Document ID: SEC-2007-1779-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Municipal Securities Rulemaking Board
Posted Date: 2007-12-28T05:00Z

[Federal Register: December 28, 2007 (Volume 72, Number 248)]
[Notices]               
[Page 73941-73946]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de07-196]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57004; File No. SR-MSRB-2007-06]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to an 
Amendment to the Municipal Securities Information Library[reg] System 
To Establish a Pilot System for Consolidated Dissemination of 
Disclosure Documents and Related Information Through an Internet-Based 
Public Access Portal

December 20, 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 15, 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 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 
establishing a pilot system for the consolidated dissemination, through 
an Internet-based public access portal, of disclosure documents and 
related information received by the MSRB through its existing 
facilities (the ``pilot portal''). The proposed rule change consists of 
an amendment to the MSRB's existing Official Statement and Advance 
Refunding Document (OS/ARD) system of the Municipal Securities 
Information Library[reg] (``MSIL''[reg]) system,\3\ under which the 
pilot portal would be established and operated pending establishment of 
a permanent Internet-based public access system (the ``permanent 
system''). The MSRB expects the pilot portal to become operational on 
the later of March 10, 2008 or 5 business days after SEC approval. The 
MSRB requests approval of the pilot portal for a period of one year 
from the date it becomes operational, subject to earlier termination 
upon completion of the transition to the permanent system. 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\ Municipal Securities Information Library and MSIL are 
registered trademarks of the MSRB. The MSIL system's OS/ARD system 
was initially approved by the Commission in 1991 and amended in 2001 
to establish the current optional electronic submission system. See 
Securities Exchange Act Release No. 29298 (June 13, 1991), 56 FR 
28194 (June 19, 1991) (File No. SR-MSRB-1990-2); Securities Exchange 
Act Release No. 44458 (June 20, 2001), 66 FR 34495 (June 28, 2001) 
(File No. SR-MSRB-2001-03).
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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
    Rule G-36 requires that a broker, dealer or municipal securities 
dealer (a ``dealer'') that acts as managing or sole underwriter for 
most primary offerings of municipal securities send the official 
statement (``OS'') and Form G-36(OS) to the MSIL system. In addition, 
if the offering is an advance refunding and an escrow deposit agreement 
or other advance refunding document (``ARD'') has been prepared, the 
ARD and Form G-36(ARD) also must be sent to the MSIL system by the 
managing or sole underwriter. OSs and ARDs collected by the MSIL system 
currently are made available in paper form, subject to copying charges, 
at the MSRB's public access facility in Alexandria, Virginia, and 
electronically by paid subscription on a daily over-night basis and by 
purchase of annual back-log collections.
    The proposed rule change will establish, on a pilot basis, an 
Internet-based public access portal (the ``pilot portal'') to provide 
free access to OSs and ARDs received by the MSRB under Rule G-36. 
Copies of all such OSs and ARDs received by the MSRB on or after 
implementation of the pilot portal will be made available to the public 
as portable document format (PDF) files for viewing, printing and 
downloading at the pilot portal promptly after

[[Page 73942]]

