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SECURITIES AND EXCHANGE COMMISSION
File No.* SR - 2013 - * 09
WASHINGTON, D.C. 20549
Amendment No. (req. for Amendments *)
Form 19b-4
Page 1 of * 89
Filing by
Municipal Securities Rulemaking Board
Pursuant to Rule 19b-4 under the Securities Exchange Act of 1934
Initial *
Amendment *
Withdrawal
Section 19(b)(2) *
Section 19(b)(3)(A) *
Section 19(b)(3)(B) *
Rule
Extension of Time Period
for Commission Action *
Pilot
19b-4(f)(1)
Date Expires *
19b-4(f)(5)
19b-4(f)(3)
19b-4(f)(6)
Notice of proposed change pursuant to the Payment, Clearing, and Settlement Act of 2010
Section 806(e)(1) *
Security-Based Swap Submission pursuant
to the Securities Exchange Act of 1934
Section 806(e)(2) *
Exhibit 2 Sent As Paper Document
19b-4(f)(4)
19b-4(f)(2)
Section 3C(b)(2) *
Exhibit 3 Sent As Paper Document
Description
Provide a brief description of the action (limit 250 characters, required when Initial is checked *).
Amendments to Rules A-12, G-14, and the Facility for Real-Time Transaction Reporting and Price Dissemination
(RTRS Facility); Deletion of Rules A-14, A-15, and G-40; Deletion of references to RTRS testing requirements under G14(b)(v), G-14(c), and in the RTRS Facility; Elimination of Forms RTRS and G-40, and Adoption of new Form A-12
Contact Information
Provide the name, telephone number, and e-mail address of the person on the staff of the self-regulatory organization
prepared to respond to questions and comments on the action.
First Name * Lawrence
Last Name * Sandor
Title *
Deputy General Counsel
E-mail *
lsandor@msrb.org
Telephone * (703) 797-6600
Fax
(703) 797-6700
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
Municipal Securities Rulemaking Board
has duly caused this filing to be signed on its behalf by the undersigned thereunto duly authorized.
(Title *)
Assistant Corporate Secretary
Date 12/24/2013
By
Amytis G. Ramos
(Name *)
NOTE: Clicking the button at right will digitally sign and lock
this form. A digital signature is as legally binding as a physical
signature, and once signed, this form cannot be changed.
Persona Not Validated - 1360873895376,
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
For complete Form 19b-4 instructions please refer to the EFFS website.
Form 19b-4 Information *
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Exhibit 1 - Notice of Proposed Rule Change *
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Exhibit 1A- Notice of Proposed Rule
Change, Security-Based Swap Submission,
or Advance Notice by Clearing Agencies *
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Exhibit 2 - Notices, Written Comments,
Transcripts, Other Communications
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The self-regulatory organization must provide all required information, presented in a
clear and comprehensible manner, to enable the public to provide meaningful
comment on the proposal and for the Commission to determine whether the proposal
is consistent with the Act and applicable rules and regulations under the Act.
The Notice section of this Form 19b-4 must comply with the guidelines for publication
in the Federal Register as well as any requirements for electronic filing as published
by the Commission (if applicable). The Office of the Federal Register (OFR) offers
guidance on Federal Register publication requirements in the Federal Register
Document Drafting Handbook, October 1998 Revision. For example, all references to
the federal securities laws must include the corresponding cite to the United States
Code in a footnote. All references to SEC rules must include the corresponding cite
to the Code of Federal Regulations in a footnote. All references to Securities
Exchange Act Releases must include the release number, release date, Federal
Register cite, Federal Register date, and corresponding file number (e.g., SR-[SRO]
-xx-xx). A material failure to comply with these guidelines will result in the proposed
rule change being deemed not properly filed. See also Rule 0-3 under the Act (17
CFR 240.0-3)
The Notice section of this Form 19b-4 must comply with the guidelines for publication
in the Federal Register as well as any requirements for electronic filing as published
by the Commission (if applicable). The Office of the Federal Register (OFR) offers
guidance on Federal Register publication requirements in the Federal Register
Document Drafting Handbook, October 1998 Revision. For example, all references to
the federal securities laws must include the corresponding cite to the United States
Code in a footnote. All references to SEC rules must include the corresponding cite
to the Code of Federal Regulations in a footnote. All references to Securities
Exchange Act Releases must include the release number, release date, Federal
Register cite, Federal Register date, and corresponding file number (e.g., SR-[SRO]
-xx-xx). A material failure to comply with these guidelines will result in the proposed
rule change, security-based swap submission, or advance notice being deemed not
properly filed. See also Rule 0-3 under the Act (17 CFR 240.0-3)
Copies of notices, written comments, transcripts, other communications. If such
documents cannot be filed electronically in accordance with Instruction F, they shall be
filed in accordance with Instruction G.
Exhibit Sent As Paper Document
Exhibit 3 - Form, Report, or Questionnaire
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Copies of any form, report, or questionnaire that the self-regulatory organization
proposes to use to help implement or operate the proposed rule change, or that is
referred to by the proposed rule change.
Exhibit Sent As Paper Document
Exhibit 4 - Marked Copies
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Exhibit 5 - Proposed Rule Text
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Partial Amendment
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The full text shall be marked, in any convenient manner, to indicate additions to and
deletions from the immediately preceding filing. The purpose of Exhibit 4 is to permit
the staff to identify immediately the changes made from the text of the rule with which
it has been working.
The self-regulatory organization may choose to attach as Exhibit 5 proposed changes
to rule text in place of providing it in Item I and which may otherwise be more easily
readable if provided separately from Form 19b-4. Exhibit 5 shall be considered part
of the proposed rule change.
If the self-regulatory organization is amending only part of the text of a lengthy
proposed rule change, it may, with the Commission's permission, file only those
portions of the text of the proposed rule change in which changes are being made if
the filing (i.e. partial amendment) is clearly understandable on its face. Such partial
amendment shall be clearly identified and marked to show deletions and additions.
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1.
Text of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of
1934 (the “Act”), 1 and Rule 19b-4 thereunder, 2 the Municipal Securities Rulemaking
Board (the “MSRB” or “Board”) is filing with the Securities and Exchange Commission
(the “SEC” or “Commission”) a proposed rule change consisting of amendments to
MSRB Rules A-12, on initial fee, Rule G-14, on reports of sales or purchases, and the
Facility for Real-Time Transaction Reporting and Price Dissemination (“RTRS
Facility”). The MSRB also proposes a deletion of the entire rule language (reserving the
rule numbers for potential future use) for Rules A-14, on annual fee, A-15, on
notification to the Board of change in status or change of name or address, and G-40, on
electronic mail contacts. Additionally, references to RTRS testing requirements under G14(b)(v), G-14(c), on RTRS Procedures, and in the RTRS facility will be deleted. Finally,
the MSRB proposes to eliminate two MSRB forms, Forms RTRS and G-40, and adopt a
single, consolidated electronic registration form, new Form A-12 (collectively, the
“proposed rule change”). The MSRB will provide at least thirty days notice of the
effective date, which shall be announced within ten days of SEC approval in a notice
published on the MSRB website. The notice will also announce a compliance date for
completion of new Form A-12 of ninety days from the effective date. 3
(a)
The text of the proposed rule change is attached as Exhibit 5. Text
proposed to be added is underlined, and text proposed to be deleted is enclosed in
brackets. Proposed Form A-12, and deleted Forms G-40 and RTRS are attached as
Exhibit 3.
2.
(b)
Not applicable.
(c)
Not applicable.
Procedures of the Self-Regulatory Organization
The proposed rule change was approved by the Board at its October 23-25, 2013
meeting. Questions concerning this filing may be directed to Lawrence Sandor, Deputy
General Counsel, or Michael Post, Deputy General Counsel, at (703) 797-6600.
3.
Self-Regulatory Organization’s Statement of the Purpose of, and Statutory
Basis for, the Proposed Rule Change
1
15 U.S.C. 78s(b)(1).
2
17 CFR 240.19b-4.
3
The MSRB anticipates that the effective date will be on or about April 28, 2014
when new Form A-12 will be available and that registrants will have ninety days
from such date to complete the form in accordance with the proposed rule change.
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(a) Purpose
The proposed rule change would amend Rule A-12 to create new registration
procedures for MSRB-regulated brokers, dealers and municipal securities dealers
(“dealers”) and municipal advisors (dealers and municipal advisors are referred to herein
collectively as “registrants” or “regulated entities”). These new procedures would be
incorporated into new Form A-12. 4 The proposed rule change would consolidate the
MSRB registration process in Rule A-12 and delete the rule language under Rules A-14,
A-15, and G-40; eliminating Forms RTRS and G-40; and amending Rule G-14(b)(iv).
The MSRB believes, as explained below, that the proposed rule change will make it
easier for registrants to complete the registration process and will provide the MSRB with
additional information regarding registrants that will be useful for regulatory purposes.
Currently, regulated entities must reference a series of MSRB rules when
registering with the MSRB, as there is no single “registration” rule. Prior to engaging in
municipal securities or municipal advisory activities, regulated entities are required,
consistent with current Rule A-12, to supply only basic identifying information to the
MSRB and pay an initial fee. Each regulated entity that changes its name or address, or
ceases to be engaged in municipal securities business, whether voluntarily or otherwise,
must so notify the MSRB, pursuant to current Rule A-15. Under Rules G-14(b)(iv) and
G-40, regulated entities must complete Forms RTRS and G-40 that require registrants to
provide the MSRB with an official contact, certain business information, and certain
other information necessary to process their transaction reports correctly. Additionally,
Rule G-14(b)(v) requires registrants that submit transaction data to the MSRB to test their
ability to interface with MSRB systems. Finally, under Rule A-14, regulated entities must
pay an annual fee upon registration and annually thereafter. The proposed rule change
reflects the MSRB’s determination that additional rulemaking in this area is necessary to
improve the efficiency by which regulated entities register, and maintain registration,
with the MSRB.
The proposed rule change addresses concerns expressed by registrants regarding
the current registration process and the number of rules and forms governing that process.
The MSRB believes that the proposed rule change would clarify and simplify the
registration process for new registrants, who, as noted, currently must follow
requirements spread across several rules and forms. In addition to increased efficiency,
the proposed rule change would allow the MSRB to collect additional data from and
about registrants. Such information would further support the MSRB and other
appropriate regulators in their regulatory activities.
The proposed rule change would require registrants to provide contact
information (name, title, phone number, address, and email address) for several new
4
The new Form A-12 found in Exhibit 3 is a pre-production depiction of an
electronic form, the final appearance of which may vary in non-substantive
respects.
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contact persons on Form A-12. In addition to the regulatory contact required under the
current rules, Form A-12 would require registrants to identify a master account
administrator, billing contact, compliance contact, and data quality contact, as further
described below under “Form A-12.” 5 These additional contacts would alleviate the need
for the MSRB to direct all communications through a primary electronic mail contact, as
is currently the case under Rule G-40. Instead, the MSRB would be able to communicate
issues and make requests directly relevant to the contact person tasked with handling
such matters. The MSRB believes that this will increase regulatory efficiency for the
MSRB and reduce the burdens on registrants when responding to MSRB inquiries.
The proposed rule change also would provide a waiver of the annual fee for
dealers and municipal advisors that register in the last month of the MSRB’s fiscal year.
This relief would address concerns raised by regulated entities that they must pay two
annual fees in a short period of time if they register with the MSRB near the end of the
fiscal year. Finally, the proposed rule change would impose a late fee on those regulated
entities that fail to pay MSRB assessments in a timely manner, as further described below
under “Summary of the Proposed Rule Change” and under “Discussion of Comments.”
The MSRB currently does not impose late fees and believes that this change will promote
compliance with fee requirements and reduce the necessity for the MSRB to expend
resources to collect untimely fees.
The proposed rule change would eliminate the requirement for registrants who
submit transaction data to the MSRB to test their ability to interface with MSRB systems.
The MSRB has determined that testing is no longer necessary due to improvements in
technology and the establishment of other controls, though dealers would still have the
ability to test transaction submissions at their discretion.
The MSRB will provide at least thirty days notice of the effective date, which
shall be announced within ten days of SEC approval in a notice published on the MSRB
website. The notice will also announce a compliance date for completion of new Form
A-12 of ninety days from the effective date. This would allow the MSRB sufficient time
to develop the automated system needed to support the new registration process. It also
would allow new and existing registrants approximately three months to complete new
Form A-12. The MSRB anticipates that the effective date will be on or about April 28,
2014 when new Form A-12 will be available and that registrants will have ninety days
from such date to complete the form in accordance with the proposed rule change.
SUMMARY OF THE PROPOSED RULE CHANGE
Rule A-12
Proposed Rule A-12, as explained in detail below, would require regulated
entities to register with the MSRB prior to engaging in any municipal securities or
5
MSRB Rule G-14(b)(iv) currently requires only dealers to provide a data quality
contact for trade submissions.
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municipal advisory activities by completing the new electronic Form A-12. Note that,
prior to registration with the MSRB, each dealer and municipal advisor must first register
with and receive approval from the Commission.
Rule A-12(a) would require each dealer, prior to engaging in municipal securities
activities, and each municipal advisor, prior to engaging in municipal advisory activities,
to register with the MSRB. Rule A-12(a) also would require registrants to notify, as
appropriate, a registered securities association or appropriate regulatory agency 6 of their
intent to engage in municipal securities and/or municipal advisory activities and provide
the MSRB, on their Form A-12, with a written statement evidencing such notification. 7
Registration with the MSRB would be effective only after the MSRB notifies a registrant
that its Form A-12 is complete and all fees have been received and processed.
Rule A-12(b) would provide for the amount and method of payment of the initial
registration fee. New registrants would be required to pay an initial fee of $100 to the
MSRB in the manner prescribed by the MSRB Registration Manual. Rule A-12(c) would
provide that the annual registration fee would continue to be $500 and would be paid in
accordance with the method described in the MSRB Registration Manual. The MSRB
Registration Manual would provide specifications for complying with the registration
process set forth in proposed Rule A-12 and would be available in advance of the Form
A-12 release date. The MSRB Registration Manual would contain instructions for
completion of Form A-12, as well as graphical representations of the form. It would not,
however, contain any substantive requirements not contained in MSRB rules or fairly and
reasonably implied from those rules. Rule A-12(d) would establish late fees for any
assessment due under Rule A-12 or A-13. Although the initial and annual fee amounts
would remain unchanged, the MSRB reviews its fee structure periodically in connection
with its budget. The annual fee would continue to be due by October 31 each year, but
proposed Rule A-12 would provide that a regulated entity that registers in September and
pays an annual fee at the time of registration need not pay the annual fee for the
following fiscal year, beginning October 1. Any registrant that fails to pay any fee due
under Rules A-12 or A-13 (underwriting, transaction or technology fee) would be
assessed a monthly late fee computed based on the overdue balance and the prime rate
plus an additional $25 per month.
6
The term “appropriate regulatory agency,” as used in this filing and proposed
Rule A-12(a) means the Comptroller of the Currency, Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation, or SEC as
defined in 15 U.S.C. 78c(a)(34)(A).
7
This requirement would only be applicable to dealers or municipal advisors first
registering on or after April 28, 2014. Registrants would have the flexibility to
submit any form of documentation, such as a letter on company letterhead,
evidencing notice to a registered securities association or appropriate regulatory
agency, as applicable, of their intent to engage in municipal securities and/or
municipal advisory activities.
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Rule A-12(e) would permit registrants to use the designation “MSRB registered”
when referencing their registrant status. The MSRB has received inquiries from
registrants regarding the proper manner for denoting their registration status in their
advertising material and on their websites. The MSRB has been informed of instances
where registrants have used various designations, such as “MSRB member.” This
designation is inappropriate because the MSRB is not a membership organization.
Section (e) would provide clarity to registrants and the general public in this regard.
