Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendment to Rule G-8, on Recordkeeping, to Add Requirement for Predispute Arbitration Agreements With Customers, and Amendment to Rule A-11, on Indemnification, to Delete Obsolete References to Arbitrators, 20194-20196 [05-7650]

Download as PDF 20194 Federal Register / Vol. 70, No. 73 / Monday, April 18, 2005 / Notices pursuant to Section 12(d) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 12d2–2(d) thereunder,2 to withdraw its common stock, $.10 par value (‘‘Security’’), from listing and registration on the American Stock Exchange LLC (‘‘Amex’’). On March 30, 2005, the Board of Directors (‘‘Board’’) of the Issuer approved resolutions to withdraw the Security from listing and registration on Amex and to list the Security on The Nasdaq National Market Systems (‘‘Nasdaq’’). The Issuer stated that the Board determined that Nasdaq is a more efficient and better structured marketplace that may provide the Issuer with a variety of advantages over Amex, including, but not limited to, a screenbased electronic marketplace with competing market makers, increased liquidity, faster trade execution time and better execution quality. The Board also stated that it believes that the public’s positive perception of Nasdaq marketplace may provide better identity and improved visibility for the Issuer. The Issuer stated that it expects trading in the Security on Nasdaq to begin April 12, 2005. The Issuer stated in its application that it has met the requirements of Amex Rule 18 by complying with all applicable laws in effect in the state of Delaware, in which it is incorporated, and provided written notice of withdrawal to Amex. The Issuer’s application relates solely to withdrawal of the Security from listing on the Amex and from registration under Section 12(b) of the Act,3 and shall not affect its obligation to be registered under Section 12(g) of the Act.4 Any interested person may, on or before May 3, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of Amex, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549–0609. All submissions should refer to File Number 1–11479. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/rules/ delist.shtml). Comments are also available for public inspection and copying in the Commission’s Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.5 Jonathan G. Katz, Secretary. [FR Doc. 05–7639 Filed 4–15–05; 8:45 am] BILLING CODE 8010–01–M SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51534; File No. SR–MSRB– 2005–05] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendment to Rule G–8, on Recordkeeping, to Add Requirement for Predispute Arbitration Agreements With Customers, and Amendment to Rule A–11, on Indemnification, to Delete Obsolete References to Arbitrators Electronic Comments April 12, 2005. • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/delist.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include the File Number 1–11479 or; Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 21, 2005, the Municipal Securities Rulemaking Board (‘‘MSRB’’ or ‘‘Board’’), filed with the Securities and Exchange Commission (‘‘Commission’’ 1 15 U.S.C. 78l(d). CFR 240.12d2–2(d). 3 15 U.S.C. 78l(b). 4 15 U.S.C. 78l(g). 2 17 VerDate jul<14>2003 16:08 Apr 15, 2005 5 17 CFR 200.30–3(a)(1). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 Jkt 205001 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 or ‘‘SEC’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the MSRB. The MSRB filed an amendment to the proposed rule change on April 1, 2005.3 The MSRB has filed the proposal as a ‘‘non-controversial’’ rule change pursuant to Section 19(b)(3)(A)(iii) of the Act,4 and Rule 19b–4(f)(6) thereunder,5 which renders the proposal effective upon filing with the Commission. However, the MSRB has set an effective date of May 1, 2005, to coincide with recent amendments to NASD Rule 3110(f), on predispute arbitration agreements with customers.6 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 technical amendments to Rule G–8, on recordkeeping, and Rule A–11, on indemnification. The MSRB has set an effective date for the amendments of May 1, 2005. The text of the proposed rule change is available on the MSRB’s Web site (https:// www.msrb.org), 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 3 The amendment replaces, in its entirety, the previously filed proposed rule language to MSRB Rule G–8 with new language to conform with the language of NASD Rule 3110(f) that is set to become effective on May 1, 2005 (‘‘Amendment No. 1’’). 4 15 U.S.C. 78s(b)(3)(A)(iii). 5 17 CFR 240.19b–4(f)(6). 6 In November 2004, the SEC approved amendments to NASD Rule 3110(f) that require NASD member firms to modify their predispute arbitration agreements with customers to provide enhanced disclosure about the arbitration process. The amendments also require NASD members to provide copies of predispute arbitration agreements and relevant arbitration forum rules to customers upon request; clarify the use of certain limiting provisions; and require firms seeking to compel arbitration of claims initiated in court to arbitrate all of the claims contained in the complaint if the customer so requests. See Release No. 34–50713 (November 22, 2004), effective May 1, 2005. E:\FR\FM\18APN1.SGM 18APN1 Federal Register / Vol. 70, No. 73 / Monday, April 18, 2005 / Notices Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In 1997, the MSRB determined that it was no longer cost-effective to continue operating an arbitration program since so few cases were being filed with its program. Accordingly, the MSRB amended Rule G–35, on arbitration, to provide that it would not accept any new arbitration claims filed on or after January 1, 1998 (the ‘‘1997 Amendments’’).7 The MSRB noted that any customer or securities dealer with a claim, dispute or controversy against a dealer involving its municipal securities activities may submit that claim to the arbitration forum of any self-regulatory organization (‘‘SRO’’) of which the dealer is a member, including NASD. Bank dealers, however, are unique in that they are subject to MSRB rules but are not members of any other SRO. Thus, it was necessary to provide an alternative arbitration forum for claims involving the municipal securities activities of bank dealers. The 1997 Amendments accomplished this by providing that as of January 1, 1998 every bank dealer, as defined in Rule D– 8,8 shall be subject to NASD’s Code of Arbitration Procedure for every claim, dispute or controversy arising out of or in connection with the municipal securities activities of the bank dealer acting in its capacity as such, and that bank dealers shall abide by NASD’s Code as if they were ‘‘members’’ of NASD for purposes of arbitration. The enforcement mechanism for bank dealers was not altered by the amendments; the bank regulatory agencies continue to be responsible for the inspection and enforcement of bank dealers’ municipal securities activities, including arbitration. At the time of the 1997 Amendments, the MSRB agreed to continue operating its arbitration program in order to administer its current, open cases and any new claims received prior to January 1, 1998, but stated that it would discontinue administering its program when all such cases were closed. On May 14, 2002, the MSRB transferred its final, open case to NASD. Accordingly, in August 2002, the MSRB submitted a 7 File No. SR–MSRB–97–04, approved in Release No. 34–39378 (December 1, 1997). 