acceptance and processing, and will remain publicly available for the 
life of the municipal securities through the pilot portal or the 
permanent system. The pilot portal will provide on-line search 
functions utilizing the MSIL system computer index to ensure that users 
of the pilot portal are able to readily identify and access documents 
that relate to specific municipal securities based on a broad range of 
search parameters. The pilot portal will be designed to provide a user 
searching for a particular municipal security with a comprehensive 
display of relevant information concerning such security available from 
the MSRB's various information systems on a single screen or related 
set of screens. The pilot portal will provide basic identifying 
information for the security, direct access to the OS submitted by the 
underwriter to the MSIL system, price information from the MSRB's Real-
Time Transaction Reporting System (``RTRS'') for the most recent trades 
in such security (as well as historical price information), and, if the 
security has been advance refunded by a refunding issue, any ARDs 
submitted by the underwriter to the MSIL system in connection with such 
advance refunding.
    The pilot portal will operate for a limited period of time as the 
MSRB transitions to a permanent integrated system for electronic 
submissions of all OSs and ARDs to the MSRB and free public access to 
such documents through a centralized Internet-based portal to be 
implemented in conjunction with the expected adoption by the MSRB of an 
``access equals delivery'' standard for OS dissemination under Rule G-
32, on disclosures in connection with new issues.\4\ The functions of 
the pilot portal, along with other key features of the current MSIL 
system and additional functional improvements (including but not 
limited to establishment of real-time subscriptions to the complete 
document collections processed through the permanent system for re-
dissemination or other use by subscribers), will be incorporated into 
the permanent system. The permanent system is expected to replace the 
MSIL system once this transition is completed and all critical 
functions and information stores (including but not limited to the 
complete OS/ARD back-log collection) of the MSIL system have been 
transferred to the new permanent system or are able to be handled by 
other Board processes.
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    \4\ Under current Rule G-32, a dealer selling a new issue 
municipal security to a customer during the period ending 25 days 
after bond closing must deliver the official statement to the 
customer on or prior to trade settlement. Under an ``access equals 
delivery'' standard, dealers selling most new issue municipal 
securities would be deemed to have satisfied this basic requirement 
for delivering OSs to customers by trade settlement since such OSs 
would be publicly available through the permanent system. The MSRB 
expects to propose amendments to Rules G-32 and G-36 to adopt an 
``access equals delivery'' standard at a future date through a 
separate filing with the SEC.
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    Although the MSRB currently operates CDINet, a service of the MSIL 
system designed to process and disseminate continuing disclosure 
information and notices of material events submitted to the MSRB under 
Exchange Act Rule 15c2-12, the MSRB does not anticipate including 
information received through CDINet in the pilot portal due to the very 
limited level of submissions of disclosure information received by 
CDINet from issuers and their agents.\5\ The MSRB believes that making 
the limited collection of secondary market information available in 
CDINet accessible to the public through the pilot portal would 
represent a piecemeal approach that would not be beneficial to the 
public and could potentially be misleading under certain circumstances. 
In particular, investors would be required to search through various 
other sources to find secondary market information for the bulk of the 
outstanding issues for which information is not available through 
CDINet and, even if some secondary market information for a particular 
security is available through CDINet, investors would still need to 
search through the various other sources to ensure that no additional 
secondary market information about that security has been submitted 
elsewhere.
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    \5\ Exchange Act Rule 15c2-12 currently requires underwriters 
for most primary offerings of municipal securities to obtain an 
undertaking by the issuer or obligated person to provide certain 
types of continuing disclosure information to the marketplace, 
consisting of material event notices and annual filings of financial 
information. Annual filings are to be sent to all existing 
nationally recognized municipal securities information repositories 
(``NRMSIRs'') and any state information depositories (``SIDs''), 
while material event notices may be sent either to all existing 
NRMSIRs or to the MSRB, as well as to any SIDs. The level of 
submissions of material event notices to the MSRB's CDINet has 
diminished dramatically since this provision was adopted such that 
CDINet receives only a small percentage of material event notices 
currently provided to the marketplace. The Commission has published 
proposed amendments to Exchange Act Rule 15c2-12 to eliminate the 
MSRB's limited role in the current secondary market disclosure 
system due in large measure to the low volume of usage as well as 
the need for significant upgrades to keep the CDINet operational. 
See Securities Exchange Act Release No. 54863 (December 4, 2006), 71 
FR 71109 (December 8, 2006).
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    The MSRB recognizes the substantial benefits to the marketplace 
that would be realized should the Commission determine to modify the 
existing secondary market disclosure system under Exchange Act Rule 
15c2-12 to provide for a centralized electronic submission and 
dissemination model. The MSRB stands ready to expand its planned 
electronic submission system under the permanent system to also serve 
as the central electronic submission system for free filings of all 
secondary market disclosure under an amended Rule 15c2-12 and to 
integrate this complete collection of secondary market disclosure 
information with the MSRB's OS/ARD collection and RTRS data to provide 
a free comprehensive centralized public access portal for primary 
market disclosure information, secondary market disclosure information 
and transaction price information.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
section 15B(b)(2)(C) of the Act,\6\ which provides that the MSRB's 
rules shall:

    \6\ 15 U.S.C. 78o-4(b)(2)(C).
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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 
the public interest.

