 
securities; and (11) rating changes.
    In addition, Rule 15c2-12(d)(2) provides an exemption from the 
application of paragraph (b)(5) of the Rule with respect to primary 
offerings if, among other things, the issuer or obligated person has 
agreed to a limited disclosure obligation, including sending certain 
material event notices to each NRMSIR or the MSRB, as well as the 
appropriate SID. See 17 CFR 240.15c2-12(d)(2).
    \26\ 17 CFR 240.15c2-12(b)(5)(i)(D). Annual filings, material 
event notices, and failure to file notices are referred to 
collectively herein as ``continuing disclosure documents.''
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B. Disclosure Practices in the Secondary Market and Need for Improved 
Availability to Continuing Disclosure

    Since the adoption of Rule 15c2-12 in 1989 and its subsequent 
amendment in 1994, the size of the municipal securities market has 
grown considerably.\27\ There were over $2.6 trillion of municipal 
securities outstanding at the end of 2007.\28\ Notably, at the end of 
2007, retail investors held approximately 35% of outstanding municipal 
securities directly and up to another 36% indirectly through money 
market funds, mutual funds, and closed end funds.\29\ There is also 
substantial trading volume in the municipal securities market. 
According to the MSRB, more than $6.6 trillion of long and short term 
municipal securities were traded in 2007 in more than 9 million 
transactions.\30\ Further, the municipal securities market is extremely 
diverse, with more than 50,000 state and local issuers of these 
securities.\31\
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    \27\ According to statistics assembled by SIFMA, the amount of 
outstanding municipal securities grew from $1.2616 trillion in 1996 
to $2.617.4 trillion at the end of 2007. See SIFMA ``Outstanding U.S 
Bond Market Debt'' (available at http://www.sifma.org/research/pdf/
Overall_Outstanding.pdf).
    \28\ See SIFMA ``Outstanding U.S. Bond Market Debt'' (available 
at http://www.sifma.org/research/pdf/Overall_Outstanding.pdf).
    \29\ See SIFMA ``Holders of U.S. Municipal Securities'' 
(available at http://www.sifma.org/research/pdf/Holders_Municipal_
Securities.pdf).
    \30\ See MSRB's Real-Time Transaction Reporting Statistical 
Information, Monthly Summaries 2007 (available at http://
www.msrb.org/msrb1/TRSweb/MarketStats/statistical_patterns_in_
the_muni.htm).
    \31\ See Securities Exchange Act Release No. 33741, supra note 
21.
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    Currently, there are four NRMSIRs \32\ and three SIDs.\33\ Each of 
the NRMSIRs utilizes the information obtained from continuing 
disclosure documents to create proprietary information products that 
are primarily sold to and used by dealers, institutional investors and 
other market participants who subscribe to such products. With respect 
to the availability of municipal securities information to retail 
investors, each of the NRMSIRs also makes continuing disclosure 
documents available for sale to non-subscribers.\34\
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    \32\ The four NRMSIRs are the Bloomberg Municipal Repository, 
DPC DATA, Interactive Data Pricing and Reference Data, Inc., and 
SPSE.
    \33\ The three SIDs are the Municipal Advisory Council of 
Michigan, Texas MAC, and OMAC.
    \34\ See http://www.bloomberg.com/markets/rates/
municontacts.html (Bloomberg Municipal Repository); http://
www.munifilings.com/help/help.cfm (DPC DATA); http://
www.interactivedata-prd.com/07company_info/about_us/MN/
NRMSIR.shtml (Interactive Data Pricing and Reference Data, Inc.); 
and http://www.disclosuredirectory.standardandpoors.com/ (SPSE).
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    Although the existing practice for the collection and availability 
of municipal securities disclosures has substantially improved the 
availability of information to the market, we believe that improvements 
could achieve more efficient, effective, and wider availability of 
municipal securities information to market participants.\35\ Among 
other things, improvements in information availability may allow 
investors to obtain information more readily and may help them to make 
more informed investment decisions. Specifically, we believe that 
municipal securities disclosure documents should be made more readily 
and more promptly available to the public and that all investors should 
have better access to important market information that may affect the 
price of a municipal security, such as information in financial 
statements and notices regarding defaults and changes in ratings, 
credit enhancement provider, and tax status.
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    \35\ The Commission notes that the aspects of the Rule that 
relate to the provision of continuing disclosure documents to 
multiple locations (i.e., to each NRMSIR and SID) may have 
engendered certain inefficiencies in the current system. See 17 CFR 
240.15c2-12(b)(5)(i)(A) through (D). For instance, there have been 
reports that NRMSIRs may not receive continuing disclosure documents 
concurrently, resulting in the uneven availability of documents from 
the various NRMSIRs for some period of time. There also have been 
reports of inconsistent document collections among NRMSIRs, possibly 
due to the failure of some issuers or obligated persons to provide 
continuing disclosure documents to each NRMSIR. Finally, there have 
been reports indicating possible weaknesses in document retrieval at 
the NRMSIRs. See, e.g., Troy L. Kilpatrick and Antonio Portuondo, Is 
This the Last Chance for the Muni Industry to Self-Regulate?, The 
Bond Buyer, August 6, 2007, and comments made at the 2001 Municipal 
Market Roundtable--``Secondary Market Disclosure for the 21st 
Century'' held November 14, 2001 (``2001 Roundtable''), and the 2000 
Municipal Market Roundtable held October 12, 2000 (available at 
http://www.sec.gov/info/municipal/roundtables/thirdmuniround.htm and 
http://www.sec.gov/info/municipal/roundtables/2000participants.htm, 
respectively).
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    Furthermore, we believe that improved access to the information in 
continuing disclosure documents not only would provide the investing 
public with important information regarding municipal securities, both 
during offerings and on an ongoing basis, but also would help fulfill 
the regulatory and information needs of municipal market participants, 
including Dealers, Participating Underwriters, mutual funds, and 
others. For example, many mutual funds include municipal securities in 
their portfolios that they routinely monitor for regulatory and other 
reasons.\36\ They do so by reviewing annual filings, as well as 
material event notices and failure to file notices, obtained from 
NRMSIRs and SIDs.\37\ In addition, the MSRB requires Dealers to 
disclose to a customer at the time of trade all material facts about a 
transaction known by the Dealer.\38\ Further, the MSRB requires a 
Dealer to disclose material facts about a security when such facts are 
reasonably accessible to the market.\39\ Accordingly, a Dealer is 
responsible for disclosing to a customer any material fact concerning a 
municipal security transaction made publicly available through sources 
such as NRMSIRs, the MSRB's Municipal Securities Information Library 
(``MSIL'') system,\40\ the MSRB's Real-Time Transaction Reporting 
System (``RTRS''), rating agency reports and

[[Page 76107]]

other sources of information relating to the municipal securities 
transaction generally used by Dealers that affect transactions in the 
type of municipal securities at issue.\41\ Dealers use the information 
contained in the continuing disclosure documents to carry out these 
obligations. Therefore, improving access to information in the 
continuing disclosure documents would help facilitate and simplify the 
process of gathering the necessary information to carry out their 
obligations. For these reasons, we proposed, and are now adopting, 
amendments to Rule 15c2-12 that, in our view, will provide municipal 
market participants with more efficient access to information in 
continuing disclosure documents to satisfy their regulatory 
requirements and informational needs.
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    \36\ For example, Rule 2a-7 under the Investment Company Act of 
1940 specifies the characteristics of investments that may be 
purchased and held by money market funds. Among other requirements, 
Rule 2a-7 requires a money market fund to limit its portfolio 
investments to those securities that the fund's board of directors 
determines present minimal credit risks (including factors in 
addition to any assigned rating). See Rule 2a-7(c)(3), 17 CFR 
270.2a-7(c)(3).
    \37\ See, e.g., the comments of Leslie Richards-Yellen, 
Principal, The Vanguard Group, at the 2001 Roundtable, supra note 
35.
    \38\ See MSRB ``Interpretive Notice Regarding Rule G-17 on 
Disclosure of Material Facts'' (March 20, 2002) (available at http:/
/www.msrb.org/msrb1/rules/notg17.htm). See also Securities Exchange 
Act Release No. 45591 (March 18, 2002), 67 FR 13673 (March 25, 2002) 
(SR-MSRB-2002-01) (order approving MSRB's proposed interpretation of 
the duty to deal fairly set forth in MSRB Rule G-17).
    \39\ Id.
    \40\ Municipal Securities Information Library and MSIL are 
registered trademarks of the MSRB. The Official Statement and 
Advance Refunding Document (``OS/ARD'') system of the MSIL system 
was initially approved by the Commission in 1991 and was amended in 
2001 to establish the MSRB's current optional electronic system for 
underwriters to submit official statements and advance refunding 
documents. See Securities Exchange Act Release Nos. 29298 (June 13, 
1991), 56 FR 28194 (June 19, 1991) (File No. SR-MSRB-90-2) (order 
approving MSRB's proposal to establish and operate the OS/ARD of the 
MSIL system, through which information collected pursuant to MSRB 
Rule G-36 would be made available electronically to market 
participants and information vendors) and 44643 (August 1, 2001), 66 
FR 42243 (August 10, 2001) (File No. SR-MSRB-2001-03) (order 
approving MSRB's proposal to amend the OS/ARD system to establish an 
optional procedure for electronic submissions of required materials 
under MSRB Rule G-36).
    \41\ See supra note 38.
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C. The MSRB's Electronic Systems

    In 2006, the Commission published for comment proposed amendments 
to Rule 15c2-12 in response to a petition from the MSRB \42\ that would 
permit the MSRB to close its Continuing Disclosure Information Net 
(``CDINet'') system, thereby eliminating the MSRB as a location to 
which issuers could submit material event notices and failure to file 
notices.\43\ In the 2006 Proposed Amendments, we indicated our belief 
that, given the limited usage of the MSRB's CDINet system, among other 
things, the proposed elimination of the provision in Rule 15c2-12 that 
allows the filing of material event notices with the MSRB was 
warranted.\44\
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    \42\ See Letter from Diane G. Klinke, General Counsel, MSRB, to 
Jonathan G. Katz, Secretary, Commission, dated September 8, 2005 
(``MSRB Petition'') (File No. 4-508).
    \43\ See Securities Exchange Act Release No. 54863 (December 4, 
2006), 71 FR 71109 (December 8, 2006) (``2006 Proposed 
Amendments''). According to the MSRB Petition, the CDINet system was 
designed to permit issuers to satisfy their undertakings to provide 
material event notices through a single submission to the MSRB, 
rather than through separate submissions to each of the NRMSIRs. The 
MSRB stated that relatively few issuers had opted to use the CDINet 
system, and, in recent years, usage of the CDINet system had 
diminished. See MSRB Petition, supra note 42.
    \44\ See 2006 Proposed Amendments, supra note 43.
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    We recently approved the MSRB's proposed rule change, filed under 
section 19(b) of the Exchange Act,\45\ to establish a pilot program for 
an Internet-based public access portal (``pilot portal'') for the 
consolidated availability of primary offering information about 
municipal securities that currently is made available in paper form, 
subject to copying charges, at the MSRB's public access facility, and 
electronically by paid subscription on a daily over-night basis and by 
purchase of annual back-log collections.\46\ The MSRB has implemented 
the pilot portal as a service of its new Internet-based public access 
system, which it designated as the EMMA system, as a pilot facility 
within the MSIL system.
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    \45\ 15 U.S.C. 78s(b).
    \46\ See Securities Exchange Act Release No. 57577 (March 28, 
2008), 73 FR 18022 (April 2, 2008) (File No. SR-MSRB-2007-06) (order 
approving the pilot portal). Primary offering information consists 
of the official statement and the advance refunding document that 
Participating Underwriters are required to send to the MSRB under 
MSRB Rule G-36.
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    In the course of developing the primary offering information 
component of the EMMA system, the MSRB determined that it could 
incorporate in the EMMA system the collection and availability of 
continuing disclosure documents, thus eliminating the need for the 
Commission to adopt its proposed changes to Rule 15c2-12 to remove the 
MSRB as a repository of material event notices.\47\ As a result, the 
MSRB submitted to the Commission a proposed rule change, filed under 
section 19(b) of the Exchange Act,\48\ to expand the EMMA system to 
accommodate the collection and availability of annual filings, material 
event notices and failure to file notices.\49\ We published the MSRB's 
proposal to incorporate continuing disclosure documents in the EMMA 
system simultaneously with the proposed amendments to Rule 15c2-12 that 
we are adopting today.\50\ While the MSRB still intends to propose to 
terminate its CDINet System, subject to Commission approval,\51\ the 
MSRB's subsequent decision to file a proposed rule change to expand the 
EMMA system to accommodate annual filings, material event notices, and 
failure to file notices \52\ has led it to withdraw the MSRB 
Petition.\53\ In the Proposing Release, we noted that, in light of our 
most recent proposed amendments, we were considering whether to 
withdraw our 2006 Proposed Amendments.\54\ We received no comments 
regarding our proposed withdrawal of the 2006 Proposed Amendments. 
Therefore, in conjunction with the Commission's proposal today to amend 
Rule 15c2-12, the Commission is withdrawing its 2006 Proposed 
Amendments.
---------------------------------------------------------------------------

    \47\ See MSRB EMMA Proposal, supra note 12.
    \48\ 15 U.S.C. 78s(b).
    \49\ See MSRB EMMA Proposal, supra note 12.
    \50\ Id.
    \51\ Id.
    \52\ Id.
    \53\ See letter to Florence E. Harmon, Acting Secretary, 
Commission, from Ernesto A. Lanza, General Counsel, MSRB, dated 
October 22, 2008.
    \54\ See Proposing Release, supra note 3, 73 FR at 46141.
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III. Discussion of Amendments and Comments Received

A. Amendments to Rule 15c2-12

    We are adopting, without change, our proposed amendments to the 
Rule, which facilitate the collection and availability of information 
about outstanding municipal securities. For the reasons discussed in 
this release and the Proposing Release, we believe that the amendments 
are consistent with the Commission's mandate to, among other things, 
adopt rules reasonably designed to prevent fraud in the municipal 
securities market.
    In summary, we are amending paragraph (b)(5) of Rule 15c2-12, which 
relates to a Participating Underwriter's obligation under the Rule to 
reasonably determine that issuers or obligated persons have 
contractually agreed to provide specified documents, in connection with 
primary offerings subject to the Rule. The final amendments require a 
Participating Underwriter to reasonably determine that the issuer or 
obligated person has agreed at the time of a primary offering: (1) To 
provide the continuing disclosure documents to the MSRB instead of to 
each NRMSIR and the appropriate SID, if any; and (2) to provide the 
continuing disclosure documents in an electronic format and accompanied 
by identifying information as prescribed by the MSRB.\55\ In addition, 
the final amendments make comparable changes to paragraph (d)(2) of the 
Rule, which provides for a limited exemption from Rule 15c2-12(b)(5) as 
long as specified conditions are met. We also are making revisions to 
other provisions of Rule 15c2-12 to reflect that the MSRB will be the 
sole repository and we are providing for a transition mechanism to 
accommodate existing continuing disclosure agreements that refer to 
NRMSIRs. As noted above, the rule amendments as adopted are identical 
to the proposed amendments.
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    \55\ We note that, as part of its EMMA proposal filed with the 
Commission under Section 19(b) of the Exchange Act, the MSRB set 
forth the electronic format it proposes to use. See MSRB EMMA 
Proposal, supra note 12.
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1. Use of a Single Repository
    We are adopting amendments to Rule 15c2-12 to provide for a single 
centralized repository that will receive submissions in an electronic 
format. These amendments are expected to encourage a more efficient and 
effective process for the submission and availability of continuing 
disclosure

[[Page 76108]]

documents. In our view, a single repository that receives submissions 
electronically should assist in facilitating and simplifying the 
process of submitting continuing disclosure documents under the Rule. 
Issuers and obligated persons will be able to comply with their 
undertakings by submitting their continuing disclosure documents only 
to one repository, as opposed to multiple repositories.
    We also believe that having a centralized repository that receives 
submissions in an electronic format will help provide ready and prompt 
access to continuing disclosure documents by investors and other 
municipal securities market participants. Rather than having to 
approach multiple locations, investors and other market participants 
will be able to go solely to one location to retrieve continuing 
disclosure documents, thereby allowing for a more convenient means to 
obtain such information. Moreover, we believe that having one 
repository electronically collect and make available all continuing 
disclosure documents will increase the likelihood that investors and 
other market participants will obtain complete information about a 
municipal security or its issuer, since the information will not be 
distributed across multiple repositories. In addition, we expect that 
the consistent availability of municipal secondary market disclosures 
from a single source can simplify compliance with regulatory 
requirements by Participating Underwriters and others, such as mutual 
funds and Dealers. Information vendors (including NRMSIRs and SIDs) and 
others also will have ready access to continuing disclosure documents 
from a single source for use in their value-added products.
    We have long been interested in improving the availability of 
disclosure in the municipal securities market. At the time we adopted 
Rule 15c2-12 and amended it in 1994, disclosure documents were 
submitted in paper form. We believed that, in such an environment where 
document retrieval would be handled manually, the establishment of one 
or more repositories could be beneficial in widening the retrieval and 
availability of information in the secondary market, since the public 
could obtain the disclosure documents from multiple locations. Our 
objective of encouraging greater availability of municipal securities 
information remains unchanged. However, as indicated above, there have 
been significant inefficiencies in the current use of multiple 
repositories that likely have impacted the public's ability to retrieve 
continuing disclosure documents.\56\ Although in the 1989 Adopting 
Release we supported the development of an information linkage among 
the repositories, none was established to help broaden the availability 
of the disclosure information. Since the adoption of the 1994 
Amendments, there have been significant advancements in technology and 
information systems, including the use of the Internet, to provide 
information quickly and inexpensively to market participants and 
investors. In this regard, we believe that the use of a single 
repository to receive, in an electronic format, and make available 
continuing disclosure documents, in an electronic format, will 
substantially and effectively increase the availability of information 
about municipal issues, thereby preventing fraud, and enhance the 
efficiency of the secondary trading market.
---------------------------------------------------------------------------

    \56\ See supra note 35.
---------------------------------------------------------------------------

    In the Proposing Release, we requested comment on whether we should 
amend Rule 15c2-12 as proposed, or whether it would be preferable to 
continue to have multiple sources for such information. In addition, 
with respect to the transition to a sole repository for continuing 
disclosure documents, we requested comment on whether commenters 
foresee any differences that could occur between the existing structure 
of multiple NRMSIRs and one repository regarding the scope, quantity, 
and continuity of information.
    Many commenters supported amending the Rule to provide for only one 
repository instead of multiple repositories for the submission of, and 
access to, continuing disclosure documents.\57\ Generally, commenters 
expressed the view that the creation of a single repository would be a 
significant step forward in making municipal disclosure more 
transparent in its scope,\58\ more efficient in its delivery,\59\ more 
consistent \60\ and comparable \61\ across issuers, and more accessible 
for investors,\62\ particularly individual investors, and others--
enhancing the overall efficiency of the secondary trading market for 
municipal securities.\63\ As discussed below, two commenters objected 
to the establishment of a single repository.\64\
---------------------------------------------------------------------------

    \57\ See, e.g., GFOA Letter, at 1, Vanguard Letter, at 1, SIFMA 
Letter, at 1, MSRB Letter, at 1, Treasurer of the State of 
Connecticut Letter, at 1, IAA Letter, at 1-2, Texas MAC Letter, at 
1, NAHEFFA Letter, at 1, NFMA Letter, at 1, NASACT Letter, at 1, and 
Multiple-Markets Letter, at 1.
    \58\ See Treasurer of the State of Connecticut Letter, at 1, 
Mooney Letter, at 1, IAA Letter, at 1, and Multiple-Markets Letter, 
at 1.
    \59\ See Treasurer of the State of Connecticut Letter, at 1, 
Texas MAC Letter, and Multiple-Markets Letter, at 1.
    \60\ See Treasurer of the State of Connecticut Letter, at 1.
    \61\ See Treasurer of the State of Connecticut Letter, at 1, and 
EDGAR Online Letter.
    \62\ See GFOA Letter, at 2, Vanguard Letter, at 2, SIFMA Letter, 
at 2, MSRB Letter, at 3, Treasurer of the State of Connecticut 
Letter, at 2-3, IAA Letter, at 1, NASACT Letter, at 1, and ICI 
Letter, at 3.
    \63\ See Treasurer of the State of Connecticut Letter, at 1, 
EDGAR Online Letter, SIFMA Letter, at 1, IAA Letter, at 3, and 
NASACT Letter at 1.
    \64\ See SPSE Letter and DPC DATA Letter.
---------------------------------------------------------------------------

    In response to our question about whether having one repository 
instead of multiple repositories for the submission of, and access to, 
continuing disclosure documents would improve access to secondary 
market disclosure for investors and municipal securities market 
participants, commenters expressed the expectation that allowing only 
one entity to serve as the repository for continuing disclosure 
documents would greatly streamline the current system and resolve 
previous accessibility and consistency issues that resulted from 
submissions to several different information repositories.\65\ In 
addition, commenters noted that having a single repository for 
secondary market disclosures would benefit investors by allowing them 
to obtain complete information without having to search for disclosures 
in multiple locations.\66\ One commenter stated that its members 
reported that it is rare for municipal securities disclosure 
information currently to be found in one location.\67\ This commenter 
expressed the view that a single repository would significantly improve 
information availability by allowing investors to obtain information 
more readily, increasing the likelihood that investors can obtain more 
complete information and enabling them to better protect themselves 
from misrepresentation or other fraudulent activities, and would assist 
investors in making more informed investment decisions.\68\ Another 
commenter echoed this concern when, in discussing the discrepancies 
that currently exist, it stated that it is not reasonable to expect an 
investor to have to search multiple locations for the same 
information.\69\ One commenter--a financial information disseminator--
noted that it is not feasible under the current system for it to have 
access to municipal bond

[[Page 76109]]

disclosures for the purpose of redistribution to investors because it 
would have to either: (1) obtain disclosures individually from each of 
50,000 different issuers; or (2) pay a NRMSIR an annual subscription 
fee or a $25 per document fee, in which case it would still be unable 
to redistribute the disclosures because the NRMSIRs have copyrighted 
the documents by categorizing and reformatting the documents into a 
proprietary format.\70\ This commenter further noted that obtaining 
what it referred to as a ``fundamental database'' of municipal 
disclosures is currently problematic because the disclosures are 
difficult to locate, financial reporting between municipalities differs 
greatly, and the volume of documents is too great.\71\ Another 
commenter also supported the replacement of the current system and 
agreed with the Commission that a centralized location for the 
collection of information would eliminate the problem of an issuer 
failing to provide certain information to every repository, resulting 
in one repository not having a complete set of information.\72\ In 
addition, a single source of secondary market information was 
anticipated by some commenters to reduce the costs incurred by market 
participants as a result of the existing fragmented system, which 
forces investors and others to seek information from multiple 
sources.\73\ Furthermore, it was suggested that, as with the 
Commission's EDGAR system for reporting issuers, the establishment of a 
single repository for municipal information would encourage links with 
other information delivery sources that the investing public could 
access, such as free Web sites, subscriptions, or brokerage services, 
which would promote greater familiarity and usage and a more 
transparent and efficient market.\74\
---------------------------------------------------------------------------