8 Rule D–8 defines ‘‘bank dealer’’ to mean a municipal securities dealer which is a bank or a separately identifiable department or division of a bank as defined in Rule G–1. VerDate jul<14>2003 17:22 Apr 15, 2005 Jkt 205001 filing to the SEC to delete Sections 1 through 37 of Rule G–35, on arbitration, thereby effectively discontinuing the operation of its arbitration program.9 The filing also incorporated by reference into Rule G–35 the NASD Code of Arbitration Procedure and all future amendments thereto.10 When the MSRB deleted Sections 1 through 37 of its arbitration code in 2002, the requirements governing predispute arbitration agreements (previously in Section 36 of Rule G–35) were also deleted. While Rule G–35 currently provides that bank dealers shall abide by the NASD Code of Arbitration Procedure, NASD’s requirement for predispute arbitration agreements is not contained in that Code. Instead, the NASD requirement is set forth in its Rule 3110, on books and records, and IM–3110(f), on customer account information. NASD Rule 0116, on application of NASD rules to exempted securities, provides that NASD Rule 3110 and the related interpretive materials (among other rules and interpretive materials) do not apply to municipal securities. Thus, there currently is no requirement specifically governing the way bank dealers or municipal-only dealers use predispute arbitration agreements with customers. To remedy this situation, the MSRB is filing a technical amendment to Rule G–8, on recordkeeping, to add such a requirement. The language of the proposed amendment tracks the language of NASD Rule 3110(f), on predispute arbitration agreements with customers, as recently amended.11 The proposed amendment to Rule G–8 will become effective on May 1, 2005, to coincide with the effective date of NASD’s recent amendments to its Rule 3110(f). In addition, the MSRB is filing a technical amendment to Rule A–11, on indemnification, to delete its obsolete references to arbitrator indemnification. 2. Statutory Basis The MSRB believes that the proposed rule change is consistent with sections 9 File No. SR–MSRB–2002–09 (August 19, 2002), approved in Release No. 34–46666 (October 16, 2002). 10 At the request of the SEC’s Division of Market Regulation, the MSRB requested that, pursuant to section 36 of the Act and Rule 0–12 thereunder, the SEC grant an exemption from the requirements of section 19(b) of the Act and Rule 19b–4 thereunder to allow the MSRB to incorporate by reference into Rule G–35 any changes to the NASD’s Code without requiring that the MSRB submit a separate filing for each such change. See letter from Diane G. Klinke, General Counsel, MSRB, to Jonathan G. Katz, Secretary, SEC, dated April 4, 2002. The SEC granted this exemption in Release No. 34–49260 (February 17, 2004). 11 See note 6, above. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 20195 15B(b)(2)(C) and (D) of the Act,12 which provide that MSRB 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, to remove impediments to and perfect the mechanism of a free and open market in municipal securities, and, in general, to protect investors and the public interest * * * [and] if the Board deems appropriate, provide for the arbitration of claims, disputes, and controversies relating to transactions in municipal securities. * * * The MSRB believes that the proposed rule change is consistent with these provisions in that it would provide for the protection of investors and the public interest by ensuring that there is a requirement governing the use of predispute arbitration agreements with customers by brokers, dealers and municipal securities dealers, including bank dealers and municipal-only dealers. The proposed rule change also would ensure consistent treatment across the securities markets regarding the use of such agreements. B. Self-Regulatory Organization’s Statement on Burden on Competition The MSRB does not believe that the proposed rule change will result in any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not become operative for 30 days from the date on which it was filed, and the MSRB provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to the filing date, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act 13 and Rule 19b– 4(f)(6) thereunder.14 12 15 U.S.C. 78o–4(b)(2)(C), (D). U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b–4(f)(6). 13 15 E:\FR\FM\18APN1.SGM 18APN1 20196 Federal Register / Vol. 70, No. 73 / Monday, April 18, 2005 / Notices At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.15 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–MSRB–2005–05 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549–0609. All submissions should refer to File Number SR–MSRB–2005–05. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the MSRB. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–MSRB–2005–05 and should be submitted on or before May 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16 Jill M.Peterson, Assistant Secretary. [FR Doc. 05–7650 Filed 4–15–05; 8:45 am] BILLING CODE 8010–01–U SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51533; File No. SR–MSRB– 2005–06] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Frequency of Updates from the National Do-Not-Call Registry Pursuant to Rule G–39 April 12, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 23, 2005, the Municipal Securities Rulemaking Board (‘‘MSRB’’ or ‘‘Board’’), filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the MSRB. The MSRB has filed the proposal as a ‘‘non-controversial’’ rule change pursuant to Section 19(b)(3)(A)(iii) of the Act,3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposal effective upon filing with the Commission. 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 amending Rule G–39, on telemarketing, to require a broker, dealer or municipal securities dealer that seeks to qualify for the safe harbor set forth in Rule G–39 to, among other things, use a process to prevent telephone solicitations to any telephone number in a version of the national do-not-call registry obtained 15 See section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-day abrogation period, the Commission considers the period to commence on April 1, 2005, the date that the MSRB filed Amendment No. 1. VerDate jul<14>2003 16:08 Apr 15, 2005 Jkt 205001 PO 00000 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(6). 1 15 Frm 00096 Fmt 4703 Sfmt 4703 from the administrator of the registry no more than thirty-one (31) days prior to the date any call is made. This proposed amendment is consistent with recent amendments to the comparable do-notcall rules of the Federal Trade Commission (‘‘FTC’’) and the Federal Communications Commission (‘‘FCC’’). The proposed rule change will become effective on May 1, 2005. The text of the proposed rule change is available on the MSRB’s Web site (https://www.msrb.org), 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 In 2003, the FTC, via its Telemarketing Sales Rule, and the FCC, via its Miscellaneous Rules Relating to Common Carriers, established requirements for sellers and telemarketers to participate in a national do-not-call registry.5 Since June 2003, consumers have been able to enter their home telephone numbers into the national do-not-call registry, which is maintained by the FTC. Under rules of the FTC and FCC, sellers and telemarketers generally are prohibited from making telephone solicitations to consumers whose numbers are listed in the national do-not-call registry. The FCC’s do-not-call rules apply to brokers, dealers and municipal securities dealers while the FTC’s rules do not.6 5 The do-not-call rules of the FCC and FTC are very similar in terms of substance, in part, because Congress directed the FCC to consult with the FTC to maximize consistency between their respective do-not-call rules. See The Do-Not-Call Implementation Act, 108 P.L. 10, 117 Stat. 557 (Mar. 11, 2003). 6 See 15 U.S.C. § 6102(d)(2)(A), which provides that ‘‘The rules promulgated by the Federal Trade Commission under subsection (a) shall not apply to * * *[among other persons, brokers or dealers] * * *’’ The FTC’s do-not-call rules were promulgated under 15 U.S.C. § 6102. The FCC’s E:\FR\FM\18APN1.SGM 18APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 73 (Monday, April 18, 2005)]
[Notices]
[Pages 20194-20196]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-7650]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51534; File No. SR-MSRB-2005-05]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Amendment to Rule G-8, on Recordkeeping, to Add 
Requirement for Predispute Arbitration Agreements With Customers, and 
Amendment to Rule A-11, on Indemnification, to Delete Obsolete 
References to Arbitrators