Rule A-12(f), rather than the current requirement to provide only a primary
electronic mail contact, would require the provision of a primary regulatory contact,
master account administrator, billing contact, compliance contact, and primary data
quality contact. MSRB registrants could also provide an optional regulatory contact, data
quality contact and technical contact. For dealers, the primary regulatory contact would
be required to be a registered principal. It would be the responsibility of the primary
regulatory contact to receive official communications from the MSRB, similar to the role
of the primary electronic mail contact under current Rule G-40.
Rule A-12(g) would require dealers, prior to registering with the MSRB, to
provide trade reporting information so that their trade reports can be processed correctly,
or notify the MSRB that they are exempt from the trade reporting requirements, as further
described below under “Rule G-14(b)(iv).”
Rule A-12(h), similar to current Rule G-40(d), would require dealers and
municipal advisors to comply, within 15 days or such longer period as may be agreed to
by the requesting authority, with any request from the MSRB, a registered securities
association or other appropriate regulatory authority, for information required as a
function of their registration with the MSRB. The MSRB requirement of registrants to
comply with such requests from the MSRB or a registered securities association, as
applicable, would be a new obligation not required under current Rule G-40(d).
Sections (i)-(k) of proposed Rule A-12 establish the requirements for completing,
updating, and annually affirming the information on new electronic Form A-12, as further
described below under “Form A-12.” The proposed rule provides for an annual
affirmation process, similar to the current process under Rule G-40(c), which would
require registrants to review, update and affirm the information on Form A-12 during the
first seventeen business days of each calendar year. Similar to the current requirement in
Rule A-15, registrants would be required to update Form A-12, within 30 days, if any
information on the form becomes inaccurate or the firm ceases to be engaged in
municipal securities or municipal advisory activities either voluntarily or involuntarily
through a regulatory or judicial bar, suspension or otherwise. Registrants that
involuntarily cease to be engaged in municipal securities or municipal advisory activities
would be required to provide a written explanation, on their Form A-12, of the
circumstances that lead to, and resulted in, the involuntary cessation of such activities.
Finally, to collect more complete data concerning the activities engaged in by MSRB
registrants, regulated entities would be required to inform the MSRB of the types of
municipal securities and municipal advisory activities engaged in by such firms.
8 of 89
Currently, the MSRB collects similar information from municipal advisor registrants on
Form G-40, and from dealers on Form RTRS. Finally, MSRB registrants would be able
to withdraw their registration, either fully or partially, by amending Form A-12.
The instructions for completing and amending Form A-12, as well as information
about the method of payment under Rule A-12, would be located in the MSRB
Registration Manual as described in section (l) of the proposed rule.
Form A-12
The information required by Form A-12 would be submitted electronically by
each registrant through a web portal located on the MSRB’s website. In order to mitigate
the burden on current registrants and ease the transition process, information from
registrants’ current Forms RTRS and G-40 would be pre-populated on new Form A-12,
as feasible. To the extent that any part of a registrant’s Form A-12 is pre-populated, the
registrant would be able to amend, edit or delete such information prior to submitting the
completed form. Form A-12 would require the submission of the following information:
•
Registration Categories: Form A-12 would require the registrant to
identify its registration category, such as dealer or municipal advisor.
Registrants would be permitted to select both registration categories,
either initially or at a later date. Similarly, registrants that are
registered as both dealers and municipal advisors would be permitted
to withdraw either of these categories or submit a complete
withdrawal. Registered entities that would like to add a category
would be required to update Form A-12 to change their status prior to
engaging in activities in the additional category. Moreover, those
registered in multiple categories would be required to amend Form A12 if they cease to engage in either municipal securities or municipal
advisory activities. The registrants would be able to designate their
firm as a broker-dealer, municipal securities dealer (e.g., bank dealer),
or municipal advisor, or as both a broker-dealer or municipal securities
dealer and municipal advisor. In instances of complete withdrawal,
the registrant would select the indicator on the Form for a complete
withdrawal.
•
General Firm Information:
o Firm Identifiers: Each registrant would be required to enter the
1) name of the firm or individual, if registrant is a sole
proprietorship, 2) dealer SEC identification number, if
applicable, 3) municipal advisor SEC identification number, if
applicable, 4) FINRA identification (Central Registration
Depository) number, if applicable, and 5) legal entity identifier,
if any.
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o Intent to Engage in Municipal Securities and/or Municipal
Advisory Activities: Registrants would be required to upload
an electronic copy (PDF format) of the documentation
evidencing the registrant’s notification to a registered securities
association or appropriate regulatory agency (bank regulator),
as applicable, of its intent to engage in municipal securities
and/or municipal advisory activities.
o Business Information: Registrants would provide their firm’s
physical address and website address, if any.
o Form of Organization: Each registrant would be required to
disclose its legal form from a list that includes: Corporation,
Sole Proprietorship (for individuals), Limited Liability
Partnership, Partnership, Limited Liability Company, Limited
Partnership, or Other (registrant would be required to specify).
This list is identical to the list of organization types on the
Commission’s Form MA, which will be completed by
municipal advisors. Registrants would also be required to
provide the city and state in which they are incorporated,
organized or established.
•
Types of Business Activity: Each registrant would be required to
identify its types of business activities. Multiple activities may be
selected. The types of business activities a registrant would be able to
select from are based on the registration category or categories
selected by the registrant (i.e., dealer and/or municipal advisor). The
municipal advisor business activities substantially mirror the business
activity categories available on the Commission’s Form MA.
However, abbreviated titles are used in Form A-12. Detailed
descriptions of each business activity would be provided in the MSRB
Registration Manual. The following are the business activities that
would be available on Form A-12 for each registration category:
o Business Activities of Broker/Dealers – Municipal Fund
Securities: 529 Plan Underwriting, 529 Plan Sales, Local
Government Investment Pool Distributor/Sales, Other
(registrant to specify).
o Business Activities of Broker/Dealers – Sales/Trading: Retail
Sales, Institutional Sales, Trading – Proprietary, Trading –
Inter-Dealer, Broker’s Broker Activities, Online Brokerage.
o Business Activities of Broker/Dealer – Other: Underwriting,
Clear and settle transactions as National Securities Clearing
Corporation (NSCC) participant, Alternative Trading System,
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Remarket Variable Rate Demand Obligations (VRDOs),
Auction Rate Securities (ARS) Program Dealer, Research,
Engage in other activities that require registration (registrant to
specify).
o Business Activities of Municipal Advisors: Issuance Advice,
Investment Advice – Proceeds of Municipal Securities,
Investment Advice – Funds of Municipal Entity, Municipal
Escrow Investment Advice, Municipal Escrow Investment
Brokerage, Guaranteed Investment Contracts Advice,
Municipal Derivatives Advice, Solicitation of Business –
Investment Advisory, Solicitation of Business – Other than
Investment Advisory, Municipal Advisor/Underwriter
Selection Advice, Other (registrant to specify).
•
Contact Information: Rather than provide a primary electronic mail
contact as is required currently, registrants would provide contact
information on Form A-12 for a primary regulatory contact, master
account administrator, billing contact, compliance contact, and data
quality contact. Registrants may also provide an optional regulatory
contact, optional data quality contact and/or optional technical contact.
Registrants would be required to provide the name, title, address,
phone number, and email address of each contact entered on the form.
Registrants would be permitted to designate one individual for any or
all of the contacts required under the proposed rule change. Below are
brief descriptions of each contact:
o Primary & Optional Regulatory Contact: For dealers, the
primary regulatory contact would be required to be a registered
principal. It would be the responsibility of the primary
regulatory contact to receive official communications from the
MSRB, similar to the role of the primary electronic mail
contact under current Rule G-40. Also, the primary regulatory
contact, optional regulatory contact or compliance contact
would be required to annually affirm the information in Form
A-12.
o Master Account Administrator: The master account
administrators would maintain each registrant’s MSRB
Gateway account (a web portal containing all MSRB Market
Transparency submission services, applications and the
associated forms), ensure only appropriate personnel of the
registrant have access to MSRB systems, and serve as the
MSRB’s primary contact for any and all issues that may arise
regarding the account.
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o Billing Contact: Each registrant would provide a billing contact
who is responsible for receiving electronic statements and
invoices from the MSRB that relate to fees assessed under
MSRB Rules A-12 and A-13, facilitating payment of such
invoices, and acting as the MSRB’s first point of contact
regarding billing and payment questions for such fees. The
addition of this contact would assist registrants by directing the
MSRB’s billing questions to the individual at the registered
entity, thereby avoiding unnecessary communications with the
primary regulatory contact.
o Compliance Contact: The compliance contact would be an
individual capable of competently responding to inquiries from
the MSRB about registrants’ monitoring of day-to-day
operations, internal controls, and policies and procedures
established to comply with applicable rules and regulations.
Also, the compliance contact, primary regulatory contact or
optional regulatory contact would be required to annually
affirm of the information in Form A-12.
o Primary & Optional Data Quality Contact: Each registrant
would be required to identify an individual that would respond
to MSRB inquiries relating to the quality and control of the
data the registrant transmits to the MSRB as part of its trade
reporting and other regulatory obligations. 8 Registrants would
also have the option to provide a second contact person capable
of responding to MSRB communications regarding the quality
and control of the registrant’s data transmissions.
o Optional Technical Contact: Registrants would have the option
of providing a technical contact that would be able to respond
to inquiries from the MSRB related to a registrant’s technical
capabilities and any technical issues in connection with trade
reporting and other programs.
•
8
Trade Reporting: Form A-12 would require registrants to select a
prescribed method for reporting municipal securities transactions to
the MSRB and receiving and responding to transaction and error
feedback messages from the MSRB.
There are no data submission requirements for municipal advisors or dealers
exempt from the transaction reporting requirements under current Rule G14(b)(vi) (proposed Rule G-14(b)(v)) at this time. However, these registrants must
designate a data quality contact because future rulemaking may impose new data
submission requirements on these registrants.
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o Submission Information: Registrants would select among three
manners of reporting transactions to the MSRB: (1) self-report
trades using a message-based trade portal operated by the
NSCC and RTTM Web (an electronic platform maintained by
NSCC-Fixed Income Services for the submission, collection
and monitoring of trade data); (2) have their trades reported by
another dealer acting as agent; or (3) self-report through RTRS
Web (a web based reporting mechanism maintained by the
MSRB for submitting, modifying and canceling municipal
securities transactions as well as for modifications to regulatory
data on inter-dealer transactions). If a registrant chooses to
submit trades through another dealer acting as agent, the
registrant must include the identity of such intermediary dealer
to be used as a submitter.
o Feedback Information: Registrants would be required to select
among three methods to receive and respond to transaction
status and error feedback messages from the MSRB: (1) email;
(2) Process MT509 messages (a standardized electronic
messaging format used by dealers when reporting trade data
from computer to computer); or (3) RTRS Web. If registrants
select to receive transaction status and error feedback messages
through email, the registrant would be required to include the
email address that would receive such messages.
o Trade Reporting Identifiers: Registrants would continue to be
required to provide certain trade reporting identifiers, as
currently required under Rule G-14. These include their
Executing Broker Symbols (EBS) (also known as Market
Participant Identifiers or MPIDs) assigned by NASDAQ and,
for registrants that report transactions using a message-based
portal operated by the NSCC, their NSCC Participant
Identifier.
Rules A-14, A-15 and G-40
The entire rule language for Rules A-14, A-15 and G-40 would be deleted.
Forms RTRS and G-40
Forms RTRS and G-40 would be discontinued.
Rule G-14(b)(iv)
Amended Rule G-14(b)(iv) would replace a requirement to provide a completed
Form RTRS with a provision exempting dealers from all of the requirements listed in
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Rule G-14(b), related to trade reporting, if the dealer does not effect any municipal
securities transactions or if the dealer’s transactions in municipal securities are limited to
(1) transactions in securities without assigned CUSIP numbers, (2) transactions in
municipal fund securities, or (3) inter-dealer transactions for principal movement of
securities between dealers that are not inter-dealer transactions eligible for comparison in
a clearing agency registered with the Commission. 9 Furthermore, the amended rule
would require dealers to confirm that they qualified for the exemption as provided in
proposed Rule A-12(g). 10
Rule G-14(b)(v)
The entire language from this section would be deleted.
Rule G-14(c)
The reference to the testing procedures contained in the RTRS Users Manual
would be deleted.
(b) Statutory Basis
The MSRB believes that the proposed rule change is consistent with Section
15B(b)(2)(C) of the Act, 11 which provides that the MSRB’s rules shall:
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.
9
MSRB Rule G-14(b)(vi).
10
In connection with the proposed rules change, as a result of the proposed deletion
of Form RTRS, the MSRB proposes deleting the following sentence in the
description of the Facility for Real-Time Transaction Reporting and Price
Dissemination (the “REAL-TIME TRANSACTION REPORTING SYSTEM” or
“RTRS”): “The requirement for testing and submission of a “Form RTRS” with
the name of a contact person is reflected in Rule G-14.”
11
15 U.S.C. 78o-4(b)(2)(C).
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As summarized above, the proposed rule change removes impediments to dealers
and municipal advisors by streamlining the registration process for new registrants. The
MSRB believes that the consolidation into a single rule of requirements currently located
in multiple rules will clarify and simplify the identification of regulatory requirements.
The MSRB also believes that the new electronic form will reduce the burden on
registrants who currently must complete multiple forms to register with the MSRB. The
proposed rule change also would allow the MSRB to collect information on the business
activities of registrants, which would assist the MSRB and other appropriate regulatory
authorities in regulating dealers and municipal advisors.
The MSRB also believes that the proposed rule change is consistent with Section
15B(b)(2)(J) of the Act, 12 which provides that the MSRB’s rules shall:
provide that each municipal securities broker, municipal securities dealer,
and municipal advisor shall pay to the Board such reasonable fees and
charges as may be necessary or appropriate to defray the costs and
expenses of operating and administering the Board. Such rules shall
specify the amount of such fees and charges, which may include charges
for failure to submit to the Board, or to any information system operated
by the Board, within the prescribed timeframes, any items of information
or documents required to be submitted under any rule issued by the Board.
The MSRB regards the obligation to pay late fees for failure to pay any fee
assessed under Rules A-12 and A-13 as reasonable for several reasons. No dealer or
municipal advisor will be obligated to pay a late fee if it remits the applicable fee under
Rules A-12 or A-13 in the timeframe required by MSRB rules. Furthermore, the MSRB
believes that the existence of late fee provisions will promote timely compliance with
MSRB rules on fees.
4.
Self-Regulatory Organization’s Statement on Burden on Competition
The MSRB does not believe that the proposed rule change would impose any
burden on competition not necessary or appropriate in furtherance of the purposes of the
Act. The MSRB solicited comments on the potential burden of the proposed rule change
in a request for comment. 13 Among the questions asked were:
•
Would the proposed changes make it easier for regulated entities to
understand and follow the registration requirements of the MSRB? Are there
other ways for the MSRB to assist new registrants in meeting their registration
requirements?
•
Relative to the process for registration today, do the proposed changes offer
any benefits to regulated entities?
12
15 U.S.C. 78o-4(b)(2)(J).
13
See MSRB Notice 2013-19 (August 19, 2013) (the “August Notice”).
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•
To the extent the proposed changes would impose any new burdens on
regulated entities, please describe those burdens in detail and quantify them,
to the extent possible.
•
Would the waiver of the following year’s annual fee for firms that register in
September be appropriate relief for firms that seek to register at the end of a
fiscal year?
•
Would the assessment of late fees impose any undue burden on firms that fail
to pay the requisite fees in a timely fashion? If so, what alternatives should
the MSRB consider as means to promote the payment of fees in a timely
manner?
•
Are there any other provisions in MSRB rules that should be consolidated into
the proposed new registration rule?
