Document ID: SEC-2022-1526-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Municipal Securities Rulemaking Board
Posted Date: 2022-11-23T05:00Z

[Federal Register Volume 87, Number 225 (Wednesday, November 23, 2022)]
[Notices]
[Pages 71731-71734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25476]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96348; File No. SR-MSRB-2022-09]

Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Amend Rule G-3, on Professional Qualification Requirements, 
To Delete References to Certain Temporary Regulatory Relief Implemented 
During the Height of the Coronavirus Disease

November 17, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on November 16, 2022, the Municipal Securities 
Rulemaking Board (``MSRB'' or ``Board'') filed with the Securities and 
Exchange Commission (``SEC'' or ``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been 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 filed with the Commission a proposed rule change to amend 
Rule G-3, on professional qualification requirements, to delete 
references to certain temporary regulatory relief,\3\ implemented 
during the height of the coronavirus disease (``COVID-19'' or 
``pandemic'') (the ``proposed rule change'').
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    \3\ See Release No. 34-88694 (April 20, 2020), 85 FR 23088 
(April 24, 2020) (File No. SR-MSRB-2020-01) (the ``April 2020 
relief'').
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    The MSRB has designated the proposed rule change as constituting a 
``non-controversial'' rule change under Section 19(b)(3)(A) \4\ of the 
Act and Rule 19b-4(f)(6) \5\ thereunder, which renders the proposed 
rule change effective upon receipt of this filing by the Commission. 
The MSRB would have the proposed rule change become operative on 
December 27, 2022.
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    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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    The text of the proposed rule change is available on the MSRB's 
website at https://msrb.org/2022-SEC-Filings, at the MSRB's principal 
office, and at the Commission's Public Reference Room.

[[Page 71732]]