April 12, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 21, 2005, the Municipal Securities Rulemaking Board (``MSRB'' 
or ``Board''), filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the MSRB. The 
MSRB filed an amendment to the proposed rule change on April 1, 
2005.\3\ The MSRB has filed the proposal as a ``non-controversial'' 
rule change pursuant to Section 19(b)(3)(A)(iii) of the Act,\4\ and 
Rule 19b-4(f)(6) thereunder,\5\ which renders the proposal effective 
upon filing with the Commission. However, the MSRB has set an effective 
date of May 1, 2005, to coincide with recent amendments to NASD Rule 
3110(f), on predispute arbitration agreements with customers.\6\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The amendment replaces, in its entirety, the previously 
filed proposed rule language to MSRB Rule G-8 with new language to 
conform with the language of NASD Rule 3110(f) that is set to become 
effective on May 1, 2005 (``Amendment No. 1'').
    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \5\ 17 CFR 240.19b-4(f)(6).
    \6\ In November 2004, the SEC approved amendments to NASD Rule 
3110(f) that require NASD member firms to modify their predispute 
arbitration agreements with customers to provide enhanced disclosure 
about the arbitration process. The amendments also require NASD 
members to provide copies of predispute arbitration agreements and 
relevant arbitration forum rules to customers upon request; clarify 
the use of certain limiting provisions; and require firms seeking to 
compel arbitration of claims initiated in court to arbitrate all of 
the claims contained in the complaint if the customer so requests. 
See Release No. 34-50713 (November 22, 2004), effective May 1, 2005.
---------------------------------------------------------------------------