    \65\ See Treasurer of the State of Connecticut Letter, at 1, 
EDGAR Online Letter, SIFMA Letter, at 1, IAA Letter, at 3, and 
NASACT Letter at 1.
    \66\ See ICI Letter, at 3, and SIFMA Letter, at 2.
    \67\ See ICI Letter, at 3.
    \68\ Id.
    \69\ See Treasurer of the State of Connecticut Letter, at 1.
    \70\ See EDGAR Online Letter, at 2.
    \71\ See EDGAR Online Letter, at 4.
    \72\ See IAA Letter, at 2.
    \73\ See ICI Letter, at 3, and SIFMA Letter, at 2.
    \74\ See Treasurer of the State of Connecticut Letter, at 1-2.
---------------------------------------------------------------------------

    We also requested comment on whether the availability of such 
information from a single source would simplify compliance with 
regulatory requirements by Participating Underwriters and others. 
Commenters anticipated that having a single site for continuing 
disclosure information would assist dealers in meeting their obligation 
to obtain the information necessary to establish a reasonable basis for 
making investment recommendations, improve the due diligence activities 
of underwriters of new offerings, and assist mutual funds in carrying 
out their regulatory obligations.\75\ Some commenters indicated a 
belief that a single repository would simplify the manner in which 
municipal issuers, obligated persons and their agents make filings, and 
promote full compliance by issuers and obligated persons with the 
filing requirements contained in continuing disclosure agreements.\76\
---------------------------------------------------------------------------

    \75\ See SIFMA Letter, at 2, and ICI Letter, at 3.
    \76\ See GFOA Letter, at 1, and SIFMA Letter, at 2.
---------------------------------------------------------------------------

    Two commenters that are NRMSIRs opposed having a single 
repository.\77\ Both commenters stated that the proposed amendments 
would not accomplish the Commission's information goals because the 
amendments do not address the root cause of current municipal 
disclosure problems, such as issuers who file late or fail to file.\78\ 
One commenter stated the Commission's information goals would not be 
accomplished because of the absence of uniform accounting and financial 
reporting standards for issuers in the municipal market.\79\ One 
commenter was of the opinion that the proposed amendment ``does nothing 
to improve the overall continuing disclosure regime, except to make the 
filing materials available free of charge to the public.'' \80\ This 
commenter further stated that many problems with the present system of 
municipal continuing disclosure would ``remain unaddressed in the 
proposed rule change, as do other publicly described and measured 
problems such as the significant level of municipal continuing 
disclosure delinquency'' and that the ``proposed rule change has no 
substantive benefit to offer.'' \81\ Another commenter, while noting 
that numerous inefficiencies exist within the current NRMSIR system, 
indicated that a single repository system still would depend on if, 
how, and when an issuer submits information.\82\ The Commission 
understands that the proposed amendments will not necessarily solve 
every problem found in the current system based on NRMSIRs and SIDs. 
Under the current system, it is not possible to determine with 
certainty whether gaps in the continuing disclosure document 
collections of NRMSIRs are the result of failures by issuers to provide 
continuing disclosure documents as provided in their continuing 
disclosure agreements or failures of NRMSIRs to maintain accurate 
indices or adequate document retrieval systems. The Commission believes 
that the use of a single repository will make it easier for investors 
and others to identify issuers who fail to file. The Commission expects 
that, with the rule amendments, investors will be able to make better 
informed investment decisions and Participating Underwriters and 
Dealers will be able to fulfill their regulatory responsibilities more 
easily and accurately. At the same time, the Commission believes that 
the use of a single venue, from which all continuing disclosure 
documents will be available to the general public immediately upon 
being filed, will provide a comprehensive source of information to 
NRMSIRs and other vendors to utilize in their value added products.
---------------------------------------------------------------------------

    \77\ See SPSE Letter and DPC DATA Letter.
    \78\ See SPSE Letter, at 8, and DPC DATA Letter, at 1.
    \79\ See SPSE Letter, at 8.
    \80\ See DPC DATA Letter, at 1.
    \81\ Id.
    \82\ See DAC Letter, at 3.
---------------------------------------------------------------------------

    One commenter, who opposed the amendments, suggested the use of a 
``central post office'' approach whereby all filings would be supplied 
to a single location for immediate redistribution to all NRMSIRs and 
SIDs and an index of filings would be available to the general public 
at no charge.\83\ Another commenter, who supported a single repository, 
requested that, in the event the Commission determines not to adopt the 
proposed amendments, it consider the establishment of a ``central post 
office'' facility.\84\ One commenter, which currently operates such a 
``central post office'' facility, also supported having of a single 
repository operated by the MSRB and indicated its belief that a single 
repository would be more efficient than the current decentralized 
system.\85\ The Commission has considered a ``central post office'' 
approach. However, while a central post office may benefit NRMSIRs by 
providing a comprehensive source of continuing disclosure documents in 
an electronic format, it would not result in such documents being made 
available to the public at no charge. The Commission believes that 
direct access to such information from a single repository, without 
charge, will benefit investors, particularly individual investors, 
while providing a comprehensive source of continuing disclosure 
documents to information vendors and others who may wish to obtain all 
filings or a subset thereof, such as filings related to issuers and 
obligated persons in a single state.
---------------------------------------------------------------------------

    \83\ See SPSE Letter, at 2.
    \84\ See GFOA Letter, at 2.
    \85\ See Texas MAC Letter.
---------------------------------------------------------------------------

    One commenter noted that having a single repository might cause 
investors and broker-dealers unduly to rely on the

[[Page 76110]]

repository's contents, which it believed would create a risk of 
undermining the purpose of protecting investors against fraud.\86\ This 
commenter provided no reason for its view that documents supplied to 
the MSRB would be less reliable than those supplied to NRMSIRs and SIDs 
directly or through a ``central post office.''
---------------------------------------------------------------------------

    \86\ See SPSE Letter, at 2.
---------------------------------------------------------------------------

    While we acknowledge that today's amendments do not address all of 
the information challenges of the municipal market, we nonetheless 
believe that they will be a significant step forward in improving the 
availability of, and access to, secondary market municipal disclosures. 
As noted above, the vast majority of commenters on the proposed 
amendments believed that the adoption of the rule amendments will 
simplify and improve the current system. The Commission also believes 
that this will be the case. With respect to comments favoring a 
``central post office,'' we believe that this approach would fail to 
achieve the benefits of the amendments. For example, with a central 
post office, there would continue to be no single location to which 
investors, particularly individuals, could turn for free access to 
information regarding municipal securities. Instead, individuals or 
entities that wish to obtain such information would find it necessary 
first to access the central post office to find out what documents 
might be available from NRMSIRs and SIDs and then to contact one or 
more NRMSIRs or SIDs and pay applicable fees to obtain the document or 
documents they seek. This would be a less efficient process than that 
contemplated by the final amendments, in which interested persons could 
directly access, view and print for free continuing disclosure 
documents from one place--the MSRB's Internet site.
    Moreover, a ``central post office'' would not, to the same extent 
as the Commission's amendments, simplify compliance with regulatory 
requirements by Participating Underwriters, Dealers and others. This is 
because they would have to first access the ``central post office'' to 
determine what documents are available and then contact one or more 
NRMSIRs or SIDs to obtain these documents. In fact, one commenter that 
supported the proposed amendments indicated that the proposal, along 
with the MSRB EMMA Proposal, ``takes the notion of a central post 
office one step further by streamlining the process and removing the 
necessity and inefficiency of forwarding filings to several NRMSIRs and 
SIDs.'' \87\ We therefore anticipate that public access to all 
continuing disclosure documents on the Internet, as provided by the 
amendments, will promote market efficiency and deter fraud by improving 
the availability of information to all investors.
---------------------------------------------------------------------------

    \87\ See NASACT Letter, at 1.
---------------------------------------------------------------------------

 2. MSRB as the Sole Repository
    In the Proposing Release, we sought comment concerning whether the 
MSRB should be the sole repository included in Rule 15c2-12 or whether 
another entity, such as a private vendor, should be the sole 
repository, instead of the MSRB, and requested that commenters provide 
reasons for their viewpoints. As proposed, we are revising Rule 15c2-12 
to delete all references to NRMSIRs and SIDs and in their place refer 
solely to the MSRB.
    Twelve commenters supported and two commenters opposed our proposal 
for the MSRB to be the single repository for secondary market 
disclosure.\88\ Commenters favoring the MSRB as the sole repository 
expressed a belief that the Commission's oversight of the MSRB as a 
self-regulatory organization (``SRO'') and the MSRB's experience with 
the complexities of municipal securities and the municipal securities 
markets and the MSRB's direct experience in developing and maintaining 
electronic information systems for the municipal securities market 
(such as its MSIL and RTRS systems) would provide significant value to 
the framework of the proposed repository.\89\ The two commenters that 
opposed having the MSRB as the sole repository believed that the 
current system should be retained and that they and other vendors of 
municipal information would be at a competitive disadvantage if the 
MSRB became the sole repository.\90\
---------------------------------------------------------------------------

    \88\ See GFOA Letter, Vanguard Letter, SIFMA Letter, MSRB 
Letter, Texas MAC Letter, NASACT Letter, OMAC Letter, ICI Letter, 
NAHEFFA Letter, Multiple-Markets Letter, NFMA Letter, and EDGAR 
Online Letter (each supporting the MSRB as the single repository). 
See also SPSE Letter and DPC DATA Letter (each opposing the MSRB as 
the single repository).
    \89\ See SIFMA Letter, NFMA Letter, and ICI Letter.
    \90\ See SPSE Letter, at 2, 7 and DPC DATA Letter, at 2.
---------------------------------------------------------------------------

    Comment also was solicited regarding whether the MSRB's status as 
an SRO would be an advantage or disadvantage to its serving as the sole 
repository. Three commenters stated a belief that having the MSRB serve 
as the sole repository is reasonable because, as an SRO, it is subject 
to oversight by the Commission.\91\ One of these commenters also noted 
that, as a result, a rule change relevant to the continuing disclosure 
service of EMMA would be subject to public comment and Commission 
approval.\92\ However, a commenter that opposed the proposed amendments 
suggested that naming the MSRB to be the sole repository would not be 
appropriate because the MSRB would be reimbursed through mandatory fees 
assessed against broker-dealers rather than users.\93\ This commenter 
expressed a belief that such costs ultimately would be passed along by 
broker-dealers to their customers.\94\
---------------------------------------------------------------------------

    \91\ See Vanguard Letter, SIFMA Letter, and ICI Letter.
    \92\ See SIFMA Letter, at 3.
    \93\ See SPSE Letter, at 11.
    \94\ Id.
---------------------------------------------------------------------------

    We also sought comment on whether the MSRB would be an appropriate 
operator of a centralized repository for the collection and 
availability of continuing disclosure information about municipal 
securities, and whether there is a more appropriate location or means 
through which such information could be made readily available to the 
public without charge. Some commenters noted that one benefit of having 
the MSRB act as sole repository would be the accessibility of 
comprehensive information regarding municipal securities, including 
official statements, continuing disclosure documents and pricing 
information, without charge at one location.\95\ However, one commenter 
suggested that, by analogy to our EDGAR system, the Commission might be 
a more appropriate party to operate such a repository than the MSRB, 
which represents only one segment of the market (i.e., brokers, dealers 
and municipal securities dealers).\96\ In addition, one of the existing 
NRMSIRs indicated its view that it is inappropriate for a quasi-
governmental entity such as the MSRB to operate a facility that would 
compete with private business.\97\ Two commenters indicated an overall 
preference for maintenance of the existing structure of the Rule--
pursuant to which private entities, not the MSRB, provide locations or 
means through which such information is made available to the 
public.\98\
---------------------------------------------------------------------------

    \95\ See, e.g., SIFMA Letter, at 2, and NASACT Letter, at 1.
    \96\ See Treasurer of the State of Connecticut Letter, at 2.
    \97\ See DPC DATA Letter, at 2. See discussion below in Section 
III.A.3.
    \98\ See SPSE Letter and DPC DATA Letter.
---------------------------------------------------------------------------

    We agree with the many commenters who believed that the MSRB is the 
appropriate entity to serve as the single repository. Established 
pursuant to an act of Congress\99\ as an SRO for brokers,

[[Page 76111]]

dealers and municipal securities dealers engaged in transactions in 
municipal securities, the MSRB is subject to Commission oversight, as 
provided by the Exchange Act. As an SRO, the MSRB is required to file 
its rules and changes to those rules with the Commission for notice and 
comment under section 19(b) of the Exchange Act.\100\ Pursuant to 
section 15B(b)(2)(C) of the Exchange Act, the MSRB's rules are required 
to be designed, in part, ``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, to remove 
impediments to and perfect the mechanism of a free and open market in 
municipal securities, and, in general, to protect investors and the 
public interest.'' \101\ The MSRB's existing RTRS and MSIL systems, and 
the primary offering information component of the EMMA system that has 
been approved by the Commission (relating to the submission of official 
statements and advance refunding documents),\102\ were subject to 
notice and comment and Commission review. Similarly, the MSRB's 
proposal to establish a continuing disclosure component within the EMMA 
system was subject to notice and comment under section 19(b) of the 
Exchange Act, as would as any future changes to the system.\103\ 
Further, we believe that, in addition to being subject to Commission 
oversight as an SRO, the MSRB is both familiar with the complexities of 
municipal securities and the municipal securities market and has 
experience in developing and maintaining electronic information systems 
for that market.\104\ Collectively, these factors lead us to adopt 
amendments to Rule 15c2-12 to provide that the MSRB be the centralized 
location for collecting (in an electronic format) and making 
information about municipal securities available to the public at no 
cost.
---------------------------------------------------------------------------

    \99\ 15 U.S.C. 78o-4.
    \100\ 15 U.S.C. 78s(b).
    \101\ 15 U.S.C. 78o-4(b)(2)(C).
    \102\ See Securities Exchange Act Release No. 57577, supra note 
46.
    \103\ See MSRB EMMA Proposal, supra note 12.
    \104\ For example, the MSRB is experienced with operating 
CDINet, the MSIL system, and the RTRS system.
---------------------------------------------------------------------------

    Although two commenters opposed the proposal for the MSRB to be the 
sole repository,\105\ the Commission believes that the MSRB's status as 
an SRO and experience with municipal market disclosure make it 
appropriate for the MSRB to be the sole repository. Moreover, as 
discussed in detail throughout the Proposing Release as well as this 
release, the Commission believes that the current NRMSIR model of 
disclosure needs to be improved. Many commenters agreed with this 
view.\106\ Although one commenter suggested that the Commission should 
be the repository,\107\ we believe that the MSRB, in light of its 
experience with municipal disclosure and its status as an SRO, will be 
in a better position to act as the repository more quickly and 
efficiently.
---------------------------------------------------------------------------

    \105\ See SPSE Letter, at 2, DPC DATA Letter, at 3.
    \106\ See, e.g., Vanguard Letter, at 2, NASACT Letter, at 1, ICI 
Letter, at 3, IAA Letter, at 1, and NFMA Letter, at 1.
    \107\ See Treasurer of the State of Connecticut Letter, at 2.
---------------------------------------------------------------------------

    As discussed below, with respect to the comment that it is 
inappropriate for a quasi-governmental entity such as the MSRB to 
operate a facility that would compete with private business, the 
Commission believes that any competitive impact that may result from 
the MSRB's status as the sole repository is justified by the benefits 
that such status is expected to provide to investors, broker-dealers, 
mutual funds, vendors of municipal information, municipal security 
analysts, other market professionals, and the public generally.\108\ 
Further, as discussed in section III.A.3. below, we believe that having 
the MSRB serve as the repository for the electronic submission and 
availability of continuing disclosure documents could foster 
competition for value-added products and services and thus it is not 
anti-competitive for the MSRB to serve as the repository.
---------------------------------------------------------------------------

    \108\ See discussion above regarding the MSRB's status as an SRO 
and resulting Commission oversight, infra Section III.A.3.
---------------------------------------------------------------------------

    With respect to the statement that broker-dealers would pass on 
fees to their customers to support the EMMA system, the Commission 
notes that the MSRB, as an SRO, would have to file any fees relating to 
the use of EMMA with the Commission under section 19(b) of the Exchange 
Act.\109\ The Commission further notes that broker-dealers currently 
are charged fees for access to disclosure documents obtained from the 
NRMSIRs that they currently may or may not pass on to their customers. 
According to the MSRB, it presently anticipates no increase in fees on 
brokers, dealers, and municipal securities dealers who effect 
transactions in municipal securities to establish and operate the EMMA 
system.\110\ The MSRB has indicated that it has funds on hand that, 
together with amounts it will collect in the future under its current 
fee schedule, it believes will be sufficient to establish and operate 
the EMMA system.\111\
---------------------------------------------------------------------------

    \109\ 15 U.S.C. 78s(b). Under Section 15B(b)(2)(J) of the 
Exchange Act, 15 U.S.C. 78o-4(b)(2)(J), among other requirements, 
any fees charged by the MSRB must be reasonable.
    \110\ Telephone conversation between Earnesto Lanza, General 
Counsel, MSRB, and Martha Mahan Haines, Chief of the Office of 
Municipal Securities and Assistant Director, Division of Trading and 
Markets, October 22, 2008.
    \111\ Id.
---------------------------------------------------------------------------

    Indeed, we anticipate that the accessibility of documents through 
the repository will greatly benefit dealers in satisfying their 
obligation to have a reasonable basis for investment recommendations 
and other regulatory responsibilities, in addition to investors and 
other market participants who seek information about municipal 
securities. All commenters who addressed this issue supported this 
conclusion.\112\
---------------------------------------------------------------------------

    \112\ See SIFMA Letter, at 2, ICI Letter, at 3, Dickman Letter, 
Grant Letter, and Mooney Letter.
---------------------------------------------------------------------------

3. Competitive Concerns With a Single Repository
    In the Proposing Release, we discussed the competitive implications 
generally of having a single repository for continuing disclosure 
documents and specifically of having the MSRB serve as the sole 
repository and sought commenters' views on potential competition 
issues. With respect to the Exchange Act goal of promoting competition, 
we note that, when we adopted Rule 15c2-12 in 1989, we strongly 
supported the development of one or more central repositories for 
municipal disclosure documents.\113\ We ``recognize[d] the benefits 
that may accrue from the creation of competing private repositories,'' 
and indicated that ``the creation of central sources for municipal 
offering documents is an important first step that may eventually 
encourage widespread use of repositories to disseminate annual reports 
and other current information about issuers to the secondary markets.'' 
\114\ Further, when we adopted the 1994 Amendments, we stated that the 
``requirement to deliver disclosure to the NRMSIRs and the appropriate 
SID also allay[ed] the anti-competitive concerns raised by the creation 
of a single repository.'' \115\
---------------------------------------------------------------------------

    \113\ See 1989 Adopting Release at 54 FR 28807, supra note 18. 
See also Securities Exchange Act Release No. 33742 (March 9, 1994), 
59 FR 12759 (March 17, 1994) (File No. S7-5-94) (proposing release 
for the 1994 Amendments) (``1994 Proposing Release'').
    \114\ See 1989 Adopting Release, supra note 18. See also 1994 
Proposing Release, supra note 113.
    \115\ See 1994 Amendments, supra note 21.
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    Since the adoption of the 1994 Amendments, there have been 
significant advancements in technology

[[Page 76112]]

and information systems that allow market participants and investors, 
both retail and institutional, easily, quickly, and inexpensively to 
obtain information through electronic means. The exponential growth of 
the Internet and the capacity it affords to investors, particularly 
individual investors, to obtain, compile and review information has 
likely helped to keep investors better informed. In addition to the 
Commission's EDGAR system, which contains filings by public companies 
required to file periodic reports and by mutual funds, we have 
increasingly encouraged and, in some cases required, the use of the 
Internet and Web sites by public reporting companies and mutual funds 
to provide disclosures and communicate with investors.\116\
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    \116\ See, e.g., Securities Exchange Act Release Nos. 52056 
(July 19, 2005), 70 FR 44722 (August 3, 2005) (File No. S7-38-04) 
(adopting amendments to encourage and, in some cases, mandate the 
use of an Internet site in securities offering); 56135 (July 26, 
2007), 72 FR 42222 (August 1, 2007) (File No. S7-03-07) (adopting 
amendments to the proxy rules under the Exchange Act requiring 
issuers and other soliciting persons to post their proxy materials 
on an Internet Web site and providing shareholders with a notice of 
the Internet availability of the materials); and 58288 (August 1, 
2008), 73 FR 45862 (August 7, 2008) (File No. S7-23-08) 
(interpretative release providing guidance on the use of company Web 
sites).
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    Our adoption of the proposed amendments, which provide for having a 
single repository for the electronic collection and availability of 
continuing disclosure documents, will help further the Exchange Act 
objective of promoting competition because information about municipal 
securities will be more widely available to market professionals, 
investors, information vendors, and others as a result of the final 
amendments. For example, we believe that competition among vendors can 
increase because vendors can utilize this information to provide value-
added services to municipal market participants. The rule amendments 
also may promote competition in the purchase and sale of municipal 
securities because the greater availability of information, delivered 
electronically through a single repository, may instill greater 
investor confidence in the municipal securities market. Moreover, this 
greater availability of information also may encourage improvement in 
the completeness and timeliness of disclosures by issuers and obligated 
persons and may foster interest in municipal securities by retail and 
institutional customers. As a result, more investors may be attracted 
to this market sector and broker-dealers may compete for their 
business.
    In the Proposing Release, we acknowledged that adoption of the 
proposed amendments potentially could have an adverse impact on one or 
more existing NRMSIRs, especially if their business models depended on 
their status as a NRMSIR. Moreover, since NRMSIRs have received 
compensation for providing copies of continuing disclosure documents to 
persons who request them, we noted that one or more NRMSIRs possibly 
could be adversely affected by the rule amendments, if they no longer 
have available to them a steady flow of funds from providing for a fee 
copies of continuing disclosure documents to persons who request them. 
As a result of the final amendments, a NRMSIR could find that it would 
have to revise its current manner of doing business or face a 
significant downturn in its business operations. Vendors of information 
about municipal securities, other than NRMSIRs, also could be affected 
by the final amendments because the MSRB proposes to provide 
information electronically free of charge.
    In addition, because there would be just one repository, in lieu of 
the four NRMSIRs, the Proposing Release noted that the proposed 
amendments could reduce competition with respect to services provided 
by NRMSIRs as information vendors. In addition to supplying municipal 
disclosure documents upon request, NRMSIRs also provide value-added 
market data services to municipal investors that incorporate continuing 
disclosure information. We noted in the Proposing Release that, if 
NRMSIRs are adversely affected by the proposed amendments, it is 
possible that there could be a reduction in these value-added market 
data services relating to municipal securities or a loss of innovation 
in offering competing information services regarding municipal 
securities.
    We received comment letters from two NRMSIRs that raised concerns 
about the competitive effects of the proposed amendments.\117\ The 
primary concerns, raised by both commenters, relate to the MSRB's role 
as the sole repository of continuing disclosure documents and the 
competitive effects that this would have on existing vendors of 
municipal disclosure information. One commenter stated that the 
Commission's proposal ``would allow the MSRB to impose restrictions on 
municipal issuers and obligated persons by limiting the filings to a 
single, electronic format.'' \118\ In addition, this commenter noted 
that the Commission's proposal would place the MSRB ``in direct 
competition with commercial vendors who have served the market as 
practical implementers of Rule 15c2-12 without any subsidy for more 
than a decade.'' \119\ This commenter also expressed concern that the 
MSRB would unfairly discriminate against private vendors by controlling 
their access to information through fee structures and dissemination of 
information.\120\ The Commission acknowledges that the existing NRMSIR 
system was an improvement over the disclosure regime that was in place 
prior to its creation. However, we believe that there have been 
significant improvements in technology that will allow for increased 
access to municipal disclosure information to investors and others for 
free via the Internet. This supports having the MSRB serve as the sole 
repository. We continue to believe that our rule amendments being 
adopted today are a significant step forward in fostering greater 
availability of municipal disclosures to a broad range of market 
participants, investors, and other individuals and entities, thereby 
preventing fraud. Moreover, we note that a majority of commenters 
recognized there were inefficiencies with respect to the current 
municipal disclosure system and supported the proposed amendments.\121\
---------------------------------------------------------------------------