    The MSRB believes that the proposed rule change is consistent with 
the Act because the pilot facility will serve as a necessary 
transitional step toward establishing a permanent system for free and 
timely public access to OSs and ARDs. Together, the pilot facility and 
permanent system will remove impediments to and help perfect the 
mechanisms of a free and open market in municipal securities, assist in 
preventing fraudulent and manipulative acts and practices, and will in 
general promote investor protection and the public interest by ensuring 
equal access for all market participants to the critical disclosure 
information needed by investors in the municipal securities market.

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 because documents and 
information provided

[[Page 73943]]

through the pilot portal and the permanent system will be available to 
all persons on an equal basis. The MSRB will continue to make the OS/
ARD collection available by subscription on an equal basis without 
imposing restrictions on subscribers from re-disseminating such 
documents or otherwise offering value-added services and products based 
on such documents on terms determined by each subscriber. The MSRB 
believes that any incidental impact of the proposed rule change on 
commercial enterprises would not create an unequal burden among such 
enterprises and would be substantially outweighed by the benefits 
provided by the proposed rule change in removing impediments to and 
helping to perfect the mechanisms of a free and open market in 
municipal securities, assisting in the prevention of fraudulent and 
manipulative acts and practices, and generally promoting investor 
protection and the public interest.

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

Concept Release

    In a concept release published on July 27, 2006, the MSRB sought 
comment on whether the establishment of an ``access equals delivery'' 
model in the municipal securities market would be appropriate and on 
the general parameters relating to such a model (the ``Concept 
Release'').\7\ The Concept Release described two critical factors that 
would need to be put into place: all OSs must be available 
electronically, and such electronic OSs must be easily and freely 
available to the public. The Concept Release described in general terms 
certain modifications that could be made to existing MSRB rules to 
implement the ``access equals delivery'' model.
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    \7\ MSRB Notice 2006-19 (July 27, 2006).
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    With regard to public access to OSs under an ``access equals 
delivery'' standard for municipal securities, the Concept Release 
stated that electronic OSs would need to be made readily available to 
the investing public, at no cost, for the duration of the applicable 
new issue disclosure period, at a minimum. The MSRB expressed the 
belief that investors would be best served if such OSs were made 
available at a centralized Internet website, although other parties 
could of course make all or portions of such collection available at 
other websites or through other means as well. In the alternative, a 
central directory of such OSs could be maintained, with the actual 
hosting of the electronic OS occurring by multiple parties (such as 
issuers, financial advisors, underwriters, information vendors, 
printers, etc.) that have undertaken to maintain free ready access to 
such documents throughout the new issue disclosure period. However, the 
MSRB observed that this second alternative would provide fewer 
assurances that electronic access to the OSs will in fact be maintained 
in a uniform manner for the required duration and likely would require 
third-party monitoring of these decentralized sources. The MSRB also 
sought comment on whether it should undertake the central access 
function, or whether other market participants or vendors could 
undertake such function subject to appropriate supervision.

January 2007 Notice

    In a subsequent notice published on January 25, 2007, the MSRB 
sought comment on draft amendments to Rules G-32 and G-36 to implement 
an electronic system for access to primary market disclosure in the 
municipal securities market (the ``January 2007 Notice'').\8\ The 
electronic system would build on the MSIL system to provide through an 
Internet-based central access facility an assured source for free 
access to OSs and other related documents and information in connection 
with all new issue municipal securities to investors, other market 
participants and the public. Additional public access portals using the 
document collections from the MSIL system obtained through real-time 
subscriptions could be established by other entities as parallel 
sources for OSs and other documents and information.
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    \8\ MSRB Notice 2007-5 (January 25, 2007).
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    The MSRB noted in the January 2007 Notice that it would operate a 
public access portal that would post OSs and other documents and 
information directly on its centralized website and would make posted 
information available for free for the life of the securities to 
investors, other market participants and the general public. The MSRB 
indicated that multiple entities subscribing to the MSIL system 
document collection--which will be designed to provide nearly real-time 
access to documents as they are submitted and processed--could 
establish separate public access portals designed to make available 
publicly the basic documents and information provided through such 
subscription, together with such other documents, information and 
utilities (e.g., indicative data, transaction pricing data, secondary 
market information, analytic tools, etc.) as each such operator shall 
determine. These separate portals could provide these services on such 
commercial terms as they deem appropriate.
    The January 2007 Notice also stated that the MSRB intends to 
continue offering subscriptions to the MSIL system collection on terms 
that promote the broad dissemination of disclosure information 
throughout the marketplace without creating a significant negative 
impact on the pricing of dissemination services by subscribers. The 
MSRB hoped that multiple public access portals would provide free 
continuous access to OSs and other documents throughout the new issue 
disclosure period and a reasonable limited period of time thereafter 
and also would provide continuing access beyond the expiration of this 
period on favorable terms, with due consideration for promoting access 
by infrequent users (e.g., retail investors) for free or at greatly 
reduced rates. The MSRB's goal in promoting the establishment of 
parallel public access portals would be to provide all market 
participants with a realistic opportunity to access OSs and other 
documents and information throughout the life of the securities in a 
non-cost prohibitive manner while encouraging market-based approaches 
to meeting the needs of investors and other market participants.

