Document ID: SEC-2019-0570-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Municipal Securities Rulemaking Board
Posted Date: 2019-04-26T04:00Z

[Federal Register Volume 84, Number 81 (Friday, April 26, 2019)]
[Notices]
[Pages 17897-17899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08399]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85699; File No. SR-MSRB-2019-08]

Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Amend Certain MSRB Rules To Update Cross-References to the 
Rules of Other Self-Regulatory Organizations, To Amend Rules With 
Grammatical or Typographical Errors and To Delete Certain Sections of 
MSRB Rules That Are Outdated or No Longer Relevant

April 22, 2019.
    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 April 10, 2019 the Municipal Securities 
Rulemaking Board (``MSRB'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 
certain MSRB rules to update cross-references to the rules of other 
self-regulatory organizations (SROs), to amend rules with grammatical 
or typographical errors and to delete certain sections of MSRB rules 
that are outdated or no longer relevant given the expiration or passing 
of time limitations set forth therein (the ``proposed rule change''). 
The MSRB is filing the proposed rule

[[Page 17898]]

change under Section 19(b)(3)(A)(iii) \3\ of the Act and Rule 19b-
4(f)(6) \4\ thereunder, as a noncontroversial rule change that renders 
the proposal effective upon receipt of this filing by the Commission. 
The operative date of the proposed rule change will be June 3, 2019.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the MSRB's 
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2019-Filings.aspx, at the MSRB's principal office, and at the Commission's 
Public Reference Room.

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

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

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

1. Purpose
    The MSRB has been conducting a retrospective review of its rules in 
an effort to ensure the rules are effective in their principal goal of 
protecting investors, issuers and the public interest. The 
retrospective review also seeks to ensure that MSRB rules are not 
overly burdensome, are clear and harmonized with the rules of other 
regulators, as appropriate, and are reflective of current market 
practices.
    In its review, the MSRB identified several instances where cross 
references to the rules of other SROs are incorrect. In addition, the 
MSRB has identified two rule sections with date references that are no 
longer valid. Finally, the MSRB has identified several places where 
grammatical or typographical corrections are needed. The proposed rule 
change would make non-substantive changes to address these issues.
Cross-References to Other SRO Rules
    The Financial Industry Regulatory Authority (FINRA) is an SRO 
providing regulatory oversight of brokers and dealers doing business in 
the United States. It was formed by the consolidation of the member 
regulation, enforcement and arbitration operations of the New York 
Stock Exchange, NYSE Regulation, Inc. and the National Association of 
Securities Dealers (NASD). Prior to this consolidation, the NASD served 
as a predecessor SRO to FINRA. As a result, many of the MSRB's rules 
continue to cross-reference outdated NASD rules that have since been 
updated with the creation of the FINRA rulebook.\5\ The proposed rule 
change would update incorrect NASD rule references in the MSRB rulebook 
to the correct FINRA rule, by amending:
---------------------------------------------------------------------------

    \5\ In some instances, a single NASD rule subsequently became 
multiple FINRA rules (e.g., NASD Rule 3010 became FINRA Rules 3110 
and 3170). The proposed rule change only references those FINRA 
rules that are relevant to the particular MSRB rule being amended.
---------------------------------------------------------------------------

