Document ID: SEC-2010-1772-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Municipal Securities Rulemaking Board
Posted Date: 2010-11-18T05:00Z

[Federal Register: November 18, 2010 (Volume 75, Number 222)]
[Notices]               
[Page 70759-70760]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18no10-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63313; File No. SR-MSRB-2010-14]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Amendments to 
Rule A-12, on Initial Fee, and Rule A-14, on Annual Fee

November 12, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 9, 2010, the Municipal Securities Rulemaking Board 
(``Board'' or ``MSRB''), filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the MSRB. 
The MSRB has designated the proposed rule change as changing a fee 
applicable to municipal advisors pursuant to Section 19(b)(3)(A)(ii) of 
the Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the 
proposal effective upon filing with the Commission. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing a proposed rule change consisting of amendments 
to Rule A-12, on initial fee, and Rule A-14, on annual fee, to provide 
for the payment to the Board by municipal advisors of initial and 
annual fees. The proposed rule change is effective immediately upon 
filing.
    The proposed rule change would apply to municipal advisors 
immediately; however, it will have a deferred compliance date of 
December 31, 2010. The text of the proposed rule change is available on 
the MSRB's Web site at http://www.msrb.org/Rules-and-Interpretations/
SEC-Filings/2010-Filings.aspx, at the MSRB's principal office, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the MSRB included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The MSRB has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to provide for the 
assessment of reasonable fees to defray a portion of the increased 
costs and expenses associated with the operation and administration of 
the Board attributable to the Board's regulation of municipal advisors, 
including an initial fee of $100 and an annual fee of $500. Except as 
described below, the proposed rule change applies the provisions of 
Rules A-12 and A-14 to municipal advisor firms in the same manner that 
they currently apply to brokers, dealers, and municipal securities 
dealers (``dealers''). Individuals will not be required to pay these 
fees unless they are sole proprietorships. Although the initial fee 
under Rule A-12 normally would be payable to the Board prior to a 
municipal advisor engaging in any municipal advisory activities, the 
proposed rule change would permit a municipal advisor firm to engage in 
such activities prior to January 1, 2011 so long as the initial fee is 
paid by January 1, 2011. Similarly, although the annual fee under Rule 
A-14 normally would be payable by October 31 of each fiscal year (or, 
for municipal advisor firms becoming subject to MSRB rules in the 
current fiscal year, simultaneously with the initial fee under Rule A-
12), the proposed rule change would permit a municipal advisor firm to 
engage in such activities prior to January 1, 2011 so long as the 
annual fee for the current fiscal year of the Board is paid by January 
1, 2011. Each firm subject to the rules of the Board shall be required 
to pay the initial fee only once, and the annual fee only once each 
fiscal year, even if a firm is both a dealer and a municipal advisor.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(J) of the Act, which provides that the Board's rules 
shall:

    Provide that each municipal securities broker, municipal 
securities dealer, and municipal advisor shall pay to the Board such 
reasonable fees and charges as may be necessary or appropriate to 
defray the costs and expenses of operating and administering the 
Board.

    The $100 initial fee imposed on municipal advisors by amended Rule 
A-12 and the $500 annual fee imposed on municipal advisors by amended 
Rule A-14 are reasonable. In its filing, the MSRB noted that the annual 
fee is comparable to the fees that municipal advisors must pay to State 
regulators if they must register as investment advisers. The initial 
fee is less than most States impose for the initial registration of 
investment advisers. The revenue resulting from these fees will defray 
only a small portion of the cost of MSRB regulation of municipal 
advisors.

[[Page 70760]]

    Section 15B(2)(L) of the Act requires that rules adopted by the 
Board

    not impose a regulatory burden on small municipal advisors that 
is not necessary or appropriate in the public interest and for the 
protection of investors, municipal entities, and obligated persons, 
provided that there is robust protection of investors against fraud.

    The proposed rule change does not impose a regulatory burden on 
small advisors that is not necessary or appropriate in the public 
interest and for the protection of investors, municipal entities, and 
obligated persons and for the robust protection of investors against 
fraud. The MSRB stated that it considers the $100 initial fee and $500 
annual fee to be de minimis. The annual fee is comparable to the fees 
that municipal advisors must pay to State regulators if they must 
register as investment advisers. The initial fee is less than most 
States impose for the initial registration of investment advisers. The 
MSRB stated that, while the proposed rule change, at best, imposes only 
a de minimis burden on municipal advisors, the proposed rule change is 
necessary to help defray the costs of the MSRB's registration of 
municipal advisors, which in turn permits the MSRB to have a record of 
the municipal advisors it regulates, so that it may keep them abreast 
of regulatory developments, better target its rulemaking and 
professional qualifications examinations to different types of 
municipal advisors, and identify to the Commission those municipal 
advisors who have reportedly violated MSRB rules.

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

    The MSRB does not believe that the proposed rule change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act, since it would apply equally to all 
municipal advisors.

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

    Written comments were neither solicited nor received on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \5\ and Rule 19b-4(f)(2) \6\ thereunder, in 
that it establishes fees applicable to municipal advisors. At any time 
within 60 days of the filing of the proposed rule change, the 
Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.\7\
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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
    \7\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2010-14 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2010-14. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the MSRB. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MSRB-2010-14 and should be 
submitted on or before December 9, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-29080 Filed 11-17-10; 8:45 am]
BILLING CODE 8011-01-P