SEC's ``Access Equals Delivery'' Rule

    The Concept Release and January 2007 Notice noted that the new 
dissemination system for municipal securities disclosure would be 
modeled in part on the ``access equals delivery'' rule for prospectus 
delivery for registered securities offerings adopted by the SEC in 
2005.\9\ The MSRB observed that issuers in the registered securities 
market are required to file registration statements and prospectuses 
electronically through the SEC's EDGAR (Electronic Data Gathering, 
Analysis, and Retrieval) system prior to an offering. The EDGAR system 
then makes electronic versions of filings available to the public at no 
charge on a ``real-time'' basis through the SEC's website. As a result, 
prospectuses for most registered offerings are available free of charge 
at a centralized site (as well as through other information services, 
in some

[[Page 73944]]

cases for a fee) throughout the selling process. The MSRB observed that 
the SEC's ``access equals delivery'' standard is premised on, among 
other things, this immediate free availability of prospectuses and 
other filings through the EDGAR system and other electronic sources.
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    \9\ See Securities Act Release No. 8591 (July 19, 2005), 70 FR 
44722 (August 3, 2005). The MSRB's draft amendments would 
incorporate (with modifications adapted to the specific 
characteristics of the municipal securities market) many of the key 
``access equals delivery'' provisions in Securities Act Rule 172, on 
delivery of prospectus, Rule 173, on notice of registration, and 
Rule 174, on delivery of prospectus by dealers and exemptions under 
Section 4(3) of the Securities Act of 1933, as amended.
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Discussion of Comments