     Rule G-20, on gifts, gratuities, non-cash compensation and 
expenses of issuance, to change the reference in subsection (b)(iv) 
from NASD Rule 2830 to FINRA Rule 2341.
     Rule G-27, on supervision, to change references in 
subsection (g)(vi) from NASD Rules 2110, 2120, 2310, 2330, 2440, 3010 
(failure to supervise only), 3310 and 3330 to FINRA Rules 2010, 2020, 
2111, 2150, 2121, 3110 (failure to supervise only), 5210 and 5230, 
respectively.
     Rule G-35, on arbitration, to delete reference to ``the 
Code of Arbitration Procedure of the National Association of Securities 
Dealers, Inc. (``NASD''),'' ``NASD's Code of Arbitration Procedure,'' 
and ``NASD'' and to change these reference as follows:
    [cir] Code of Arbitration Procedure of the National Association of 
Securities Dealers, Inc. (``NASD'') would be changed to ``the Financial 
Industry Regulatory Authority's (FINRA) Code of Arbitration Procedure 
for Customer Disputes and Code of Arbitration Procedure for Industry 
Disputes, as appropriate,''
    [cir] NASD's Code of Arbitration Procedure would be changed to 
``FINRA's Code of Arbitration Procedure for Customer Disputes and Code 
of Arbitration Procedure for Industry Disputes, as appropriate,'' and
    [cir] NASD would be changed to ``FINRA''.
     Rule G-41, on anti-money laundering compliance programs, 
to change the reference therein from NASD Rule 3011 to FINRA Rule 3310.
Outdated Date References
    There are two MSRB rules that have date references that are 
outdated or no longer necessary for purposes of compliance with the 
rules. To eliminate these outdated or unnecessary references, the 
proposed rule change would amend:
     Rule G-38, on solicitation of municipal securities 
business, to delete subsection (c) in its entirety, as this section 
addresses transitional payments made for solicitation activities that 
occurred ``on or prior to August 29, 2005.'' In particular, this 
subsection requires a filing to be made ``by the last day of the month 
following the end of each calendar quarter during which payments for 
such solicitations are made or remain pending.'' The MSRB has not 
received a Form G-38t filing for two years which would indicate 
payments for solicitations pursuant to subsection (c) are no longer 
occurring or pending. If such payments were still being made or were 
pending for activity occurring prior to August 29, 2005, a Form G-38t 
would have been filed indicating so. As a result, the MSRB believes 
there is no longer a need for the requirements set forth in subsection 
(c). The proposed rule change also would delete from section (a) 
reference to section (c) for consistency.
     Rule G-45, on reporting of information on municipal fund 
securities, to delete subsection (e), which provides a transition 
provision for reporting related to the Stephen Beck, Jr., Achieving a 
Better Life Experience Act of 2014 (``ABLE program''). Rule G-45 
requires reporting of information on Form G-45 to the MSRB of certain 
primary offerings of municipal fund securities. Subsection (e) 
indicates that for underwriters in primary offerings of an ABLE 
program, the first submissions due pursuant to the rule ``will be for 
the reporting period ending June 30, 2018.'' Because this deadline has 
passed, the proposed rule change would delete this provision as it is 
no longer necessary for compliance with the rule.
Typographical or Grammatical Errors
    The proposed rule change would fix typographical or grammatical 
errors by amending:
     Rule G-12, on uniform practice, to delete duplicative 
language from paragraph (h)(ii)(A) on close-out by seller.
     Rule G-26, on customer account transfers, to change the 
word ``affect'' to ``effect'' as it appears in Supplementary Material 
.02 Written Procedures.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
the provisions of Section 15B(b)(2)(C) of the

[[Page 17899]]

Act,\6\ which provides that the MSRB's rules shall:
---------------------------------------------------------------------------

    \6\ 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 and 
municipal financial products, to remove impediments to and perfect 
the mechanism of a free and open market in municipal securities and 
municipal financial products, and, in general, to protect investors, 
---------------------------------------------------------------------------
municipal entities, obligated persons, and the public interest.

    The proposed rule change would promote just and equitable 
principles of trade by ensuring that existing rule provisions are 
accurate and understandable. While the proposed rule change affects 
rules applicable to brokers, dealers and municipal securities 
(``dealers''), it is meant to clarify existing MSRB rules and would not 
impose additional burdens on dealers.

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.\7\ The 
MSRB does not believe that the proposed rule change would impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Exchange Act because it would apply 
equally to all dealers.\8\
---------------------------------------------------------------------------

    \7\ Id.
    \8\ The Board's policy on the use of economic analysis limits 
its applications regarding those rules for which the Board seeks 
immediate effectiveness. The scope of the Board's policy on the use 
of economic analysis in rulemaking provides that: ``[t]his Policy 
addresses rulemaking activities of the MSRB that culminate, or are 
expected to culminate, in a filing of a proposed rule change with 
the SEC under Section 19(b) of the Exchange Act, other than a 
proposed rule change that the MSRB reasonably believes would qualify 
for immediate effectiveness under Section 19(b)(3)(A) of the 
Exchange Act if filed as such (e.g., fee filing or facility filing) 
or as otherwise provided under the exception process of this 
Policy.'' Policy on the Use of Economic Analysis in MSRB Rulemaking. 
For those rule changes which the MSRB seeks immediate effectiveness, 
the MSRB usually focuses exclusively its examination on the burden 
of competition on regulated entities.
---------------------------------------------------------------------------

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Exchange Act \9\ and Rule 19b-4(f)(6) \10\ 
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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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-2019-08 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-2019-08. 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-2019-08 and should be submitted on 
or before May 17, 2019.

    For the Commission, pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-08399 Filed 4-25-19; 8:45 am]
 BILLING CODE 8011-01-P