    \117\ See DPC DATA Letter and SPSE Letter.
    \118\ See DPC DATA Letter, at 1.
    \119\ See DPC DATA Letter, at 2.
    \120\ Id.
    \121\ See supra notes 57-64 and accompanying text.
---------------------------------------------------------------------------

    Another commenter echoed similar sentiments as the commenter above 
and cited to the Commission's statements in adopting Rule 15c2-12 in 
1989 and amendments to the Rule in 1994, which discussed possible anti-
competitive concerns regarding the use of a single repository.\122\ 
This commenter noted that eliminating the NRMSIR function would upset 
the balance of its current business model and have an impact on its 
ability to provide value-added products and services.\123\ The 
commenter disputed that the potential burdens on competition would be 
justified by the proposed amendments' adoption because, in its view, 
the current issues with municipal disclosure lie in the quality and 
timeliness of the information that is filed.\124\ This commenter also 
urged the Commission to adopt an alternative approach.\125\ Under this 
commenter's proposal, the MSRB would not be the sole repository for 
municipal disclosure

[[Page 76113]]

information.\126\ Instead, this commenter proposed having an 
unspecified entity serve as a central electronic post office for 
municipal disclosure information where ``issuers and obligors would 
file documents through a single electronic format'' and such entity 
``would then forward the centrally-filed documents in real time to the 
NRMSIRs.'' \127\ The commenter expressed no opinion regarding the 
identity of the entity that should serve as the central electronic post 
office or how such entity would be chosen.\128\
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    \122\ See SPSE Letter, at 5-7.
    \123\ See SPSE Letter, at 7.
    \124\ See SPSE Letter, at 7-8.
    \125\ See SPSE Letter, at 3-5.
    \126\ See SPSE Letter, at 4.
    \127\ See SPSE Letter, at 2. See discussion above in Section 
III.A.1.
    \128\ Id.
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    Although two commenters questioned whether the proposed amendments 
would benefit competition,\129\ the Commission continues to believe 
that having a single repository will provide the benefits discussed 
throughout the release and will not have a significant adverse effect 
on the ability or willingness of private information vendors to compete 
to create and market value-added data products. Commercial vendors will 
be able to readily access the information made available by the MSRB to 
re-disseminate it or use it in whatever value-added products they may 
wish to provide.\130\ In fact, we believe a single repository in which 
documents are submitted in an electronic format could encourage the 
private information vendors to disseminate municipal securities 
information by reducing the cost of entry into the information services 
market. We also believe that existing vendors may need to make some 
adjustments to their infrastructure, facilities, or services offered. 
However, we believe that some vendors could determine that they no 
longer will need to invest in the infrastructure and facilities 
necessary to collect and store continuing disclosure documents, and new 
entrants into the market will not need to obtain the information from 
multiple locations, but rather could readily access such information 
from one centralized source. Thus, we believe that all vendors should 
be able to obtain easily continuing disclosure documents and should be 
able to compete in providing value-added services.
---------------------------------------------------------------------------

    \129\ See DPC DATA Letter, at 2, and SPSE Letter, at 6-8.
    \130\ In addition to making available such information on the 
MSRB's Web site through EMMA, the MSRB has indicated that it will 
make continuing disclosure documents available by subscription for a 
fee to information vendors and other bulk data users on terms that 
will promote the development of value-added services by subscribers 
for use by market participants. See MSRB EMMA Proposal, 73 FR at 
46163. The fees for this subscription service will be subject to a 
proposed rule change to be filed with the Commission under Section 
19(b) of the Exchange Act.
---------------------------------------------------------------------------

    We previously stated that we would specifically consider the 
competitive implications of the MSRB becoming a repository.\131\ In 
addition, we stated that if we were to conclude that the MSRB's status 
as a repository might have adverse competitive implications, we would 
consider whether we should take any action to address these 
effects.\132\ As noted earlier, we recognize that competition with 
respect to certain information services regarding municipal securities 
that are provided by the existing NRMSIRs could decline should the MSRB 
become the central repository. Two commenters suggested in their 
comment letters that a decrease in competition could occur as a result 
of the Commission's rulemaking.\133\ As discussed in more detail above 
and in the Proposing Release, circumstances have changed since we last 
considered Rule 15c2-12 amendments in 1994. For example, technology 
developments have facilitated access to information and access to 
municipal information typically is subject to a fee and can be 
difficult for individuals to obtain. Further, the NRMSIRs did not 
develop a system of linkages with each other. We continue to believe 
that one of the benefits in having the MSRB as the sole repository will 
be the MSRB's ability to provide a ready source of continuing 
disclosure documents to other information vendors who wish to use that 
information for their products. Private vendors could utilize the MSRB 
in its capacity as a repository as a means to collect information from 
the continuing disclosure documents to create value-added products for 
their customers.\134\
---------------------------------------------------------------------------

    \131\ See Securities Exchange Act Release No. 28081 (June 1, 
1990), 55 FR 23333 (June 7, 1990) (File No. SR-MSRB-89-9).
    \132\ Id.
    \133\ See DPC DATA Letter and SPSE Letter.
    \134\ The Commission notes that two commenters raised concerns 
with the potential subscription fees associated with having the MSRB 
as the single repository. The Commission notes that the MSRB will be 
required to file a proposed rule change with the Commission pursuant 
to Section 19(b) of the Exchange Act regarding any subscription fees 
for a data stream that it proposes as well as any changes to those 
fees.
---------------------------------------------------------------------------

    With respect to concerns that the MSRB could control private 
vendors' access to information through unfair fee structures and biased 
dissemination of information, we note that, as an SRO, the MSRB will 
need to file its fee changes and rule proposals relating to its EMMA 
system with the Commission under section 19(b) of the Exchange Act. 
When the Commission publishes any such proposed rule changes, 
interested parties will have the opportunity to comment and bring to 
our attention any potential issues that they discern.
    We do not believe that there are competitive implications that 
would uniquely apply to the MSRB in its capacity as the sole 
repository. As we have noted, we believe the MSRB's status as an SRO 
will provide an additional level of Commission oversight since changes 
to its rules relating to continuing disclosure documents will have to 
be filed for Commission consideration as a proposed rule change under 
section 19(b) of the Exchange Act. Accordingly, we believe that any 
competitive impact that may result from the MSRB's status as the sole 
repository is justified by the benefits that such status is expected to 
provide to investors, broker-dealers, mutual funds, vendors of 
municipal information, municipal security analysts, other market 
professionals, and the public generally.
4. Electronic Document Submission
    Because the current environment differs markedly from the time when 
Rule 15c2-12 was adopted in 1989 and subsequently amended in 1994, we 
believe that it is appropriate to adopt an approach that utilizes the 
significant technological advances, such as the development and use of 
various electronic formats, which have occurred in the intervening 
years. Thus, we are adopting the proposed amendments that specify that 
continuing disclosure documents must be provided to the MSRB in an 
electronic format as specified by the MSRB.\135\
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    \135\ We note that the MSRB will be required to file a proposed 
rule change with the Commission pursuant to Section 19(b) of the 
Exchange Act regarding the electronic format that it wishes to 
prescribe as well as any changes to that format. In fact, the MSRB 
prescribed the format for submissions of continuing disclosure 
documents in a recent filing with the Commission. See MSRB EMMA 
Proposal, supra note 12.
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    We believe that this method of submission will better enable the 
information to be promptly posted by the single repository and made 
available to the public without charge. Electronic submission also will 
eliminate the need for manual handling of paper documents, which can be 
a less efficient and more costly process. For instance, the submission 
of paper documents would require the repository to manually review, 
sort and store such documents. There is also a potential for a less 
complete record of continuing disclosure documents at the repository if 
such documents are submitted in paper to the repository and, for 
instance, are misplaced or misfiled. The

[[Page 76114]]

Commission believes that submissions in an electronic format will not 
be burdensome on issuers or other obligated persons, since many 
continuing disclosure documents already are being created in an 
electronic format and, as a result, are readily transmitted by 
electronic means.
    We requested comment on the proposed amendments to provide 
continuing disclosure documents in an electronic format, including 
whether submitting continuing disclosure documents in an electronic 
format would increase the efficiency of submission and availability of 
continuing disclosure documents, and whether submitting the documents 
in an electronic format would facilitate wider availability of the 
information. Furthermore, we requested comment concerning whether the 
proposed amendments should allow for the submission of paper documents 
and, if so, whether any conditions should be imposed in connection with 
paper submissions. Comments also were requested on whether the proposed 
amendments should allow for the availability of paper copies upon 
request from the central repository.
    The commenters who addressed this topic supported the proposal 
that, under continuing disclosure agreements, continuing disclosure 
documents must be provided in an electronic format.\136\ These 
commenters generally expressed the opinion that the current disclosure 
system, which relies on paper-based filings, should be updated in light 
of today's use of, and advances in, technology and that the electronic 
submission of documents would better enable the information to be 
promptly submitted, categorized, and posted on the Internet for 
investor use. In addition, one commenter noted that ``the proposed 
amendments provide for necessary flexibility in changes to technology 
by delegating to the MSRB the authority to determine electronic 
formatting and identifying information.'' \137\ Further, one commenter 
mentioned that, while some issuers, especially smaller issuers, may 
have to purchase new software in order to submit electronic documents, 
the overall long-term savings that an electronic-based central 
repository would provide would benefit state and local governments and 
authorities.\138\ However, as discussed in section III.A.6. below, two 
commenters expressed the opinion that smaller issuers may need 
additional time to adapt to the need to obtain documents in an 
electronic format.\139\ No commenters suggested that the MSRB should 
accept paper documents.
---------------------------------------------------------------------------

    \136\ See Vanguard Letter, IAA Letter, e-certus Letter, NASACT 
Letter, ICI Letter, Multiple-Markets Letter, NFMA Letter, EDGAR 
Online Letter, SPSE Letter and DAC Letter.
    \137\ See SIFMA Letter, at 3.
    \138\ See GFOA Letter, at 2.
    \139\ See NASACT Letter, at 2, and GFOA Letter, at 2.
---------------------------------------------------------------------------

    Two commenters \140\ urged the implementation of an interactive 
data format (i.e., XBRL) for EMMA. In the Proposing Release, we noted 
that the availability of audited financial statements and other 
financial and statistical data in an electronic format by issuers and 
obligated persons could encourage the establishment of the necessary 
taxonomies and permit states and local governments and other obligated 
persons to make use of XBRL in the future, should they wish to do 
so.\141\ The final amendments to the Rule do not designate the 
electronic format or formats that EMMA will accept; instead, they 
provide that the MSRB will prescribe the format, which will be subject 
to the section 19(b) rule filing process. Nevertheless, we note that 
this provision allows flexibility for future implementation of improved 
methods for the electronic presentation of information.
---------------------------------------------------------------------------

    \140\ See e-certus Letter, at 2, and EDGAR Online Letter, at 6.
    \141\ See Proposing Release, 73 FR at 46144 n.64.
---------------------------------------------------------------------------

    One commenter stated that the design of the electronic filing 
format should be entrusted to a joint industry committee.\142\ This 
commenter further noted its belief that the notice and comment process 
would not be an adequate substitute for a joint industry working group 
because it would not permit ongoing dialogue.\143\ While we do not 
believe that a joint industry committee is the only method by which the 
electronic filing format could be determined, we do believe that the 
notice and comment process is necessary to allow issuers, obligated 
persons and others a method for providing input in the determination of 
the electronic filing format. The Commission notes that our rule 
amendments do not preclude the formation of a joint industry committee 
that would be able to work with the MSRB in designing the electronic 
filing format. In addition, we expect that the MSRB would welcome an 
ongoing dialogue with those industry participants that wish to provide 
input on the electronic filing format and any other aspects of the 
continuing disclosure component of the EMMA system.
---------------------------------------------------------------------------

    \142\ See SPSE Letter, at 9.
    \143\ Id.
---------------------------------------------------------------------------

5. Identifying Information
    To enable the continuing disclosure documents to be identified and 
retrieved accurately, we are adopting new subparagraph (b)(5)(iv) of 
Rule 15c2-12, as proposed to be amended, to require Participating 
Underwriters to reasonably determine that the issuer or obligated 
person has undertaken in writing to accompany continuing disclosure 
documents submitted to the MSRB with identifying information as 
prescribed by the MSRB. Similarly, the Commission is adopting a 
conforming change to subparagraph (d)(2)(ii)(C) of the Rule, relating 
to the limited undertaking set forth in Rule 15c2-12(d)(2)(ii), to 
specify that continuing disclosure agreements provide that the relevant 
continuing disclosure documents shall be provided to the MSRB and shall 
be accompanied by identifying information as prescribed by the 
MSRB.\144\
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    \144\ The MSRB proposed certain identifying information to be 
required in the MSRB EMMA Proposal, which the Commission is also 
approving. See supra note 12. We note that the MSRB would be 
required to file a proposed rule change with the Commission pursuant 
to Section 19(b) of the Exchange Act regarding any additional 
identifying information and any changes to that information that it 
wishes to prescribe.
---------------------------------------------------------------------------

    We believe that providing identifying information with each 
submitted document will permit the repository to sort and categorize 
the document efficiently and accurately. We also anticipate that the 
inclusion with each submission of the basic information needed to 
accurately identify the document will facilitate the ability of 
investors, market participants, and others to reliably search for and 
locate relevant disclosure documents. Facilitation of the efficient 
retrieval of information is designed to decrease the possibilities for 
fraudulent practices. Furthermore, we expect that there will be a 
minimal burden on Participating Underwriters to comply with this 
requirement because the only change is that they would need to 
determine reasonably that issuers and obligated persons have 
contractually agreed to supply the identifying information prescribed 
by the MSRB. On the other hand, there will be a significant benefit to 
investors and other municipal market participants as a result of this 
amendment because they will be able to more easily retrieve from the 
MSRB the information that they seek. Indeed, issuers and other 
obligated persons that choose to submit continuing disclosure documents 
through some existing dissemination agents and document delivery 
services already are supplying

[[Page 76115]]

identifying information with their submissions.\145\
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    \145\ The commitment by an issuer to provide identifying 
information exists only if it were included in a continuing 
disclosure agreement. As a result, issuers submitting continuing 
disclosure documents pursuant to the terms of undertakings that were 
entered into prior to the effective date of the final amendments and 
that did not require identifying information will be able to submit 
documents without supplying identifying information. Nevertheless, 
we encourage such issuers to include identifying information when 
they or their agent submit continuing disclosure documents to the 
repository. See also Section III.C., infra discussing transition 
issues.
---------------------------------------------------------------------------

    The Proposing Release also requested comments regarding supplying 
identifying information as prescribed by the MSRB and regarding 
alternative methods that would assist investors and municipal market 
participants in locating specific information about a municipal 
security that is submitted under the Rule.
    Commenters generally supported requiring Participating Underwriters 
to reasonably determine that the issuer or obligated person has 
undertaken in writing to accompany all documents submitted to the MSRB 
with identifying information as prescribed by the MSRB.\146\ In 
addition, one commenter did not believe that this determination would 
impose an unreasonable burden on underwriters.\147\ The need for such 
information was generally perceived as essential to permit investors 
and others to access continuing disclosure documents from the 
MSRB.\148\ Two commenters observed that in order for the EMMA system to 
sort and categorize disclosure documents efficiently and accurately, 
submissions to EMMA should include specific identifying 
information.\149\ Two other commenters noted that the need for 
identifying information is essential.\150\ The Commission believes that 
it is in the interest of issuers and obligated persons to provide 
accurate indexing information. Moreover, under rule changes in this 
release and the MSRB Approval Order, identifying information will be 
required by Commission and MSRB rules. Several commenters suggested 
specific items of identifying information that should be prescribed by 
the MSRB or sought clarification about such items.\151\ Because these 
comments are pertinent to the MSRB's EMMA proposal, and not to the 
Commission's adoption of these amendments, they are addressed in the 
Commission order approving the continuing disclosure document component 
of the EMMA system.\152\
---------------------------------------------------------------------------

    \146\ See, e.g., GFAO Letter, at 2, Vanguard Letter, at 4, SIFMA 
Letter, at 2, Texas MAC Letter, OMAC Letter, ICI Letter, at 5, 
Multiple-Markets Letter, at 2-3, NFMA Letter, at 1, and Edgar Online 
Letter, at 3.
    \147\ See SIFMA Letter, at 2.
    \148\ See, e.g., Vanguard Letter, at 4, Texas MAC Letter, NFMA 
Letter, at 2, and ICI Letter, at 5.
    \149\ See Vanguard Letter, at 4, and NFMA Letter, at 1.
    \150\ See Texas MAC Letter and OMAC Letter.
    \151\ See, e.g., Edgar Online Letter, at 3, DAC Letter, at 6, 
Multiple-Markets Letter, at 3, NFMA Letter, at 2, and NAHEFFA 
Letter, at 2.
    \152\ See MSRB Approval Order, supra note 12.
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6. Exemptive Provision
    We are amending Rule 15c2-12(d)(2)(ii), as proposed, which provides 
for a limited exemption from the requirements of paragraph (b)(5) of 
the Rule, as long as the conditions specified in paragraph (d)(2) are 
met. The exemption in Rule 15c2-12(d)(2) provides that paragraph (b)(5) 
of the Rule, which relates to the submission of continuing disclosure 
documents pursuant to continuing disclosure agreements, does not apply 
to a primary offering if three conditions are met. These conditions 
are: (i) The issuer or the obligated person has less than or equal to 
$10 million of debt outstanding; \153\ (ii) the issuer or obligated 
person has undertaken in a written agreement or contract (``limited 
undertaking'') to provide: (A) upon request to any person or at least 
annually to the appropriate SID, if any, financial information or 
operating data regarding each obligated person for which financial 
information or operating data is presented in the final official 
statement, which financial information and operating data shall 
include, at a minimum, that financial information and operating data 
which is customarily prepared by such obligated person and is publicly 
available,\154\ and (B) to each NRMSIR or to the MSRB, and to the 
appropriate SID, if any, material event notices; \155\ and (iii) the 
final official statement identifies by name, address and telephone 
numbers the persons from which the foregoing information, data and 
notices can be obtained.\156\ The rule amendments revise the limited 
undertaking set forth in 15c2-12(d)(2)(ii)(A) and (B) by deleting 
references to NRMSIRs and SIDs, and by solely referencing the 
MSRB.\157\ Accordingly, under the amendment to Rule 15c2-12(d)(2)(ii), 
a Participating Underwriter will be exempt from its obligations under 
paragraph (b)(5) of the Rule if an issuer or obligated person has 
agreed in its limited undertaking to provide annual financial 
information, operating data and material event notices to the MSRB in 
an electronic format as prescribed by the MSRB, and the exemption's 
other conditions are met.
---------------------------------------------------------------------------

    \153\ 17 CFR 240.15c2-12(d)(2)(i).
    \154\ 17 CFR 240.15c2-12(d)(2)(ii)(A).
    \155\ 17 CFR 240.15c2-12(d)(2)(ii)(B).
    \156\ Although this provision provides an exemption for 
Participating Underwriters in a primary offering of municipal 
securities, as long as its conditions are satisfied, it is commonly 
referred to as the ``small issuer exemption.''
    \157\ See Section III.A.7. infra for a discussion of the 
deletion from the Rule of references to SIDs.
---------------------------------------------------------------------------

    One commenter stated that the practical effect of the proposed 
amendments would be the repeal of the small issuer exemption.\158\ The 
commenter stated that, while small issuers receive few requests for 
continuing disclosure documents from investors, many of these issuers 
are subject to public disclosure laws and make financial information 
and operating data publicly available that exceeds that which would be 
included in an official statement or required of other issuers pursuant 
to a continuing disclosure agreement under Rule 15c2-12(b)(5). The 
commenter believed that the practical effect of this proposal would be 
to cause small issuers to incur increased costs associated with filing 
such information electronically because they believed that the 
information may be considerably more extensive than that submitted by 
other issuers. The commenter suggested that the Commission either 
retain the small issuer exemption in its current form or delete 
paragraph (d)(2) of Rule 15c2-12 altogether.
---------------------------------------------------------------------------

    \158\ See NABL Letter, at 2.
---------------------------------------------------------------------------

    We recognize that one effect of the amendments will be that some 
small issuers will submit annual financial information and operating 
data to the MSRB when currently they do not regularly submit such 
disclosures to any repository. We do not believe that electronically 
formatting information a small issuer already has and makes publicly 
available will be a significant burden. Further, we do not believe that 
the final amendments would result in small issuers providing the 
voluminous filings the commenter suggests. This amendment does not 
affect the nature of a Participating Underwriter's obligation to 
reasonably determine that a small issuer has undertaken to deliver 
continuing disclosure documents to fulfill the conditions of the 
exemption; rather, it affects what the Participating Underwriter needs 
to determine regarding the undertaking with respect to the location 
where such documents are to be sent. Specifically, the final amendments 
do not revise the provision limiting the commitment to provide annual 
financial or operating data only if such information is customarily

[[Page 76116]]

prepared by such obligated person and is publicly available. 
Furthermore, if a small issuer customarily prepares and makes publicly 
available information that is more extensive than that provided in the 
final official statement, the Participating Underwriter may rely on an 
undertaking that is limited to providing the information that would 
comprise annual financial information for non-exempt offerings.\159\
---------------------------------------------------------------------------

    \159\ See response to question 18 in letter to John S. 
Overdorff, Chair, and Gerald J. Laporte, Vice-Chair, of the 
Securities Law and Disclosure Committee of NABL, from Robert L.D. 
Colby, Deputy Director, Division of Market Regulation, dated June 
23, 1995, 1995 SEC No-Act. LEXIS 563.
---------------------------------------------------------------------------

    Under our amendments, a condition of the exemption available to 
Participating Underwriters now will require the undertaking to provide 
that annual financial information or operating data, if customarily 
prepared and publicly available, will be submitted to the MSRB, rather 
than being supplied only upon request to any person or at least 
annually to the appropriate SID, if any.\160\ Participating 
Underwriters seeking an exemption from subparagraph (b)(5) would no 
longer need to reasonably determine that small issuers will provide 
annual financial information or operating data to any person, upon 
request, pursuant to the small issuer's undertaking. If such requests 
are received, small issuers will be able to refer investors or others 
to the MSRB to obtain the information. Nevertheless, we recognize that 
today some small issuers that reside in a state without a SID and that 
historically receive no requests from investors or others for such 
annual financial information are not obligated by their continuing 
disclosure agreement to provide this information to each NRMSIR, the 
MSRB, or any other entity.\161\ In contrast, as a condition of the 
exemption, the final amendments will provide that a Participating 
Underwriter must reasonably determine that a small issuer undertakes to 
provide annual financial information, to the extent the issuer prepares 
it and makes it publicly available, to the MSRB in an electronic 
format.
---------------------------------------------------------------------------