    The MSRB received comments on the Concept Release from 29 
commentators and on the January 2007 Notice from 12 commentators.\10\ 
Commentators were nearly unanimous in their support of adoption of an 
``access equals delivery'' standard and the establishment of a 
centralized Internet-based system for dissemination of municipal 
securities disclosure.\11\ After reviewing these comments, the MSRB 
approved the proposed rule change for filing with the SEC. The comments 
relating to the dissemination system are discussed below.\12\ Document 
Format. PDF was the preferred OS file format of most commentators 
responding to the Concept Release.\13\ Some commentators suggested that 
other OS formats also should be accepted,\14\ with Wells Fargo 
emphasizing that PDF is the licensed product of a single software 
vendor and, although popular, the municipal securities industry should 
not encourage a situation that may require firms to purchase essential 
technology from only one vendor. Other commentators stated that the 
system should have the flexibility to allow new formats that may in the 
future meet or exceed the current parameters for PDF.\15\ RMOA stated 
that a single format should be prescribed, and other commentators 
believed that allowing multiple formats could prove problematic.\16\ 
Zions stated that other electronic formats that may require specific 
formatting, such as hypertext markup language (``html'') or ASCII 
(American Standard Code for Information Interchange), would be 
unacceptable. However, ADP noted that there may be benefits to market 
participants in permitting Extensible Business Reporting Language 
(``XBRL'') and TRB suggested that PDF does not permit analysis and 
comparison between different investments. UBS observed that submissions 
using files that originate electronically yield smaller, better quality 
files than do scanned files, and that larger scanned files can 
sometimes cause technological difficulties, particularly for smaller 
retail customers. UBS suggested that the MSRB and industry remain 
cognizant of any emerging, widely utilized, non-proprietary, freely 
available format that would retain the desirable characteristics of PDF 
documents but create smaller scanned files.
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    \10\ The MSRB received comments on the Concept Release from the 
American Bar Association, Section of State and Local Government; 
American Government Financial Services Company (``AGFS''); Automated 
Data Process, Inc.; Bernardi Securities, Inc. (``Bernardi''); Bond 
Market Association (``BMA''); brokersXpress, LLC 
(``brokersXpress''); College Savings Plans Network (``CSPN''); 
Commerce Bancshares, Inc. (``Commerce''); Digital Assurance 
Certification LLC; DPC DATA Inc. (``DPC''); Edward D. Jones & Co., 
LP (``Edward Jones''); First Southwest Company (``First 
Southwest''); Griffin, Kubik, Stephens & Thompson, Inc. (``Griffin 
Kubik''); Investment Company Institute (``ICI''); J.J.B. Hilliard, 
W.L. Lyons, Inc. (``Hilliard Lyons''); Morgan Keegan & Company, Inc. 
(``Morgan Keegan''); Municipal Advisory Council of Texas (``Texas 
MAC''); National Association of Bond Lawyers (``NABL''); National 
Federation of Municipal Analysts (``NFMA''); Regional Municipal 
Operations Association (``RMOA''); Securities Industry Association 
(``SIA''); Standard & Poor's CUSIP Service Bureau (``S&PCUSIP''); 
Daniel E. Stone; TRB Associates; UBS Securities LLC (``UBS''); UMB 
Bank, N.A. (``UMB''); USAA Investment Management Company (``USAA''); 
Wells Fargo Institutional Brokerage & Sales (``Wells Fargo''); and 
Zions Bank Public Finance (``Zions''). The MSRB received comments on 
the January 2007 Notice from American Municipal Securities, Inc. 
(``AMS''); Bear, Stearns & Co., Inc. (``Bear Stearns''); Bernardi; 
CSPN; DPC; Griffin Kubik; Ipreo Holdings LLC (``Ipreo''); NABL; 
Securities Industry and Financial Markets Association (``SIFMA''); 
Merry Jane Tissier; UMB; and Wulff, Hansen & Co. (``Wulff'').
    \11\ AGFS, AMS, Bear Stearns, Bernardi, BMA, brokersXpress, 
CSPN, Commerce, DPC, Edward Jones, First Southwest, Griffin Kubik, 
Hilliard Lyons, ICI, Ipreo, Morgan Keegan, Texas MAC, NABL, NFMA, 
RMOA, SIA, SIFMA, S&P CUSIP, UBS, UMB, USAA, Wells Fargo, Wulff, 
Zions. Although DPC supported the concept of electronic access to 
OSs, it expressed concerns regarding several basic concepts 
discussed in the January 2007 Notice, as discussed below. A number 
of these commentators (e.g., ADP, AGFS, BMA, CSPN, Griffin Kubik, 
ICI, Hilliard Lyons, RMOA, SIA), as well as Mr. Stone and Ms. 
Tissier, made specific suggestions on details relating to the manner 
of implementing the ``access equals delivery'' standard. See 
footnote 12 infra. While supporting a central dissemination system 
for OSs, TRB stated that it was unclear whether the proposal would 
make any improvement on what it viewed as most important--the 
availability of current information on all municipal bonds on an 
ongoing basis.
    \12\ Comments relating to the draft amendments to Rules G-32 and 
G-36 that would institute an ``access equals delivery'' standard to 
replace the current physical delivery paradigm will be addressed in 
the MSRB's expected rule filing relating to such amendments.
    \13\ Bernardi, BMA, brokersXpress, CSPN, Commerce, DPC, Edward 
Jones, Griffin Kubik, Hilliard Lyons, Morgan Keegan, Texas MAC, 
NABL, SIA, UBS, UMB, Wells Fargo, Zions.
    \14\ Bernardi, Wells Fargo.
    \15\ BMA, Edward Jones, Griffin Kubik, SIA, Texas MAC, UBS, 
Zions.
    \16\ DPC, NABL, UBS, Zions.
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    The January 2007 Notice indicated that PDF would be the acceptable 
document format, although the system would retain flexibility to permit 
other appropriate file formats as they are developed and become 
available for general public use. SIFMA, AMS, DPC, Ipreo and NABL 
generally agreed with this approach. With regard to formats other than 
PDF that may be developed in the future, NABL suggested the following 
as basic parameters before permitting such format to be used for OSs: 
(i) software to read files should be free, user-friendly and readily 
available; (ii) software should protect the integrity of files; and 
(iii) consumers should be familiar with the format before adoption.\17\
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    \17\ DPC suggested that required data elements accompanying 
documents be captured in formatted fields and that such data be 
parsed automatically into extensible markup language (XML) for 
distribution. The current electronic submission process in the MSIL 
system provides an option for XML uploads of such data and the MSRB 
expects to continue providing this or similar capabilities in the 
new system.
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    In addition, the MSRB supports the SEC's Interactive Data and XBRL 
Initiatives for registered offerings. Although the MSRB will initially 
accept documents into the pilot portal solely as PDF files and will not 
be in a position to accept documents or data in XBRL format upon 
initial launch of the pilot portal or the permanent system, the MSRB 
will seek to explore with other industry participants the possibility 
of incorporating into the permanent system at a later date an option to 
make submissions using XBRL.