The specific comments and responses that were received to these questions are
discussed below. The MSRB believes that the proposed rule change would benefit
dealers and municipal advisors by improving the efficiency by which they register with
the MSRB. Specifically, the proposed rule change would consolidate and clarify the
registration process through a single rule and form, rather than multiple rules and forms,
as is the case currently. The MSRB believes that the proposed rule and form would
reduce the amount of inquiries by registrants to the MSRB about the registration process,
thereby reducing the amount of time and expense incurred by registrants when registering
and maintaining their registration. In addition, registrants would benefit from the changes
proposed to the assessment of the annual fee by permitting regulated entities that register
and pay the annual fee in September to avoid the annual fee for the following fiscal year.
This change would reduce costs to new registrants by eliminating the need to pay for the
entire year when registering in the last month of the fiscal year.
The MSRB recognizes that there are costs of compliance associated with the
proposed rule change. The MSRB notes, however, that the requirement to submit
additional information about each regulated entity and its business activities would apply
equally to all registered entities. Moreover, the MSRB believes that other elements of the
proposed rule change, including the consolidation of various “registration” rules and
forms would serve to make the registration process more efficient for dealers and
municipal advisors.
The MSRB notes that several commenters have stated that the proposed rule
change would improve the municipal securities market and its efficient operation, and
that any burden created by the proposed rule change is outweighed by the benefits
received by registrants and the municipal securities marketplace.
5.
Self-Regulatory Organization’s Statement on Comments on the
Proposed Rule Change Received from Members, Participants, or Others
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The proposed rule change was developed with input from a diverse group of
market participants. On August 19, 2013, the MSRB published the August Notice
soliciting comment on the rule proposals regarding registration under Rule A-12, Rule G14 and Form A-12. The MSRB received four letters in response to the August Notice. 14
DISCUSSION OF COMMENTS
Support for the Consolidation of the Registration Rules
Comments: SIFMA, NAIPFA and FSI expressed support of the consolidation of
the registration process, the proposed rules and the new electronic registration form.
SIFMA stated that the proposed rule change makes “the registration process easier to
understand, and that is a benefit to regulated entities” and that there were no additional
provisions in the MSRB rules that needed to be consolidated into the new rule. NAIPFA
and FSI expressed their support of the consolidation and wrote that the proposed rule
change would simplify the registration process and add clarity to the registration rules
and process. In expressing its support for the proposed rule change, FSI stated that the
provision of the proposed rule change that allows registrants who register in the last
month of the fiscal year to not pay the annual fee for the following fiscal year would
“allow flexibility and relief for some new registered entities”. FSI also stated that the
proposed rule change is a “net positive” that would “increase the uniformity between
[the] information collected by the MSRB and other self-regulatory organizations.” Mr.
Neufeld of U.S. Bancorp stated that he supported a simplification of the registration
process that removes ambiguities.
MSRB Response: The MSRB acknowledges these comments.
Application and Structure of Fees
Comments: SIFMA sought clarification that the initial fee assessed under Rule
A-12 would be required only of new MSRB registrants and not of current registrants that
have already paid the $100 initial fee and would be submitting a new Form A-12 in
compliance with the proposed Rule A-12.
MSRB Response: MSRB would not charge existing registrants an additional
$100 initial fee for completing the new form, if such registrants have already paid the
initial fee.
14
Comment Letters were received from: Financial Services Institute (“FSI”);
National Association of Independent Public Finance Advisors (“NAIPFA”);
Securities Industry and Financial Markets Association (“SIFMA”); and Herbert
Neufeld of U.S. Bancorp Investments, Inc. (“Neufeld/U.S. Bancorp”).
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Creation of a New Fee: Late Fees
Comments: While FSI expressed a general concern about fee increases, it stated
that it is not opposed to the MSRB charging the late fees because such fees are “de
minimis in nature.”
MSRB Response: The MSRB acknowledges these comments but notes that the
applicable standard under the Act for these fees is that they be reasonable.
Functions of Form A-12
Comments: SIFMA asked for clarification on whether registrants would be able
to enter multiple business activity types on Form A-12. SIFMA expressed concern that
the part of Form A-12 that requires regulated entities to provide the "type of business
activity" in which the regulated entity plans to conduct is singular and does not consider
the fact that many regulated entities engage in multiple types of business activities.
SIFMA recommended that Form A-12 permit a singular registration by a regulated entity
for multiple business activities.
MSRB Response: On the new Form A-12, registrants would be able to indicate
that they engage in multiple types of municipal securities and/or municipal advisory
activities. Therefore, regulated entities need only complete a single Form A-12, even for
multiple types of municipal securities activities and/or multiple types of municipal
advisory activities, and even if registering as both a dealer and municipal advisor.
Improvements to Registration Forms and Process
Comments: SIFMA suggested that the MSRB use a spreadsheet to maintain the
registrant contact information similar to a spreadsheet purportedly used by the Financial
Industry Regulatory Authority (FINRA) to collect contact information for submitters to
FINRA's Trade Reporting and Compliance Engine (TRACE) system.
MSRB Response: MSRB staff has been informed by FINRA that it no longer
collects contact information in the manner described by SIFMA. Under the proposed rule
change, the trade reporting information would be entered directly on Form A-12, thereby
streamlining the registration process.
Comments: NAIPFA stated that it would welcome additional efforts by the
MSRB to harmonize its registration process with that of the SEC in terms of developing a
more standardized or uniform initial registration form/system designed to avoid the
current duplicative SEC and MSRB registration process. Also, NAIPFA suggested that
the MSRB standardize its forms and process for updating registrant information between
the MSRB and the SEC.
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MSRB Response: The MSRB has reviewed the SEC forms and process
established for registering municipal advisors in creating draft Form A-12 and has
harmonized the business activities on Form A-12 with SEC Form MA.
6.
Extension of Time Period of Commission Action
The MSRB declines to consent to an extension of the time period specified in
Section 19(b)(2) or Section 19(b)(7)(D) of the Act.
7.
Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for
Accelerated Effectiveness Pursuant to Section 19(b)(2) or Section 19(b)(7)(D)
Not applicable.
8.
Proposed Rule Change Based on Rules of Another Self-Regulatory
Organization or of the Commission
Not applicable.
9.
Security-Based Swap Submissions Filed Pursuant to Section 3C of the Act
Not applicable.
10.
Advance Notices Filed Pursuant to Section 806(e) of the Payment, Clearing
and Settlement Supervision Act
Not applicable.
11.
Exhibits
Exhibit 1.
Completed Notice of Proposed Rule Change for Publication in the
Federal Register
Exhibit 2.
Notice Requesting Comment and Comment Letters
Exhibit 3.
Text of Proposed Form A-12, and deleted Forms G-40 and RTRS
Exhibit 5.
Text of Proposed Rule Change
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EXHIBIT 1
SECURITIES AND EXCHANGE COMMISSION
(Release No. 34-___________; File No. SR-MSRB-2013-09)
Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a
Proposed Rule Change Consisting of Amendments to MSRB Rules A-12, on Initial Fee, G-14,
on Reports of Sales or Purchases, and the Facility for Real-Time Transaction Reporting and
Price Dissemination (“RTRS Facility”); Deletion of Rules A-14, on Annual Fee, A-15, on
Notification to the Board of Change in Status or Change of Name or Address, and G-40, on
Electronic Mail Contacts; Deletion of References to RTRS Testing Requirements under G14(b)(v), G-14(c), on RTRS Procedures, and in the RTRS Facility; Elimination of MSRB Forms
RTRS and G-40, and Adoption of a Single, Consolidated Electronic Registration Form, New
Form A-12
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”) 1 and
Rule 19b-4 thereunder, 2 notice is hereby given that on
the Municipal
Securities Rulemaking Board (the “MSRB” or “Board”) filed with the Securities and Exchange
Commission (the “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.
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 MSRB Rules A-12, on initial fee, Rule G-14, on reports of sales or purchases,
and the Facility for Real-Time Transaction Reporting and Price Dissemination (“RTRS
Facility”). The MSRB also proposes a deletion of the entire rule language (reserving the rule
numbers for potential future use) for Rules A-14, on annual fee, A-15, on notification to the
Board of change in status or change of name or address, and G-40, on electronic mail contacts.
1
15 U.S.C. 78s(b)(1).
2
17 CFR 240.19b-4.
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Additionally, references to RTRS testing requirements under G-14(b)(v), G-14(c), on RTRS
Procedures, and in the RTRS facility will be deleted. Finally, the MSRB proposes to eliminate
two MSRB forms, Forms RTRS and G-40, and adopt a single, consolidated electronic
registration form, new Form A-12 (collectively, the “proposed rule change”). The MSRB will
provide at least thirty days notice of the effective date, which shall be announced within ten days
of SEC approval in a notice published on the MSRB website. The notice will also announce a
compliance date for completion of new Form A-12 of ninety days from the effective date. 3
The text of the proposed rule change is available on the MSRB’s website at
www.msrb.org/Rules-and-Interpretations/SEC-Filings/2013-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 proposed rule change would amend Rule A-12 to create new registration procedures
for MSRB-regulated brokers, dealers and municipal securities dealers (“dealers”) and municipal
3
The MSRB anticipates that the effective date will be on or about April 28, 2014 when
new Form A-12 will be available and that registrants will have ninety days from such
date to complete the form in accordance with the proposed rule change.
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advisors (dealers and municipal advisors are referred to herein collectively as “registrants” or
“regulated entities”). These new procedures would be incorporated into new Form A-12. The
proposed rule change would consolidate the MSRB registration process in Rule A-12 and delete
the rule language under Rules A-14, A-15, and G-40; eliminating Forms RTRS and G-40; and
amending Rule G-14(b)(iv). The MSRB believes, as explained below, that the proposed rule
change will make it easier for registrants to complete the registration process and will provide
the MSRB with additional information regarding registrants that will be useful for regulatory
purposes.
Currently, regulated entities must reference a series of MSRB rules when registering with
the MSRB, as there is no single “registration” rule. Prior to engaging in municipal securities or
municipal advisory activities, regulated entities are required, consistent with current Rule A-12,
to supply only basic identifying information to the MSRB and pay an initial fee. Each regulated
entity that changes its name or address, or ceases to be engaged in municipal securities business,
whether voluntarily or otherwise, must so notify the MSRB, pursuant to current Rule A-15.
Under Rules G-14(b)(iv) and G-40, regulated entities must complete Forms RTRS and G-40 that
require registrants to provide the MSRB with an official contact, certain business information,
and certain other information necessary to process their transaction reports correctly.
Additionally, Rule G-14(b)(v) requires registrants that submit transaction data to the MSRB to
test their ability to interface with MSRB systems. Finally, under Rule A-14, regulated entities
must pay an annual fee upon registration and annually thereafter. The proposed rule change
reflects the MSRB’s determination that additional rulemaking in this area is necessary to
improve the efficiency by which regulated entities register, and maintain registration, with the
MSRB.
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The proposed rule change addresses concerns expressed by registrants regarding the
current registration process and the number of rules and forms governing that process. The
MSRB believes that the proposed rule change would clarify and simplify the registration process
for new registrants, who, as noted, currently must follow requirements spread across several
rules and forms. In addition to increased efficiency, the proposed rule change would allow the
MSRB to collect additional data from and about registrants. Such information would further
support the MSRB and other appropriate regulators in their regulatory activities.
The proposed rule change would require registrants to provide contact information
(name, title, phone number, address, and email address) for several new contact persons on Form
A-12. In addition to the regulatory contact required under the current rules, Form A-12 would
require registrants to identify a master account administrator, billing contact, compliance contact,
and data quality contact, as further described below under “Form A-12.” 4 These additional
contacts would alleviate the need for the MSRB to direct all communications through a primary
electronic mail contact, as is currently the case under Rule G-40. Instead, the MSRB would be
able to communicate issues and make requests directly relevant to the contact person tasked with
handling such matters. The MSRB believes that this will increase regulatory efficiency for the
MSRB and reduce the burdens on registrants when responding to MSRB inquiries.
The proposed rule change also would provide a waiver of the annual fee for dealers and
municipal advisors that register in the last month of the MSRB’s fiscal year. This relief would
address concerns raised by regulated entities that they must pay two annual fees in a short period
of time if they register with the MSRB near the end of the fiscal year. Finally, the proposed rule
change would impose a late fee on those regulated entities that fail to pay MSRB assessments in
4
MSRB Rule G-14(b)(iv) currently requires only dealers to provide a data quality contact
for trade submissions.
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a timely manner, as further described below under “Summary of the Proposed Rule Change” and
under “Discussion of Comments.” The MSRB currently does not impose late fees and believes
that this change will promote compliance with fee requirements and reduce the necessity for the
MSRB to expend resources to collect untimely fees.
The proposed rule change would eliminate the requirement for registrants who submit
transaction data to the MSRB to test their ability to interface with MSRB systems. The MSRB
has determined that testing is no longer necessary due to improvements in technology and the
establishment of other controls, though dealers would still have the ability to test transaction
submissions at their discretion.
The MSRB will provide at least thirty days notice of the effective date, which shall be
announced within ten days of SEC approval in a notice published on the MSRB website. The
notice will also announce a compliance date for completion of new Form A-12 of ninety days
from the effective date. This would allow the MSRB sufficient time to develop the automated
system needed to support the new registration process. It also would allow new and existing
registrants approximately three months to complete new Form A-12. The MSRB anticipates that
the effective date will be on or about April 28, 2014 when new Form A-12 will be available and
that registrants will have ninety days from such date to complete the form in accordance with the
proposed rule change.
SUMMARY OF THE PROPOSED RULE CHANGE
Rule A-12
Proposed Rule A-12, as explained in detail below, would require regulated entities to
register with the MSRB prior to engaging in any municipal securities or municipal advisory
activities by completing the new electronic Form A-12. Note that, prior to registration with the
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MSRB, each dealer and municipal advisor must first register with and receive approval from the
Commission.
Rule A-12(a) would require each dealer, prior to engaging in municipal securities
activities, and each municipal advisor, prior to engaging in municipal advisory activities, to
register with the MSRB. Rule A-12(a) also would require registrants to notify, as appropriate, a
registered securities association or appropriate regulatory agency 5 of their intent to engage in
municipal securities and/or municipal advisory activities and provide the MSRB, on their Form
A-12, with a written statement evidencing such notification. 6 Registration with the MSRB would
be effective only after the MSRB notifies a registrant that its Form A-12 is complete and all fees
have been received and processed.
Rule A-12(b) would provide for the amount and method of payment of the initial
registration fee. New registrants would be required to pay an initial fee of $100 to the MSRB in
the manner prescribed by the MSRB Registration Manual. Rule A-12(c) would provide that the
annual registration fee would continue to be $500 and would be paid in accordance with the
method described in the MSRB Registration Manual. The MSRB Registration Manual would
provide specifications for complying with the registration process set forth in proposed Rule A12 and would be available in advance of the Form A-12 release date. The MSRB Registration
Manual would contain instructions for completion of Form A-12, as well as graphical
5
The term “appropriate regulatory agency,” as used in this filing and proposed Rule A12(a) means the Comptroller of the Currency, Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, or SEC as defined in 15 U.S.C.
78c(a)(34)(A).
6
This requirement would only be applicable to dealers or municipal advisors first
registering on or after April 28, 2014. Registrants would have the flexibility to submit
any form of documentation, such as a letter on company letterhead, evidencing notice to a
registered securities association or appropriate regulatory agency, as applicable, of their
intent to engage in municipal securities and/or municipal advisory activities.
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representations of the form. It would not, however, contain any substantive requirements not
contained in MSRB rules or fairly and reasonably implied from those rules. Rule A-12(d) would
establish late fees for any assessment due under Rule A-12 or A-13. Although the initial and
annual fee amounts would remain unchanged, the MSRB reviews its fee structure periodically in
connection with its budget. The annual fee would continue to be due by October 31 each year,
but proposed Rule A-12 would provide that a regulated entity that registers in September and
pays an annual fee at the time of registration need not pay the annual fee for the following fiscal
year, beginning October 1. Any registrant that fails to pay any fee due under Rules A-12 or A-13
(underwriting, transaction or technology fee) would be assessed a monthly late fee computed
based on the overdue balance and the prime rate plus an additional $25 per month.
