Document ID: SEC-2007-1582-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Municipal Securities Rulemaking Board
Posted Date: 2007-11-23T05:00Z

[Federal Register: November 23, 2007 (Volume 72, Number 225)]
[Notices]               
[Page 65786-65787]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23no07-114]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56796; File No. SR-MSRB-2007-05]

 
 Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Rule G-27, on Supervision

November 15, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 8, 2007, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board''), filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in Items I, II and III below, which Items have been 
substantially prepared by the MSRB. The MSRB has filed the proposal as 
a ``non-controversial'' rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act,\3\ and Rule 19b-4(f)(6) 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing with the Commission a proposed rule change 
consisting of amendments to Rule G-27 to clarify that the requirements 
of the rule apply solely in connection with the municipal securities 
activities of brokers, dealers and municipal securities dealers 
(``dealers'') and their associated persons. The text of the proposed 
rule change is available on the MSRB's Web site (http://www.msrb.org), 

at the MSRB, 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 proposed rule change will amend Rule G-27, on supervision, to 
clarify that the requirements of the rule apply solely in connection 
with the municipal securities activities of dealers and their 
associated persons. Rule G-27 has previously been amended, with an 
effective date of February 29, 2008, to strengthen the supervisory 
procedures and controls of dealers effecting transactions in municipal 
securities, as well as to ensure a coordinated regulatory approach 
with, and to facilitate inspection and enforcement in this area by, the 
Financial Industry Regulatory Authority (the ``new supervisory 
requirements'').\5\ In its filing with the SEC of the new supervisory 
requirements, the MSRB had stated that, as a general principle, the 
requirements of Rule G-27 apply only with respect to those registered 
persons who engage in municipal securities activities and those offices 
in which municipal securities activities are undertaken.\6\ The 
proposed rule change will explicitly incorporate this limitation on the 
applicability of Rule G-27 throughout the language of the rule, in 
addition to correcting certain cross-references and making certain 
formatting changes to improve clarity.
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    \5\ See Securities Exchange Act Release No. 55830 (May 30, 
2007), 72 FR 31122 (June 5, 2007) (SR-MSRB-2006-09). See also 
Securities Exchange Act Release No. 56478 (September 20, 2007), 72 
FR 54702 (September 26, 2007) (SR-MSRB-2007-03).
    \6\ See Securities Exchange Act Release No. 54930 (December 13, 
2006), 71 FR 76400 (December 20, 2006) (SR-MSRB-2006-10).
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2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section

[[Page 65787]]

15B(b)(2)(C) of the Act,\7\ which provides that the MSRB's rules shall:
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    \7\ 15 U.S.C. 78o-4(b)(2)(C).

be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in municipal securities, to remove 
impediments to and perfect the mechanism of a free and open market 
in municipal securities, and, in general, to protect investors and 
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the public interest.

    The Board believes that the proposed rule change will facilitate 
transactions in municipal securities and protect investors and the 
public interest by clarifying that the requirements of Rule G-27 apply 
solely in connection with the municipal securities activities of 
dealers and their associated persons.

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

    The Board does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act since it does not modify 
existing rule obligations and applies equally to all brokers, dealers 
and municipal securities dealers.

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

    The MSRB has received four letters requesting guidance on or 
amendments to the new supervisory requirements in Rule G-27, as well as 
a delay in the effectiveness of the new supervisory requirements. In 
summary, these commentators sought to understand the circumstances 
under which individuals must be qualified as either municipal 
securities principals or municipal fund securities limited principals 
in dealers' offices in which supervisory responsibilities are 
undertaken. The clarification provided by the proposed rule change that 
the new supervisory requirements of the rule apply solely in connection 
with the municipal securities activities of dealers and their 
associated persons, as the MSRB had previously enunciated in the 
original filing of the new supervisory requirements, should resolve 
these and other ambiguities regarding the operation of these new 
provisions.

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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days from November 8, 2007, the date on which it was 
filed, and the MSRB provided the Commission with written notice of its 
intent to file the proposed rule change at least five business days 
prior to the filing date, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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.\10\
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    \10\ 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-2007-05 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2007-05. 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 inspection and 
copying 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-2007-05 and should be 
submitted on or before December 14, 2007.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority. \11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-22780 Filed 11-21-07; 8:45 am]

BILLING CODE 8011-01-P