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 technical amendments to Rule G-8, on recordkeeping, and 
Rule A-11, on indemnification. The MSRB has set an effective date for 
the amendments of May 1, 2005. The text of the proposed rule change is 
available on the MSRB's Web site (https://www.msrb.org), 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

[[Page 20195]]

Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    In 1997, the MSRB determined that it was no longer cost-effective 
to continue operating an arbitration program since so few cases were 
being filed with its program. Accordingly, the MSRB amended Rule G-35, 
on arbitration, to provide that it would not accept any new arbitration 
claims filed on or after January 1, 1998 (the ``1997 Amendments'').\7\ 
The MSRB noted that any customer or securities dealer with a claim, 
dispute or controversy against a dealer involving its municipal 
securities activities may submit that claim to the arbitration forum of 
any self-regulatory organization (``SRO'') of which the dealer is a 
member, including NASD. Bank dealers, however, are unique in that they 
are subject to MSRB rules but are not members of any other SRO. Thus, 
it was necessary to provide an alternative arbitration forum for claims 
involving the municipal securities activities of bank dealers. The 1997 
Amendments accomplished this by providing that as of January 1, 1998 
every bank dealer, as defined in Rule D-8,\8\ shall be subject to 
NASD's Code of Arbitration Procedure for every claim, dispute or 
controversy arising out of or in connection with the municipal 
securities activities of the bank dealer acting in its capacity as 
such, and that bank dealers shall abide by NASD's Code as if they were 
``members'' of NASD for purposes of arbitration. The enforcement 
mechanism for bank dealers was not altered by the amendments; the bank 
regulatory agencies continue to be responsible for the inspection and 
enforcement of bank dealers' municipal securities activities, including 
arbitration.
---------------------------------------------------------------------------

    \7\ File No. SR-MSRB-97-04, approved in Release No. 34-39378 
(December 1, 1997).
    \8\ Rule D-8 defines ``bank dealer'' to mean a municipal 
securities dealer which is a bank or a separately identifiable 
department or division of a bank as defined in Rule G-1.
---------------------------------------------------------------------------

    At the time of the 1997 Amendments, the MSRB agreed to continue 
operating its arbitration program in order to administer its current, 
open cases and any new claims received prior to January 1, 1998, but 
stated that it would discontinue administering its program when all 
such cases were closed. On May 14, 2002, the MSRB transferred its 
final, open case to NASD. Accordingly, in August 2002, the MSRB 
submitted a filing to the SEC to delete Sections 1 through 37 of Rule 
G-35, on arbitration, thereby effectively discontinuing the operation 
of its arbitration program.\9\ The filing also incorporated by 
reference into Rule G-35 the NASD Code of Arbitration Procedure and all 
future amendments thereto.\10\
---------------------------------------------------------------------------