Rule A-12(e) would permit registrants to use the designation “MSRB registered” when
referencing their registrant status. The MSRB has received inquiries from registrants regarding
the proper manner for denoting their registration status in their advertising material and on their
websites. The MSRB has been informed of instances where registrants have used various
designations, such as “MSRB member.” This designation is inappropriate because the MSRB is
not a membership organization. Section (e) would provide clarity to registrants and the general
public in this regard.
Rule A-12(f), rather than the current requirement to provide only a primary electronic
mail contact, would require the provision of a primary regulatory contact, master account
administrator, billing contact, compliance contact, and primary data quality contact. MSRB
registrants could also provide an optional regulatory contact, data quality contact and technical
contact. For dealers, the primary regulatory contact would be required to be a registered
principal. It would be the responsibility of the primary regulatory contact to receive official
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communications from the MSRB, similar to the role of the primary electronic mail contact under
current Rule G-40.
Rule A-12(g) would require dealers, prior to registering with the MSRB, to provide trade
reporting information so that their trade reports can be processed correctly, or notify the MSRB
that they are exempt from the trade reporting requirements, as further described below under
“Rule G-14(b)(iv).”
Rule A-12(h), similar to current Rule G-40(d), would require dealers and municipal
advisors to comply, within 15 days or such longer period as may be agreed to by the requesting
authority, with any request from the MSRB, a registered securities association or other
appropriate regulatory authority, for information required as a function of their registration with
the MSRB. The MSRB requirement of registrants to comply with such requests from the MSRB
or a registered securities association, as applicable, would be a new obligation not required under
current Rule G-40(d).
Sections (i)-(k) of proposed Rule A-12 establish the requirements for completing,
updating, and annually affirming the information on new electronic Form A-12, as further
described below under “Form A-12.” The proposed rule provides for an annual affirmation
process, similar to the current process under Rule G-40(c), which would require registrants to
review, update and affirm the information on Form A-12 during the first seventeen business days
of each calendar year. Similar to the current requirement in Rule A-15, registrants would be
required to update Form A-12, within 30 days, if any information on the form becomes
inaccurate or the firm ceases to be engaged in municipal securities or municipal advisory
activities either voluntarily or involuntarily through a regulatory or judicial bar, suspension or
otherwise. Registrants that involuntarily cease to be engaged in municipal securities or municipal
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advisory activities would be required to provide a written explanation, on their Form A-12, of the
circumstances that lead to, and resulted in, the involuntary cessation of such activities. Finally, to
collect more complete data concerning the activities engaged in by MSRB registrants, regulated
entities would be required to inform the MSRB of the types of municipal securities and
municipal advisory activities engaged in by such firms. Currently, the MSRB collects similar
information from municipal advisor registrants on Form G-40, and from dealers on Form RTRS.
Finally, MSRB registrants would be able to withdraw their registration, either fully or partially,
by amending Form A-12.
The instructions for completing and amending Form A-12, as well as information about
the method of payment under Rule A-12, would be located in the MSRB Registration Manual as
described in section (l) of the proposed rule.
Form A-12
The information required by Form A-12 would be submitted electronically by each
registrant through a web portal located on the MSRB’s website. In order to mitigate the burden
on current registrants and ease the transition process, information from registrants’ current Forms
RTRS and G-40 would be pre-populated on new Form A-12, as feasible. To the extent that any
part of a registrant’s Form A-12 is pre-populated, the registrant would be able to amend, edit or
delete such information prior to submitting the completed form. Form A-12 would require the
submission of the following information:
•
Registration Categories: Form A-12 would require the registrant to identify its
registration category, such as dealer or municipal advisor. Registrants would
be permitted to select both registration categories, either initially or at a later
date. Similarly, registrants that are registered as both dealers and municipal
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advisors would be permitted to withdraw either of these categories or submit a
complete withdrawal. Registered entities that would like to add a category
would be required to update Form A-12 to change their status prior to
engaging in activities in the additional category. Moreover, those registered in
multiple categories would be required to amend Form A-12 if they cease to
engage in either municipal securities or municipal advisory activities. The
registrants would be able to designate their firm as a broker-dealer, municipal
securities dealer (e.g., bank dealer), or municipal advisor, or as both a brokerdealer or municipal securities dealer and municipal advisor. In instances of
complete withdrawal, the registrant would select the indicator on the Form for
a complete withdrawal.
•
General Firm Information:
o Firm Identifiers: Each registrant would be required to enter the 1)
name of the firm or individual, if registrant is a sole proprietorship, 2)
dealer SEC identification number, if applicable, 3) municipal advisor
SEC identification number, if applicable, 4) FINRA identification
(Central Registration Depository) number, if applicable, and 5) legal
entity identifier, if any.
o Intent to Engage in Municipal Securities and/or Municipal Advisory
Activities: Registrants would be required to upload an electronic copy
(PDF format) of the documentation evidencing the registrant’s
notification to a registered securities association or appropriate
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regulatory agency (bank regulator), as applicable, of its intent to
engage in municipal securities and/or municipal advisory activities.
o Business Information: Registrants would provide their firm’s physical
address and website address, if any.
o Form of Organization: Each registrant would be required to disclose its
legal form from a list that includes: Corporation, Sole Proprietorship
(for individuals), Limited Liability Partnership, Partnership, Limited
Liability Company, Limited Partnership, or Other (registrant would be
required to specify). This list is identical to the list of organization
types on the Commission’s Form MA, which will be completed by
municipal advisors. Registrants would also be required to provide the
city and state in which they are incorporated, organized or established.
•
Types of Business Activity: Each registrant would be required to identify its
types of business activities. Multiple activities may be selected. The types of
business activities a registrant would be able to select from are based on the
registration category or categories selected by the registrant (i.e., dealer and/or
municipal advisor). The municipal advisor business activities substantially
mirror the business activity categories available on the Commission’s Form
MA. However, abbreviated titles are used in Form A-12. Detailed descriptions
of each business activity would be provided in the MSRB Registration
Manual. The following are the business activities that would be available on
Form A-12 for each registration category:
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o Business Activities of Broker/Dealers – Municipal Fund Securities:
529 Plan Underwriting, 529 Plan Sales, Local Government Investment
Pool Distributor/Sales, Other (registrant to specify).
o Business Activities of Broker/Dealers – Sales/Trading: Retail Sales,
Institutional Sales, Trading – Proprietary, Trading – Inter-Dealer,
Broker’s Broker Activities, Online Brokerage.
o Business Activities of Broker/Dealer – Other: Underwriting, Clear and
settle transactions as National Securities Clearing Corporation (NSCC)
participant, Alternative Trading System, Remarket Variable Rate
Demand Obligations (VRDOs), Auction Rate Securities (ARS)
Program Dealer, Research, Engage in other activities that require
registration (registrant to specify).
o Business Activities of Municipal Advisors: Issuance Advice,
Investment Advice – Proceeds of Municipal Securities, Investment
Advice – Funds of Municipal Entity, Municipal Escrow Investment
Advice, Municipal Escrow Investment Brokerage, Guaranteed
Investment Contracts Advice, Municipal Derivatives Advice,
Solicitation of Business – Investment Advisory, Solicitation of
Business – Other than Investment Advisory, Municipal
Advisor/Underwriter Selection Advice, Other (registrant to specify).
•
Contact Information: Rather than provide a primary electronic mail contact as
is required currently, registrants would provide contact information on Form
A-12 for a primary regulatory contact, master account administrator, billing
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contact, compliance contact, and data quality contact. Registrants may also
provide an optional regulatory contact, optional data quality contact and/or
optional technical contact. Registrants would be required to provide the name,
title, address, phone number, and email address of each contact entered on the
form. Registrants would be permitted to designate one individual for any or all
of the contacts required under the proposed rule change. Below are brief
descriptions of each contact:
o Primary & Optional Regulatory Contact: For dealers, the primary
regulatory contact would be required to be a registered principal. It
would be the responsibility of the primary regulatory contact to receive
official communications from the MSRB, similar to the role of the
primary electronic mail contact under current Rule G-40. Also, the
primary regulatory contact, optional regulatory contact or compliance
contact would be required to annually affirm the information in Form
A-12.
o Master Account Administrator: The master account administrators
would maintain each registrant’s MSRB Gateway account (a web
portal containing all MSRB Market Transparency submission services,
applications and the associated forms), ensure only appropriate
personnel of the registrant have access to MSRB systems, and serve as
the MSRB’s primary contact for any and all issues that may arise
regarding the account.
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o Billing Contact: Each registrant would provide a billing contact who is
responsible for receiving electronic statements and invoices from the
MSRB that relate to fees assessed under MSRB Rules A-12 and A-13,
facilitating payment of such invoices, and acting as the MSRB’s first
point of contact regarding billing and payment questions for such fees.
The addition of this contact would assist registrants by directing the
MSRB’s billing questions to the individual at the registered entity,
thereby avoiding unnecessary communications with the primary
regulatory contact.
o Compliance Contact: The compliance contact would be an individual
capable of competently responding to inquiries from the MSRB about
registrants’ monitoring of day-to-day operations, internal controls, and
policies and procedures established to comply with applicable rules
and regulations. Also, the compliance contact, primary regulatory
contact or optional regulatory contact would be required to annually
affirm of the information in Form A-12.
o Primary & Optional Data Quality Contact: Each registrant would be
required to identify an individual that would respond to MSRB
inquiries relating to the quality and control of the data the registrant
transmits to the MSRB as part of its trade reporting and other
regulatory obligations. 7 Registrants would also have the option to
7
There are no data submission requirements for municipal advisors or dealers exempt from
the transaction reporting requirements under current Rule G-14(b)(vi) (proposed Rule G14(b)(v)) at this time. However, these registrants must designate a data quality contact
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provide a second contact person capable of responding to MSRB
communications regarding the quality and control of the registrant’s
data transmissions.
o Optional Technical Contact: Registrants would have the option of
providing a technical contact that would be able to respond to inquiries
from the MSRB related to a registrant’s technical capabilities and any
technical issues in connection with trade reporting and other programs.
•
Trade Reporting: Form A-12 would require registrants to select a prescribed
method for reporting municipal securities transactions to the MSRB and
receiving and responding to transaction and error feedback messages from the
MSRB.
o Submission Information: Registrants would select among three
manners of reporting transactions to the MSRB: (1) self-report trades
using a message-based trade portal operated by the NSCC and RTTM
Web (an electronic platform maintained by NSCC-Fixed Income
Services for the submission, collection and monitoring of trade data);
(2) have their trades reported by another dealer acting as agent; or (3)
self-report through RTRS Web (a web based reporting mechanism
maintained by the MSRB for submitting, modifying and canceling
municipal securities transactions as well as for modifications to
regulatory data on inter-dealer transactions). If a registrant chooses to
submit trades through another dealer acting as agent, the registrant
because future rulemaking may impose new data submission requirements on these
registrants.
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must include the identity of such intermediary dealer to be used as a
submitter.
o Feedback Information: Registrants would be required to select among
three methods to receive and respond to transaction status and error
feedback messages from the MSRB: (1) email; (2) Process MT509
messages (a standardized electronic messaging format used by dealers
when reporting trade data from computer to computer); or (3) RTRS
Web. If registrants select to receive transaction status and error
feedback messages through email, the registrant would be required to
include the email address that would receive such messages.
o Trade Reporting Identifiers: Registrants would continue to be required
to provide certain trade reporting identifiers, as currently required
under Rule G-14. These include their Executing Broker Symbols
(EBS) (also known as Market Participant Identifiers or MPIDs)
assigned by NASDAQ and, for registrants that report transactions
using a message-based portal operated by the NSCC, their NSCC
Participant Identifier.
Rules A-14, A-15 and G-40
The entire rule language for Rules A-14, A-15 and G-40 would be deleted.
Forms RTRS and G-40
Forms RTRS and G-40 would be discontinued.
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Rule G-14(b)(iv)
Amended Rule G-14(b)(iv) would replace a requirement to provide a completed Form
RTRS with a provision exempting dealers from all of the requirements listed in Rule G-14(b),
related to trade reporting, if the dealer does not effect any municipal securities transactions or if
the dealer’s transactions in municipal securities are limited to (1) transactions in securities
without assigned CUSIP numbers, (2) transactions in municipal fund securities, or (3) interdealer transactions for principal movement of securities between dealers that are not inter-dealer
transactions eligible for comparison in a clearing agency registered with the Commission. 8
Furthermore, the amended rule would require dealers to confirm that they qualified for the
exemption as provided in proposed Rule A-12(g). 9
Rule G-14(b)(v)
The entire language from this section would be deleted.
Rule G-14(c)
The reference to the testing procedures contained in the RTRS Users Manual would be
deleted.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with Section
15B(b)(2)(C) of the Act, 10 which provides that the MSRB’s rules shall:
8
MSRB Rule G-14(b)(vi).
9
In connection with the proposed rules change, as a result of the proposed deletion of
Form RTRS, the MSRB proposes deleting the following sentence in the description of the
Facility for Real-Time Transaction Reporting and Price Dissemination (the “REALTIME TRANSACTION REPORTING SYSTEM” or “RTRS”): “The requirement for
testing and submission of a “Form RTRS” with the name of a contact person is reflected
in Rule G-14.”
10
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 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.
As summarized above, the proposed rule change removes impediments to dealers and
municipal advisors by streamlining the registration process for new registrants. The MSRB
believes that the consolidation into a single rule of requirements currently located in multiple
rules will clarify and simplify the identification of regulatory requirements. The MSRB also
believes that the new electronic form will reduce the burden on registrants who currently must
complete multiple forms to register with the MSRB. The proposed rule change also would allow
the MSRB to collect information on the business activities of registrants, which would assist the
MSRB and other appropriate regulatory authorities in regulating dealers and municipal advisors.
The MSRB also believes that the proposed rule change is consistent with Section
15B(b)(2)(J) of the Act, 11 which provides that the MSRB’s rules shall:
provide that each municipal securities broker, municipal securities dealer, and
municipal advisor shall pay to the Board such reasonable fees and charges as may
be necessary or appropriate to defray the costs and expenses of operating and
administering the Board. Such rules shall specify the amount of such fees and
charges, which may include charges for failure to submit to the Board, or to any
information system operated by the Board, within the prescribed timeframes, any
items of information or documents required to be submitted under any rule issued
by the Board.
11
15 U.S.C. 78o-4(b)(2)(J).
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The MSRB regards the obligation to pay late fees for failure to pay any fee assessed
under Rules A-12 and A-13 as reasonable for several reasons. No dealer or municipal advisor
will be obligated to pay a late fee if it remits the applicable fee under Rules A-12 or A-13 in the
timeframe required by MSRB rules. Furthermore, the MSRB believes that the existence of late
fee provisions will promote timely compliance with MSRB rules on fees.
B.
Self-Regulatory Organization’s Statement on Burden on Competition
The MSRB does not believe that the proposed rule change would impose any burden on
competition not necessary or appropriate in furtherance of the purposes of the Act. The MSRB
solicited comments on the potential burden of the proposed rule change in a request for
comment. 12 Among the questions asked were:
•
Would the proposed changes make it easier for regulated entities to understand and
follow the registration requirements of the MSRB? Are there other ways for the
MSRB to assist new registrants in meeting their registration requirements?
•
Relative to the process for registration today, do the proposed changes offer any
benefits to regulated entities?
•
To the extent the proposed changes would impose any new burdens on regulated
entities, please describe those burdens in detail and quantify them, to the extent
possible.
•
Would the waiver of the following year’s annual fee for firms that register in
September be appropriate relief for firms that seek to register at the end of a fiscal
year?
12
See MSRB Notice 2013-19 (August 19, 2013) (the “August Notice”).
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•
Would the assessment of late fees impose any undue burden on firms that fail to pay
the requisite fees in a timely fashion? If so, what alternatives should the MSRB
consider as means to promote the payment of fees in a timely manner?