    \160\ See Section V.B., infra for a discussion of the costs 
small issuers may incur in connection with submitting continuing 
disclosure documents to the MSRB.
    \161\ We understand that, in some cases, state laws may provide 
for the public availability or distribution of such information. 
However, these requirements vary widely.
---------------------------------------------------------------------------

    At this time, we believe that our proposed amendment of the small 
issuer exemption is preferable to the commenter's alternative 
suggestion to eliminate the small issuer exemption altogether.\162\ We 
note that the final amendments do not alter the provision that 
specifies that the undertaking by small issuers to provide annual 
financial information or operating data need be satisfied only to the 
extent that such information is customarily prepared by the obligated 
person and is publicly available.\163\ We understand that most small 
governmental issuers prepare and make publicly available annual 
financial statements or other financial and operating data as a matter 
of course. For such issuers, we recognize that the difference between 
our amendment to the exemption and elimination of the exemption 
entirely, as a practical matter, may be minimal. However, we note that 
small obligated persons, such as private conduit borrowers, also 
benefit from the small issuer exemption. Such obligated persons and 
some small issuers may not customarily prepare financial and operating 
data for public availability. We believe that it is preferable to take 
a measured approach and observe the actual impact of the final 
amendments before considering elimination of the small issuer exemption 
entirely. Accordingly, the Commission has determined not to eliminate 
at this time the small issuer exemption as the commenter 
suggested.\164\
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    \162\ See NABL Letter, at 2.
    \163\ 17 CFR 15c2-12(d)(2)(ii)(A).
    \164\ It is possible that this provision could provide a 
disincentive to an obligated person to prepare the information and 
make it publicly available. As noted above, we understand that most 
small governmental issuers routinely prepare and make publicly 
available annual financial statements or other financial and 
operating data, although some small obligated persons, such as 
private conduit borrowers, may not prepare this information and make 
it publicly available. We will monitor the extent to which the 
exemption as currently crafted fosters a disincentive to preparing 
annual financial information and operating data and making it 
publicly available and will consider whether any further amendment 
to the small issuer exemption is warranted.
---------------------------------------------------------------------------

    We believe that the exemptive provision of the amended Rule--that 
paragraph (b)(5) of the Rule will not apply under the revised 
conditions described above--is justified despite the increased burden 
on some small issuers by the amended Rule's objective that this 
information be more widely available to investors, market 
professionals, and others. The availability of this information should 
help brokers to fulfill their obligations and investors to make better 
informed investment decisions regarding municipal securities, thereby 
helping to deter fraud in the municipal securities market.
7. SIDs
    We are amending subparagraphs (A) through (D) of Rule 15c2-
12(b)(5)(i), as proposed to be amended, to delete references to SIDs, 
in addition to references to each NRMSIR. Thus, Participating 
Underwriters no longer will need to reasonably determine that issuers 
or obligated persons have agreed in continuing disclosure agreements to 
provide continuing disclosure documents to the appropriate SID, if any. 
We also are revising paragraph (d)(2) of the Rule, which provides for 
an exemption from paragraph (b)(5) of the Rule if specified conditions 
are met.\165\ The final amendments revise the limited undertaking set 
forth in Rule 15c2-12(d)(2)(ii) by deleting references to each NRMSIR 
and the appropriate SID, if any, and solely referencing the MSRB and 
specifying that the financial information, operating data, and material 
event notices are to be provided to the MSRB in an electronic format 
and accompanied by identifying information as prescribed by the MSRB. 
As noted above, under paragraph (d)(2) of the Rule, Participating 
Underwriters will be exempt from their obligation under paragraph 
(b)(5) of the Rule if the issuer or obligated person has agreed in its 
limited undertaking to provide financial information, operating data, 
and material event notices to the MSRB in an electronic format and 
accompanied by identifying information as prescribed by the MSRB, and 
if the provision's other conditions are met.
---------------------------------------------------------------------------

    \165\ See Section III.A.6. supra for a discussion of the 
exemptive provision contained in Rule 15c2-12(d)(2).
---------------------------------------------------------------------------

    We requested comment on the proposal to omit references to the SIDs 
in the Rule. In particular, comment was requested concerning the impact 
of removing the references to the SIDs in the Rule, including the 
impact of this proposal on the obligations of Participating 
Underwriters, issuers and obligated persons. We also requested comment 
on the effect of the proposed amendment on SIDs and on their role in 
the collection and disclosure of continuing disclosure documents.
    Five commenters addressed the proposed removal of references to 
SIDs from the Rule.\166\ Four of the commenters stated that the MSRB 
should provide a data feed to SIDs of documents related to issuers in 
their states so that those issuers that may be required by their states 
to send continuing disclosure documents to a SID need not provide them 
to both the

[[Page 76117]]

MSRB and a SID.\167\ They believed that this approach would be more 
efficient for both issuers and SIDs and result in more complete and 
consistent data availability of information from the MSRB and SIDs. 
Furthermore, two of these commenters expressly indicated that there 
should be no charge to SIDs to receive such a data feed.\168\ One 
commenter supported the proposal to remove references to SIDs from the 
Rule, noting that there are just three SIDs and that the ease of public 
access to the MSRB's EMMA system renders specific reference to SIDs, 
unnecessary.\169\
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    \166\ See GFOA Letter, SIFMA Letter, Texas MAC Letter, OMAC 
Letter, and Multiple-Markets Letter.
    \167\ See GFOA Letter, at 3, Texas MAC Letter, OMAC Letter, and 
Multiple-Markets Letter, at 2.
    \168\ See GFOA Letter, at 3, and Multiple-Markets Letter, at 3.
    \169\ See SIFMA Letter, at 3.
---------------------------------------------------------------------------

    Because we are amending the Rule to provide for a single repository 
for the electronic collection and availability of continuing disclosure 
documents that, in our view, will efficiently and effectively improve 
disclosure in the municipal securities market, we believe that it is no 
longer necessary to specifically require in the Rule that Participating 
Underwriters reasonably determine that issuers and obligated persons 
have contractually agreed to provide continuing disclosure documents to 
the SIDs or that the provision that provides an exemption from this 
requirement refer to SIDs. Nevertheless, the amendments will not affect 
the legal obligation of issuers and obligated persons to provide 
continuing disclosure documents, along with any other submissions, to 
the appropriate SID, if any, as required under the appropriate state 
law. In addition, the amendments will have no effect on the obligations 
of issuers and obligated persons under outstanding continuing 
disclosure agreements entered into prior to the effective date of the 
amendments to the Rule to submit continuing disclosure documents to the 
appropriate SID, if any, as stated in their existing continuing 
disclosure agreements, nor on their obligation to make any other 
submissions that may be required under the appropriate state law. We 
agree with the opinions of those commenters who underscored the 
importance for the document collections of the MSRB and SIDs to be 
consistent to avoid uneven access to information that otherwise might 
result. However, the commenters' suggestions relating to data feeds, 
including free access to such feeds, relate to the operation of the 
MSRB's continuing disclosure component of the EMMA system, rather than 
to the instant rulemaking and therefore are addressed in connection 
with the MSRB Approval Order.\170\
---------------------------------------------------------------------------

    \170\ As noted above, the MSRB is required to file any new fees 
or changes to its fees with the Commission under Section 19(b) of 
the Exchange Act.
---------------------------------------------------------------------------

8. Other Amendments
    We are adopting a change to Rule 15c2-12(b)(4)(ii), as proposed, 
which currently refers to a NRMSIR with respect to the time period in 
which the Participating Underwriter must send the final official 
statement to any potential customer. Specifically, under Rule 15c2-
12(b)(4), from the time the final official statement becomes available 
until the earlier of: (1) Ninety days from the end of the underwriting 
period; or (2) the time when the official statement is available to any 
person from a NRMSIR, but in no case less than twenty-five days 
following the end of the underwriting period, the Participating 
Underwriter in a primary offering is required to send to any potential 
customer, upon request, the final official statement. We are amending 
the language in Rule 15c2-12(b)(4)(ii), as proposed, to refer to the 
MSRB instead of to a NRMSIR. Accordingly, Participating Underwriters 
will have the time period from when the final official statement 
becomes available until the earlier of: (1) Ninety days from the end of 
the underwriting period; or (2) the time when the official statement is 
available to any person from the MSRB, but in no case less than twenty-
five days following the end of the underwriting period, to send the 
final official statement to a potential customer, upon request.
    In addition, we are adopting similar changes to Rule 15c2-12(f)(3) 
and (f)(9), as proposed, which define the terms ``final official 
statement'' and ``annual financial information,'' respectively. Rule 
15c2-12(f)(3) defines the term ``final official statement'' to mean a 
document or set of documents prepared by an issuer of municipal 
securities or its representatives that is complete as of the date 
delivered to the Participating Underwriter and that sets forth 
information concerning, among other things, financial information or 
operating data concerning such issuers of municipal securities and 
those other entities, enterprises, funds, accounts, and other persons 
material to an evaluation of the offering. Rule 15c2-12(f)(9) defines 
the term ``annual financial information'' to mean financial information 
or operating data, provided at least annually, of the type included in 
the final official statement with respect to an obligated person, or in 
the case where no financial information or operating data was provided 
in the final official statement with respect to such obligated person, 
of the type included in the final official statement with respect to 
those obligated persons that meet the objective criteria applied to 
select the persons for which financial information or operating data 
will be provided on an annual basis. Both definitions allow for 
financial information or operating data to be set forth in the document 
or set of documents, or be included by specific reference to documents 
previously provided to each NRMSIR, and to a SID, if any, or filed with 
the Commission. We are amending Rule 15c2-12(f)(3) and (f)(9), as 
proposed, to replace references to each NRMSIR and the appropriate SID, 
if any, with references to the MSRB's Internet Web site. Accordingly, 
the amendments to paragraphs (f)(3) and (f)(9) of the Rule will allow 
issuers to reference financial information or operating data set forth 
in specified documents available to the public from the MSRB's Internet 
Web site (or filed with the Commission) as part of the final official 
statements and annual financial information, instead of referencing 
specific documents previously provided to each NRMSIR and SID.
    We received one comment letter that addressed the proposed 
amendment to the definition of ``final official statement.'' \171\ The 
commenter expressed technical concerns regarding the first sentence of 
paragraph (f)(3), noting that issuers obligated by undertakings made 
before the effective date of the final amendments would not have 
entered into a ``written contract or agreement specified in paragraph 
(b)(5)(i)'' (because paragraph (b)(5)(i) currently requires different 
terms of the continuing disclosure undertaking). However, we have not 
made the change suggested in the comment letter because we do not 
believe that it is necessary. We believe that the amendment as adopted 
makes clear that, in reporting any instances in the previous five years 
in which each person specified pursuant to paragraph (b)(5)(ii) of the 
Rule failed to comply, in all material respects, with any previous 
undertakings in a written contract or agreement specified in paragraph 
(b)(5)(i) of the Rule, a final official statement must include any such 
failures over such period with respect to both written contracts or 
agreements entered into in conformance with paragraph (b)(5)(i) of the 
Rule prior to the effective date of the amendments and written 
contracts or agreements

[[Page 76118]]

entered into in conformance with paragraph (b)(5)(i) of the Rule as 
amended.
---------------------------------------------------------------------------

    \171\ See NABL Letter, at 2-3.
---------------------------------------------------------------------------

B. Other Comments

    Two commenters \172\ questioned the Commission's authority to adopt 
the proposed amendments in light of the provisions of section 15B(d) of 
the Exchange Act, commonly referred to as the ``Tower Amendment.'' 
\173\ One of the commenters stated its belief that the Tower Amendment 
prohibits federal regulation of state issuers; the proposed amendments 
place ``de facto regulatory power in the hands of a federal regulatory 
body;'' and ``the body in whose hands regulatory power is placed is a 
group constituted of those who stand to profit from underwriting of 
state-issued securities.'' \174\ The other commenter stated that the 
proposed amendments, in combination, with the MSRB's EMMA Proposal, go 
further than the 1994 Amendments into the area protected by the Tower 
Amendment, because they establish, as the sole repository, a single 
Commission-supervised body, the MSRB, that is also subject to the Tower 
Amendment.\175\ In addition, this commenter stated a belief that 
because the proposed amendments and the MSRB's related rule filing 
``are akin to a joint initiative between the SEC and the MSRB,'' they 
should be subject to the limits of both provisions of Section 15B(d). 
Because the commenter questions whether the Commission's and MSRB's 
proposals would in fact improve the availability of municipal 
securities disclosure, it believed that it is ``even harder to link the 
[proposed amendments and related MSRB rule filing] to preventing fraud, 
which is the basis for the Commission's authority.'' \176\
---------------------------------------------------------------------------

    \172\ See SPSE Letter, at 12-15, and DPC DATA Letter, at 1.
    \173\ The so-called ``Tower Amendment,'' added Section 15B(d), 
15 U.S.C. 78o-4(d) to the Exchange Act. It states: ``(1) Neither the 
Commission nor the Board is authorized under this title, by rule or 
regulation, to require any issuer of municipal securities, directly 
or indirectly through a purchaser or prospective purchaser of 
securities from the issuer, to file with the Commission or the Board 
prior to the sale of such securities by the issuer any application, 
report, or document in connection with the issuance, sale, or 
distribution of such securities. (2) The Board is not authorized 
under this title to require any issuer of municipal securities, 
directly or indirectly through a municipal securities broker or 
municipal securities dealer or otherwise, to furnish to the Board or 
to a purchaser or a prospective purchaser of such securities any 
application, report, document, or information with respect to such 
issuer: Provided, however, That the Board may require municipal 
securities brokers and municipal securities dealers to furnish to 
the Board or purchasers or prospective purchasers of municipal 
securities applications, reports, documents, and information with 
respect to the issuer thereof which is generally available from a 
source other than such issuer. Nothing in this paragraph shall be 
construed to impair or limit the power of the Commission under any 
provision of this title.'' 15 U.S.C. 78o-4(d).
    \174\ See DPC DATA Letter, at 1.
    \175\ See SPSE Letter, at 14.
    \176\ See SPSE Letter, at 14.
---------------------------------------------------------------------------

    Three commenters that supported the proposed amendments expressed 
their concern about any actions that would allow the Commission to 
impose disclosure requirements on issuers.\177\ One of these 
commenters, however, expressly noted that ``the proposal's sole purpose 
of having the MSRB operate a system to accept and post disclosure 
documents does not violate the Tower Amendment.'' \178\
---------------------------------------------------------------------------

    \177\ See GFOA Letter, at 1, NASACT Letter, at 2, and NAHEFFA 
Letter, at 2.
    \178\ See GFOA Letter, at 3.
---------------------------------------------------------------------------

    As we have noted in the past,\179\ with the passage of the 
Securities Acts Amendments of 1975 (``1975 Amendments''), Congress 
provided for a limited regulatory scheme for municipal securities.\180\ 
Prior to the passage of the 1975 Amendments, municipal issuers were 
exempt from the registration and continuous reporting provisions of 
both the Securities Act of 1933 \181\ and the Exchange Act. While 
municipal issuers continued to be exempt from all but the antifraud 
provisions of the federal securities laws, the 1975 Amendments required 
the registration of municipal securities brokers and dealers,\182\ and 
established the MSRB,\183\ granting it the authority to promulgate 
rules governing the sale of municipal securities effected by brokers, 
dealers and municipal securities dealers.
---------------------------------------------------------------------------

    \179\ See 1994 Proposing Release, supra note 113.
    \180\ The Securities Acts Amendments of 1975, Pub. L. 94-29, 89 
Stat. 97 (June 4, 1975).
    \181\ 15 U.S.C. 77a et seq.
    \182\ 15 U.S.C. 78o-4(a)(1).
    \183\ 15 U.S.C. 78o-4(b)(1).
---------------------------------------------------------------------------

    While narrowly tailoring the authority of the MSRB to require that 
disclosure documents be provided to investors, Congress was careful to 
preserve the authority of the Commission under section 15(c)(2) of the 
Exchange Act.\184\ Section 15B(d)(2) expressly indicates that 
``[n]othing in this paragraph shall be construed to impair or limit the 
power of the Commission under any provision of this title.'' \185\ 
Thus, while prohibiting the Commission from requiring municipal issuers 
to file reports or documents prior to issuing securities in section 
15B(d)(1),\186\ Congress expanded the Commission's authority to adopt 
rules reasonably designed to prevent fraud. The Commission does not 
believe the amendments to Rule 15c2-12 are inconsistent with the 
limitations in Exchange Act section 15B(d). As discussed in detail 
throughout this release, as well as the Proposing Release, the 
Commission believes that the amendments to Rule 15c2-12 are consistent 
with its Congressional mandate to, among other things, adopt rules 
reasonably designed to prevent fraud in the municipal securities 
market.\187\ It is important for investors, market professionals, 
analysts, and others to have access to complete and timely descriptive 
information about municipal securities and municipal securities 
issuers. The proposed amendments are expected to improve access to 
information about municipal securities for those who effect 
transactions in the municipal markets. Better access to the disclosure 
is designed to allow them to compare that information against any other 
information disseminated with respect to municipal securities. In 
furtherance of the fundamental purpose of Rule 15c2-12, this 
accessibility should allow these market participants to more easily 
detect potentially fraudulent information. Finally, we do not believe 
that this Commission rulemaking implicates section 15B(d)(2), which 
applies only to the MSRB. Indeed, this rulemaking comports with section 
15B(d)(2)'s explicit reservation of the Commission's authority under 
the Exchange Act to, among other things, promulgate regulations 
reasonably designed to prevent fraud, thereby protecting investors and 
preserving the integrity of the market for municipal securities.
---------------------------------------------------------------------------

    \184\ 15 U.S.C. 78o(c)(2).
    \185\ 15 U.S.C. 78o-4(d)(2).
    \186\ 15 U.S.C. 78o-4(d)(1).
    \187\ Rule 15c2-12 was adopted under a number of Exchange Act 
provisions, including Section 15(c); 15 U.S.C. 78o(c).
---------------------------------------------------------------------------

C. Transition

    The amendments to Rule 15c2-12 will require Participating 
Underwriters to reasonably determine whether continuing disclosure 
agreements for primary offerings occurring on or after the effective 
date of the amendments comply with the provisions of the amendments, 
including containing a specific reference to the MSRB as the sole 
repository to receive an issuer's or obligated person's continuing 
disclosure documents. Commenters generally confirmed that an issue 
exists with respect to the handling of continuing disclosure documents 
submitted under continuing disclosure agreements entered into by 
issuers and obligated persons prior to the effective date of the

[[Page 76119]]

final rule amendments.\188\ To address issues that may arise if 
continuing disclosure documents submitted pursuant to existing 
continuing disclosure agreements must be filed in different locations 
from those documents submitted in connection with offerings occurring 
on or after the amendments' effective date, we requested comment on 
directing Commission staff to withdraw the ``no action'' letters 
provided to the current NRMSIRs and designating the MSRB as the sole 
NRMSIR.\189\
---------------------------------------------------------------------------

    \188\ See, e.g., ICI Letter, at 4, NABL Letter, at 1-2, SPSE 
Letter, at 15, and Vanguard Letter, at 3.
    \189\ See Proposing Release, 73 FR at 46146.
---------------------------------------------------------------------------

    While some commenters \190\ supported this approach, others 
advocated various alternative transition processes.\191\ For example, 
one commenter suggested that the Commission could require any 
continuing disclosure made pursuant to the amended Rule provide that 
issuers make filings with the MSRB electronically with respect to new 
undertakings and all undertakings previously entered into by such 
issuers.\192\ In the alternative, this commenter suggested that the 
Commission issue an interpretive letter stating that an issuer that 
chooses to satisfy existing undertakings (namely, that documents be 
provided to NRMSIRs and SIDs) by transmitting them to the MSRB would be 
acting in a manner consistent with the Rule as amended.\193\ Another 
commenter supported the proposed alternative approaches.\194\ The 
Commission observes that under the commenter's primary suggestion, the 
Commission in effect would mandate the amendment of existing contracts 
without the parties' consent. We do not believe that it would be 
appropriate to interfere with the terms of existing contracts, which 
were the subject of negotiation among the parties. In addition, we note 
that the submission to the MSRB of continuing disclosure documents for 
past offerings would not occur until a subsequent offering occurs. As 
many issuers and obligated persons do not offer securities annually--
many do so only occasionally--there would be a potentially lengthy 
period during which some issuers would supply continuing disclosure 
documents to the MSRB, while others would continue to supply them to 
the NRMSIRs and SIDs under existing continuing disclosure agreements. 
The commenter's suggested alternative, that the Commission issue an 
interpretive letter stating that an issuer or obligated person that 
chooses to satisfy an existing undertaking by transmitting documents to 
the MSRB would be acting in a manner consistent with the Rule, as 
amended, would also be inappropriate because it would ignore the plain 
meaning of those existing contracts that require continuing disclosure 
documents to be provided to NRMSIRs and SIDs.
---------------------------------------------------------------------------

    \190\ See SIFMA Letter, at 3-4, ICI Letter, at 3-4, and Vanguard 
Letter, at 2-3.
    \191\ See GFOA Letter, at 3, NABL Letter, at 1-2, NASACT Letter, 
at 2, and NFMA Letter, at 1.
    \192\ See NABL Letter, at 1-2.
    \193\ Id.
    \194\ See GFOA Letter, at 3.
---------------------------------------------------------------------------

    We believe that it would be inefficient, confusing and burdensome 
for issuers to submit continuing disclosure documents for offerings 
that occurred prior to the effective date of the final amendments to 
different locations than for offerings occurring afterwards. Moreover, 
having such a bifurcated system would not be in the best interests of 
investors and others who seek information about municipal issuers 
because it could result in the MSRB collecting only a portion of new 
information. We believe that one commenter's suggestion that new 
continuing disclosure agreements amend all prior disclosure agreements 
of the same issuer would incorporate existing continuing disclosure 
into the new centralized system only if and when an issuer returns to 
the market, and therefore is not as effective a transition mechanism as 
the Commission's approach.
    We believe that it will be more efficient and effective to 
implement a sole repository expeditiously. In our view, this can best 
be accomplished by creating a mechanism by which issuers or obligated 
persons may comply with their existing undertakings by submitting their 
continuing disclosure documents to one location, thereby providing 
investors and municipal market participants with prompt and easy access 
to continuing disclosure documents at no charge. Our proposed approach 
to withdraw the ``no action'' letters to the existing NRMSIRs and have 
the MSRB be the sole NRMSIR for the submission of continuing disclosure 
documents pursuant to continuing disclosure agreements entered into 
prior to the effective date of the final amendments was supported by a 
number of commenters who addressed this issue.\195\ We believe that, 
given the MSRB's proposal to implement the continuing disclosure 
feature of its EMMA system that we are approving today, it is 
reasonable and sensible for the MSRB also to serve as the sole NRMSIR.
---------------------------------------------------------------------------

    \195\ See ICI Letter, at 4, SIFMA Letter, at 4, and Vanguard 
Letter, at 3.
---------------------------------------------------------------------------

    Accordingly, the Commission has determined to implement the 
approach that it outlined in the Proposing Release.\196\ We hereby 
direct Commission staff to withdraw all ``no action'' letters 
recognizing existing NRMSIRs \197\ as of 12 midnight (ET) of the day 
preceding the effective date of the final amendments to Rule 15c2-12. 
In addition, by amending Rule 15c2-12, we are designating the MSRB as 
the sole NRMSIR. Consequently, beginning on the effective date of the 
final amendments, continuing disclosure documents that are provided 
pursuant to existing continuing disclosure agreements--i.e., those 
agreements entered into prior to the effective date of the final 
amendments (which typically reference the NRMSIRs as locations to which 
a submission should be made)--should be provided to the MSRB in its 
capacity as the sole NRMSIR.\198\ Providing all submissions--for both 
past and future offerings--to the same location is expected to be less 
confusing to, and is expected to simplify the submission process for, 
issuers and other obligated persons subject to continuing disclosure 
agreements, as well as to investors and others who wish to obtain such 
information.\199\
---------------------------------------------------------------------------

    \196\ See Proposing Release, 73 FR at 46146.
    \197\ See Letters from Brandon Becker, Director, Division of 
Market Regulation (n/k/a Division of Trading and Markets), 
Commission, to: Michael R. Bloomberg, President, Bloomberg L.P., 
dated June 26, 1995, and Aaron L. Kaplow, Vice President, Kenny S&P 
Information Services, dated June 26, 1995; and Letters from Robert 
L.D. Colby, Deputy Director, Division of Market Regulation (n/k/a 
Division of Trading and Markets), Commission, to: Peter J. Schmitt, 
President, DPC DATA, dated June 23, 1997, and John King, Chief 
Operating Officer, Interactive Data, dated December 21, 1999.
    \198\ Issuers or obligated persons with existing limited 
undertakings under Rule 15c2-12(d)(2)(ii)(B) that reference the MSRB 
rather than the NRMSIRs as the location to submit material event 
notices would not be affected by this approach because they would 
continue to submit such notices to the MSRB as stated in their 
limited undertaking. However, issuers or obligated persons with 
existing limited undertakings that reference the NRMSIRs as the 
location to submit material event notices would provide such notices 
to the MSRB in its capacity as the sole NRMSIR.
    \199\ We note that this approach will result in issuers located 
in the three states with SIDs providing continuing disclosure 
documents for undertakings entered into prior to the effective date 
of the final amendments to both the MSRB and the appropriate SID. 
This situation is unavoidable even though SIDS no longer will be 
referenced in the Rule as amended, because the obligation to provide 
documents to the appropriate SID under existing agreements is not 
being affected as a result of our direction to withdraw outstanding 
``no action'' letters to the NRMSIRs and designating the MSRB as the 
sole NRMSIR for purposes of outstanding continuing disclosure 
agreements.