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 2020, 2021 and 2022, the MSRB provided temporary regulatory 
relief to brokers, dealers, and municipal securities dealers 
(``dealers'') and municipal advisors (collectively ``regulated 
entities'') in complying with certain obligations under MSRB rules in 
light of operational challenges due to the pandemic.\6\ Specifically, 
with respect to regulatory relief provided from certain professional 
qualification standards, the MSRB was guided in part by operational 
concerns related to Prometric Test Centers, the physical facilities 
used for the MSRB-owned professional qualification examinations.\7\ In 
March 2020, Prometric announced that, due to the pandemic, it was 
temporarily closing all test center locations in the United States and 
Canada through April 15, 2020.\8\
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    \6\ See supra note 3. In 2020, 2021 and 2022, the MSRB provided 
and further extended other COVID-19 related temporary relief to 
regulated entities for certain compliance obligations under MSRB 
rules. See Release No. 34-90621 (December 9, 2020), 85 FR 81254 
(December 15, 2020) (File No. SR-MSRB-2020-09), Release No. 34-93435 
(October 27, 2021), 86 FR 60522 (November 2, 2021) (File No. SR-
MSRB-2021-06) and Release No. 34-94383 (March 9, 2022), 87 FR 14596 
(March 15, 2022) (File No. SR-MSRB-2022-01).
    \7\ The Financial Industry Regulatory Authority (``FINRA'') has 
been designated to provide test administration services to the MSRB 
for the delivery of MSRB-owned professional qualification 
examinations. FINRA uses Prometric as its sole vendor for the 
delivery of MSRB-owned professional qualification examinations. See 
e.g., Release No. 34-75714 (August 17, 2015), 85 FR 50863 (August 
21, 2015) (Designation of the Financial Industry Regulatory 
Authority to Administer Professional Qualification Tests for 
Associated Persons of Registered Municipal Advisors).
    \8\ See https://www.prometric.com/corona-virus-update.
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    In response to the test center closures and in light of other 
operational challenges due to the pandemic, such as stay-at-home orders 
imposed by many states and the vast number of regulated entities 
operating under business continuity plans, the April 2020 relief 
extended the time to comply with certain professional qualification 
obligations, as follows:
     The date by which an individual functioning in the 
capacity as a principal before passing the applicable MSRB-owned 
principal qualification examination pursuant to Rule G-3(b)(ii)(D), G-
3(b)(iv)(B)(4) and G-3(c)(ii)(D), as applicable, would be extended 120 
days from the time that the MSRB announces that Prometric has resumed 
access to its testing centers; thereby, marking the expiration date of 
the temporary period.\9\
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    \9\ See Rule G-3, Supplementary Material .10-.12.
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     The date by which an individual must complete their 
Regulatory Element component of continuing education training,\10\ as 
required by Rule G-3(i)(i)(A)(1), would be extended 120 days from the 
time the MSRB announces that Prometric has resumed access to its 
testing centers; thereby, marking the expiration date of the temporary 
period.\11\
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    \10\ The Regulatory Element component of continuing education is 
a computer-based training program that focuses on dealer compliance, 
regulatory, ethical and sales practice standards with the content 
derived from common industry rules and regulations for dealers, as 
well as widely accepted standards and practices within the industry.
    \11\ See Rule G-3, Supplementary Material .14. This extension 
was only for purposes of compliance with MSRB Rule G-3(i)(i)(A)(1) 
and was not intended to provide regulatory relief to individuals who 
needed to complete Regulatory Element pursuant to the rules of 
another regulatory authority.
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     The date by which certain individuals are required to 
become qualified with the Municipal Advisor Principal Qualification 
Examination (``Series 54'') was extended until November 30, 2021. On 
October 11, 2019, the MSRB announced that a municipal advisor 
principal, as defined under Rule G-3(e),\12\ had a one-year grace 
period, sunsetting on November 12, 2020, to pass the Series 54.\13\ The 
MSRB subsequently extended the grace period until March 31, 2021,\14\ 
and further extended it to November 30, 2021.\15\ These extensions 
permitted individuals qualified with the Municipal Advisor 
Representative Qualification Examination (Series 50) to continue to 
engage in principal-level activities without passing the Series 54 
until November 30, 2021.\16\
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    \12\ The term ``municipal advisor principal'' is defined in Rule 
G-3(e)(i) to mean a natural person associated with a municipal 
advisor who is directly engaged in the management, direction or 
supervision of the municipal advisory activities of the municipal 
advisor and its associated persons. To become qualified as a 
municipal advisor principal a person must, as a pre-requisite, take 
and pass the Municipal Advisor Representative Qualification 
Examination; and take and pass the Municipal Advisor Principal 
Qualification Examination.
    \13\ See MSRB Notice 2019-18 (October 21, 2019) announcing the 
launch of the Series 54 exam, which the SEC had approved on November 
20, 2018. See Release No. 34-84630 (November 20, 2018), 80 FR 60927 
(November 27, 2018) (File No. SR-MSRB-2018-07).
    \14\ See Release No. 34-90621 (December 9, 2020), 85 FR 81254 
(December 15, 2020) (File No. SR-MSRB-2020-09).
    \15\ See Release No. 34-92938 (September 10, 2021), 86 FR 51696 
(September 16, 2021) (File No. SR-MSRB-2021-05).
    \16\ See Rule G-3, Supplementary Material .13.
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     The Firm Element \17\ obligations for calendar year 2020 
were deemed satisfied if completed on or before March 31, 2021.\18\
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    \17\ The Firm Element component of continuing education is a 
firm-administered training program that requires all regulated 
entities to annually evaluate and prioritize their training needs 
based on a completed needs analysis. A needs analysis generally 
reflects a firm's assessment of its unique training needs based on 
various factors, for example, the business activities the firm and 
its associated persons engage in, the level of industry experience 
the firm's associated persons have and any changes to applicable 
rules or regulations.
    \18\ See Rule G-3, Supplementary Material .15.
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     The annual needs analysis and the delivery of continuing 
education pursuant to Rule G-3(i)(i)(B) and G-3(i)(ii), as applicable, 
was deemed to have been timely completed for calendar year 2020, 
provided that the needs analysis and the delivery of continuing 
education were completed on or before March 31, 2021.\19\
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    \19\ See Rule G-3, Supplementary Material .16.
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    These modified obligations were reflected in Supplementary Material 
to Rule G-3. By their terms, Supplementary Material paragraphs .13, .15 
and .16 have expired.\20\ The MSRB stated in the April 2020 relief that 
it would announce an end date for the temporary relief provided under 
Supplementary Material .10 through .12 and .14 by a notice published on 
its website.\21\
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    \20\ In an effort to provide regulated entities the opportunity 
to better manage and allocate resources, the MSRB modified the date 
by which compliance obligations were due to be completed, under 
certain MSRB rules, to March 31, 2021.
    \21\ See supra note 3. Specifically, the MSRB stated it would 
publish a notice on its website announcing when Prometric resumes 
operations in its testing centers so regulated entities are on 
notice of when the 120-day period begins to toll.
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    Prometric fully restored access to its test centers, thus 
permitting individuals seeking to take an MSRB-owned professional 
qualification examination to visit any Prometric test center in-person 
to take a principal qualification examination.\22\ Therefore, on July 
25,