Duration of Availability of OSs On-Line and Impact on Commercial 
Vendors

    Most commentators stated that OSs should remain publicly available 
for the life of the securities.\18\ Some commentators noted that, 
although financial and operating information in OSs quickly becomes 
stale, many portions of the OS remain useful throughout the life of a 
bond issue.\19\ BMA stated that the financial and operating information 
included in the OS serve as valuable points of reference when reviewing 
secondary market financial and operating information provided to 
NRMSIRs pursuant to Rule 15c2-12.\20\ UBS suggested that appropriate 
disclaimers be used with respect to the potential staleness of 
information beyond the current new issue disclosure period. RMOA stated 
that OSs could be made available for free during the 25 day new issue 
disclosure period and a fee could be charged for access after that 
period.
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    \18\ Bernardi, BMA, Griffin Kubik, Morgan Keegan, NABL, NFMA, 
RMOA, SIA, Texas MAC, UBS, UMB, Wells Fargo, Zions.
    \19\ BMA, Griffin Kubik, NFMA, RMOA, SIA, Texas MAC, UBS.
    \20\ Griffin Kubik, SIA and UBS agreed.
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    Other commentators stated that making the OSs available solely for 
the current 25 day new issue disclosure

[[Page 73945]]

period would be sufficient,\21\ with DPC stating that maintaining 
public access beyond this 25-day period would impair the economic 
interests of information vendors that currently make OSs available on a 
commercial basis and would ultimately negatively impact the 
marketplace.\22\ DPC stated that, although OSs may be made available 
for free to those accessing them through a public access portal, there 
will be a cost to the dealer community to subsidize the dissemination 
system's development and operation. DPC further noted that having the 
industry subsidize the cost ``appears to be more biased and unfair than 
recovering the costs from the users of the system based on usage.''
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    \21\ brokersXpress, Commerce, DPC, First Southwest.
    \22\ DPC argued that some aspects of the system's operations as 
proposed ``could be construed as interfering with standard 
commercial processes of private businesses.'' DPC viewed the MSRB's 
proposal in the January 2007 Notice that customer notices provide a 
specific URL for the OS as ``prejudicial to the economic interests 
of existing vendors whose delivery services required that the 
definitive PDF file be archived on their web sites for public 
access.'' DPC also did not approve of the proposal in the January 
2007 Notice to the effect that a public access portal referred to in 
the customer notice would need to provide free OS access to 
customers for a limited period of time after issuance of the 
securities, although the January 2007 Notice made clear that private 
portal operators could provide value-added services, as well as 
access to OSs after the initial free period, on such commercial 
terms as they deem appropriate. Concerns regarding the potential 
impact on existing commercial interests of the amendments necessary 
to institute the ``access equals delivery'' standard will be 
addressed in the MSRB's expected rule filing relating to such 
amendments. See footnote 12 supra.
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    The MSRB agrees that there is significant value to maintaining OSs 
available for the life of the securities and therefore will make OSs 
available through the pilot portal and the permanent system until the 
maturity of the securities. The MSRB also agrees with the approach 
taken by the SEC in the registered securities market of providing such 
access to disclosure at no charge to the public. The MSRB believes that 
a free flow of basic disclosure information to all market participants 
on an equal basis is essential to pursuing one of the MSRB's 
congressionally mandated core functions of removing impediments to and 
perfecting a free and open market in municipal securities. By making 
these basic disclosure documents--most of which exist and are available 
to commercial enterprises solely by virtue of the mandates set forth by 
the SEC in its Rule 15c2-12--also available to the general public for 
free, the MSRB does not in any way inhibit the free market in value-
added services based on such documents.
    OS Amendments and POSs. BMA noted that investors should be informed 
of any amendments to an OS available on the system, and BMA and AGFS 
suggested the possibility of highlighting changes made in such 
amendments. BMA and DPC emphasized the importance of tracking and 