•
Are there any other provisions in MSRB rules that should be consolidated into the
proposed new registration rule?
The specific comments and responses that were received to these questions are discussed
below. The MSRB believes that the proposed rule change would benefit dealers and municipal
advisors by improving the efficiency by which they register with the MSRB. Specifically, the
proposed rule change would consolidate and clarify the registration process through a single rule
and form, rather than multiple rules and forms, as is the case currently. The MSRB believes that
the proposed rule and form would reduce the amount of inquiries by registrants to the MSRB
about the registration process, thereby reducing the amount of time and expense incurred by
registrants when registering and maintaining their registration. In addition, registrants would
benefit from the changes proposed to the assessment of the annual fee by permitting regulated
entities that register and pay the annual fee in September to avoid the annual fee for the
following fiscal year. This change would reduce costs to new registrants by eliminating the need
to pay for the entire year when registering in the last month of the fiscal year.
The MSRB recognizes that there are costs of compliance associated with the proposed
rule change. The MSRB notes, however, that the requirement to submit additional information
about each regulated entity and its business activities would apply equally to all registered
entities. Moreover, the MSRB believes that other elements of the proposed rule change,
including the consolidation of various “registration” rules and forms would serve to make the
registration process more efficient for dealers and municipal advisors.
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The MSRB notes that several commenters have stated that the proposed rule change
would improve the municipal securities market and its efficient operation, and that any burden
created by the proposed rule change is outweighed by the benefits received by registrants and the
municipal securities marketplace.
C.
Self-Regulatory Organization’s Statement on Comments on the Proposed Rule
Change Received from Members, Participants, or Others
The proposed rule change was developed with input from a diverse group of market
participants. On August 19, 2013, the MSRB published the August Notice soliciting comment on
the rule proposals regarding registration under Rule A-12, Rule G-14 and Form A-12. The
MSRB received four letters in response to the August Notice. 13
DISCUSSION OF COMMENTS
Support for the Consolidation of the Registration Rules
Comments: SIFMA, NAIPFA and FSI expressed support of the consolidation of the
registration process, the proposed rules and the new electronic registration form. SIFMA stated
that the proposed rule change makes “the registration process easier to understand, and that is a
benefit to regulated entities” and that there were no additional provisions in the MSRB rules that
needed to be consolidated into the new rule. NAIPFA and FSI expressed their support of the
consolidation and wrote that the proposed rule change would simplify the registration process
and add clarity to the registration rules and process. In expressing its support for the proposed
rule change, FSI stated that the provision of the proposed rule change that allows registrants who
register in the last month of the fiscal year to not pay the annual fee for the following fiscal year
13
Comment Letters were received from: Financial Services Institute (“FSI”); National
Association of Independent Public Finance Advisors (“NAIPFA”); Securities Industry
and Financial Markets Association (“SIFMA”); and Herbert Neufeld of U.S. Bancorp
Investments, Inc. (“Neufeld/U.S. Bancorp”).
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would “allow flexibility and relief for some new registered entities”. FSI also stated that the
proposed rule change is a “net positive” that would “increase the uniformity between [the]
information collected by the MSRB and other self-regulatory organizations.” Mr. Neufeld of
U.S. Bancorp stated that he supported a simplification of the registration process that removes
ambiguities.
MSRB Response: The MSRB acknowledges these comments.
Application and Structure of Fees
Comments: SIFMA sought clarification that the initial fee assessed under Rule A-12
would be required only of new MSRB registrants and not of current registrants that have already
paid the $100 initial fee and would be submitting a new Form A-12 in compliance with the
proposed Rule A-12.
MSRB Response: MSRB would not charge existing registrants an additional $100 initial
fee for completing the new form, if such registrants have already paid the initial fee.
Creation of a New Fee: Late Fees
Comments: While FSI expressed a general concern about fee increases, it stated that it is
not opposed to the MSRB charging the late fees because such fees are “de minimis in nature.”
MSRB Response: The MSRB acknowledges these comments but notes that the
applicable standard under the Act for these fees is that they be reasonable.
Functions of Form A-12
Comments: SIFMA asked for clarification on whether registrants would be able to enter
multiple business activity types on Form A-12. SIFMA expressed concern that the part of Form
A-12 that requires regulated entities to provide the "type of business activity" in which the
regulated entity plans to conduct is singular and does not consider the fact that many regulated
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entities engage in multiple types of business activities. SIFMA recommended that Form A-12
permit a singular registration by a regulated entity for multiple business activities.
MSRB Response: On the new Form A-12, registrants would be able to indicate that they
engage in multiple types of municipal securities and/or municipal advisory activities. Therefore,
regulated entities need only complete a single Form A-12, even for multiple types of municipal
securities activities and/or multiple types of municipal advisory activities, and even if registering
as both a dealer and municipal advisor.
Improvements to Registration Forms and Process
Comments: SIFMA suggested that the MSRB use a spreadsheet to maintain the registrant
contact information similar to a spreadsheet purportedly used by the Financial Industry
Regulatory Authority (FINRA) to collect contact information for submitters to FINRA's Trade
Reporting and Compliance Engine (TRACE) system.
MSRB Response: MSRB staff has been informed by FINRA that it no longer collects
contact information in the manner described by SIFMA. Under the proposed rule change, the
trade reporting information would be entered directly on Form A-12, thereby streamlining the
registration process.
Comments: NAIPFA stated that it would welcome additional efforts by the MSRB to
harmonize its registration process with that of the SEC in terms of developing a more
standardized or uniform initial registration form/system designed to avoid the current duplicative
SEC and MSRB registration process. Also, NAIPFA suggested that the MSRB standardize its
forms and process for updating registrant information between the MSRB and the SEC.
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MSRB Response: The MSRB has reviewed the SEC forms and process established for
registering municipal advisors in creating draft Form A-12 and has harmonized the business
activities on Form A-12 with SEC Form MA.
III.
Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Within 45 days of the date of publication of this notice in the Federal Register or within
such longer period of up to 90 days (i) as the Commission may designate if it finds such longer
period to be appropriate and publishes its reasons for so finding or (ii) as to which the selfregulatory organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be
disapproved.
Solicitation of Comments
IV.
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-MSRB2013-09 on the subject line.
Paper comments:
•
Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and
Exchange Commission, 100 F Street, NE, Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2013-09. This file number should be
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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 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 am and
3:00 pm. 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; 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-2013-09 and should be submitted on or before [insert date 21 days from
publication in the Federal Register].
For the Commission, by the Division of Trading and Markets, pursuant to delegated
authority. 14
Elizabeth M. Murphy
Secretary
14
17 CFR 200.30-3(a)(12).
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EXHIBIT 2
MSRB NOTICE 2013-19 (AUGUST 19, 2013)
REQUEST FOR COMMENT ON PROPOSED RULE CHANGE TO
CONSOLIDATE REGISTRATION REQUIREMENTS
The Municipal Securities Rulemaking Board ("MSRB" or “Board”) is seeking comment on proposed rule
changes that would set forth in a single rule the requirements to and process by which brokers, dealers and
municipal securities dealers ("dealers") and municipal advisors (collectively "regulated entities") register with
the MSRB. The substance of the single rule would be similar to that of existing rules, with the exception of
new requirements to provide additional contact and firm identification information, as well as data concerning
the scope of dealer activities. The proposed changes would consolidate the requirements for new MSRB
registrants into MSRB Rule A-12 and would eliminate MSRB Rules A-14, on the Board's annual fee, A-15, on
the notification to the Board of a change in status or a change of name or address, and G-40, on electronic
mail contacts, and modify MSRB Rule G-14(b)(iv). Additionally, the proposed changes would eliminate two
existing MSRB forms, Forms RTRS and G-40, and create a single, consolidated electronic registration form,
Form A-12.
Comments should be submitted no later than September 20, 2013, and may be submitted in electronic or
paper form. Comments may be submitted electronically by clicking here. Comments submitted in paper form
should be sent to Ronald W. Smith, Corporate Secretary, Municipal Securities Rulemaking Board, 1900 Duke
Street, Suite 600, Alexandria, VA 22314. All comments will be available for public inspection on the MSRB's
website.[1]
Questions about this notice should be directed to Lawrence P. Sandor, Deputy General Counsel, at 703-7976600.
BACKGROUND
Currently, regulated entities must reference a series of MSRB rules when registering with the MSRB, as there
is no single "registration" rule. Prior to engaging in municipal securities or municipal advisory activities,
regulated entities must, consistent with Rule A-12, supply basic identifying information to the MSRB and pay
an initial fee. Each regulated entity that changes its name or address, or ceases to be engaged in municipal
securities business, whether voluntarily or otherwise, must so notify the MSRB, pursuant to Rule A-15. Also,
regulated entities must complete Forms RTRS and G-40, which are required by Rules G-14(b)(iv) and G-40,
respectively. These rules require registrants to provide the MSRB with an official contact, as well as other
business information, and to provide the MSRB with information necessary to process their transactions
correctly, such as their trading symbol. Additionally, under Rule A-14, regulated entities must pay an annual
fee upon registration and annually thereafter.
The purpose of the proposed registration rule, revised Rule A-12, is to delineate succinctly and clearly in one
location the requirements and process for MSRB registration and to resolve certain other regulatory issues
discussed below that are not fully addressed by existing MSRB rules. The proposed changes would result in
the elimination of three current MSRB rules, Rules A-14, A-15, and G-40, as well as two forms, Forms RTRS
and G-40. These forms would be replaced by the single new electronic Form A-12.
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The MSRB believes that the proposed changes will clarify and facilitate the registration process for new
registrants, who, as noted, currently must follow requirements spread across several rules and forms. The
MSRB staff regularly provides guidance to new registrants regarding registration, and the MSRB believes that
a streamlined “registration” rule will reduce the necessity for such staff guidance and the use of outside
counsel. The MSRB also believes that relief is warranted for new registrants that register in the last month of
the MSRB's fiscal year in the form of a waiver of the following year's annual registration fee. This relief is
intended to address concerns raised by regulated entities that they must pay two annual fees in a short period
of time if they register with the MSRB at the end of a fiscal year. The proposed changes would impose a late
fee on those regulated entities that fail to pay certain MSRB fees timely.
SUMMARY OF THE PROPOSAL
Revised Rule A-12 would require regulated entities to register with the Board prior to engaging in any
municipal securities or municipal advisory activities. As a precondition to MSRB registration, dealers and
municipal advisors would be required to register with the SEC, notify the Financial Industry Regulatory
Authority (“FINRA”) or the appropriate bank regulator, as applicable, complete Form A-12 and pay the initial
and annual registration fees. Necessary information collected previously on Forms RTRS and G-40 would be
collected on Form A-12. This includes information regarding a dealer’s executing broker symbol assigned by
NASDAQ and any participant member identification assigned by the National Securities Clearing
Corporation. It also includes other trade reporting information and contact information currently collected on
Form RTRS and Form G-40.
Under the proposed changes, rather than provide a primary electronic mail contact, the registrant would
provide contact information on Form A-12 for a primary regulatory contact, optional regulatory contact, master
account administrator, billing contact, compliance contact, data quality contact, and optional technical contact.
For dealers, the primary regulatory contact would be required to be a registered principal. It would be the
responsibility of the primary regulatory contact to receive official communications from the MSRB, similar to
the role of the primary electronic mail contact under Rule G-40.
Based on questions from regulated entities as to whether they can reference their status as an MSRB
registrant in advertising and, if so, how to do so, the rule change provides that, once registered, a regulated
entity may use the designation “MSRB registered” in its advertising, including on its website.
The initial and annual fee amounts would remain unchanged, though the MSRB will review its fee structure
periodically. The annual fee would continue to be due by October 31 each year, but revised Rule A-12 would
provide that a regulated entity that registers in September and pays an annual fee at the time of registration
need not pay the annual fee for the following fiscal year. Consistent with the practices of other SROs, the
MSRB will institute late fees as a means to encourage timely payment of fees. Any registrant that fails to pay
the annual fee or any fee due under Rule A-13 (underwriting, transaction and technology fees) will be
assessed a monthly late fee computed based on the overdue balance and the prime rate plus an additional
$25 per month.
The proposal also would provide for an annual affirmation process similar to the current process under Rule G
-40, which would require registrants to review, update and affirm the information on Form A-12 during the first
seventeen business days of each calendar year. Similar to the current requirement in Rule A-15, registrants
would be required to update Form A-12 if any information on the form becomes inaccurate or if the firm
ceases to be engaged in municipal securities or municipal advisory activities.
Finally, to have more complete data concerning the scope of activities engaged in by MSRB registrants,
regulated entities would be required to inform the MSRB of the types of municipal securities and municipal
advisory activities engaged in by such firms.
REQUEST FOR COMMENT
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The MSRB is requesting comment from regulated entities and other market participants regarding the
proposed changes to Rules A-12 and G-14, the proposed elimination of Rules A-14, A-15, and G-40, and the
replacement of Forms RTRS and G-40 with Form A-12. In addition to the substance of the proposed
changes, the MSRB requests that commenters address the following questions, and include relevant data
wherever possible:
1. Would the proposed changes make it easier for regulated entities to understand and follow the
registration requirements of the MSRB? Are there other ways for the MSRB to assist new registrants in
meeting their registration requirements?
2. Relative to the process for registration today, do the proposed changes offer any benefits to regulated
entities?
3. To the extent the proposed changes would impose any new burdens on regulated entities, please
describe those burdens in detail and quantify them, to the extent possible.
4. Would the waiver of the following year’s annual fee for firms that register in September be appropriate
relief for firms that seek to register at the end of a fiscal year?
5. Would the assessment of late fees impose any undue burden on firms that fail to pay the requisite fees in
a timely fashion? If so, what alternatives should the MSRB consider as means to promote the payment
of fees in a timely manner?
6. Are there any other provisions in MSRB rules that should be consolidated into the proposed new
registration rule?
August 19, 2013
*****
TEXT OF PROPOSED AMENDMENTS[2]
Rule A-12: Registration Initial Fee
(a) Registration Requirements. Each broker, dealer and municipal securities dealer prior to engaging in
municipal securities activities must register with the Board, and each municipal advisor prior to engaging in
municipal advisory activities must register with the Board. Prior to registration, each broker, dealer, municipal
securities dealer and municipal advisor must register as such with the Commission and, as applicable,
provide the Board with evidence of notification to a registered securities association or appropriate regulatory
agency of its intent to engage in municipal securities and/or municipal advisory activities. Registration will not
become effective until the broker, dealer, municipal securities dealer or municipal advisor is notified by the
Board that its Form A-12 is complete and its initial registration fee and annual registration fee have been
received and processed.
(b) Initial Registration Fee. Each broker, dealer, municipal securities dealer and municipal advisor shall pay
to the Board an initial registration fee of $100, which shall be payable in the manner provided by the MSRB
Registration Manual. A firm registering as a broker, dealer or municipal securities dealer and as a municipal
advisor need only pay one initial registration fee, so long as such firm remains continuously registered with
the Board.
(c) Annual Registration Fee. As part of its initial registration and annually thereafter, based on the fiscal year
of the Board, each broker, dealer, municipal securities dealer and municipal advisor shall pay to the Board an
annual registration fee of $500. The annual registration fee shall be payable in the manner provided by the
MSRB Registration Manual. Subsequent to initial registration, the annual registration fee is due by October
31 each year. For any broker, dealer, municipal securities dealer or municipal advisor that registers and pays
an annual registration fee during the month of September, the annual registration fee for the following fiscal
year beginning in October shall be waived.
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(d) Late Fees. Any broker, dealer, municipal securities dealer or municipal advisor that fails to pay any fee
assessed under this rule or Rule A-13 within 30 days of the invoice date shall pay a monthly late fee of $25
and a late fee on the overdue balance, computed according to the Prime Rate, as provided for in the MSRB
Registration Manual, until paid.