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

[[Page 76120]]

    To assist issuers and obligated persons during the period between 
the date the Commission adopts the amendments and their effective date, 
municipal advisers and lawyers may wish to consider noting to their 
clients that the MSRB will become the only NRMSIR on the effective date 
and that all continuing disclosure documents should thereafter be 
provided to the MSRB alone. We note that the MSRB has indicated plans 
for an extensive outreach program to educate issuers and other 
obligated persons regarding use of its EMMA system's continuing 
disclosure service and to assist filers who have been accustomed to 
providing paper documents, which should help further alleviate the 
potential for transitional problems.\200\
---------------------------------------------------------------------------

    \200\ See MSRB EMMA Proposal, supra note 12, 73 FR at 46165.\
---------------------------------------------------------------------------

    In determining that the MSRB should become the sole NRMSIR on the 
effective date of the final amendments, we considered the continued 
accessibility to the public of the documents provided to the existing 
NRMSIRs. In the Proposing Release, we sought comment on whether there 
are concerns that the NRMSIRs would not retain the historical 
continuing disclosure documents and whether commenters anticipate any 
problems in obtaining such documents from the current NRMSIRs, if they 
were no longer recognized as such. In addition, we requested that, if 
commenters foresaw any such problems, they suggest alternative 
approaches for the retention of and access to historical information.
    One NRMSIR requested that, in the event that the Commission 
determined no longer to designate it as a NRMSIR, it not have any 
continuing obligation to serve as a NRMSIR for existing documents and 
historical documents.\201\ However, other commenters expressed a 
concern that such documents might not remain accessible.\202\ The 
Commission understands that each NRMSIR is an information vendor that 
has been in that business for a number of years.\203\ While Rule 15c2-
12, as amended, will no longer contemplate use of the current NRMSIRs 
for future continuing disclosure documents from issuers and obligated 
persons after the effective date of the final amendments, the 
Commission believes that the current NRMSIRs could determine it is in 
their interest to continue to provide public access to the continuing 
disclosure documents they obtained while serving as NRMSIRs, in order 
to be able to earn revenue from their respective collections. As a 
practical matter, requests for such documents from the NRMSIRs by those 
who are not already subscribers to their services may be expected to 
decline over time, because more current continuing disclosure documents 
will become available without charge from the MSRB.
---------------------------------------------------------------------------

    \201\ See SPSE Letter, at 15.
    \202\ See Vanguard Letter, at 3, and ICI Letter, at 4.
    \203\ See supra note 197.
---------------------------------------------------------------------------

    We also requested comment on any issues or problems that could 
arise if investors seek to obtain and compare information from multiple 
repositories--e.g., historical continuing disclosure documents from the 
NRMSIRs and current continuing disclosure documents from the MSRB-- and 
whether there are any alternative methods that would allow them to 
obtain complete information about municipal securities, including 
obtaining historical information. Two commenters, however, favored 
transferring continuing disclosure information to the MSRB if the 
NRMSIRs do not retain historical documents.\204\
---------------------------------------------------------------------------

    \204\ See ICI Letter, at 4, and Vanguard Letter, at 3.
---------------------------------------------------------------------------

    We note that transitional issues regarding access to continuing 
disclosure documents generally are time limited. Investors presumably 
desire to obtain information for only the most recent years. Further, 
since final official statements of offerings subject to the Rule must 
disclose the failures of an issuer or obligated person to comply with 
continuing disclosure undertakings only for the previous five 
years,\205\ Participating Underwriters presumably do not desire access 
to older information. The Commission believes that the benefits that it 
anticipates in connection with the final amendments justify the 
transitory challenges of the Rule's conversion from the NRMSIR model to 
a model in which the MSRB will be the sole repository.
---------------------------------------------------------------------------

    \205\ See Rule 15c2-12(f)(3), 17 CFR 15c2-12(f)(3).
---------------------------------------------------------------------------

    Some commenters advocated a short transition period \206\ whereas 
other commenters stressed that the Commission should allow sufficient 
time to allow small issuers to prepare for an electronic-only 
process.\207\ We have established July 1, 2009 as the effective date of 
these amendments.\208\ We believe that the approximately eight month 
period will be adequate to address commenters' concerns regarding the 
need for adequate time for issuers to become informed about the MSRB's 
new role as the only NRMSIR; become familiar with the continuing 
disclosure component of EMMA; arrange to obtain necessary documents in 
or convert such documents into the electronic format designated by the 
MSRB; and generally adapt their policies and procedures for providing 
continuing disclosure documents.
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    \206\ See NFMA Letter, at 1, and Vanguard Letter, at 3.
    \207\ See GFOA Letter, at 2, and NASACT, at 2.
    \208\ Because commenters also addressed the proper length of the 
transition period in the context of the MSRB EMMA Proposal, we also 
are addressing the issue in the MSRB Approval Order, supra note 12.
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IV. Paperwork Reduction Act

    The Rule, as amended, contains ``collection of information 
requirements'' within the meaning of the Paperwork Reduction Act of 
1995 (``PRA'').\209\ In accordance with 44 U.S.C. 3507 and 5 CFR 
1320.11, the Commission submitted revisions to the currently approved 
collection of information titled ``Municipal Securities Disclosure'' 
(17 CFR 240.15c2-12) (OMB Control No. 3235-0372) to the Office of 
Management and Budget (``OMB''). An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid control number. In the Proposing 
Release, the Commission solicited comments on the collection of 
information requirements. The Commission noted that the estimates of 
the effect that the proposed amendments to the Rule would have on the 
collection of information were based on data from various sources, 
including the most recent PRA submission for Rule 15c2-12, the MSRB, 
and municipal industry participants. Although the Commission received 
twenty-three comment letters on the proposed rulemaking, none of the 
commenters addressed the estimates regarding its collection of 
information aspects. After further consideration, the Commission has 
refined the cost estimate that issuers could incur to obtain technology 
resources. The Commission continues to believe that all other burden 
estimates provided in the Proposing Release are appropriate.
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    \209\ 44 U.S.C. 3501 et seq.
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A. Summary of Collection of Information

    Prior to these amendments, under paragraph (b) of Rule 15c2-12, a 
Participating Underwriter is required: (1) To obtain and review an 
official statement ``deemed final'' by an issuer of the securities, 
except for the omission of specified information, prior to making a 
bid, purchase, offer, or sale of municipal securities; (2) in non-
competitively bid offerings, to send, upon request, a copy of the most 
recent preliminary official statement (if one

[[Page 76121]]

exists) to potential customers; (3) to send, upon request, a copy of 
the final official statement to potential customers for a specified 
period of time; (4) to contract with the issuer to receive, within a 
specified time, sufficient copies of the final official statement to 
comply with the Rule's delivery requirement, and the requirements of 
the rules of the MSRB; and (5) before purchasing or selling municipal 
securities in connection with an offering, to reasonably determine that 
the issuer or obligated person has undertaken, in a written agreement 
or contract, for the benefit of holders of such municipal securities, 
to provide annual filings, material event notices, and failure to file 
notices (i.e., continuing disclosure documents) to each NRMSIR (or, 
alternatively, to the MSRB in the case of material event notices and 
failure to file notices).\210\ Under the Rule, as amended, 
Participating Underwriters will be required to reasonably determine 
that the issuer or obligated person has undertaken in a continuing 
disclosure agreement to provide continuing disclosure documents to the 
MSRB, in an electronic format and accompanied by identifying 
information, in each case as prescribed by the MSRB. The final rule 
amendments will not substantively change any of the current obligations 
of Participating Underwriters, except to the extent that Participating 
Underwriters will have to reasonably determine that the issuer or 
obligated person has agreed in the continuing disclosure agreement to 
provide continuing disclosure documents to a single repository, i.e., 
the MSRB, instead of to multiple NRMSIRs.
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    \210\ 17 CFR 240.15c2-12(b).
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    The final amendments also will revise Rule 15c2-12(d)(2)(ii), which 
is part of an exemptive provision from the requirements of Rule 15c2-
12(b)(5). Prior to the amendments adopted today, the exemption in Rule 
15c2-12(d)(2) provided that paragraph (b)(5) of the Rule, which relates 
to the submission of continuing disclosure documents pursuant to 
continuing disclosure agreements, would not apply to a primary offering 
if three conditions were met: (1) The issuer or the obligated person 
has $10 million or less of debt outstanding; \211\ (2) the issuer or 
obligated person has undertaken in a written agreement or contract to 
provide: (A) Financial information or operating data regarding each 
obligated person for which financial information or operating data is 
presented in the final official statement, including financial 
information and operating data which is customarily prepared by such 
obligated person and is publicly available, upon request to any person 
or at least annually to the appropriate SID,\212\ and (B) material 
event notices to each NRMSIR or the MSRB, as well as the appropriate 
SID; \213\ and (3) the final official statement identifies by name, 
address and telephone number the persons from which the foregoing 
information, data and notices can be obtained. The final amendments 
revise the limited undertaking set forth in 15c2-12(d)(2)(ii)(A) and 
(B) by deleting references to the NRMSIRs and SIDs and solely 
referencing the MSRB. Accordingly, under the amendment to Rule 15c2-
12(d)(2)(ii), a Participating Underwriter will be exempt from its 
obligations under paragraph (b)(5) of the Rule if an issuer or 
obligated person has agreed in its limited undertaking to provide 
financial information, operating data and material event notices to the 
MSRB in an electronic format as prescribed by the MSRB, and the 
exemption's other conditions are met.
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    \211\ 17 CFR 240.15c2-12(d)(2)(i).
    \212\ 17 CFR 240.15c2-12(d)(2)(ii)(A).
    \213\ 17 CFR 240.15c2-12(d)(2)(ii)(B).
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B. Use of Information

    The final amendments will provide for a single repository that 
receives submissions in an electronic format to encourage a more 
efficient and effective process for the collection and availability of 
continuing disclosure documents. The final amendments are intended to 
improve the availability of continuing disclosure documents that 
provide current information about municipal issuers and their 
securities. As a result, investors and other municipal securities 
market participants should be able to have ready and prompt access to 
the continuing disclosure documents of municipal securities issuers. 
This information could be used by retail and institutional investors; 
underwriters of municipal securities; other market participants, 
including broker-dealers and municipal securities dealers; municipal 
securities issuers; vendors of information regarding municipal 
securities; the MSRB and its staff; Commission staff; and the public 
generally.

C. Respondents

    The final amendments require that a Participating Underwriter in a 
primary offering of municipal securities reasonably determine that the 
issuer or an obligated person has undertaken in a continuing disclosure 
agreement to submit specified continuing disclosure documents to the 
MSRB in an electronic format and accompanied by identifying 
information, as prescribed by the MSRB. In the Proposing Release, we 
estimated that the respondents impacted by the paperwork collection 
associated with the Rule would consist of: 250 broker-dealers, 10,000 
issuers, and the MSRB. The Commission included this estimated number of 
respondents in the Proposing Release and received no comments on this 
estimate. The Commission continues to believe that these estimates are 
appropriate.

D. Total Annual Reporting and Recordkeeping Burden

    We estimate the aggregate information collection burden for the 
amended Rule to consist of the following:
1. Broker-Dealers
    We estimate that the Rule, as amended, will impose a paperwork 
collection burden for 250 broker-dealers and will require each of these 
broker-dealers an average burden of one hour per year to comply with 
the Rule. This burden accounts for the time it will take a broker-
dealer to reasonably determine that the issuer or obligated person has 
undertaken, in a written agreement or contract, for the benefit of 
holders of such municipal securities, to provide annual filings, 
material event notices, and failure to file notices (i.e., continuing 
disclosure documents) to the MSRB.
    In addition, we estimate that a broker-dealer will incur a one-time 
paperwork burden to have its internal compliance attorney prepare and 
issue a notice advising its employees who work on primary offerings of 
municipal securities about the final amendments to Rule 15c2-12. We 
estimate that it will take the internal compliance attorney 
approximately 30 minutes to prepare a notice describing the broker-
dealer's obligations in light of the revisions to the Rule. The task of 
preparing and issuing a notice advising the broker-dealer's employees 
about the adopted amendments is consistent with the type of compliance 
work that a broker-dealer typically handles internally. Accordingly, we 
estimate that 250 broker-dealers each will incur a one-time, first-year 
burden of 30 minutes to prepare and issue a notice to its employees 
regarding the broker dealer's obligations under the adopted amendments.
    Therefore, under the final amendments, the total burden on broker-
dealer respondents will be 375

[[Page 76122]]

hours for the first year \214\ and 250 hours for each subsequent 
year.\215\ The Commission included these estimates in the Proposing 
Release and received no comments on them. The Commission continues to 
believe that these estimates are appropriate.
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    \214\ (250 (maximum estimate of broker-dealers impacted by the 
final amendments) x 1 hour) + (250 (maximum estimate of broker-
dealers impacted by the final amendments) x .5 hour (estimate for 
one-time burden to issue notice regarding broker-dealer's 
obligations under the final amendments)) = 375 hours.
    \215\ 250 (maximum estimate of broker-dealers impacted by the 
final amendments) x 1 hour = 250 hours.
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2. Issuers
    The Commission believes that issuers prepare annual filings and 
material event notices as a usual and customary practice in the 
municipal securities market. Issuers' undertakings regarding the 
submission of annual filings, material event notices, and failure to 
file notices that are set forth in continuing disclosure agreements 
contemplated by the Rule impose a paperwork burden on issuers of 
municipal securities. We estimate that, in connection with the final 
amendments to the Rule, 10,000 municipal issuers with continuing 
disclosure agreements will prepare approximately 12,000 to 15,000 
annual filings yearly.\216\
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    \216\ The estimate for the number of annual filings includes the 
submission of annual financial information or operating data 
described in Rule 15c2-12(d)(2)(ii)(A).
---------------------------------------------------------------------------

    The Rule, as amended, provides that, under continuing disclosure 
agreements, continuing disclosure documents are to be submitted 
electronically to the MSRB, but does not revise the categories of 
persons who can submit the documents. Issuers can continue to submit 
continuing disclosure documents directly to the repository or can do so 
indirectly through an indenture trustee or a designated agent. An 
issuer might engage the services of a designated agent as a matter of 
convenience to advise it of the timing and type of continuing 
disclosure documents that need to be submitted to the repository. We 
estimate that approximately 30% of issuers will utilize the services of 
a designated agent to submit disclosure documents to the MSRB.
    We estimate that, under the final amendments, an issuer will take 
approximately 45 minutes to submit an annual filing to the MSRB in an 
electronic format and accompanied by identifying information. This 
estimate includes approximately 30 minutes to prepare the annual 
filing, which is consistent with the prior paperwork collection 
associated with the Rule, plus a new burden of an additional 15 minutes 
to convert the information into an electronic format and add any 
identifying information that the repository may prescribe. Therefore, 
under the final amendments, the total burden on issuers of municipal 
securities to submit 15,000 annual filings to the MSRB is estimated to 
be 11,250 hours.\217\
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    \217\ 15,000 (maximum estimate of annual filings) x 45 minutes = 
11,250 hours.
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    We estimate that, under the final amendments, the MSRB annually 
will receive approximately 50,000 to 60,000 notices of the occurrence 
of a material event.\218\ We also estimate that, under the final 
amendments, an issuer will take approximately 45 minutes to submit a 
material event notice to the MSRB in an electronic format and 
accompanied by identifying information. This estimate includes 
approximately 30 minutes to prepare the material event notice, which is 
consistent with the prior paperwork collection associated with the 
Rule, plus an additional 15 minutes to convert the information into an 
electronic format and add any identifying information that the 
repository may prescribe. Therefore, under the final amendments, the 
total burden on issuers to submit material event notices to the MSRB 
will require 45,000 hours.
---------------------------------------------------------------------------

    \218\ This estimate for material event notices includes the 
submission of material event notices described in Rule 15c2-
12(d)(2)(ii)(B).
---------------------------------------------------------------------------

    We estimate that, under the final amendments, the MSRB annually 
will receive approximately 1,500 to 2,000 failure to file notices. We 
also estimate that, under the final amendments, an issuer will take 
approximately 30 minutes to submit a failure to file notice to the MSRB 
in an electronic format and accompanied by identifying information. 
This estimate includes approximately 15 minutes to prepare the failure 
to file notice, plus an additional 15 minutes to convert the 
information into an electronic format and add any identifying 
information that the repository would prescribe. Therefore, under the 
adopted amendments, the total burden on issuers to prepare and submit 
failure to file notices to the MSRB will be 1,000 hours.\219\ Thus, the 
estimated 1,000 hours to prepare and submit failure to file notices to 
the MSRB represents a new paperwork burden of 1,000 hours.
---------------------------------------------------------------------------

    \219\ 2,000 (maximum estimate of failure to file notices) x 30 
minutes = 1,000 hours.
---------------------------------------------------------------------------

    Accordingly, under the final amendments, the total burden on 
issuers to submit annual filings, material event notices and failure to 
file notices to the MSRB would be 57,250 hours.\220\ The Commission 
included these estimates in the Proposing Release and received no 
comments on them. The Commission continues to believe that these 
estimates are appropriate.
---------------------------------------------------------------------------

    \220\ 11,250 hours (estimated burden for issuers to submit 
annual filings) + 45,000 hours (estimated burden for issuers to 
submit material event notices) + 1,000 hours (estimated burden for 
issuers to submit failure to file notices) = 57,250 hours.
---------------------------------------------------------------------------

3. The MSRB
    Under the final amendments, the MSRB will be the sole repository 
and will receive disclosure documents in an electronic, rather than 
paper, format. We estimate that the burden on the MSRB to collect, 
index, store, retrieve, and make available the pertinent documents 
would be the number of hours that its employees would be assigned to 
the system for collecting, storing, retrieving, and making available 
the documents. In the Proposing Release, we noted that the MSRB advised 
that three full-time employees and one half-time employee would be 
assigned to these tasks and that each full-time employee would spend 
approximately 2,000 hours per year working on these tasks. Therefore, 
under the final amendments, the total burden on the MSRB to collect, 
store, retrieve, and make available the disclosure documents covered by 
the amendments will be 7,000 hours per year.\221\ The Commission 
included this estimate in the Proposing Release and received no 
comments on it. The Commission continues to believe that this estimate 
is appropriate.
---------------------------------------------------------------------------

    \221\ 2,000 hours x 3.5 (3 full time employees and 1 half-time 
employee) = 7,000 hours.
---------------------------------------------------------------------------

4. Annual Aggregate Burden for Proposed Amendments
    Accordingly, we estimate that the ongoing annual aggregate 
information collection burden for the amended Rule will be 64,500 
hours.\222\ The Commission included this estimate in the Proposing 
Release and received no comments on it. The Commission continues to 
believe that this estimate is appropriate.
---------------------------------------------------------------------------

    \222\ 250 hours (total estimated burden for broker-dealers) + 
57,250 hours (total estimated burden for issuers) + 7,000 hours 
(total estimated burden for MSRB) = 64,500 hours. The initial first-
year burden would be 64,625 hours: 375 hours (total estimated burden 
for broker-dealers in the first year) + 57,250 hours (total 
estimated burden for issuers) + 7,000 hours (total estimated burden 
for MSRB) = 64,625 hours.
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E. Total Annual Cost Burden