[[Page 71733]]

2022, the MSRB published a notice (the ``2022 Notice''),\23\ announcing 
that the remaining temporary relief under Supplementary Material .10 
through .12 under Rule G-3, which provisions provided temporary relief 
for persons designated as municipal securities principals, municipal 
securities limited principals, and/or municipal securities sale 
principals would expire on August 29, 2022. Accordingly, principals 
designated under Supplementary Material .10 through .12, who, under the 
rule provisions, were required to be qualified in a representative 
capacity with at least 18 months experience functioning as 
representatives within the preceding five-year period of such principal 
designation, may continue to do so until December 27, 2022, without 
taking and passing the appropriate principal qualification examination.
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    \22\ While Prometric test centers are now open, regulated 
entities are reminded that, due to the uncertain nature of the 
ongoing pandemic, individuals are advised to continue to review 
Prometric's website, at https://www.prometric.com/ for any 
operational changes that may affect test center access.
    \23\ See MSRB Notice 2022-05 (July 25, 2022) announcing the end 
of regulatory relief that extended certain professional 
qualification requirements due to COVID-19.
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    The 2022 Notice also announced that the temporary relief from 
Regulatory Element requirements for registered persons under 
Supplementary Material .14 of Rule G-3 would expire on August 29, 2022. 
Accordingly, persons designated under Supplementary Material .14 who 
are subject to the Regulatory Element must complete any Regulatory 
Element required under Rule G-3 (i)(i)(A)(1) within 120 days of August 
29, 2022, or by December 27, 2022--recognizing the stated regulatory 
relief was not intended to provide regulatory relief to individuals who 
may need to complete Regulatory Element pursuant to the rule of another 
regulatory authority; and thereby, may have completed such continuing 
education requirements.
    The MSRB intends to have the proposed rule change become operative 
on December 27, 2022. This aligns with the provision of allowing 120 
days from August 29, 2022, the expiration date of the temporary 
regulatory relief under Supplementary Material .10 through .12 and .14 
under Rule G-3, for individuals to meet their regulatory obligation. 
Thus, upon the operative date of December 27, 2022, the expired 
regulatory relief will be deleted from MSRB Rule G-3. The MSRB notes 
that, while the temporary regulatory relief related to Supplementary 
Material .10 through .12 and .14 expired on August 29, 2022, the MSRB 
will continue to monitor the impact of the ongoing pandemic and work in 
close coordination with other regulatory and governmental authorities, 
as needed, to address any additional pandemic-related issues that may 
arise in the future.\24\
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    \24\ The MSRB notes that while certain professional 
qualifications pandemic-related regulatory relief expired on August 
29, 2022, other relief remains in place; specifically, the ability 
for dealers to continue to conduct office inspections remotely.
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2. Statutory Basis
    Section 15B(b)(2) of the Exchange Act,\25\ provides that the Board 
shall propose and adopt rules to effect the purposes of this title with 
respect to transactions in municipal securities effected by brokers, 
dealers, and municipal securities dealers and advice provided to or on 
behalf of municipal entities or obligated persons by brokers, dealers, 
municipal securities dealers, and municipal advisors with respect to 
municipal financial products, the issuance of municipal securities, and 
solicitations of municipal entities or obligated persons undertaken by 
brokers, dealers, municipal securities dealers, and municipal advisors.
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    \25\ 15.U.S.C. 78o-4(b)(2).
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    Section 15B(b)(2)(C) of the Act \26\ provides that the MSRB's rules 
shall be designed to: prevent fraudulent and manipulative acts and 
practices; promote just and equitable principles of trade; foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating, transactions in municipal securities and municipal 
financial products; remove impediments to and perfect the mechanism of 
a free and open market in municipal securities and municipal financial 
products; and, in general, protect investors, municipal entities, 
obligated persons, and the public interest.
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    \26\ 15 U.S.C. 78o-4(b)(2)(C).
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    The proposed rule change to remove outdated references to the 
regulatory relief that is no longer applicable would ensure that rule 
provisions are clear, accurate, and streamlined, thereby facilitating 
compliance and promoting just and equitable principles of trade by 
clarifying the regulatory obligations of dealers and municipal 
advisors. The removal of expired and outdated references will promote 
just and equitable principles of trade by reducing the risk of 
potential confusion as to the current state of one or more regulatory 
obligations and ensuring that the existing rule provisions are accurate 
and understandable by all dealers and municipal advisors.