(e) Registration Designation. Any broker, dealer, municipal securities dealer or municipal advisor that is
registered with the Board may use the designation “MSRB registered” in its advertising, including on its
website.
(f) Designated Contacts. Each broker, dealer, municipal securities dealer and municipal advisor must
designate, on Form A-12, a Primary Regulatory Contact, Master Account Administrator, Billing Contact,
Compliance Contact, and Data Quality Contact, and may designate an Optional Regulatory Contact and/or
Optional Technical Contact, for purposes of communication between the firm and the Board. Each Primary
and Optional Regulatory Contact shall, in the case of brokers, dealers, or municipal securities dealers, be a
registered municipal securities principal (Series 53 or, in the case of a firm solely engaged in municipal fund
securities business, Series 51 or 53) of the broker, dealer or municipal securities dealer. Each Primary and
Optional Regulatory Contact shall, in the case of municipal advisors, be a municipal advisory principal who
shall be authorized to receive official communications from the Board. It shall be the responsibility of the
Billing Contact to receive Board invoices and to respond to any Board inquiries regarding fees.
(g) Trade Reports. Each broker, dealer and municipal securities dealer shall provide to the Board, prior to
registering with the Board, the information required by Form A-12 to ensure that its trade reports can be
processed correctly, or shall confirm that it qualifies for the exemption for trade reporting pursuant to Rule G14(b)(vi) and shall update such information promptly to ensure its continued accuracy.
(h) Compliance with Regulatory Requests. Each broker, dealer, municipal securities dealer and municipal
advisor shall comply with any request by the Board or the appropriate regulatory agency for required
information within 15 days or such longer period as may be agreed to by the Board or the appropriate
regulatory agency.
(i) Form A-12 Reporting Requirements. Each broker, dealer, municipal securities dealer and municipal
advisor shall provide to the Board, prior to registration with the Board, the information required by Form A-12
in a designated electronic format and in such manner as set forth in the MSRB Registration Manual.
(j) Form A-12 Updates and Withdrawal. A broker, dealer, municipal securities dealer or municipal advisor
must update Form A-12 within 30 days, if any information therein becomes inaccurate or if it ceases to be
engaged in municipal securities or municipal advisory activities, whether voluntarily or involuntarily through a
regulatory or judicial bar, suspension or otherwise.
(k) Form A-12 Annual Affirmation. Each broker, dealer, municipal securities dealer and municipal advisor
shall review, update as necessary, and affirm Form A-12 during the Annual Affirmation Period that
commences on January 1 of each calendar year and ends 17 business days thereafter. The annual
affirmation may be completed by the Primary Regulatory Contact or an Optional Regulatory Contact
designated by the firm. Any broker, dealer, municipal securities dealer or municipal advisor that submits its
initial Form A-12 during the Annual Affirmation Period need not affirm Form A-12 during that period.
(l) MSRB Registration Manual. The MSRB Registration Manual, as updated or amended from time to time, is
comprised of the specifications for the reporting of information required under this rule, the instructions for
submitting Form A-12, and other information relevant to payments and reporting under this rule. The MSRB
Registration Manual is located at www.msrb.org .
Prior to effecting any transaction in or inducing or attempting to induce the purchase or sale of any municipal
security, or engaging in municipal advisory activities, a broker, dealer, municipal securities dealer, or
municipal advisor shall pay to the Board an initial fee of $100, accompanied by a written statement setting
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forth the name, address and Securities and Exchange Commission registration number of the broker, dealer,
municipal securities dealer, or municipal advisor on whose behalf such fee is paid. The Commission
registration number shall also be set forth on the face of the remittance. Such fee shall be payable at the
offices of the Board. In the event any person subject to this rule shall fail to pay the required fee, the Board
may recommend to the Commission that the registration of such person with the Commission be suspended
or revoked. No municipal advisor shall be in violation of this rule for failure to pay this initial fee in advance of
January 1, 2011.
*****
Rule G-14: Reports of Sales or Purchases
(a) No change.
(b) Transaction Reporting Requirements.
(i) - (iii) No change.
(iv) The provisions of this section (b) shall not apply to a dealer if such dealer does not effect any
transactions in municipal securities or if such dealer’s transactions in municipal securities are limited
exclusively to transactions described in subsection (b)(vi) of this rule and the dealer has confirmed that it is
qualified for this exemption as provided in Rule A-12(g). Each dealer shall provide to the Board on Form
RTRS information necessary to ensure that its trade reports can be processed correctly. Such information
includes the manner in which transactions will be reported, the broker symbol used by the dealer, the identity
of and information on any intermediary to be used as a Submitter, information on personnel that can be
contacted if there are problems in RTRS submissions, and information necessary for systems testing with
RTRS. Information provided on Form RTRS shall be kept current by notifying the MSRB when contact
information or other information provided on the form changes.
(v) - (vi) No change.
*****
Rule A-14: Annual Fee
In addition to any other fees prescribed by the rules of the Board, each broker, dealer, municipal securities
dealer, and municipal advisor shall pay an annual fee to the Board of $500, with respect to each fiscal year of
the Board in which the broker, dealer, municipal securities dealer, or municipal advisor conducts municipal
securities activities or municipal advisory activities. Except as set forth below, such fee must be received at
the office of the Board no later than October 31 of the fiscal year for which the fee is paid, accompanied by
the invoice sent to the broker, dealer, municipal securities dealer, or municipal advisor by the Board, or a
written statement setting forth the name, address and Commission registration number of the broker, dealer,
municipal securities dealer, or municipal advisor on whose behalf the fee is paid. No municipal advisor shall
be in violation of this rule for failure to pay this annual fee in advance of January 1, 2011.
*****
Rule A-15: Notification to Board of Change in Status or Change of Name or Address
(a) Procedure for Notifying Board of Change in Status. A broker, dealer, municipal securities dealer, or
municipal advisor must promptly notify the Board if it ceases to be engaged in municipal securities activities or
municipal advisory activities, whether voluntarily or because it has been barred or suspended from engaging
in municipal securities activities or municipal advisory activities by the appropriate regulatory agency, judicial
authority or otherwise. A broker, dealer, or municipal securities dealer must also notify the Board if it has
been expelled or suspended from membership or participation in a national securities exchange or registered
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securities association. Any notification required by this rule shall be provided in a written statement setting
forth such broker’s, dealer’s, municipal securities dealer’s, or municipal advisor's name, address, Commission
registration number, and a description of, and the reasons for, its change in status.
(b) Obligation to Pay Fees. A broker, dealer, municipal securities dealer, or municipal advisor that files
notification with the Board pursuant to section (a) of this rule shall be obligated to pay the fees owed to the
Board at the time of filing of such notification.
(c) Notification of Name or Address Change. Each broker, dealer, municipal securities dealer, or municipal
advisor that has followed the procedure set forth in Board Rule A-12 shall notify the Board promptly of any
changes to the information required by Rule A-12.
*****
Rule G-40: Electronic Mail Contacts
(a)(i) Each broker, dealer, municipal securities dealer, or municipal advisor shall maintain an Internet
electronic mail account to permit communication with the MSRB, and shall appoint a Primary Electronic Mail
Contact to serve as the official contact person for purposes of electronic mail communication between the
broker, dealer, municipal securities dealer, or municipal advisor and the MSRB. Each Primary Electronic Mail
Contact of a broker, dealer, or municipal securities dealer shall be a registered municipal securities principal
(Series 53 or Series 51) of the broker, dealer or municipal securities dealer.
(ii) Each broker, dealer, municipal securities dealer, or municipal advisor may appoint an Optional
Electronic Mail Contact for purposes of electronic mail communication between the broker, dealer,
municipal securities dealer, or municipal advisor and the MSRB.
(b)(i) Upon completion of its Rule A-12 submissions and assignment of an MSRB Registration Number, each
broker, dealer, municipal securities dealer, or municipal advisor shall electronically submit to the MSRB a
completed Form G-40 setting forth, in the prescribed format, the following information:
(A) The name of the broker, dealer, municipal securities dealer, or municipal advisor and
the date.
(B) The MSRB Registration Number of the broker, dealer, municipal securities dealer, or
municipal advisor, including any separate MSRB Registration Number assigned if
registered both as a municipal advisor and a broker, dealer, or municipal securities dealer.
(C) The name of the Primary Electronic Mail Contact, and his/her electronic mail address
and telephone number.
(D) The name of the Optional Electronic Mail Contact, if any, and his/her electronic mail
address and telephone number.
(E) The name, title and telephone number of the person who prepared the form.
(F) In the case of a municipal advisor, the categories of municipal advisor that describe the
municipal advisor as provided on Form G-40.
(ii) A broker, dealer, municipal securities dealer, or municipal advisor may change the information
previously provided by electronically submitting to the MSRB an amended Form G-40. In addition,
each broker, dealer, municipal securities dealer, or municipal advisor shall update its information
promptly, but in any event not later than 30 days following any change in such information.
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(c)(i) Each broker, dealer, municipal securities dealer, or municipal advisor shall review and, if necessary,
update its information and submit such information electronically to the MSRB within 17 business days after
the end of each calendar year.
(ii) Any broker, dealer, municipal securities dealer, or municipal advisor that, during the 17 businessday update period, submits its initial Form G-40 or modifies or affirms its information shall be
deemed to be in compliance with the annual update requirement applicable to the year immediately
preceding that 17 business-day update period.
(d) Each broker, dealer, municipal securities dealer, or municipal advisor shall promptly comply with any
request by the appropriate regulatory agency for required information, but in any event not later than 15 days
following any such request, or such longer period that may be agreed to by the appropriate regulatory agency.
(e) No municipal advisor shall be in violation of this rule for failure to complete Form G-40 in advance of
January 1, 2011.
*****
Form A-12
Each broker, dealer, municipal securities dealer and municipal advisor shall, prior to registering with
the Board, provide the following information:
(i) Firm Information:
(A) Name of Firm or Individual;
(B) SEC identification number;
(C) FINRA identification (Central Registration Depository) number, if applicable;
(D) Legal entity identifier, if any;
(E) Executing broker symbol(s) (Market Participant Identifier) assigned by
NASDAQ, if any; and
(F) Participant member identification number assigned by National Securities
Clearing Corporation, if any.
(ii) Applicant’s Form of Organization:
(A) Sole Proprietorship (Individual), Limited Liability Company, US Federally
Chartered Bank, Partnership, Limited Liability Partnership, Other. Indicate where
the entity is incorporated, organized or established.
(iii) Registration Categories:
(A) Broker-Dealer;
(B) Bank Dealer;
(C) Municipal Advisor.
(iv) Type of Business Activity:
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(A) Municipal Advisor (Financial Advisor, GIC Broker/Advisor, Investment
Advisor/Bonds Proceeds Investment, Placement Agent, Solicitor/Finder,
Swap/Derivative Advisor, Tax, Third Party Marketer, Other);
(B) Municipal Fund Securities (529 Plan Primary Distributor, 529 Plan Sales, Local
Government Investment Pool Distributor/Sales, Other);
(C) Dealer Activities (Underwriting, Retail Sales, Research, Alternative Trading
System, Broker’s Broker Activities, Institutional Sales, Online Brokerage, TradingProprietary, Trading-Inter-Dealer, Other).
(v) Business Information:
(A) Business address, mailing address, phone number, and fax number;
(B) Website address, if any; and
(C) E-mail address.
(vi) Other Names (d/b/a)
(vii) Contact Information – name, title, address, phone number, fax number and email
address for the following:
(A) Primary Regulatory Contact;
(B) Optional Regulatory Contact;
(C) Master Account Administrator;
(D) Billing Contact;
(E) Compliance Contact;
(F) Data Quality Contact; and
(G) Optional Technical Contact.
(viii) Trade Reporting Information:
(A) Method by which dealer will report transactions;
(B) Identity of dealer(s) employed as agent for the purpose of submitting
transaction information;
(C) Method by which dealer will review transaction status information;
(D) If method selected is email, email address to which transaction status
information should be sent; and
(E) Identity of any executing broker symbol used to report transactions effected
when acting as a broker’s broker.
[1] Comments are posted on the MSRB website without change. Personal identifying information
such as name, address, telephone number, or email address, will not be edited from submissions.
Therefore, commenters should only submit information that they wish to make available publicly.
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[2] Underlining indicates new language; strikethrough denotes deletions.
©2013 Municipal Securities Rulemaking Board. All Rights
Reserved.
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Alphabetical List of Comment Letters on MSRB Notice 2013-19 (August 19, 2013)
1. Financial Services Institute: Letter from David T. Bellaire, Executive Vice President and
General Counsel, dated September 20, 2013
2. National Association of Independent Public Finance Advisors: Letter from Jeanine Rodgers
Caruso, President, dated September 20, 2013
3. Securities Industry and Financial Markets Association: Letter from Leslie M. Norwood,
Managing Director and Associate General Counsel, dated September 20, 2013
4. U.S. Bancorp Investments, Inc.: E-mail from Herbert Neufeld dated August 19, 2013
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Financial Services Institute
607 14th Street NW, Suite 750
Washington, D.C. 20005
888 373-1840 | financialservices.org
VIA ELECTRONIC MAIL
September 20, 2013
Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1900 Duke Street, Suite 600
Alexandria, VA 22314
Re:
Notice of Request for Public Comment on Proposed Rule Change to Consolidate Registration
Requirements
Dear Mr. Smith:
On August 19, 2013, the Municipal Securities Rulemaking Board (MSRB) published its request for public
comment on a proposed rule change to consolidate registration requirements (Proposed Changes). 1 The
purpose of the Proposed Changes is to set forth in a single rule the requirements to and process by which
brokers, dealers, municipal securities dealers and municipal advisors (Regulated Entities) register with the
MSRB. The Proposed Changes would consolidate the requirements for new MSRB registrants into MSRB
Rule A-12 and replace: MSRB Rules A-14 on the MSRB’s annual fee; A-15 on the notification to the
Board of a change in status or change of name or address; and G-40 on electronic mail contacts. The
Proposed Changes would also modify MSRB Rule G-14(b)(iv) and replace two existing MSRB forms (Form
RTRS and Form G-40) with a single consolidated electronic registration form, Form A-12. While the
Proposed Changes consolidate existing MSRB guidance, new information is requested from firms
regarding additional contact and firm identification information, as well as data concerning the scope of
dealer activities in the municipal market. The Proposed Changes will also allow the MSRB to institute late
fees to encourage timely payment of both the annual fee charged on firms and fees assessed under
MSRB Rule A-13.2
The Financial Services Institute 3 (FSI) appreciates the opportunity to comment on this important proposal.
While FSI is concerned about any increase in the overall fee burden on firms, FSI believes the Proposed
Changes are net positive and increase the uniformity between information collected by the MSRB and
other self-regulatory organizations (SROs), namely the Financial Industry Regulatory Authority (FINRA).
Moreover, a consolidated registration rule and registration form will provide increased clarity and
efficiency in the registration process.
Request for Comment on Proposed Rule Change to Consolidate Registration Requirements, MSRB Notice 2013-19,
available at: http://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2013/2013-19.aspx?n=1.
2 Fees charged under MSRB Rule A-13 include underwriting, transaction and technology fees.
3 The Financial Services Institute, Voice of Independent Broker-Dealers and Independent Financial Advisors, was
formed on January 1, 2004. Our members are broker-dealers, often dually registered as federal investment
advisers, and their independent contractor registered representatives. FSI has 100 Broker-Dealer member firms that
have more than 138,000 affiliated registered representatives serving more than 14 million American households. FSI
also has more than 35,000 Financial Advisor members.