1. Issuers
    The Commission expects that some issuers may be subject to some 
costs associated with the electronic

[[Page 76123]]

submission of annual filings, material event notices and failure to 
file notices, particularly if they (or their agent) were submitting 
paper copies of these documents to the repositories. It is likely, 
however, that many issuers of municipal securities currently have the 
computer equipment and software necessary to convert paper copies of 
continuing disclosure documents to electronic copies and to 
electronically transmit the documents to the MSRB. For issuers that 
currently have such capability, the start-up costs to provide 
continuing disclosure documents to the MSRB will be minimal because 
they already possess the necessary resources internally. Some issuers 
may have the necessary computer equipment to transmit documents 
electronically to the MSRB, but may need to upgrade or obtain the 
software necessary to submit documents to the MSRB in the electronic 
format that it prescribes. For these issuers, the start-up costs will 
be the costs of upgrading or acquiring the necessary software. Issuers 
that presently do not provide their annual filings, material event 
notices and/or failure to file notices in an electronic format and that 
are currently sending paper copies of their documents to the 
repositories pursuant to their continuing disclosure agreements (or 
only providing disclosures upon request) may incur some costs to obtain 
electronic copies of such documents if they are prepared by a third 
party (e.g., accountant or attorney) or, alternatively, to have a paper 
copy converted into an electronic format. These costs can vary 
depending on how the issuer elects to convert its continuing disclosure 
documents into an electronic format. An issuer may elect to have a 
third-party vendor transfer its paper continuing disclosure documents 
into the appropriate electronic format. An issuer also may decide to 
undertake the work internally, and its costs will vary depending on the 
issuer's current technology resources.
    The cost for an issuer to have a third-party vendor transfer its 
paper continuing disclosure documents into an appropriate electronic 
format can vary depending on what resources are required to transfer 
the documents into the appropriate electronic format. One example of 
such a transfer is the scanning of paper-based continuing disclosure 
documents into an electronic format. We estimate that the cost for an 
issuer to have a third-party vendor scan documents will be $6 for the 
first page and $2 for each page thereafter. We estimate that material 
event and failure to file notices consist of one to two pages, while 
annual filings range from eight to ten pages to several hundred pages, 
but average about 30 pages in length. Accordingly, the approximate cost 
for an issuer to use a third party vendor to scan a material event 
notice or failure to file notice will be $8 each, and the approximate 
cost to scan an average-sized annual financial statement will be $64. 
We further estimate that an issuer will submit one to five continuing 
disclosure documents annually. We included these estimates in the 
Proposing Release and received no comments on them. We continue to 
believe that these estimates are appropriate.
    Alternatively, an issuer that currently does not have the 
appropriate technology can elect to purchase the resources to 
electronically format the disclosure documents on its own.\223\ We 
estimate that an issuer's initial cost to acquire these technology 
resources could range from $750 to $4,300.\224\ Some issuers may have 
the necessary hardware to transmit documents electronically to the 
MSRB, but may need to upgrade or obtain the software necessary to 
submit documents to the MSRB in the electronic format that it 
prescribes. We estimate that an issuer's cost to update or acquire this 
software can range from $50 to $300.\225\ We included these estimates 
in the Proposing Release and received no comments on them. We continue 
to believe that these estimates are appropriate.
---------------------------------------------------------------------------

    \223\ Generally, the technology resources necessary to transfer 
a paper document into an electronic format are a computer, scanner 
and possibly software to convert the scanned document into the 
appropriate electronic document format. Most scanners include a 
software package that is capable of converting scanned images into 
multiple electronic document formats. An issuer will need to 
purchase software only if the issuer (1) has a scanner that does not 
include a software package that is capable of converting scanned 
images into the appropriate electronic format, or (2) purchases a 
scanner that does not include a software package capable of 
converting documents into the appropriate electronic format.
    \224\ The estimated cost for an issuer to upgrade or acquire the 
necessary technology to transfer its paper continuing disclosure 
documents into an electronic format is based on the following 
estimates for purchasing the necessary equipment from a commercial 
vendor: (1) $500 to $3,000 for a computer; (2) $200 to $1,000 for a 
scanner; and (3) $50 to $300 for software to submit documents in an 
electronic format.
    \225\ Issuers that need solely to upgrade existing software may 
incur costs closer to the lower end of this estimate, while those 
issuers that need to purchase completely new software packages may 
incur costs closer to the higher end of this estimate.
---------------------------------------------------------------------------

    In addition, issuers without direct Internet access may incur some 
costs to obtain such access to submit the documents. However, Internet 
access is now broadly available to and utilized by businesses, 
governments, organizations and the public, and we expect that most 
issuers of municipal securities currently have Internet access. In the 
event that an issuer does not have Internet access, we estimate the 
cost of such access to be approximately $50 per month. Otherwise, there 
are multiple free or low cost locations that an issuer can utilize, 
such as various commercial sites, which could help an issuer to avoid 
the costs of maintaining continuous Internet access solely to submit 
documents to the MSRB.
    Accordingly, the Commission estimates that the costs to some 
issuers to submit continuing disclosure documents to a single 
repository in electronic format includes: (1) An approximate cost of $8 
per notice to use a third party vendor to scan a material event notice 
or failure to file notice, and an approximate cost of $64 to use a 
third party vendor to scan an average-sized annual financial statement; 
(2) an approximate cost ranging from $750 to $4,300 to acquire 
technology resources to convert continuing disclosure documents into an 
electronic format; (3) an approximate cost ranging from $50 to $300 
solely to upgrade or acquire the software to submit documents in an 
electronic format; and (4) approximately $50 per month to acquire 
Internet access.
    For an issuer that does not have Internet access and elects to have 
a third party convert continuing disclosure documents into an 
electronic format (``Category 1 issuers''), the total maximum external 
estimated cost such issuer will incur is $752 per year.\226\ For an 
issuer that does not have Internet access and elects to acquire the 
technological resources to convert continuing disclosure documents into 
an electronic format internally (``Category 2 issuers''), the total 
maximum external estimated cost such issuer will incur is $4,900 for 
the first year and $600 per year thereafter.\227\ As

[[Page 76124]]

noted in the Proposing Release, the estimated total cost for issuers, 
if they all were classified as Category 1 issuers, is $7,520,000 per 
year, and the estimated total cost for issuers, if they all were 
classified as Category 2 issuers, is $49,000,000 for the first year and 
$6,000,000 per year thereafter.\228\ We included these cost estimates 
in the Proposing Release and received no comments on them.
---------------------------------------------------------------------------

    \226\ [$64 (cost to have third party convert annual filing into 
an electronic format) x 2 (maximum estimated number of annual 
filings filed per year per issuer)] + [$8 (cost to have third party 
convert material event notice or failure to file notice into an 
electronic format) x 3 (maximum estimated number of material event 
or failure to file notices filed per year per issuer)] + [$50 
(estimated monthly Internet charge) x 12 months] = $752. We estimate 
that an issuer would file one to five continuing disclosure 
documents per year. These documents generally consist of no more 
than two annual filings and three material event or failure to file 
notices.
    \227\ [$4,300 (maximum estimated one-time cost to acquire 
technology to convert continuing disclosure documents into an 
electronic format)] + [$50 (estimated monthly Internet charge) x 12 
months] = $4,900. After the initial year, issuers who acquire the 
technology to convert continuing disclosure documents into an 
electronic format internally only will have the cost of securing 
Internet access. $50 (estimated monthly Internet charge) x 12 months 
= $600.
    \228\ Total cost for Category 1 issuers: 10,000 issuers x $752 
(annual cost per issuer to have a third party convert continuing 
disclosure documents into an electronic format and for Internet 
access) = $7,520,000. Total cost for Category 2 issuers: 10,000 
issuers x $4,900 (one-time cost to acquire technology to convert 
continuing disclosure documents into an electronic format and annual 
cost for Internet access) = $49,000,000. 10,000 issuers x $600 
(annual cost per issuer for Internet access) = $6,000,000.
---------------------------------------------------------------------------

    After further consideration, we believe that the actual total costs 
that are likely to be incurred by issuers to convert continuing 
disclosure documents into an electronic format will be less than the 
estimated maximum external costs described above. We note that these 
total annual cost estimates are based on the assumption that all 
issuers subject to continuing disclosure agreements would have to 
acquire technology resources necessary to submit continuing disclosure 
documents in an electronic format to the MSRB. In the Proposing 
Release, we noted our belief that this was a conservative estimate, and 
that in all likelihood, many issuers either currently submit continuing 
disclosure documents in an electronic format or currently have the 
necessary technology resources to submit continuing disclosure 
documents in an electronic format.
    In this regard, we noted in the Proposing Release that 
approximately 30% of issuers currently utilize the services of a 
designated filing agent to submit documents electronically to NRMSIRs. 
Moreover, all NRMSIRs currently allow electronic filing of continuing 
disclosure documents. We further note that it was reported in 2002 that 
approximately 89% of all municipal governments in New York, 
Pennsylvania and West Virginia had access to computer technology and 
used it in their operations.\229\
---------------------------------------------------------------------------

    \229\ See Timothy M. Kelsey, Michael J. Dougherty and Michael 
Hattery, Information Technology Use by Local Governments in the 
Northeast: Assessment and Needs, 40 Journal of Extension 5, October 
2002 (available at http://www.joe.org/joe/2002october/a4.shtml) 
(``Journal of Extension'').
---------------------------------------------------------------------------

    Finally, even if all issuers currently lack the necessary 
technology, we assume that they would be more likely to choose the 
lower cost option, i.e., Category 1 with an estimated annual cost of 
$7,520,000. To be conservative for purposes of the PRA, however, the 
Commission estimates that the annual costs for those issuers that need 
to acquire technology resources to submit documents to the MSRB will be 
approximately $9,800,000 \230\ for the first year after the adoption of 
the final amendments and approximately $1,200,000 \231\ for each year 
thereafter.
---------------------------------------------------------------------------

    \230\ 2,000 (Category 2 issuers) x $4,900 = $9,800,000. This 
estimate assumes 20% of issuers incur Category 2 costs at $4,900 per 
issuer. To be conservative, we are using a number approximately 
double the percentage of issuers estimated in the Journal of 
Extension article. We acknowledge that this estimate yields a sum 
greater than the total Category 1 cost.
    \231\ 2,000 (Category 2 issuers) x $600 = $1,200,000.
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    Alternatively, an issuer may elect to use the services of a 
designated agent to submit continuing disclosure documents to the MSRB. 
As noted above, we believe that approximately 30% of municipal issuers 
that submit continuing disclosure documents today rely on the services 
of a designated agent. Generally, when issuers utilize the services of 
a designated agent, they enter into a contract with the designated 
agent for a package of services, including the submission of continuing 
disclosure documents, for a single fee. As noted in the Proposing 
Release, it is anticipated that five of the largest designated agents 
will submit documents electronically to the MSRB via a direct computer-
to-computer interface. We estimate that the start-up cost for an entity 
to develop a direct computer-to-computer interface with the MSRB will 
range from approximately $69,360 to $138,720.\232\ Thus, the maximum 
estimated total start-up cost of developing a direct computer-to-
computer interface by each of the five designated agents for the 
submission of continuing disclosure documents to the MSRB is $693,600. 
The Commission included these cost estimates in the Proposing Release 
and received no comments on them. The Commission continues to believe 
that these estimates are appropriate.
---------------------------------------------------------------------------

    \232\ As noted in the Proposing Release, the MSRB estimated that 
it would take an entity approximately 240 to 480 hours of computer 
programming to develop the computer-to-computer interface with the 
MSRB. $289 (hourly wage for a senior programmer) x 240 hours = 
$69,360. $289 (hourly wage for a senior programmer) x 480 hours = 
$138,720. The $289 per hour estimate for a senior programmer is from 
SIFMA's Office Salaries in the Securities Industry 2007, modified by 
Commission staff to account for an 1,800-hour work-year and 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits and overhead.
---------------------------------------------------------------------------

    The Commission believes that, in light of the estimated cost to 
develop and implement a computer-to-computer interface with the MSRB, 
it is unlikely that issuers will elect to proceed with this approach 
given the availability of less expensive alternatives to submitting 
continuing disclosure documents electronically to the MSRB. However, 
some issuers may choose to submit their continuing disclosure documents 
to the MSRB through a designated agent. A designated agent may submit 
continuing disclosure documents along with identifying information to 
the MSRB on behalf of numerous issuers. Depending on its business 
model, a designated agent may submit continuing disclosure documents 
along with identifying information to the MSRB via the Internet or 
through a direct computer-to-computer interface. In either case, the 
issuer will incur a cost associated with the designated agent's 
electronic submission of the pertinent continuing disclosure document 
and any identifying information to the MSRB. We estimate that this cost 
is approximately $16 per continuing disclosure document.\233\ We 
continue to believe that this estimate is appropriate.
---------------------------------------------------------------------------

    \233\ This estimate includes the cost of having the designated 
agent's compliance clerk submit electronically the pertinent 
continuing disclosure document and any identifying information to 
the MSRB. 15 minutes (.25 hours) (estimated time per document to 
gather identifying information) x $62 (hourly wage for a compliance 
clerk) = $15.50 (approximately $16). The $62 per hour estimate for a 
compliance clerk is from SIFMA's Office Salaries in the Securities 
Industry 2007, modified to account for an 1,800-hour work-year and 
multiplied by 2.93 to account for bonuses, firm size, employee 
benefits and overhead.
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2. MSRB
    The MSRB will incur costs to develop the computer system to allow 
it to collect, store, process, retrieve, and make available continuing 
disclosure documents furnished to it by issuers of municipal 
securities. The MSRB's start-up costs associated with developing the 
portal for continuing disclosure documents, including hardware, an 
additional hosting site, and software licensing and acquisition costs, 
is estimated to be approximately $1,000,000. In addition, the MSRB's 
annual operating costs for this system, excluding salary and other 
costs related to employees, is estimated to be approximately $350,000. 
Accordingly, we estimate that the total costs for the MSRB is 
$1,350,000 for the first year and $350,000 per year thereafter, 
exclusive of salary and other costs related to employees.\234\ The

[[Page 76125]]

Commission included these cost estimates in the Proposing Release and 
did not receive any comments on them. The Commission continues to 
believe that these estimates are appropriate.
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    \234\ $1,000,000 (cost to establish computer system) + $350,000 
(annual operation costs for computer system, excluding salary and 
other related costs for employees) = $1,350,000 (first year cost to 
MSRB). After the first year, the only cost would be the annual 
operation cost of $350,000. These costs do not include the salary 
and other overhead costs related to the employees who would maintain 
the system. The Proposing Release noted that MSRB staff advised 
Commission staff that the personnel costs associated with operating 
the portal for continuing disclosure documents will be approximately 
$400,000 per year.
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F. Retention Period of Recordkeeping Requirements

    The final amendments to the Rule do not contain any recordkeeping 
requirements. However, as an SRO subject to Rule 17a-1 under the 
Exchange Act,\235\ the MSRB is required to retain records of the 
collection of information for a period of not less than five years, the 
first two years in an easily accessible place.
---------------------------------------------------------------------------

    \235\ 17 CFR 240.17a-1.
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G. Collection of Information Is Mandatory

    The collection of information pursuant to the Rule, as amended, is 
a mandatory collection of information.

H. Responses to Collection of Information Will Not Be Kept Confidential

    The collection of information pursuant to the Rule, as amended, 
will not be confidential and will be publicly available.

V. Costs and Benefits of Proposed Amendments to Rule 15c2-12

    In the Proposing Release the Commission considered certain costs 
and benefits of the amendments to Rule 15c2-12. As noted below, the 
Commission received a few general comments relating to the costs or 
benefits of the proposed amendments. As discussed below, the Commission 
is refining its cost analysis relating to the costs that issuers could 
incur to obtain technology resources. Other than this cost revision, 
the Commission is not modifying its costs and benefits analysis from 
that presented in the Proposing Release.

A. Benefits

    Under the Rule, as amended, a Participating Underwriter will be 
prohibited from purchasing or selling municipal securities covered by 
the Rule in a primary offering, unless it has reasonably determined 
that the issuer of a municipal security has undertaken in a continuing 
disclosure agreement to provide continuing disclosure documents to the 
MSRB.\236\ The Commission believes that providing for a single 
repository that receives submissions in an electronic format, rather 
than multiple repositories, will encourage a more efficient and 
effective process for the collection and availability of continuing 
disclosure information. In the Commission's view, a single electronic 
point of collection and accessibility of continuing disclosure 
documents can assist issuers and obligated persons in complying with 
their undertakings. Submission of continuing disclosure documents to 
one repository only rather than multiple repositories will reduce the 
resources issuers and obligated persons need to devote to the process 
of gathering and submitting continuing disclosure documents. Because 
the final amendments will provide for the electronic submission and 
availability of continuing disclosure documents, the costs to issuers 
and obligated persons of gathering and submitting this information 
ultimately could be reduced because these entities no longer will have 
to gather and submit documents in a paper format.
---------------------------------------------------------------------------

    \236\ Under the adopted amendments to paragraph (d)(2)(ii) of 
the Rule, a Participating Underwriter would be exempt from its 
obligations under paragraph (b)(5) of the Rule as long as an issuer 
or obligated person has agreed in its limited undertaking that the 
publicly available financial information or operating data described 
in paragraph (d)(2)(ii)(A) of the Rule would be submitted to the 
MSRB annually, instead of upon request to any person or at least 
annually to the appropriate SID, if any, and that the material event 
notices described in paragraph (d)(2)(ii)(B) of the Rule would be 
submitted to the MSRB, instead of to each NRMSIR or the MSRB and to 
the appropriate SID, if any, and as long as the other conditions of 
the exemption are met.
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    Most commenters were supportive of the proposed amendments and 
believed that a single repository for the collection, storage, and 
dissemination of continuing disclosure documents would greatly benefit 
investors and other municipal market participants.\237\ Commenters 
indicated that the benefits of the proposed amendments include: (1) 
Increased transparency of municipal securities disclosure; \238\ (2) 
simplifying and improving the efficiency of filing municipal disclosure 
information; \239\ (3) improved accessibility to municipal disclosure 
information for investors and other market participants; \240\ (4) 
assisting broker-dealers and mutual funds in meeting their regulatory 
obligations; \241\ and (5) reducing the potential for fraudulent 
activities.\242\ In addition, commenters noted that the submission of 
municipal disclosure information in an electronic format with indexing 
information would: (1) Make finding and using municipal disclosure 
information easier for investors and other municipal market 
participants; \243\ and (2) help facilitate the creation of new value-
added services by municipal disclosure vendors.\244\
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    \237\ See GFOA Letter, Vanguard Letter, SIFMA Letter, MSRB 
Letter, Treasurer of the State of Connecticut Letter, IAA Letter, 
NASACT Letter, EDGAR Online Letter, NFMA Letter, NAHEFFA Letter, ICI 
Letter, Texas Mac Letter, and Multiple-Markets Letter.
    \238\ See Treasurer of the State of Connecticut Letter, at 1, 
and IAA Letter, at 1.
    \239\ See Texas MAC Letter, at 1, and IAA Letter, at 2.
    \240\ See SIFMA Letter, at 2, NASACT Letter, at 1, and ICI 
Letter, at 3.
    \241\ See SIFMA Letter, at 2, and ICI Letter, at 3.
    \242\ See ICI Letter, at 3.
    \243\ See ICI Letter, at 3, and IAA Letter, at 3.
    \244\ See Multiple-Markets Letter, at 2.
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    As described more fully in section IV. above, we estimate that the 
ongoing annual information collection burden under the adopted 
amendments will be 64,500 hours.\245\ This represents a reduction of 
59,350 burden hours from the immediately preceding collection of 
information.\246\ This overall reduction in the Rule's paperwork 
burden--and the costs associated with that burden--principally will 
benefit issuers or obligated persons.
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    \245\ The estimated annual information collection burden for the 
first year under the final amendments is 64,625 hours.
    \246\ For the first year, there is a reduction of 59,225 burden 
hours relative to the immediately preceding collection of 
information.
---------------------------------------------------------------------------

    The Commission also believes that having a single repository that 
receives and makes available submissions in an electronic format will 
provide ready and prompt access to this information by investors and 
municipal securities market participants. Investors and market 
participants will be able to go solely to one location to retrieve 
continuing disclosure documents rather than having to approach multiple 
locations, thereby allowing for a more convenient means to obtain such 
information. In addition, we believe that having one repository that 
electronically collects and makes available all continuing disclosure 
documents will increase the likelihood that investors and other market 
participants will obtain more complete information about municipal 
securities, thereby decreasing the potential for fraud.
    We expect that a single repository that receives submissions in an 
electronic format could simplify compliance with regulatory 
requirements by broker-dealers and others, such as mutual funds, by 
providing them with consistent availability of continuing disclosure 
documents from a single

[[Page 76126]]

source. Information vendors (including those NRMSIRs and SIDs that had 
been information repositories for Rule 15c2-12 purposes) and others 
also will have ready access to all continuing disclosure documents that 
they in turn can use in any value-added products that they create. The 
Commission also expects that having a single repository that receives 
submissions in an electronic format will make municipal disclosure 
information more accessible for all municipal market participants.
    Moreover, providing for a single repository may reduce the 
paperwork and other costs that NRMSIRs currently incur because they no 
longer will have to maintain personnel and other resources solely in 
connection with their status as a NRMSIR. Also, the Commission believes 
that the proposed amendments may encourage the dissemination of 
information in the information services markets by providing easier 
access to continuing disclosure documents. As a result, there 
potentially may be an increase in the number of information vendors 
disseminating continuing disclosure documents and offering value-added 
products because the cost of entry into the municipal securities 
information services market may be reduced.