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

    Section 15B(b)(2)(C) of the Exchange Act requires that MSRB rules 
not be designed to impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Exchange Act.\27\ In 
fact, the MSRB does not believe that the proposed rule change will have 
any burden on competition because the proposed rule change would apply 
equally to all regulated entities by deleting references to certain 
temporary regulatory relief implemented during the height of the 
pandemic for all regulated entities. Regulated entities of all size 
would be equitably and proportionately impacted by the proposed rule 
change. Therefore, the proposed rule change would not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of the Exchange Act.\28\
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    \27\ Id.
    \28\ The Board's ``Policy on the Use of Economic Analysis in 
MSRB Rulemaking'' (``policy''), available at: https://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx, maintains 
that proposed rule changes filed for immediate effectiveness under 
Section 19(b)(3)(A) of the Exchange Act are not subject to the 
policy. With such filings, the MSRB usually focuses its economic 
analysis exclusively on the burden of competition to regulated 
entities. However, the MSRB may include further analysis based upon 
facts and circumstances if it believes that such analysis may inform 
the rulemaking process.
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    Additionally, Section 15B(b)(2)(L)(iv) of the Act requires that 
MSRB rules 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.\29\ The MSRB believes that the proposed rule change is 
consistent with Section 15B(b)(2)(L)(iv) of the Act in that, while the 
proposed rule change will affect all municipal advisors, including 
small municipal advisors, there is no new regulatory burden that 
results.
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    \29\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public

[[Page 71734]]

interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \30\ and Rule 19b-
4(f)(6) \31\ thereunder. 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.
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    \30\ 15 U.S.C. 78s(b)(3)(A).
    \31\ 17 CFR 240.19b-4(f)(6).
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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 email to [email protected]. Please 
include File Number SR-MSRB-2022-09 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2022-09. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (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 website 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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the MSRB. All comments received 
will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-MSRB-2022-09 and should be submitted on 
or before December 14, 2022.
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    \32\ 17 CFR 200.30-3(a)(12).

    For the Commission, pursuant to delegated authority.\32\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25476 Filed 11-22-22; 8:45 am]
BILLING CODE 8011-01-P