1
55 of 89
Ronald W. Smith
September 20, 2013
Page 2 of 4
Background on FSI Members
The independent broker-dealer (IBD) community has been an important and active part of the lives of
American investors for more than 30 years. The IBD business model focuses on comprehensive financial
planning services and unbiased investment advice. IBD firms also share a number of other similar business
characteristics. They generally clear their securities business on a fully disclosed basis; primarily engage in
the sale of packaged products, such as mutual funds and variable insurance products; take a
comprehensive approach to their clients’ financial goals and objectives; and provide investment advisory
services through either affiliated registered investment adviser firms or such firms owned by their
registered representatives. Due to their unique business model, IBDs and their affiliated financial advisers
are especially well positioned to provide middle-class Americans with the financial advice, products, and
services necessary to achieve their financial goals and objectives.
In the U.S., approximately 201,000 independent financial advisers – or approximately 64 percent of all
practicing registered representatives – operate in the IBD channel. 4 These financial advisers are selfemployed independent contractors, rather than employees of the IBD firms. These financial advisers
provide comprehensive and affordable financial services that help millions of individuals, families, small
businesses, associations, organizations, and retirement plans with financial education, planning,
implementation, and investment monitoring. Clients of independent financial advisers are typically “main
street America” – it is, in fact, almost part of the “charter” of the independent channel. The core market of
advisers affiliated with IBDs is comprised of clients who have tens and hundreds of thousands as opposed
to millions of dollars to invest. Independent financial advisers are entrepreneurial business owners who
typically have strong ties, visibility, and individual name recognition within their communities and client
base. Most of their new clients come through referrals from existing clients or other centers of influence.5
Independent financial advisers get to know their clients personally and provide them investment advice in
face-to-face meetings. Due to their close ties to the communities in which they operate their small
businesses, we believe these financial advisers have a strong incentive to make the achievement of their
clients’ investment objectives their primary goal.
FSI is the advocacy organization for IBDs and independent financial advisers. Member firms formed FSI to
improve their compliance efforts and promote the IBD business model. FSI is committed to preserving the
valuable role that IBDs and independent advisers play in helping Americans plan for and achieve their
financial goals. FSI’s primary goal is to ensure our members operate in a regulatory environment that is
fair and balanced. FSI’s advocacy efforts on behalf of our members include industry surveys, research, and
outreach to legislators, regulators, and policymakers. FSI also provides our members with an appropriate
forum to share best practices in an effort to improve their compliance, operations, and marketing efforts.
Comments
FSI appreciates the opportunity to comment on the Proposed Changes. While FSI is concerned about the
overall fee burden on firms, FSI believes that the Proposed Changes are net positive as they enhance
uniformity between MSRB and FINRA rules, promote clarity, and reduce the resource burden on firms’
efforts to comply with MSRB rules.
FSI is Concerned About the Overall Burden of Regulatory Fees on Member Firms - FSI remains
concerned about any increased fees imposed by regulatory agencies. Broker-dealers are constantly
faced with increased compliance and regulatory costs in addition to the fees imposed by regulatory
agencies such as FINRA and the MSRB. The Proposed Changes will impose new late fees on MSRB
registered firms for late payment of annual registration fees or the transaction, underwriting, and
technology fees under MSRB Rule A-13. These late fees will be computed based on the overdue balance
and the prime rate plus an additional $25 per month. As these late fees are de minimus in nature, FSI is
4
5
Cerulli Associates at http://www.cerulli.com/.
These “centers of influence” may include lawyers, accountants, human resources managers, or other trusted advisers.
56 of 89
Ronald W. Smith
September 20, 2013
Page 3 of 4
not opposed to the MSRB charging the late fees for registration. 6 However, FSI and its membership will
continue to monitor these fees to ensure that they do not become an excessive burden for MSRB registered
firms. In addition, FSI supports the modification under the Proposed Changes that allows a regulated
entity that registers and pays the annual registration fee in September to not pay the annual fee for the
following fiscal year despite annual fees being due by October 31. This modification will allow flexibility
and relief for some newly registered entities.
FSI Supports the Increased Uniformity and Harmonization of Similar MSRB and FINRA Rules - Under
Rule A-12(f) of the Proposed Changes, firms will be required to provide the MSRB with significantly more
contact information for firm personnel engaged in municipal securities activities.7 Firms will also now be
required to provide information to the MSRB about the types of municipal securities and advisory activities
engaged in by the firms, on newly created Form A-12. 8 Broker-dealers are currently required to provide
similar information to FINRA on FINRA Form BD 9 and through the FINRA contact system as required by
NASD Rule 1160. The additional requested information promotes uniformity with FINRA requirements and
will provide for more enhanced and effective communication between the MSRB and Regulated Entities.
FSI supports increased harmonization between the rulebooks of FINRA and the MSRB as it promotes more
effective compliance by Regulated Entities.
The Consolidation and Simplification of Registration Requirements Will Promote More Effective
Compliance - FSI supports the MSRB’s effort to consolidate its multiple rules and forms regarding MSRB
registration into the new Rule A-12 under the Proposed Changes. This consolidation and simplification will
promote more effective compliance with MSRB registration requirements by Regulated Entities and free up
resources that firms can dedicate to their ongoing compliance responsibilities. FSI has consistently
supported the simplification and harmonization of regulatory rules as we believe that clear, uniform
guidelines are the key to successful compliance. We applaud the MSRB for its efforts to enhance resource
efficiencies while maintaining effective regulatory requirements in the municipal securities industry.
Conclusion
We are committed to constructive engagement in the regulatory process and, therefore, welcome the
opportunity to work with the MSRB on this and other important regulatory efforts.
Thank you for your consideration of our comments. Should you have any questions, please contact me at
(202) 803-6061.
Respectfully submitted,
6 FSI member firms have indicated that the annual registration fee assessed under MSRB Rule A-14 ($500) and the
transaction, technology and underwriting fees charged under MSRB Rule A-13 are relatively minor. In contrast,
FINRA’s new member fee ranges from $7,500 to $55,000 depending on the size of the new member applicant and
from $5,000 to $35,000 for continuing membership, depending on size of firm. See Regulatory Notice 12-32,
FINRA, available at:
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p127238.pdf
7 Firms will now be required to designate on Form A-12, a Primary Regulatory Contact, Master Account
Administrator, Billing Contact, Compliance Contact, and a Data Quality Contact and may also designate an Optional
Regulatory Contact and/or an Optional Technical Contact for purposes of communication between the firm and the
MSRB.
8 This information includes whether they act as a Municipal Advisor (as a Financial Advisor, GIC Broker/Advisor,
Investment Advisor/Bonds Proceed Investment, Placement Agent, Solicitor/Finder, Swap/Derivative Advisor, Tax,
Third Party Marketer or Other), the types of municipal securities they involved with (529 Plan Primary Distributor,
529 Plan Sales, Local Government Investment Pool Distributor/Sales or Other) and the activities they carry out as a
dealer (Underwriting, Retail Sales, Research, Alternative Trading System, Broker’s Broker Activities, Institutional Sales,
Online Brokerage, Trading-Proprietary, Trading Inter-Dealer or Other).
9 See FINRA Form BD, p. 5; Form BD Schedule D; see also NASD Rule 1160; FINRA Regulatory Notice 07-42,
available at: http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p036732.pdf
57 of 89
David T. Bellaire, Esq.
Executive Vice President & General Counsel
Ronald W. Smith
September 20, 2013
Page 4 of 4
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National Association of Independent
Public Finance Advisors
P.O. Box 304
Montgomery, Illinois 60538.0304
630.896.1292 • 209.633.6265 Fax
www.naipfa.com
September 20, 2013
Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1900 Duke Street
Suite 600
Alexandria, VA 22314
Re:
MSRB Notice 2013-19
The National Association of Independent Public Finance Advisors (“NAIPFA”) appreciates this
opportunity to provide comments in connection with Municipal Securities Rulemaking Board
(“MSRB”) Notice 2013-19 – Request for Comment on Proposed Rule Change to Consolidate
Registration Requirements (the “Notice”).
NAIPFA supports the MSRB’s proposal to consolidate current MSRB Rules A-12, A-14, A-15
and G-40. We agree with the MSRB’s assessment that consolidating these rules will promote
efficiencies within the initial and annual registration processes. We would also welcome efforts
by the MSRB to harmonize its registration process with that of the SEC in terms of developing a
more standardized or uniform initial registration form/system designed to avoid the currently
duplicative SEC and MSRB registration processes. In addition, to the extent that the forms for
updating registrant information with the SEC and MSRB could be made standardized or uniform,
this too would be welcome.
Please contact me if you should have any questions or require any clarification relative to the
foregoing.
Sincerely,
Jeanine Rodgers Caruso, CIPFA
President, National Association of Independent Public Finance Advisors
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September 20, 2013
Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1900 Duke Street
Suite 600
Alexandria, VA 22314
Re: MSRB Notice 2013-19: Request for Comment on Proposed Rule
Change to Consolidate Registration Requirements
Dear Mr. Smith:
The Securities Industry and Financial Markets Association (“SIFMA”)1
appreciates this opportunity to respond to Notice 2013-192 (the “Notice”) issued by
the Municipal Securities Rulemaking Board (the “MSRB”) in which the MSRB is
requesting comment on proposed rule changes that would set forth in a single rule
the requirements to and process by which brokers, dealers and municipal securities
dealers (“dealers”) and municipal advisors (collectively “regulated entities”)
register with the MSRB. SIFMA applauds the MSRB in its efforts to make it easier
for firms to understand and follow the registration requirements of the MSRB.
SIFMA and its members generally are supportive of consolidating rules,
particularly when the effects are clarifying the rules, streamlining processes and
reducing the compliance burdens on regulated entities. We do have some specific
comments about certain aspects of this proposal that are more fully described
below.
1
The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of
hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry,
investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in
the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the
Global Financial Markets Association (GFMA). For more information, visit www.sifma.org.
2
MSRB Notice 2013-19 (August 19, 2013).
New York | Washington
120 Broadway, 35th Floor | New York, NY 10271-0080 | P: 212.313.1200 | F: 212.313.1301
www.sifma.org | www.investedinamerica.org
60 of 89
Mr. Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
Page 2 of 3
I.
The Proposed Changes Generally
The MSRB is proposing changes to Rules A-12 and G-14, the elimination of
Rules A-14, A-15, and G-40, and the replacement of Forms RTRS and G-40 with
Form A-12. SIFMA feels this rule consolidation makes the registration process
easier to understand, and that is a benefit to regulated entities. At this time, we do
not have any further substantive suggestions for the MSRB to assist new registrants
in meeting their registration requirements, and do not feel that there are other
provisions in the MSRB rules that should be consolidated into the proposed new
registration rule. SIFMA would like to confirm that regulated entities would only
need to submit new or changed information in Form A-12 when the new Form A-12
takes effect and annually thereafter.
II.
Fees
We do not feel these proposed changes would impose any significant new
burdens on regulated entities. SIFMA feels the assessment of late fees does not
impose an undue burden on firms, as regulated entities typically pay their
registration fees on a timely basis. We also feel that the waiver of the following
year’s annual fee for new firms that register in September is appropriate relief for
firms that seek to register at the end of a fiscal year. We also wanted to confirm
that the $100 initial fee is only applicable to new MSRB registrants, and not to all
regulated entities which will need to file a revised Form A-12. SIFMA appreciates
the consideration of these matters by the MSRB, and believes the treatment of
payment of fees in revised Rule A-12 is fair and reasonable.
III.
Annual Certification and Firm Contact Information Spreadsheet
The MSRB, in Rule A-12(f), sets forth a number of designated contacts that
a regulated entity must designate and specify on its Form A-12. SIFMA and its
members applaud this change. Under current Rule G-40, there is one and only one
designated contact for MSRB regulatory purposes. This singular point of contact
between a regulated entity and the regulator created unintended points of failure and
unnecessary delays in responding to requests from the MSRB or receiving
information from the MSRB. For instance, a G-40 contact at a bank dealer must
take a regulation-mandated two week vacation without access to their email and
voicemail. Regular vacations, business travel, sick days, and other days the current
G-40 contact is unavailable highlight the weaknesses in a single point of contact
system. Additionally, the G-40 contact typically would route the MSRB’s request
for information to the appropriate internal contact; in new Rule A-12, the MSRB
will be able to reach out directly to appropriate personnel at regulated entities. We
encourage the MSRB to use a spreadsheet for contact information similar to the one
developed by the Financial Industry Regulatory Authority (FINRA) for use by
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Mr. Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
Page 3 of 3
regulated entities related to FINRA’s Trade Reporting And Compliance Engine
(TRACE) System. SIFMA’s member firms are familiar with this methodology for
designating firm contact information and feel that the enhanced connectivity
between the regulated entities and FINRA as a result of the implementation of this
spreadsheet has been beneficial.
IV.
Multiple Types of Business Activity
The revised Form A-12(iv) specifies that regulated entities shall, prior to
registering with the Board, provide the “type of business activity” in which the
regulated entity plans to conduct. SIFMA and its members were concerned that
“type” was singular in this instance. In order to best serve their clients by offering a
wide range of products and services, many broker dealers conduct a variety of
business activities, including dealer activities, municipal advisor activities and
municipal fund securities activities. The revised Form A-12 should permit a
singular registration by a regulated entity for multiple business activities.
*
*
*
We would be pleased to discuss any of these comments in greater detail, or
to provide any other assistance that would be helpful. If you have any questions,
please do not hesitate to contact the undersigned at (212) 313-1130.
Sincerely yours,
Leslie M. Norwood
Managing Director and
Associate General Counsel
cc:
Municipal Securities Rulemaking Board
Lynnette Kelly, Executive Director
Gary L. Goldsholle, General Counsel
Lawrence P. Sandor, Deputy General Counsel
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Comment on Notice 2013-19
from Herbert Neufeld, U.S. Bancorp Investments, Inc.
on Monday, August 19, 2013
Comment:
Conformity and simplicity are most desirable when they, combined, remove ambiguities and the ability of
parties to claim that "I didn't know" or that "I didn't think that aspect applied to my business."
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EXHIBIT 3
Storyboard
Form A-12
Registration Category
New Registration
Update Registration
Select One
Select One
Broker-Dealer Only
Broker-Dealer Only
Municipal Securities Dealer (e.g., Bank Dealer) Only
Municipal Securities Dealer (e.g., Bank Dealer) Only
Municipal Advisor Only
Municipal Advisor Only
Broker-Dealer and Municipal Advisor
Broker-Dealer and Municipal Advisor
Municipal Securities Dealer and Municipal Advisor
Municipal Securities Dealer and Municipal Advisor
None – Withdraw all registrations
General Firm Information
FIRM IDENTIFIERS
Firm Name:*
Dealer SEC ID:*
Municipal Advisor SEC ID:*
Legal Entity Identifier:
CRD Number:*
WRITTEN NOTICE TO SECURITIES ASSOCIATION OR REGULATORY AGENCY
Upload
Upload a Document (PDF):*
BUSINESS INFORMATION
Firm Address:*
State:*
City:*
Zip:*
Firm Website:
FORM OF ORGANIZATION
Choose the appropriate organization type from the list provided and indicate the city and state in which it is organized,
incorporated, or established.
Organization Type:*
Select One
Corporation
Sole Proprietorship
Limited Liability Partnership (LLP)
Partnership
Limited Liability Company (LLC)
Limited Partnership
Other (specify):_________
City:*
*This storyboard does not reflect final user interface design.
State:*
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Business Activities
Broker/Dealer - MFS
Select all that apply:
Broker/Dealer – Sales/Trading
Select all that apply:
529 Plan Underwriting
Retail Sales
529 Plan Sales
Institutional Sales
Local Government Investment Pool Distributor/Sales
Trading - Proprietary
Other (specify):
Trading - Inter-Dealer
Broker's Broker Activities
Online Brokerage
Broker/Dealer – Other
Select all that apply:
Municipal Advisor
Select all that apply:
Underwriting
Issuance Advice
Clear and settle transactions as an NSCC participant
Guaranteed Investment Contracts Advice
Alternative Trading System
Investment Advice - Proceeds of Municipal Securities
Remarket VRDOs
Investment Advice - Funds of Municipal Entity
ARS Program Dealer
Municipal Escrow Investment Advice
Research
Municipal Escrow Investment Brokerage
Engage in other activities that require registration (Specify):
Municipal Derivatives Advice
Solicitation of Business - Investment Advisory
Solicitation of Business - Other than Investment Advisory
Municipal Advisor/Underwriter Selection Advice
Other (specify):
*This storyboard does not reflect final user interface design.