B. Costs

    The Commission does not expect broker-dealers to incur any 
additional recurring costs as a result of the Rule 15c2-12 amendments, 
because the amendments will not alter substantively the existing Rule's 
requirements for these entities, except with respect to the place to 
which issuers would agree to make filings. The final amendments will 
change the location where the continuing disclosure documents of 
issuers or obligated persons will be submitted pursuant to continuing 
disclosure agreements. As noted above, we estimate that the annual 
information collection burden for each broker-dealer under the Rule 
will be one hour. This annual burden is identical to the burden that a 
broker-dealer previously had under the Rule. Accordingly, we estimate 
that it will cost each broker-dealer $270 annually to comply with the 
Rule, as amended.\247\
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    \247\ 1 hour (estimated annual information collection burden for 
each broker-dealer) x $270 (hourly cost for a broker-dealer's 
internal compliance attorney) = $270. The hourly rate for the 
compliance attorney is from SIFMA's Management & Professional 
Earnings in the Securities Industry 2007, modified to account for an 
1,800-hour work-year and multiplied by 5.35 to account for bonuses, 
firm size, employee benefits and overhead.
---------------------------------------------------------------------------

    We further estimate that a broker-dealer may have a one-time 
internal cost associated with having an in-house compliance attorney 
prepare and issue a memorandum advising the broker-dealer's employees 
who work on primary offerings of municipal securities about the 
amendments to Rule 15c2-12. Our estimate is that it will take internal 
counsel approximately 30 minutes to prepare this memorandum, for a cost 
of approximately $135.\248\
---------------------------------------------------------------------------

    \248\ See Section IV.D.1., supra.
---------------------------------------------------------------------------

    We believe that the ongoing obligations of broker-dealers under the 
Rule will be handled internally because compliance with these 
obligations is consistent with the type of work that a broker-dealer 
typically handles internally. We do not believe that a broker-dealer 
will have any recurring external costs associated with the amendments 
to the Rule.
    The Commission received one comment letter regarding the 
obligations of a broker-dealer under the revised Rule, particularly 
with respect to its reasonably determining that the issuer or obligated 
person has contractually agreed to provide identifying information as 
prescribed by the MSRB.\249\ This commenter stated that this 
requirement would not be unreasonably burdensome on broker-dealers that 
are Participating Underwriters. The Commission included in the 
Proposing Release the foregoing cost estimate regarding a broker-
dealer's obligations under the Rule, as amended, and received no 
comments regarding this cost estimates.
---------------------------------------------------------------------------

    \249\ See SIFMA Letter, at 3.
---------------------------------------------------------------------------

    Although Rule 15c2-12 relates to the obligations of broker-dealers, 
issuers or obligated persons indirectly could incur costs as a result 
of the adopted amendments. In connection with today's amendments, 
issuers of municipal securities will undertake in their continuing 
disclosure agreements to provide continuing disclosure documents to the 
MSRB, either directly or indirectly through an indenture trustee or a 
designated agent. In either case, some issuers may be subject to the 
costs associated with the electronic filing of annual filings, material 
event notices and failure to file notices, particularly if they (or 
their agent) were submitting paper copies of these documents to the 
NRMSIRs. For those issuers that delivered their continuing disclosure 
documents electronically to the NRMSIRs, there is expected to be 
minimal change in costs as a result of the Rule's new requirement that 
documents be submitted electronically.
    Issuers that had not been providing their annual filings, material 
event notices and/or failure to file notices in an electronic format 
and were sending paper copies of their documents to the NRMSIRs 
pursuant to their continuing disclosure agreements may incur some costs 
to obtain electronic copies of such documents from the party who 
prepared them or, alternatively, to have a paper copy converted into an 
electronic format. These costs will vary depending on how the issuer 
elects to convert their continuing disclosure documents into an 
electronic format. An issuer can elect to have a third-party vendor 
transfer their paper continuing disclosure documents into the 
appropriate electronic format. An issuer also can decide to undertake 
the work internally, and its costs will vary depending on the issuer's 
technology resources. An issuer also will need to have Internet access 
to submit documents electronically and will incur the costs of 
maintaining such service, if the issuer currently does not have 
Internet access, unless it relies on other sources of Internet access.
    It is likely, however, that most issuers of municipal securities 
currently possess the computer equipment and software necessary to 
convert paper copies of continuing disclosure documents to electronic 
copies and to electronically transmit the documents to the MSRB. For 
issuers that currently have such capability, the start-up costs to 
provide continuing disclosure documents to the MSRB will be minimal 
because they already will have the necessary resources internally.
    As described more fully in section IV. above, we estimate that the 
costs to some issuers to submit continuing disclosure documents to the 
MSRB in an electronic format may include: (1) An approximate cost of $8 
per notice to use a third party vendor to scan a material event notice 
or failure to file notice, and an approximate cost of $64 to use a 
third party vendor to scan an average-sized annual financial statement; 
(2) an approximate cost ranging from $750 and $4,300 to acquire 
technology resources to convert continuing disclosure documents into an 
electronic format; (3) approximately $50 to $300 to upgrade or acquire 
the software to submit documents in an electronic format; (4) 
approximately $50 per month to acquire Internet access; and (5) an 
approximate cost of $16 per continuing disclosure document to have a 
designated agent submit electronically continuing disclosure documents 
and identifying information to the MSRB. As noted in the Proposing 
Release, for an issuer that does not have Internet access and elects to 
have a third party convert continuing disclosure documents into an 
electronic format, the maximum external estimated cost such issuer will 
incur is $752 per

[[Page 76127]]

year.\250\ As noted in the Proposing Release, for an issuer that does 
not have Internet access and elects to acquire the technological 
resources to convert continuing disclosure documents into an electronic 
format internally, the maximum external estimated cost such issuer will 
incur is $4,900 for the first year and $600 per year thereafter.\251\ 
As noted in the Proposing Release, the estimated total cost for 
issuers, if they all were classified as Category 1 issuers, is 
$7,520,000 per year, and the estimated total cost for issuers, if they 
all were classified as Category 2 issuers, is $49,000,000 for the first 
year and $6,000,000 per year thereafter.\252\ We included these cost 
estimates in the Proposing Release and received no comments on them. In 
the Proposing Release, the Commission indicated that we believe that 
most issuers either currently submit continuing disclosure documents in 
an electronic format, or currently have the necessary technology 
resources to submit continuing disclosure documents in an electronic 
format. Accordingly, we believe that the actual total costs that will 
be incurred by issuers to convert continuing disclosure documents into 
an electronic format will be less than the estimated maximum external 
costs described above and discussed more fully in section IV. above.
---------------------------------------------------------------------------

    \250\ [$64 (cost to have third party convert annual filing into 
an electronic format) x 2 (maximum estimated number of annual 
filings filed per year per issuer)] + [$8 (cost to have third party 
convert material event notice or failure to file notice into an 
electronic format) x 3 (maximum estimated number of material event 
or failure to file notices filed per year per issuer)] + [$50 
(estimated monthly Internet charge) x 12 months] = $752. We estimate 
that an issuer would file one to five continuing disclosure 
documents per year. These documents generally consist of no more 
than two annual filings and three material event or failure to file 
notices.
    \251\ [$4,300 (maximum estimated one-time cost to acquire 
technology to convert continuing disclosure documents into an 
electronic format)] + [$50 (estimated monthly Internet charge) x 12 
months] = $4,900. After the initial year, issuers who acquire the 
technology to convert continuing disclosure documents into an 
electronic format internally only will have the cost of securing 
Internet access. $50 (estimated monthly Internet charge) x 12 months 
= $600.
    \252\ Total cost for Category 1 issuers: 10,000 issuers x $752 
(annual cost per issuer to have a third party convert continuing 
disclosure documents into an electronic format and for Internet 
access) = $7,520,000. Total cost for Category 2 issuers: 10,000 
issuers x $4,900 (one-time cost to acquire technology to convert 
continuing disclosure documents into an electronic format and annual 
cost for Internet access) = $49,000,000. 10,000 issuers x $600 
(annual cost per issuer for Internet access) = $6,000,000. To 
provide an estimate of the total costs to issuers that would not be 
under-inclusive, we assumed that all 10,000 issuers are Category 1 
issuers and Category 2 issuers.
---------------------------------------------------------------------------

    The Commission estimates that the annual costs for those issuers 
that need to acquire technology resources to submit documents to the 
MSRB will be approximately $9,800,000 \253\ for the first year after 
the adoption of the final amendments and approximately $1,200,000 \254\ 
for each year thereafter.
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    \253\ 2,000 (Category 2 issuers) x $4,900 = $9,800,000. This 
estimate assumes 20% of issuers incur Category 2 costs at $4,900 per 
issuer. To be conservative, we are using a number approximately 
double the percentage of issuers estimated in the Journal of 
Extension article. We acknowledge that this estimate yields a sum 
greater than the total Category 1 cost.
    \254\ 2,000 (Category 2 issuers) x $600 = $1,200,000.
---------------------------------------------------------------------------

    Also, as more fully described in section IV. above, the total 
estimated cost of five designated agents to develop computer-to-
computer interfaces for the submission of documents to the MSRB is 
$693,600. The Commission included this cost estimate in the Proposing 
Release and received no comments regarding it. The Commission continues 
to believe that this estimate is appropriate.
    Issuers or obligated persons also will have to provide certain 
identifying information to the repository pursuant to their 
undertakings in continuing disclosure agreements. As described more 
fully in section IV. above, we estimate that each issuer will submit 
one to five continuing disclosure documents annually to the MSRB, for a 
maximum estimated annual labor cost of approximately $232.50 per 
issuer,\255\ which equates to a total maximum annual cost of $2,325,000 
for all issuers ($232.50 x 10,000 issuers). The Commission included 
these cost estimates for issuers in the Proposing Release and received 
no comments regarding these estimates. The Commission continues to 
believe that these estimates are appropriate.
---------------------------------------------------------------------------

    \255\ 5 (maximum estimated number of continuing disclosure filed 
per year per issuer) x $62 (hourly wage for a compliance clerk) x 45 
minutes (.75 hours) (average estimated time for compliance clerk to 
submit a continuing disclosure document electronically) = $232.50. 
The $62 per hour estimate for a compliance clerk is from SIFMA's 
Office Salaries in the Securities Industry 2007, modified to account 
for an 1,800-hour work-year and multiplied by 2.93 to account for 
bonuses, firm size, employee benefits and overhead. In order to 
provide an estimate of total costs for issuers that would not be 
under-inclusive, the Commission elected to use the higher end of the 
estimate of annual submissions of continuing disclosure documents.
---------------------------------------------------------------------------

    The Commission expects that the costs to issuers may vary somewhat, 
depending on the issuer's size. In the Proposing Release, we noted our 
belief that any such difference would be attributable to the fact that 
larger issuers may tend to have more issuances of municipal securities; 
thus, larger issuers may tend to submit more documents than smaller 
issuers. We indicated that the costs of submitting documents under the 
proposal could be greater for larger issuers. Although no commenters 
took issue with any of the specific cost estimates set forth in the 
Proposing Release, two commenters discussed generally the potential 
costs of aspects of the proposed amendments, particularly with respect 
to smaller issuers.\256\ One of these commenters noted that small 
issuers relying on the exemption contained in paragraph (d)(2) of the 
Rule would incur increased costs associated with the electronic filing 
of the information set forth in the exemption.\257\ Prior to today's 
amendments, the exemption in paragraph (d)(2) of the Rule would not 
apply to a primary offering if, among other conditions, the issuer or 
obligated person has undertaken in a written agreement or contract to 
provide financial information or operating data regarding each 
obligated person for which financial information or operating data is 
presented in the final official statement, including financial 
information and operating data which is customarily prepared by such 
obligated person and is publicly available, upon request to any person 
or at least annually to the appropriate SID.\258\ After today's 
amendments, Participating Underwriters seeking to utilize the exemption 
will need to reasonably determine that such issuer or obligated person 
has undertaken to provide such information to the MSRB annually. The 
amendment to paragraph (d)(2) of the Rule does not affect the nature of 
a Participating Underwriter's obligation to reasonably determine that a 
small issuer has undertaken to deliver continuing disclosure documents 
to fulfill the conditions of the exemption; rather, it affects what the 
Participating Underwriter needs to determine regarding the undertaking 
with respect to the location where such documents are to be sent. 
Specifically, the final amendments do not revise the provision limiting 
the commitment to provide annual financial or operating data only if 
such information is customarily prepared by such obligated person and 
is publicly available. We recognize that one effect of the amendments 
will be that some small issuers will submit annual financial 
information and operating data to the MSRB when currently they do not 
regularly submit such disclosures to any repository. We do not believe 
that electronically formatting information a small issuer already has 
and makes publicly

[[Page 76128]]

available will be a significant burden. In addition, we do not believe 
that the final amendments would result in small issuers providing 
voluminous filings. Further, the costs that these issuers could incur 
to send documents electronically to the MSRB are included in the cost 
estimates for issuers discussed above. The only difference between the 
prior provision and the amended Rule is that, while issuers previously 
provided such information and data upon request, they now must provide 
it to the MSRB annually. The other commenter noted that some smaller 
issuers may have to purchase new software to submit electronic 
documents, but it further stated that the overall savings that an 
electronic-based repository will provide will benefit state and local 
governments and authorities.\259\
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    \256\ See NABL Letter, at 2, and GFOA Letter, at 2.
    \257\ See NABL Letter, at 2.
    \258\ 17 CFR 240.15c2-12(d)(2)(ii)(A).
    \259\ See GFOA Letter, at 2.
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    Further, the Commission does not anticipate that issuers will incur 
any costs associated with the need to revise the template for 
continuing disclosure agreements. The Proposing Release noted that, 
based on conversations between Commission staff and NABL staff, NABL 
members advised that the cost of revising the template for continuing 
disclosure agreements to reflect the rule amendments will be 
insignificant and thus unlikely to be passed on to issuers. We received 
no comments regarding this estimate and continue to believe that it is 
appropriate.
    As discussed in section IV. above, the MSRB will incur costs to 
develop the computer system to allow it to collect, store, process, 
retrieve, and make available continuing disclosure documents furnished 
to it by issuers of municipal securities. We stated in the Proposing 
Release that the MSRB's start-up costs associated with developing the 
portal for continuing disclosure documents, including hardware, an 
additional hosting site, and software licensing and acquisition costs, 
will be approximately $1,000,000; that the MSRB's ongoing costs of 
operating the system, including allocated costs associated with such 
items as office space and licensing fees, will be approximately 
$1,350,000 for the first year and $350,000 per year thereafter; and 
that the MSRB's personnel costs associated with operating the portal 
for continuing disclosure documents will be approximately $400,000 per 
year.\260\ We received no comments regarding these estimates and 
continue to believe that they are appropriate.
---------------------------------------------------------------------------

    \260\ This figure represents the estimated personnel costs 
associated with the MSRB's devoting three and one-half persons to 
the operation of the continuing disclosure portal.
---------------------------------------------------------------------------

    Some NRMSIRs and other vendors of municipal disclosure information 
may incur costs in transitioning their business models as a result of 
the final amendments that call for the MSRB to serve as the single 
repository for continuing disclosure documents. In the Proposing 
Release, we noted that any NRMSIR that provided municipal disclosure 
documents as its primary business model could face a significant 
decline in its business, and thus in income, as a result of the 
proposed amendments, as well as the possible withdrawal of the ``no 
action'' letters issued to the NRMSIRs and the designation of the MSRB 
as the sole NRMSIR for existing continuing disclosure agreements. As a 
result, the NRMSIRs could experience an immediate decline in income 
with respect to those parts of their business that provide municipal 
disclosure documents to persons who request them. We also noted that 
NRMSIRs could have some costs if they continued to maintain historical 
continuing disclosure information that they have already received under 
existing continuing disclosure agreements. Two commenters that are 
NRMSIRs submitted comment letters opposing the proposed 
amendments.\261\ One of these commenters acknowledged generally that 
the proposed amendments could affect its business model.\262\ However, 
neither of these commenters provided any specific cost estimates of the 
impact of the proposed amendments on their operations. In addition, one 
potential consequence of the final amendments is that there could be 
fewer value-added products available to investors, market participants 
and others, and the potential reduction in such products is not 
quantifiable.\263\ The Commission included a discussion of the 
potential costs for NRMSIRs under the amended Rule in the Proposing 
Release and received no specific comments addressing these costs. The 
Commission believes that the potential costs discussed in the Proposing 
Release are still appropriate.
---------------------------------------------------------------------------

    \261\ See DPC Data Letter and SPSE Letter.
    \262\ See DPC Data Letter at 1.
    \263\ See Section VI. infra for a discussion of the competitive 
impact of the amendments on the NRMSIRs.
---------------------------------------------------------------------------

    Finally, under the final amendments, Rule 15c2-12 no longer will 
refer to SIDs. The rule amendments will not affect the legal 
obligations of issuers or obligated persons to provide continuing 
disclosure documents, along with any other submissions, to the 
appropriate SID, if any, that may be required under the appropriate 
state law. In addition, the final amendments will have no effect on the 
obligations of issuers and obligated persons under outstanding 
continuing disclosure agreements entered into prior to the effective 
date of today's amendments to the Rule, to submit continuing disclosure 
documents to the appropriate SID, if any, as stated in their existing 
continuing disclosure agreements, nor on their obligation to make any 
other submissions that may be required under the appropriate state law. 
SIDs are membership organizations and use information submitted to them 
in products for their members. While SIDs can charge fees for requested 
documents, we do not believe that this is a primary source of revenue 
for them. As discussed above, the Commission received a number of 
comments regarding the proposed removal of references to SIDs from the 
Rule.\264\ However, none of these comments included any discussions of 
the cost implications of removing references to SIDs from the Rule. In 
the Proposing Release, the Commission indicated that it does not expect 
that SIDs will experience a decline in operations or incur any costs as 
a result of the proposed amendments. The Commission received no 
comments regarding this statement and we continue to believe that this 
statement is appropriate.
---------------------------------------------------------------------------

    \264\ See GFOA Letter, SIFMA Letter, Texas MAC Letter, OMAC 
Letter, and Multiple-Markets Letter.
---------------------------------------------------------------------------

    In summary, the Commission estimates that the total annual cost for 
all respondents in the first year, under the amended Rule, is 
approximately $14,602,350.\265\ The Commission also estimates that the 
total annual cost for all respondents after the first year, under the 
amended Rule, is approximately $4,275,000.\266\
---------------------------------------------------------------------------

    \265\ ($33,750 (estimated annual cost for broker-dealers in year 
one) + (($9,800,000 (estimated annual cost for issuers to acquire 
technology resources) + $2,325,000 (estimated annual cost for all 
issuers' labor hours) + $693,600 (estimated one-time cost for 
development of designated agents computer interface)) total 
estimated annual costs for issuers in year one) + $1,750,000 
(maximum estimated annual cost for the MSRB in year one)) = 
$14,602,350.
    \266\ ($1,200,000 (estimated annual cost for issuers to convert 
documents into an electronic format) + $2,325,000 (estimated annual 
cost for all issuers' labor hours)) estimated annual costs for 
issuers) + $750,000 (maximum estimated annual cost for the MSRB)) = 
$4,275,000.

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[[Page 76129]]

VI. Consideration of Burden and Promotion of Efficiency, Competition, 
and Capital Formation

    Section 3(f) of the Exchange Act \267\ requires the Commission, 
whenever it engages in rulemaking and is required to consider or 
determine whether an action is necessary or appropriate in the public 
interest, to consider whether the action would promote efficiency, 
competition, and capital formation. In addition, section 23(a)(2) of 
the Exchange Act \268\ requires the Commission, when adopting rules 
under the Exchange Act, to consider the impact such rules would have on 
competition. Section 23(a)(2) of the Exchange Act also prohibits the 
Commission from adopting any rule that would impose a burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Exchange Act.
---------------------------------------------------------------------------

    \267\ 15 U.S.C. 78c(f).
    \268\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    In the Proposing Release, we considered the proposed amendments to 
Rule 15c2-12 in light of the standards set forth in the above-noted 
Exchange Act provisions. We solicited comment on whether, if adopted, 
the proposed amendments would result in any anti-competitive effects or 
would promote efficiency, competition, and capital formation. We asked 
commenters to provide empirical data or other facts to support their 
views on any anti-competitive effects or any burdens on efficiency, 
competition, or capital formation that might result from adoption of 
the proposed amendments.
    We believe that the amendments to the Rule will help make the 
municipal securities disclosure process more efficient and help 
conserve resources for municipal security issuers, as well as for 
investors and market participants. Under the regulatory framework that 
existed prior to today's amendments, issuers of municipal securities in 
their continuing disclosure agreements undertook to submit continuing 
disclosure documents to four separate NRMSIRs, and they submitted such 
documents in paper or electronic form. The Commission anticipates that 
the final rule amendments likely will promote the efficiency of the 
municipal disclosure process by reducing the resources municipal 
security issuers will need to devote to the process of submitting 
continuing disclosure documents.
    As noted above, the Commission has long been interested in reducing 
the potential for fraud in the municipal securities market. At the time 
the Commission adopted Rule 15c2-12 in 1989 and adopted the 1994 
Amendments, disclosure documents were submitted in paper form. The 
Commission believed that, in such an environment where document 
retrieval would be handled manually, the establishment of one or more 
repositories could be beneficial in widening the retrieval and 
availability of information in the secondary market, since the public 
could obtain the disclosure documents from multiple locations. The 
Commission's objective of deterring the potential for fraud by 
facilitating greater availability of municipal securities information 
remains unchanged.
    However, there have been significant inefficiencies in the current 
use of multiple repositories that likely have affected the public's 
ability to retrieve continuing disclosure documents.\269\ In this 
regard, the Commission noted in the 1989 Adopting Release that ``the 
creation of multiple repositories should be accompanied by the 
development of an information linkage among these repositories'' so as 
to afford ``the widest retrieval and dissemination of information in 
the secondary market.'' \270\ Although the Commission in the 1989 
Adopting Release supported the development of an information linkage 
among the repositories, none was established to help broaden the 
availability of the disclosure information. Also, since the adoption of 
the 1994 Amendments, there have been significant advancements in 
technology and information systems, including the use of the Internet, 
to provide information quickly and inexpensively to market participants 
and investors. In this regard, the Commission believes that the use of 
a single repository to receive, in an electronic format, and make 
available continuing disclosure documents in an electronic format will 
substantially and effectively increase the availability of municipal 
securities information about municipal issues and enhance the 
efficiency of the secondary trading market for these securities.
---------------------------------------------------------------------------

    \269\ See supra note 35.
    \270\ See 1989 Adopting Release, supra note 18.
---------------------------------------------------------------------------

    In addition, we believe that having a single repository for 
electronically submitted information will provide investors, market 
participants, and others with a more efficient and convenient means to 
obtain continuing disclosure documents and will help increase the 
likelihood that investors, market participants, and others will make 
more informed investment decisions regarding whether to buy, sell or 
hold municipal securities. The Commission believes that the final 
amendments will foster a more efficient means of municipal disclosure 
and, as a result, the Commission is approving the adoption of the 
proposed amendments to Rule 15c2-12.
    With respect to the Exchange Act goal of promoting competition, the 
Commission notes that, when we adopted Rule 15c2-12 in 1989, we 
strongly supported the development of one or more central repositories 
for municipal disclosure documents.\271\ The Commission ``recognize[d] 
the benefits that may accrue from the creation of competing private 
repositories,'' and indicated that ``the creation of central sources 
for municipal offering documents is an important first step that may 
eventually encourage widespread use of repositories to disseminate 
annual reports and other current information about issuers to the 
secondary markets.'' \272\ Further, when we adopted the 1994 
Amendments, the Commission stated that the ``requirement to deliver 
disclosure to the NRMSIRs and the appropriate SID also allay[ed] the 
anti-competitive concerns raised by the creation of a single 
repository.'' \273\
---------------------------------------------------------------------------

    \271\ See 1989 Adopting Release at 54 FR 28807, supra note 18. 
See also 1994 Proposing Release, supra note 113.
    \272\ See 1989 Adopting Release, supra note 18. See also 1994 
Proposing Release, supra note 113.
    \273\ See 1994 Amendments, supra note 21.
---------------------------------------------------------------------------

    There have been significant advances in technology and information 
collection and delivery since that time, as discussed throughout this 
release and the Proposing Release, that indicate that having multiple 
repositories may not be necessary because the widespread availability 
and dissemination of information can be achieved through different, 
more efficient, means. Because the current environment differs markedly 
from the time when Rule 15c2-12 was adopted in 1989 and subsequently 
amended in 1994, the Commission believes that it is appropriate to 
adopt an approach that utilizes the significant technological advances, 
such as the development and use of various electronic formats, which 
have occurred in the intervening years.
    The Commission's adoption of amendments to the Rule to provide for 
the use of a single repository for continuing disclosure documents will 
help further the Exchange Act objective of promoting competition 
because information about municipal securities, provided in an 
electronic format, will be more widely available to market 
professionals, investors, information vendors, and others as a result 
of the final amendments. For example, the Commission believes that 
competition