properly linking amendments and the original OSs to which they relate.
    Some commentators suggested preliminary official statements 
(``POSs'') should also be made available electronically through the 
system.\23\ DPC suggested that the MSRB explore making the submission 
of all POSs mandatory, while SIFMA, AMS and NABL emphasized that POS 
submissions should not be made mandatory. SIFMA and DPC noted the 
importance of ensuring version control where both POSs and OSs are made 
available (as well as in handling ``stickers'' to OSs), suggesting that 
the MSRB include a mechanism for notification to the public when the 
final OS is posted in cases where a POS has previously been submitted. 
DPC suggested that POSs be deleted when final OSs are submitted, while 
NABL suggested that underwriters be permitted to request that the POS 
be removed from the system once the ``timeliness of a POS has ended,'' 
noting that its continued availability may confuse investors. However, 
SIFMA opposed the removal of the POS.
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    \23\ AMS, Bear Stearns, DPC, Griffin Kubik, Ipreo, NABL, SIFMA, 
TRB, UMB, Zions.
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    The MSRB will continue to receive and will post all amendments to 
OSs, with such amendments properly linked to the original OS. The MSRB 
also intends to make POSs voluntarily submitted available on the 
permanent system, but POSs are not expected to be available on the 
pilot portal. Once POSs become part of the permanent system, the MSRB 
expects to provide a feature that would alert investors who have 
accessed an earlier version to be alerted of the posting of updated 
information, such as where an OS is posted after an initial posting of 
a POS or where a posted OS is subsequently stickered.
    Secondary Market Disclosure. Some commentators stated that 
secondary market disclosures should be made available on the same 
platform as OSs.\24\ ICI stated that the ``access equals delivery'' 
system should disseminate OSs to the NRMSIRs so that investors can view 
OSs and secondary market disclosures at a single source.
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    \24\ BMA, RMOA, Texas MAC, TRB, UBS.
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    As noted above, the MSRB stands ready to expand its planned 
electronic submission system under the permanent system to also serve 
as the central electronic submission system for free filings of all 
secondary market disclosure under an amended Rule 15c2-12 and to 
integrate this complete collection of secondary market disclosure 
information with the MSRB's OS/ARD collection and RTRS data to provide 
a free comprehensive centralized public access portal for primary 
market disclosure information, secondary market disclosure information 
and transaction price information, should the SEC determine to pursue 
such option.
    Basic Identifying Information and Search Function. Some 
commentators suggested that the information submitted on Form G-36(OS) 
should be made available to the public.\25\ UBS noted that Form G-36 
data should be used to develop a flexible indexing system, perhaps 
using XML, to allow for searches on a broad range of fields. NFMA also 
emphasized the importance of the search function. TRB stated that a 
cover sheet including primary information such as issuer, CUSIP 
numbers, security, maturity dates, ratings, callability, etc. is 
needed. TRB believed that the task of creating a data base from such 
information that is available to investors would be the most 
significant contribution that could be made by the MSRB to the 
municipal marketplace.
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    \25\ BMA, RMOA, TRB.
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    As noted above, the MSRB will use its MSIL indexing data to provide 
appropriate identifying information on the pilot portal and to develop 
a robust search function to facilitate quickly finding the appropriate 
document on the system.
    Method of Posting Documents. Nearly all commentators stated that 
the central access facility should post OSs directly on a central 
website, rather than serving as a directory of links to OSs posted by 
underwriters, issuers, financial advisors, printers or others at other 
sites.\26\ Some commentators noted that a decentralized system with a 
central hyperlinked directory could be problematic with regard to 
ensuring continuous access, uniformity of handling and ease of use.\27\ 
Morgan Keegan stated that a decentralized model could be acceptable if 
access and data input requirements are uniformly applied to all 
vendors, but that long-term free access would be problematic. TRB 
stated that it would be more