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Contact Information
Add Contact
Name*
Title
Email Address*
Confirm Email Address*
Address*
City*
State*
Zip*
Phone*
-
-
Required Contacts
Optional Contacts
Master Account Administrator: ____________
Optional Regulatory Contact: ___________
Primary Regulatory Contact: ____________
Optional Data Quality Contact: ___________
Billing Contact:___________
Optional Technical Contact: ___________
Compliance Contact: ___________
Primary Data Quality Contact: ___________
*This storyboard does not reflect final user interface design.
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Trade Reporting
Exempt from reporting trades under MSRB Rule G-14(b)(v)
Trade Reporting Identifiers
Executing Broker Symbols (EBS) assigned by NASDAQ
Executing Broker Symbol
Submission and Feedback
Identify the manner in which transactions will be reported
Report own trades using message-based trade portal operated by
National Securities Clearing Corporation (NSCC) and RTTM Web
EBS:
Trades will be reported by another dealer acting as agent
Receive error or transaction status feedback by email
Organization Name
EBS
Participant ID
Email:
RTRS Web only
Participant ID assigned to your company by NSCC
Participant Identifier
Participant ID:
Receive error or transaction status feedback by email
Email:
*This storyboard does not reflect final user interface design.
Method of receiving error feedback
Email - Review trade status emails sent to the email address(es)
identified in the Trade Reporting Identifiers section
Process MT509 messages containing trade status information
(Note: DTCC participants only)
RTRS Web - Review trade status information using RTRS Web
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MSRB Form G-40
(Form to be deleted in its entirety)
[
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]
[
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MSRB Form RTRS
(Form to be deleted in its entirety)
[
]
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EXHIBIT 5
TEXT OF PROPOSED RULE CHANGE
1
Rule A-12: Registration [Initial Fee]
(a) Registration Requirements. Each broker, dealer and municipal securities dealer prior to
engaging in municipal securities activities must register with the Board, and each municipal
advisor prior to engaging in municipal advisory activities must register with the Board.
Registration will not become effective until the broker, dealer, municipal securities dealer or
municipal advisor is notified by the Board that its Form A-12 is complete and its initial
registration fee and annual registration fee have been received and processed. Prior to registering
with the Board, each broker, dealer, municipal securities dealer, and municipal advisor must:
(i) Register as such with, and be approved by, the Commission; and
(ii) As applicable, notify a registered securities association or appropriate regulatory
agency of its intent to engage in municipal securities and/or municipal advisory activities and
provide the Board, on Form A-12, with a written statement evidencing such notification.
(b) Initial Registration Fee. Each broker, dealer, municipal securities dealer and municipal
advisor shall pay to the Board an initial registration fee of $100, which shall be payable in the
manner provided by the MSRB Registration Manual. A firm registering as a broker, dealer or
municipal securities dealer and as a municipal advisor need only pay one initial registration fee,
so long as such firm remains continuously registered with the Board.
(c) Annual Registration Fee. As part of its initial registration and annually thereafter, based on
the fiscal year of the Board, each broker, dealer, municipal securities dealer and municipal
advisor shall pay to the Board an annual registration fee of $500. The annual registration fee
shall be payable in the manner provided by the MSRB Registration Manual. Subsequent to
initial registration, the annual registration fee is due by October 31 each year. For any broker,
dealer, municipal securities dealer or municipal advisor that registers and pays an annual
registration fee during the month of September, the annual registration fee for the following
fiscal year beginning in October shall be waived.
(d) Late Fees. Any broker, dealer, municipal securities dealer or municipal advisor that fails to
pay any fee assessed under this rule or Rule A-13 within 30 days of the invoice date shall pay a
monthly late fee of $25 and a late fee on the overdue balance, computed according to the Prime
Rate, as provided for in the MSRB Registration Manual, until paid.
(e) Registration Designation. Any broker, dealer, municipal securities dealer or municipal
advisor that is registered with the Board may use the designation “MSRB registered” in its
advertising, including on its website.
1
Underlining indicates new language; bracketed language denotes deletions.
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(f) Designated Contacts. Each broker, dealer, municipal securities dealer and municipal advisor
must designate, on Form A-12, a Primary Regulatory Contact, Master Account Administrator,
Billing Contact, Compliance Contact, and Primary Data Quality Contact, and may designate one
or more of the following contacts for purposes of communication between the firm and the
Board: Optional Regulatory Contact, Optional Technical Contact, or Optional Data Quality
Contact. Each Primary and Optional Regulatory Contact shall, in the case of brokers, dealers, or
municipal securities dealers, be a registered municipal securities principal (Series 53 or, in the
case of a firm solely engaged in municipal fund securities business, Series 51 or 53) of the
broker, dealer or municipal securities dealer and who shall be authorized to receive official
communications from the Board. Each Primary and Optional Regulatory Contact shall, in the
case of municipal advisors, be authorized to receive official communications from the Board. It
shall be the responsibility of the Billing Contact to receive Board invoices and to respond to any
Board inquiries regarding fees.
(g) Trade Reports. Each broker, dealer and municipal securities dealer shall provide to the
Board, prior to registering with the Board, the information required by Form A-12 to ensure that
its trade reports can be processed correctly, or shall confirm that it qualifies for the exemption for
trade reporting pursuant to Rule G-14(b)(v) and shall update such information promptly to
ensure its continued accuracy.
(h) Compliance with Regulatory Requests. Each broker, dealer, municipal securities dealer and
municipal advisor, as a function of its registration with the Board, shall comply with any request
by the Board, registered securities association or appropriate regulatory agency for required
information within 15 days or such longer period as may be agreed to by the Board, registered
securities association or the appropriate regulatory agency.
(i) Form A-12 Reporting Requirements. Each broker, dealer, municipal securities dealer and
municipal advisor shall provide to the Board, prior to registration with the Board, the information
required by Form A-12 in a designated electronic format and in such manner as set forth in the
MSRB Registration Manual.
(j) Form A-12 Updates and Withdrawal. A broker, dealer, municipal securities dealer or
municipal advisor must update Form A-12 within 30 days, if any information therein becomes
inaccurate or if it ceases to be engaged in municipal securities or municipal advisory activities,
whether voluntarily or involuntarily through a regulatory or judicial bar, suspension or otherwise,
and provide the Board with a description of, and reason for, its change in registration status, if
other than a voluntary withdrawal. Changes to business activities or registration status on Form
A-12 must be submitted by the Primary Regulatory Contact, Optional Regulatory Contact or
Compliance Contact.
(k) Form A-12 Annual Affirmation. Each broker, dealer, municipal securities dealer and
municipal advisor shall review, update as necessary, and affirm the information in Form A-12
during the Annual Affirmation Period that commences on January 1 of each calendar year and
ends 17 business days thereafter. The annual affirmation must be completed by the Primary
Regulatory Contact, Optional Regulatory Contact or Compliance Contact designated by the firm.
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Any broker, dealer, municipal securities dealer or municipal advisor that submits its initial Form
A-12 during the Annual Affirmation Period need not affirm Form A-12 during that period.
(l) MSRB Registration Manual. The MSRB Registration Manual, as updated or amended from
time to time, is comprised of the specifications for the reporting of information required under
this rule, the instructions for submitting Form A-12, and other information relevant to payments
and reporting under this rule. The MSRB Registration Manual is located at www.msrb.org.
[Prior to effecting any transaction in or inducing or attempting to induce the purchase or sale of
any municipal security, or engaging in municipal advisory activities, a broker, dealer, municipal
securities dealer, or municipal advisor shall pay to the Board an initial fee of $100, accompanied
by a written statement setting forth the name, address and Securities and Exchange Commission
registration number of the broker, dealer, municipal securities dealer, or municipal advisor on
whose behalf such fee is paid. The Commission registration number shall also be set forth on the
face of the remittance. Such fee shall be payable at the offices of the Board. In the event any
person subject to this rule shall fail to pay the required fee, the Board may recommend to the
Commission that the registration of such person with the Commission be suspended or revoked.
No municipal advisor shall be in violation of this rule for failure to pay this initial fee in advance
of January 1, 2011.]
*****
Rule G-14: Reports of Sales or Purchases
(a) No change.
(b) Transaction Reporting Requirements.
(i) - (iii) No change.
(iv) The provisions of this section (b) shall not apply to a dealer if such dealer does not
effect any transactions in municipal securities or if such dealer’s transactions in municipal
securities are limited exclusively to transactions described in subsection (b)(v) of this rule and
the dealer has confirmed that it is qualified for this exemption as provided in Rule A-12(g).
[Each dealer shall provide to the Board on Form RTRS information necessary to ensure that its
trade reports can be processed correctly. Such information includes the manner in which
transactions will be reported, the broker symbol used by the dealer, the identity of and
information on any intermediary to be used as a Submitter, information on personnel that can be
contacted if there are problems in RTRS submissions, and information necessary for systems
testing with RTRS. Information provided on Form RTRS shall be kept current by notifying the
MSRB when contact information or other information provided on the form changes.]
[(v) Testing Requirements. Prior to submitting transaction data under RTRS Procedures, a
dealer must successfully test its ability to interface with RTRS as described in the RTRS Users
Manual.]
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(v)[(vi)] No change.
*****
Rule G-14: RTRS Procedures
(a) - (b) No change.
(c) RTRS Users Manual. The RTRS Users Manual is comprised of the Specifications for RealTime Reporting of Municipal Securities Transactions, the Users Guide for RTRS Web, [Testing
Procedures,] guidance on how to report specific types of transactions and other information
relevant to transaction reporting under Rule G-14. The RTRS Users Manual is located at
www.msrb.org and may be updated from time to time with additional guidance or revisions to
existing documents.
(d) No change.
*****
[Rule A-14: Annual Fee]
[In addition to any other fees prescribed by the rules of the Board, each broker, dealer, municipal
securities dealer, and municipal advisor shall pay an annual fee to the Board of $500, with
respect to each fiscal year of the Board in which the broker, dealer, municipal securities dealer,
or municipal advisor conducts municipal securities activities or municipal advisory activities.
Except as set forth below, such fee must be received at the office of the Board no later than
October 31 of the fiscal year for which the fee is paid, accompanied by the invoice sent to the
broker, dealer, municipal securities dealer, or municipal advisor by the Board, or a written
statement setting forth the name, address and Commission registration number of the broker,
dealer, municipal securities dealer, or municipal advisor on whose behalf the fee is paid. No
municipal advisor shall be in violation of this rule for failure to pay this annual fee in advance of
January 1, 2011.]
*****
[Rule A-15: Notification to Board of Change in Status or Change of Name or Address]
[(a) Procedure for Notifying Board of Change in Status. A broker, dealer, municipal securities
dealer, or municipal advisor must promptly notify the Board if it ceases to be engaged in
municipal securities activities or municipal advisory activities, whether voluntarily or because it
has been barred or suspended from engaging in municipal securities activities or municipal
advisory activities by the appropriate regulatory agency, judicial authority or otherwise. A
broker, dealer, or municipal securities dealer must also notify the Board if it has been expelled or
suspended from membership or participation in a national securities exchange or registered
securities association. Any notification required by this rule shall be provided in a written
statement setting forth such broker’s, dealer’s, municipal securities dealer’s, or municipal
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advisor's name, address, Commission registration number, and a description of, and the reasons
for, its change in status.]
[(b) Obligation to Pay Fees. A broker, dealer, municipal securities dealer, or municipal advisor
that files notification with the Board pursuant to section (a) of this rule shall be obligated to pay
the fees owed to the Board at the time of filing of such notification.]
[(c) Notification of Name or Address Change. Each broker, dealer, municipal securities dealer, or
municipal advisor that has followed the procedure set forth in Board Rule A-12 shall notify the
Board promptly of any changes to the information required by Rule A-12.]
*****
[Rule G-40: Electronic Mail Contacts]
[(a)
(i) Each broker, dealer, municipal securities dealer, or municipal advisor shall maintain
an Internet electronic mail account to permit communication with the MSRB, and shall appoint a
Primary Electronic Mail Contact to serve as the official contact person for purposes of electronic
mail communication between the broker, dealer, municipal securities dealer, or municipal
advisor and the MSRB. Each Primary Electronic Mail Contact of a broker, dealer, or municipal
securities dealer shall be a registered municipal securities principal (Series 53 or Series 51) of the
broker, dealer or municipal securities dealer. ]
[(ii) Each broker, dealer, municipal securities dealer, or municipal advisor may appoint
an Optional Electronic Mail Contact for purposes of electronic mail communication between the
broker, dealer, municipal securities dealer, or municipal advisor and the MSRB.]
[(b)
(i) Upon completion of its Rule A-12 submissions and assignment of an MSRB
Registration Number, each broker, dealer, municipal securities dealer, or municipal advisor shall
electronically submit to the MSRB a completed Form G-40 setting forth, in the prescribed
format, the following information:]
[(A) The name of the broker, dealer, municipal securities dealer, or municipal
advisor and the date. ]
[(B) The MSRB Registration Number of the broker, dealer, municipal securities
dealer, or municipal advisor, including any separate MSRB Registration Number
assigned if registered both as a municipal advisor and a broker, dealer, or municipal
securities dealer.]
[(C) The name of the Primary Electronic Mail Contact, and his/her electronic mail
address and telephone number.]
[(D) The name of the Optional Electronic Mail Contact, if any, and his/her
electronic mail address and telephone number.]
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[(E) The name, title and telephone number of the person who prepared the form.]
[(F) In the case of a municipal advisor, the categories of municipal advisor that
describe the municipal advisor as provided on Form G-40.]
[(ii) A broker, dealer, municipal securities dealer, or municipal advisor may change the
information previously provided by electronically submitting to the MSRB an amended Form G40. In addition, each broker, dealer, municipal securities dealer, or municipal advisor shall
update its information promptly, but in any event not later than 30 days following any change in
such information.]
[(c)
(i) Each broker, dealer, municipal securities dealer, or municipal advisor shall review
and, if necessary, update its information and submit such information electronically to the MSRB
within 17 business days after the end of each calendar year.]
[(ii) Any broker, dealer, municipal securities dealer, or municipal advisor that, during the
17 business-day update period, submits its initial Form G-40 or modifies or affirms its
information shall be deemed to be in compliance with the annual update requirement applicable
to the year immediately preceding that 17 business-day update period.]
[(d) Each broker, dealer, municipal securities dealer, or municipal advisor shall promptly comply
with any request by the appropriate regulatory agency for required information, but in any event
not later than 15 days following any such request, or such longer period that may be agreed to by
the appropriate regulatory agency.]
[(e) No municipal advisor shall be in violation of this rule for failure to complete Form G-40 in
advance of January 1, 2011.]
*****
FACILITY FOR REAL-TIME TRANSACTION REPORTING AND PRICE
DISSEMINATION (THE “REAL-TIME TRANSACTION REPORTING SYSTEM” OR
“RTRS”)
RTRS Facility
Improved Functionality.
No Change.
Submission of Transaction Reports by Intermediaries.
No Change.
Message-Based and Web-Based Input Methods.
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No Change.
RTRS Portals.
No Change.
Measurement of Timely Reporting.
No Change.
Enhancement of Information Available to Regulators.
No Change.
RTRS Processing.
No Change.
[Testing Requirements. The Rule G-14 Procedures require dealers to test their use of RTRS
before reporting any trades.]
[The requirement for testing and submission of a “Form RTRS” with the name of a contact
person is reflected in Rule G-14.]
Price Dissemination by RTRS
No Change.
MSRB Real-Time Transaction Data Subscription Service
No Change.
MSRB Historical Transaction Data Product
No Change.