[[Page 76130]]

among vendors may increase because vendors can utilize this information 
to provide value-added services to municipal market participants. Our 
adoption of amendments to the Rule also may promote competition in the 
purchase and sale of municipal securities because the greater 
availability of information, delivered electronically through a single 
repository, may instill greater investor confidence in the municipal 
securities market. Moreover, this greater availability of information 
also may encourage improvement in the completeness and timeliness of 
issuer disclosures and may foster interest in municipal securities by 
individual and institutional customers. As a result, more investors may 
be attracted to this market sector and broker-dealers may compete for 
their business.
    The Commission received two comment letters from NRMSIRs that 
raised concerns about the competitive effects of the proposed 
amendments.\274\ The primary concerns, raised by both commenters, 
relate to the MSRB's role as the sole repository of continuing 
disclosure documents and the competitive effects this would have on 
existing vendors of municipal disclosure information. One of these 
commenters stated that the Commission's proposal ``would allow the MSRB 
to impose restrictions on municipal issuers and obligated persons by 
limiting the filings to a single, electronic format.'' \275\ In 
addition, this commenter noted that the Commission's proposal would 
place the MSRB ``in direct competition with commercial vendors who have 
served the market as practical implementers of Rule 15c2-12 without any 
subsidy for more than a decade.'' \276\ The other commenter expressed 
similar sentiments and cited to the Commission's statements in adopting 
Rule 15c2-12 in 1989 and amendments to the Rule in 1994, which 
discussed possible anti-competitive concerns over the creation of a 
single repository.\277\ This commenter noted its view that eliminating 
the NRMSIR function would upset the balance between its current 
business model and have an impact on its ability to provide value-added 
products and services.\278\ It disputed the Commission's view that the 
potential burdens on competition would be justified by the proposed 
amendments' adoption because, in its view, the current issues with 
municipal disclosure lie in the quality and timeliness of the 
information that is filed.\279\ The commenter also urged the Commission 
to adopt an alternative approach.\280\ Under its proposal, the MSRB 
would not be the sole repository for municipal disclosure 
information.\281\ Instead, the commenter proposed having an unspecified 
entity serve as a central electronic post office for municipal 
disclosure information where ``issuers and obligors would file 
documents through a single electronic format'' and such entity ``would 
then forward the centrally-filed documents in real time to the 
NRMSIRs.'' \282\ The commenter expressed no opinion regarding the 
identity of the entity that should serve as the central electronic post 
office or how such entity would be chosen.\283\
---------------------------------------------------------------------------

    \274\ See DPC DATA Letter and SPSE Letter.
    \275\ See DPC DATA Letter, at 1.
    \276\ See DPC DATA Letter, at 2.
    \277\ See SPSE Letter, at 5-7.
    \278\ See SPSE Letter, at 7.
    \279\ See SPSE Letter, at 7-8.
    \280\ See SPSE Letter, at 3-5.
    \281\ See SPSE Letter, at 4.
    \282\ Id.
    \283\ Id.
---------------------------------------------------------------------------

    Although these commenters raised concerns about the competitive 
impact of the proposed amendments, circumstances have changed since we 
last considered Rule 15c2-12 amendments in 1994, as discussed 
throughout this release and in the Proposing Release. The NRMSIRs did 
not develop a linkage, technology developments have occurred to make it 
easier to access information; and access to municipal information 
remains costly and not easy to obtain for many individuals. For these 
reasons, we believe that there should be one repository. We continue to 
believe that one of the benefits in having the MSRB as the sole 
repository will be the MSRB's ability to provide a ready source of 
continuing disclosure documents to other information vendors who wish 
to use that information for their products. Private vendors can utilize 
the MSRB in its capacity as a repository as a means to collect 
information from the continuing disclosure documents to create value-
added products for their customers.\284\ Commercial vendors will be 
able to readily access the information made available by the MSRB to 
re-disseminate it or use it in whatever value-added products they may 
wish to provide. In fact, a single repository in which documents are 
submitted in an electronic format may encourage the private information 
vendors to disseminate municipal securities information by reducing the 
cost of entry into the information services market. Existing vendors 
may need to make some adjustments to their infrastructure, facilities, 
or services offered. However, some vendors may determine that they no 
longer need to invest in the infrastructure and facilities necessary to 
collect and store continuing disclosure documents, and new entrants 
into the market will not need to obtain the information from multiple 
locations, but rather can readily access such information from one 
centralized source. Thus, all vendors are expected to be able to obtain 
easily continuing disclosure documents and to be able to compete in 
providing value-added services. With respect to the comment regarding 
the ``quality and timeliness'' of the information issuers file, the 
Commission believes that the greater availability of information which 
will result from the final amendments to the Rule also may encourage 
improvement in the completeness and timeliness of disclosures by 
issuers and obligated persons and may foster interest in municipal 
securities by retail and institutional customers.
---------------------------------------------------------------------------

    \284\ The Commission notes that both the DPC DATA Letter and the 
SPSE Letter raised concerns with the potential subscription fees 
associated with having the MSRB as the single repository. The 
Commission notes that the MSRB will be required to file a proposed 
rule change with the Commission pursuant to Section 19(b) of the 
Exchange Act regarding any subscription fees for a data stream that 
it proposes as well as any changes to those fees.
---------------------------------------------------------------------------

    We previously stated that we would specifically consider the 
competitive implications of the MSRB becoming a repository.\285\ In 
addition, we stated that if we were to conclude that the MSRB's status 
as a repository might have adverse competitive implications, we would 
consider whether we should take any action to address these 
effects.\286\ As noted earlier, we recognize that competition with 
respect to certain information services regarding municipal securities 
that are provided by the existing NRMSIRs may decline should the MSRB 
become the central repository. The two commenters that raised 
competitive concerns suggested that a decrease in competition could 
occur as a result of the Commission's rulemaking.\287\ We continue to 
believe that one of the benefits in having the MSRB as the sole 
repository will be the MSRB's ability to provide a ready source of 
continuing disclosure documents to other information vendors who wish 
to use that information for their products. Private vendors can utilize 
the MSRB in its capacity as a repository as a means to collect 
information from the continuing

[[Page 76131]]

disclosure documents to create value-added products for their 
customers.
---------------------------------------------------------------------------

    \285\ See Securities Exchange Act Release No. 28081, supra note 
131.
    \286\ Id.
    \287\ See DPC DATA Letter and SPSE Letter.
---------------------------------------------------------------------------

    Regarding the comment that our proposal would permit the MSRB to 
impose restrictions on municipal issuers and obligated persons by 
limiting the filings to a single format, we note that the MSRB must 
file with the Commission under section 19(b) of the Exchange Act the 
format it proposes to prescribe and any changes to that format. Thus, 
the format that the MSRB proposes to prescribe, and any subsequent 
changes to that format, would have to be consistent with the Exchange 
Act. With regard to the comments favoring a central electronic post 
office, as we noted above, we believe that this approach is less likely 
to achieve the benefits of the proposed amendments. For example, with a 
central post office there would continue to be no single location to 
which investors, particularly individuals, could turn for free access 
to information regarding municipal securities. Instead, individuals or 
entities that wish to obtain such information would find it necessary 
first to access the central post office to find out what documents 
might be available from NRMSIRs and SIDs and then to contact one or 
more NRMSIRs or SIDs and pay their fees to obtain the document or 
documents they seek. This would be a less efficient process than that 
contemplated by the final amendments, in which interested persons could 
directly access, view and print for free continuing disclosure 
documents from one place--the MSRB's Internet site.
    We do not believe that there are competitive implications that will 
uniquely apply to the MSRB in its capacity as the sole repository as 
opposed to any another entity that could be the sole repository. In 
fact, we believe that, because the MSRB will be the sole repository, 
its status as an SRO will provide an additional level of Commission 
oversight, as changes to its rules relating to continuing disclosure 
documents will have to be filed for Commission consideration as a 
proposed rule change under section 19(b) of the Exchange Act. 
Accordingly, we believe that any competitive impact that could result 
from the MSRB's status as the sole repository would be justified by the 
benefits that such status could provide.
    We, therefore, believe that any potential effect on competition 
that may arise from the adoption of the Rule 15c2-12 amendments is 
justified by the more efficient and effective process for the 
collection and availability of continuing disclosure documents that 
will result. A single repository for the electronic collection and 
availability of these documents will foster the Exchange Act objective 
of promoting competition by simplifying the method of submission of 
continuing disclosure documents to one location and making the 
documents more readily accessible to investors and others by virtue of 
the documents being in an electronic format.
    We believe that the proposed amendments may have a positive effect 
on capital formation by municipal securities issuers. The Rule is 
addressed to the obligations of broker-dealers participating in a 
primary offering of municipal securities (i.e., Participating 
Underwriters). Because continuing disclosure documents will be 
submitted electronically to a single repository, investors and other 
market participants will be able to obtain information about these 
issuers more readily than they could in the past. They no longer will 
have to contact several NRMSIRs to make sure that they have obtained 
complete information about the municipal issuer. Easier access to 
continuing disclosure documents regarding municipal securities may 
provide investors and other market participants with more complete 
information about municipal issuers. Moreover, this ready availability 
of continuing disclosure documents may encourage investors to consider 
purchasing new issuances of municipal securities because they will be 
able to readily access information from a single repository and review 
that information in light of other available information when making an 
investment decision, decreasing the potential for fraud. As a result, 
we believe that our amendments to Rule 15c2-12 will help foster the 
Exchange Act goal of capital formation.
    We proposed to delete references to the SIDs in Rule 15c2-12. Since 
we are adopting amendments to the Rule that provide for a single 
repository for the electronic collection and availability of continuing 
disclosure documents that are aimed at improving disclosure in the 
municipal securities market, we believe that it is no longer necessary 
to require in the Rule that Participating Underwriters reasonably 
determine that issuers and obligated persons have contractually agreed 
to provide continuing disclosure documents to the appropriate SID.
    Five commenters specifically addressed the deletion of SIDs from 
the Rule.\288\ Most of them commented that the MSRB should provide a 
data feed to SIDs of documents related to issuers in their states in 
order that issuers who may be required by their states to send 
continuing disclosure documents to a SID need not provide them to both 
the MSRB and a SID.\289\ They believed this would be more efficient for 
both issuers and SIDs and result in more complete and consistent data 
availability of information from SIDs and the MSRB. Furthermore, some 
of these commenters suggested that there should be no charge to SIDs to 
receive such a data feed.\290\ We agree that it is important for the 
document collections of the MSRB and SIDs to be consistent to avoid 
uneven access to information that could result, depending on the source 
from which continuing disclosure documents were obtained. However, the 
specific operations of the MSRB's repository, such as data feeds, are 
related to the MSRB's operation of the collection system and are 
subject to the rule filing process under section 19(b) of the Exchange 
Act and are not an issue before us with respect to the amendments to 
the Rule.\291\
---------------------------------------------------------------------------

    \288\ See GFOA Letter, SIFMA Letter, Texas MAC Letter, OMAC 
Letter, and Multiple-Markets Letter.
    \289\ See GFOA Letter, Texas MAC Letter, OMAC Letter, and 
Multiple-Markets Letter.
    \290\ See GFOA Letter and Multiple-Markets Letter.
    \291\ See MSRB Approval Order, supra note 12.
---------------------------------------------------------------------------

    We note that the amendments will not affect the legal obligations 
of issuers and obligated persons to provide continuing disclosure 
documents, along with any other submissions, to the appropriate SID, if 
any, that are required under the relevant state law. In addition, the 
amendments will have no effect on the obligations of issuers and 
obligated persons under outstanding continuing disclosure agreements 
entered into prior to any effective date of the amendments to the Rule 
to submit continuing disclosure documents to the appropriate SID, if 
any, as stated in their existing continuing disclosure agreements, nor 
on their obligation to make any other submissions that are required 
under the relevant state law. Accordingly, the Commission does not 
believe that its deletion of references to SIDs in Rule 15c2-12 will 
have any potential effect on efficiency, competition or capital 
formation.

VII. Regulatory Flexibility Act Certification

    The Commission certified, under section 605(b) of the Regulatory 
Flexibility Act,\292\ that, when adopted, the proposed amendments to 
the Rule would not have a significant economic impact on a substantial 
number of small entities. This certification was set forth in section 
VIII. of the Proposing

[[Page 76132]]

Release.\293\ The Commission solicited comments regarding this 
certification and received no comments. The Commission continues to 
believe this certification is appropriate.
---------------------------------------------------------------------------

    \292\ 5 U.S.C. 605(b).
    \293\ See Proposing Release, supra note 3.
---------------------------------------------------------------------------

VIII. Statutory Authority

    Pursuant to the Exchange Act, and particularly Sections 2, 3(b), 
10, 15(c), 15B and 23(a)(1) thereof, 15 U.S.C. 78b, 78c(b), 78j, 
78o(c), 78o-4, and 78w(a)(1), the Commission is adopting amendments to 
Sec.  240.15c2-12 of Title 17 of the Code of Federal Regulations in the 
manner set forth below.

List of Subjects in 17 CFR Part 240

    Brokers, Reporting and recordkeeping requirements, Securities.

0
For the reasons set out in the preamble, Title 17, Chapter II, of the 
Code of Federal Regulations is amended as follows.

Text of Rule Amendments

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
1. The authority citation for part 240 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 
80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise 
noted.
* * * * *

0
2. Section 240.15c2-12 is amended by:
0
a. Revising paragraph (b)(4)(ii), the introductory text of paragraph 
(b)(5)(i), and paragraphs (b)(5)(i)(A) and (B);
0
 b. In the introductory text of paragraph (b)(5)(i)(C) and in paragraph 
(b)(5)(i)(D) remove the phrase ``to each nationally recognized 
municipal securities information repository or to the Municipal 
Securities Rulemaking Board, and to the appropriate state information 
depository, if any,'';
0
 c. In paragraph (b)(5)(ii)(C) remove the phrase ``, and to whom it 
will be provided'';
0
 d. Adding paragraph (b)(5)(iv);
0
 e. Revising paragraph (d)(2)(ii); and
0
 f. Revising paragraphs (f)(3) and (f)(9).
    The additions and revisions read as follows.

Sec.  240.15c2-12  Municipal securities disclosure.

* * * * *
    (b) * * *
    (4) * * *
    (ii) The time when the official statement is available to any 
person from the Municipal Securities Rulemaking Board, but in no case 
less than twenty-five days following the end of the underwriting 
period, the Participating Underwriter in an Offering shall send no 
later than the next business day, by first-class mail or other equally 
prompt means, to any potential customer, on request, a single copy of 
the final official statement.
    (5)(i) A Participating Underwriter shall not purchase or sell 
municipal securities in connection with an Offering unless the 
Participating Underwriter has reasonably determined that an issuer of 
municipal securities, or an obligated person for whom financial or 
operating data is presented in the final official statement has 
undertaken, either individually or in combination with other issuers of 
such municipal securities or obligated persons, in a written agreement 
or contract for the benefit of holders of such securities, to provide 
the following to the Municipal Securities Rulemaking Board in an 
electronic format as prescribed by the Municipal Securities Rulemaking 
Board, either directly or indirectly through an indenture trustee or a 
designated agent:
    (A) Annual financial information for each obligated person for whom 
financial information or operating data is presented in the final 
official statement, or, for each obligated person meeting the objective 
criteria specified in the undertaking and used to select the obligated 
persons for whom financial information or operating data is presented 
in the final official statement, except that, in the case of pooled 
obligations, the undertaking shall specify such objective criteria;
    (B) If not submitted as part of the annual financial information, 
then when and if available, audited financial statements for each 
obligated person covered by paragraph (b)(5)(i)(A) of this section;
* * * * *
    (iv) Such written agreement or contract for the benefit of holders 
of such securities also shall provide that all documents provided to 
the Municipal Securities Rulemaking Board shall be accompanied by 
identifying information as prescribed by the Municipal Securities 
Rulemaking Board.
* * * * *
    (d) * * *
    (2) * * *
    (ii) An issuer of municipal securities or obligated person has 
undertaken, either individually or in combination with other issuers of 
municipal securities or obligated persons, in a written agreement or 
contract for the benefit of holders of such municipal securities, to 
provide the following to the Municipal Securities Rulemaking Board in 
an electronic format as prescribed by the Municipal Securities 
Rulemaking Board:
    (A) At least annually, financial information or operating data 
regarding each obligated person for which financial information or 
operating data is presented in the final official statement, as 
specified in the undertaking, which financial information and operating 
data shall include, at a minimum, that financial information and 
operating data which is customarily prepared by such obligated person 
and is publicly available; and
    (B) In a timely manner, notice of events specified in paragraph 
(b)(5)(i)(C) of this section with respect to the securities that are 
the subject of the Offering, if material; and
    (C) Such written agreement or contract for the benefit of holders 
of such securities also shall provide that all documents provided to 
the Municipal Securities Rulemaking Board shall be accompanied by 
identifying information as prescribed by the Municipal Securities 
Rulemaking Board; and
* * * * *
    (f) * * *
    (3) The term final official statement means a document or set of 
documents prepared by an issuer of municipal securities or its 
representatives that is complete as of the date delivered to the 
Participating Underwriter(s) and that sets forth information concerning 
the terms of the proposed issue of securities; information, including 
financial information or operating data, concerning such issuers of 
municipal securities and those other entities, enterprises, funds, 
accounts, and other persons material to an evaluation of the Offering; 
and a description of the undertakings to be provided pursuant to 
paragraph (b)(5)(i), paragraph (d)(2)(ii), and paragraph (d)(2)(iii) of 
this section, if applicable, and of any instances in the previous five 
years in which each person specified pursuant to paragraph (b)(5)(ii) 
of this section failed to comply, in all material respects, with any 
previous undertakings in a written contract or agreement specified in 
paragraph (b)(5)(i) of this section. Financial information or operating 
data may be set forth in the document or set of documents, or may be 
included by specific reference to documents available to the public on 
the Municipal

[[Page 76133]]

Securities Rulemaking Board's Internet Web site or filed with the 
Commission.
* * * * *
    (9) The term annual financial information means financial 
information or operating data, provided at least annually, of the type 
included in the final official statement with respect to an obligated 
person, or in the case where no financial information or operating data 
was provided in the final official statement with respect to such 
obligated person, of the type included in the final official statement 
with respect to those obligated persons that meet the objective 
criteria applied to select the persons for which financial information 
or operating data will be provided on an annual basis. Financial 
information or operating data may be set forth in the document or set 
of documents, or may be included by specific reference to documents 
available to the public on the Municipal Securities Rulemaking Board's 
Internet Web site or filed with the Commission.
* * * * *

    By the Commission.

    Dated: December 5, 2008.
Florence E. Harmon,
Acting Secretary.

    Note: Exhibit A to the Preamble will not appear in the Code of 
Federal Regulations

Exhibit A

Key to Comment Letters Cited in Adopting Release Amendment to Municipal 
Securities Disclosure (File No. S7-21-08)

    1. Letter from Fran Busby to 21st Century Disclosure Initiative, 
Commission, dated October 7, 2008 (``Busby Letter'').
    2. Letter from Susan Gaffney, Director, Federal Liasion Center, 
Government Finance Officers Association (``GFOA''), to Florence E. 
Harmon, Acting Secretary, Commission, dated September 24, 2008 
(``GFOA Letter'').
    3. Letter from Christopher Alwine, Head of Municipal Money 
Market and Bond Groups, The Vanguard Group, Inc. (``Vanguard''), to 
Florence E. Harmon, Acting Secretary, Commission, dated September 
24, 2008 (``Vanguard Letter'').
    4. Letter from Leslie M. Norwood, Managing Director and 
Associate General Counsel, Securities Industry and Financial Markets 
Association (``SIFMA''), to Florence E. Harmon, Acting Secretary, 
Commission, dated September 22, 2008 (``SIFMA Letter'').
    5. Letter from Paula Stuart, Chief Executive Officer, Digital 
Assurance Certification, LLC (``DAC''), to Florence E. Harmon, 
Acting Secretary, Commission, dated September 22, 2008 (``DAC 
Letter'').
    6. Letter from Louis V. Eccleston, President, Standard & Poor's 
Securities Evaluations, Inc. (``SPSE''), to Florence E. Harmon, 
Acting Secretary, Commission, dated September 22, 2008 (``SPSE 
Letter'').
    7. Letter from Frank Chin, Chair, Municipal Securities 
Rulemaking Board (``MSRB''), to Florence E. Harmon, Acting 
Secretary, Commission, dated September 22, 2008 (``MSRB Letter'').
    8. Letter from William A. Holby, President, National Association 
of Bond Lawyers (``NABL''), to Florence E. Harmon, Acting Secretary, 
Commission, dated September 22, 2008 (``NABL Letter'').
    9. Letter from Jennifer S. Choi, Assistant General Counsel, 
Investment Adviser Association (``IAA''), to Florence E. Harmon, 
Acting Secretary, Commission, dated September 22, 2008 (``IAA 
Letter'').
    10. Letter from Denise L. Nappier, Treasurer, State of 
Connecticut, to Christopher Cox, Chairman, Commission, dated 
September 22, 2008 (``Treasurer of the State of Connecticut 
Letter'').
    11. Letter from Richard T. McNamar, Chief Executive Officer, e-
certus, Inc. (``e-certus''), to Christopher Cox, Chairman, 
Commission, and to Ernesto A. Lanza, Senior Associate General 
Counsel, MSRB, dated September 22, 2008 (``e-certus Letter'').
    12. Letter from Laura Slaughter, Executive Director, Municipal 
Advisory Council of Texas (``Texas MAC''), to Christopher Cox, 
Chairman, Commission, and to Ernesto A. Lanza, Senior Associate 
General Counsel, MSRB, dated September 22, 2008 (``Texas MAC 
Letter'').
    13. Letter from Thomas H. McTavish, President, National 
Association of State Auditors, Comptrollers and Treasurers 
(``NASACT''), to Florence E. Harmon, Acting Secretary, Commission, 
dated September 22, 2008 (``NASACT Letter'').
    14. Letter from K.W. Gurney, Director, Ohio Municipal Advisory 
Council (``OMAC''), to Christopher Cox, Chairman, Commission, and to 
Ernesto A. Lanza, Senior Associate General Counsel, MSRB, dated 
September 22, 2008 (``OMAC Letter'').
    15. Letter from Karrie McMillan, General Counsel, Investment 
Company Institute (``ICI''), to Florence E. Harmon, Acting 
Secretary, Commission, dated September 22, 2008 (``ICI Letter'').
    16. Letter from Robert Donovan, Executive Director, Rhode Island 
Health and Educational Building Corporation, and Steven Fillebrown, 
Director of Research, Investor Relations and Compliance, New Jersey 
Healthcare Financing Authority, on behalf of the National 
Association of Health and Education Facilities Finance Authorities 
(``NAHEFFA''), to Florence E. Harmon, Acting Secretary, Commission, 
dated September 22, 2008 (``NAHEFFA Letter'').
    17. Letter from Cate Long, Multiple-Markets (``Multiple-
Markets''), to Florence E. Harmon, Acting Secretary, Commission, 
dated September 19, 2008 (``Multiple-Markets Letter'').
    18. Letter from Robert Yolland, Chairman, National Federation of 
Municipal Analysts (``NFMA''), to Florence E. Harmon, Acting 
Secretary, Commission, dated September 19, 2008 (``NFMA Letter'').
    19. Letter from Peter J. Schmitt, Chief Executive Officer, DPC 
DATA, Inc. (``DPC DATA''), to Florence E. Harmon, Acting Secretary, 
Commission, dated September 18, 2008 (``DPC DATA Letter'').
    20. Letter from Philip D. Moyer, Chief Executive Officer and 
President, EDGAR Online, Inc. (``EDGAR Online''), to Christopher 
Cox, Chairman, Commission, and to Ernesto Lanza, Senior Associate 
General Counsel, MSRB, dated September 9, 2008 (``EDGAR Online 
Letter'').
    21. Letter from Al B. Dickman, Professional Investor, to 
Florence E. Harmon, Acting Secretary, Commission, dated September 5, 
2008 (``Dickman Letter'').
    22. Letter from Elizabeth V. Mooney, to Florence E. Harmon, 
Acting Secretary, Commission, dated August 21, 2008 (``Mooney 
Letter'').
    23. Letter from Aramintha Grant, to Florence E. Harmon, Acting 
Secretary, Commission, dated August 17, 2008 (``Grant Letter'').

[FR Doc. E8-29336 Filed 12-12-08; 8:45 am]

BILLING CODE 8011-01-P