    \9\ File No. SR-MSRB-2002-09 (August 19, 2002), approved in 
Release No. 34-46666 (October 16, 2002).
    \10\ At the request of the SEC's Division of Market Regulation, 
the MSRB requested that, pursuant to section 36 of the Act and Rule 
0-12 thereunder, the SEC grant an exemption from the requirements of 
section 19(b) of the Act and Rule 19b-4 thereunder to allow the MSRB 
to incorporate by reference into Rule G-35 any changes to the NASD's 
Code without requiring that the MSRB submit a separate filing for 
each such change. See letter from Diane G. Klinke, General Counsel, 
MSRB, to Jonathan G. Katz, Secretary, SEC, dated April 4, 2002. The 
SEC granted this exemption in Release No. 34-49260 (February 17, 
2004).
---------------------------------------------------------------------------

    When the MSRB deleted Sections 1 through 37 of its arbitration code 
in 2002, the requirements governing predispute arbitration agreements 
(previously in Section 36 of Rule G-35) were also deleted. While Rule 
G-35 currently provides that bank dealers shall abide by the NASD Code 
of Arbitration Procedure, NASD's requirement for predispute arbitration 
agreements is not contained in that Code. Instead, the NASD requirement 
is set forth in its Rule 3110, on books and records, and IM-3110(f), on 
customer account information. NASD Rule 0116, on application of NASD 
rules to exempted securities, provides that NASD Rule 3110 and the 
related interpretive materials (among other rules and interpretive 
materials) do not apply to municipal securities. Thus, there currently 
is no requirement specifically governing the way bank dealers or 
municipal-only dealers use predispute arbitration agreements with 
customers. To remedy this situation, the MSRB is filing a technical 
amendment to Rule G-8, on recordkeeping, to add such a requirement. The 
language of the proposed amendment tracks the language of NASD Rule 
3110(f), on predispute arbitration agreements with customers, as 
recently amended.\11\ The proposed amendment to Rule G-8 will become 
effective on May 1, 2005, to coincide with the effective date of NASD's 
recent amendments to its Rule 3110(f). In addition, the MSRB is filing 
a technical amendment to Rule A-11, on indemnification, to delete its 
obsolete references to arbitrator indemnification.
---------------------------------------------------------------------------

    \11\ See note 6, above.
---------------------------------------------------------------------------

2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
sections 15B(b)(2)(C) and (D) of the Act,\12\ which provide that MSRB 
rules shall:
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78o-4(b)(2)(C), (D).

Be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in municipal securities, to remove 
impediments to and perfect the mechanism of a free and open market 
in municipal securities, and, in general, to protect investors and 
the public interest * * * [and] if the Board deems appropriate, 
provide for the arbitration of claims, disputes, and controversies 
---------------------------------------------------------------------------
relating to transactions in municipal securities. * * *

The MSRB believes that the proposed rule change is consistent with 
these provisions in that it would provide for the protection of 
investors and the public interest by ensuring that there is a 
requirement governing the use of predispute arbitration agreements with 
customers by brokers, dealers and municipal securities dealers, 
including bank dealers and municipal-only dealers. The proposed rule 
change also would ensure consistent treatment across the securities 
markets regarding the use of such agreements.

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

    The MSRB does not believe that the proposed rule change will result 
in any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    Written comments were neither solicited nor received on the 
proposed rule change.

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

    Because the proposed rule change: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative for 30 days from the date on which it was filed, and the MSRB 
provided the Commission with written notice of its intent to file the 
proposed rule change at least five business days prior to the filing 
date, the proposed rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).

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[[Page 20196]]

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.\15\
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    \15\ See section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). 
For purposes of calculating the 60-day abrogation period, the 
Commission considers the period to commence on April 1, 2005, the 
date that the MSRB filed Amendment No. 1.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2005-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.

All submissions should refer to File Number SR-MSRB-2005-05. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the MSRB. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-MSRB-2005-05 and should be submitted on or before May 9, 
2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jill M.Peterson,
Assistant Secretary.
[FR Doc. 05-7650 Filed 4-15-05; 8:45 am]
BILLING CODE 8010-01-U

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