[[Page 73946]]

effective to link the MSRB website to the appropriate posting site for 
each OS, with the MSRB monitoring and/or restricting these posting 
sites, ``just as it does for the NRMSIRs.'' CSPN noted that it viewed 
its own centralized web-based disclosure utility for the 529 college 
savings plan market as the appropriate central access facility for that 
market.
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    \26\ Bernardi, BMA, brokersXpress, Commerce, DPC, First 
Southwest, Griffin Kubik, Hilliard Lyons, ICI, Morgan Keegan, NABL, 
NFMA, RMOA, SIA, Texas MAC, UBS, Wells Fargo, Zions.
    \27\ BMA, brokersXpress, DPC, Griffin Kubik, ICI, NFMA, SIA, 
UBS, Zions.
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    As noted above, the MSRB will post OSs and related items directly 
on its central access portal, rather than merely posting hyperlinks to 
other sources.
    Operation of Public Access Sites. AMS and UMB generally supported a 
single central access portal, while SIFMA, DPC, Ipreo, and NABL 
prefered that OSs be made available from multiple sources. Many 
commentators felt that the MSRB could operate the central access 
facility,\28\ with several indicating that the MSRB is their first 
choice to do so.\29\ Many commentators suggested that the central 
access facility also could be operated by an outside contractor with 
oversight by the MSRB pursuant to contract.\30\ Wells Fargo stated that 
the MSRB should investigate a centralization function that will not 
unequally empower a single data vendor.
    Several private sector organizations expressed interest in their 
comment letters in participating in the proposed electronic 
dissemination system.\31\ NABL stated that proposed approaches by 
market participants and others will need careful consideration to 
determine the optimal choice for the municipal securities market, and 
RMOA stated that vendors offering their services would need to insure 
the industry that they would accept oversight by established regulatory 
authorities and would be subject to penalties for non-performance. UBS 
stated that, if an entity other than the MSRB operates the central 
access facility, the MSIL system's existing OS/ARD library and full 
database would need to be made available to such entity. Several 
commentators emphasized that, in deciding which entity should operate 
the central access facility, cost should be an important factor, 
including which parties should bear such costs.\32\
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    \28\ Bernardi, BMA, Commerce, First Southwest, Griffin Kubik, 
Hilliard Lyons Morgan Keegan, NFMA, RMOA, SIA, UBS, Zions.
    \29\ Bernardi, Commerce, Hilliard, Lyons, Morgan Keegan, RMOA, 
UBS, Zions. Morgan Keegan noted that the industry has already paid 
to establish the MSIL system and that the additional expense can be 
covered at the MSRB's discretion.
    \30\ BMA, First Southwest, Griffin Kubik, NMFA, RMOA, SIA, Texas 
MAC, UBS.
    \31\ ADP, DPC, S&P CUSIP and Texas MAC.
    \32\ BMA, Griffen Kubik, SIA, UBS.
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    Although the MSRB has determined to establish the pilot portal and 
expects to transition such pilot portal to the permanent system, the 
MSRB's public access portal need not operate as the sole public access 
facility. Rather, multiple entities that subscribe to the MSIL system 
document collection--which will be designed to provide nearly real-time 
access to documents--could establish separate access portals to make 
available publicly the basic documents and information provided through 
the MSIL system subscription, together with such other documents, 
information and utilities (e.g., indicative data, transaction pricing 
data, secondary market information, analytic tools, etc.) as each 
operator determines. These separate public access portals could provide 
these services on commercial terms. The MSRB would hope that multiple 
public access portals would provide free continuous access to OSs for a 
defined period after initial issuance and continuing access beyond this 
period on favorable terms, with due consideration for promoting access 
by infrequent users (e.g., retail investors) for free or at greatly 
reduced rates. The MSRB's goal in promoting the establishment of 
parallel public access portals is to provide market participants with 
an effective opportunity to access OSs throughout the life of the 
securities in a non-cost prohibitive manner while encouraging market-
based approaches to meeting the needs of investors and other 
participants in the municipal securities market.

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.

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-2007-06 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-2007-06. 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-2007-06 and should be 
submitted on or before January 18, 2008

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-25186 Filed 12-27-07; 8:45 am]

BILLING CODE 8011-01-P