Document ID: SEC-2007-1532-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Municipal Securities Rulemaking Board
Posted Date: 2007-11-09T05:00Z

[Federal Register: November 9, 2007 (Volume 72, Number 217)]
[Notices]               
[Page 63633-63635]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09no07-100]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56736; File No. SR-MSRB-2007-04]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to Amendments 
to Rule G-40 on E-Mail Contacts

November 2, 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 October 16, 2007, the Municipal Securities Rulemaking Board 
(``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 substantially prepared by the 
MSRB. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing with the Commission a proposed rule change 
consisting of amendments to Rule G-40, on electronic mail contacts, 
that would more fully conform MSRB requirements to Financial Industry 
Regulatory Authority (``FINRA'') requirements relating to contact 
information. The MSRB proposes that the amendments become effective on 
December 31, 2007 to coincide with the effective date of recently-
approved FINRA requirements.\3\ The text of the proposed rule change is 
available on the MSRB's Web site (http://www.msrb.org), at the MSRB's 

principal office, and at the Commission's Public Reference Room.
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    \3\ Securities Exchange Act Release No. 56179 (August 1, 2007), 
72 FR 44203 (August 7, 2007) (SR-NASD-2007-034).
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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
    In 2002, the MSRB adopted Rule G-40, on e-mail contacts, to 
establish a reliable method for electronic communication with brokers, 
dealers and municipal securities dealers (collectively, 
``dealers'').\4\ The rule requires, among other things, that dealers 
use Form G-40 to appoint a ``Primary Contact'' for purposes of 
electronic communication between the dealer and the MSRB. The Primary 
Contact must be either a Series 53-registered municipal securities 
principal or a Series 51-registered municipal fund securities limited 
principal.\5\ Dealers are required to submit their original forms and 
any subsequent changes electronically through their electronic G-40 
account using the appropriate user ID and password. The rule also 
requires that each dealer maintain an Internet electronic mail account 
to permit communication with the MSRB, and to review and, if necessary, 
update its Primary Contact information within 17 business days after 
the end of each calendar quarter.
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    \4\ In adopting the rule, the MSRB stated that the events of 
September 11, 2001 and the weeks that followed, emphasized the 
importance of, and need for an efficient and reliable means of 
official communication between regulators and the industry, and that 
establishing a reliable method for electronic communication was 
necessary to allow the MSRB to efficiently alert dealers to official 
communications, including time-sensitive developments, rule changes, 
notices, etc., as well as to facilitate dealers' internal 
distribution of such information. The MSRB also noted that it had 
discontinued publication of MSRB Reports in 2002 (since that time, 
all MSRB notices have been available exclusively on the MSRB Web 
site at http://www.msrb.org.). The rule was approved in Securities 

Exchange Act Release No. 46043 (June 6, 2002), 67 FR 40762 (June 13, 
2002) (SR-MSRB 2002-05).
    \5\ Dealers may also appoint an ``Optional Contact'' and this 
person does not have to be a registered principal.

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[[Page 63634]]

    Rule G-40 was based on similar NASD (now FINRA) requirements.\6\ 
The MSRB attempts, whenever possible, to adopt rule provisions and 
language similar to FINRA rules in order to facilitate dealer 
understanding of and compliance with such provisions, as well as 
inspection and enforcement.
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    \6\ Those NASD requirements (set forth in Article IV, section 3 
of the NASD By-Laws) required member firms to appoint and certify 
one ``executive representative'' to, among other things, serve as 
the official contact person between the firm and NASD; the executive 
representative was required to be a member of the firm's senior 
management and a registered principal of the member, and was 
required to maintain an Internet e-mail account for communication 
with NASD. In addition, NASD Rule 1150 (Executive Representative) 
required each member firm to review and, if necessary, update its 
executive representative information within 17 business days after 
the end of each calendar quarter.
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    The Commission recently approved a FINRA proposal, which becomes 
effective December 31, 2007, that: (i) Changes the quarterly review/
update requirement to an annual requirement; (ii) requires firms to 
update their required contact information promptly but not later than 
30 days following any change in such information; and (iii) requires 
firms to comply with any FINRA request for such information promptly 
but not later than 15 days following such request, or such longer 
period that may be agreed to by FINRA staff.\7\
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    \7\ In its filing (File No. SR-NASD-2007-034 and Amendment No. 1 
thereto), NASD proposed to adopt new Rule 1160 (Firm Contact 
Information) regarding the reporting of designated contact 
information to NASD and the annual review of such information. NASD 
also proposed amendments to, among other things, Rule 1150 
(Executive Representative) to eliminate the requirement that members 
review and update, at the end of each calendar quarter, the contact 
information required by that rule. In its filing, NASD noted that, 
for many firms, the designated contact persons seldom change. Thus, 
its proposal was designed to eliminate any unnecessary burden that 
firms may incur in conducting quarterly reviews of their required 
contact information while at the same time ensuring that such 
information is kept current and provided to NASD promptly upon 
request. In approving NASD's proposal, the Commission noted that the 
proposal sets forth a reasonable approach for member firms to 
provide and keep current required contact information, which should 
reduce unnecessary burdens on firms by eliminating the requirement 
that firms review and update the contact information on a quarterly 
basis; instead, firms would be required to conduct such reviews on 
an annual basis as well as to promptly update the information 
following any change. See Securities Exchange Act Release No. 56179 
(August 1, 2007), 72 FR 44203 (August 7, 2007) (SR-NASD-2007-034).
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    The MSRB has determined to similarly amend Rule G-40 to ensure a 
coordinated regulatory approach in this area. Thus, the proposed 
amendments to Rule G-40 would require dealers to: (i) Promptly update 
any change in the required information for their Primary Contact but 
not later than 30 days following such change; (ii) review and, if 
necessary, update required information on their Primary Contact within 
17 business days after the end of each calendar year; and (iii) 
promptly comply with any request by the appropriate regulatory agency 
(as defined in Section 3(a)(34) of the Act) for such information but 
not later than 15 days following such request, or such longer period 
that may be agreed to by the appropriate regulatory agency.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
section 15B(b)(2)(C) of the Act,\8\ which provides that the MSRB's 
rules shall:
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    \8\ 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 MSRB believes that the proposed rule change is consistent with the 
Act because substantially conforming Rule G-40 to comparable FINRA 
requirements relating to e-mail contact information will promote 
regulatory consistency by facilitating dealer compliance with such 
requirements, as well as the inspection and enforcement thereof.

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 that is not necessary or appropriate in 
furtherance of the purposes of the Act since it would apply 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

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The MSRB has proposed that the amendments become effective on 
December 31, 2007 to coincide with the effective date of the recently-
approved FINRA requirements described above.

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-2007-04 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-2007-04. 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

[[Page 63635]]

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-2007-04 and should be 
submitted on or before November 30, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
 Deputy Secretary.
[FR Doc. E7-21981 Filed 11-8-07; 8:45 am]

BILLING CODE 8011-01-P