Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Proposed Rule Change to MSRB Rule G-14 RTRS Procedures Relating to “List Offering Price” and “Takedown” Transactions, 54323-54325 [E6-15230]
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Federal Register / Vol. 71, No. 178 / Thursday, September 14, 2006 / Notices
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–ISE–2004–17 on the subject
line.
Paper Comments
rwilkins on PROD1PC63 with NOTICES
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54416; File No. SR–MSRB–
2006–07]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing of Proposed
Rule Change to MSRB Rule G–14
RTRS Procedures Relating to ‘‘List
Offering Price’’ and ‘‘Takedown’’
Transactions
September 8, 2006.
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 August
All submissions should refer to File
15, 2006, the Municipal Securities
Number SR–ISE–2004–17. This file
Rulemaking Board (‘‘MSRB’’ or
number should be included on the
‘‘Board’’) filed with the Securities and
subject line if e-mail is used. To help the Exchange Commission (‘‘SEC’’ or
Commission process and review your
‘‘Commission’’) the proposed rule
comments more efficiently, please use
change as described in Items I, II, and
only one method. The Commission will III below, which Items have been
post all comments on the Commission’s substantially prepared by the MSRB.
Internet Web site (https://www.sec.gov/
The Commission is publishing this
rules/sro.shtml). Copies of the
notice to solicit comments on the
proposed rule change from interested
submission, all subsequent
persons.
amendments, all written statements
with respect to the proposed rule
I. Self-Regulatory Organization’s
change that are filed with the
Statement of the Terms of Substance of
Commission, and all written
the Proposed Rule Change
communications relating to the
The MSRB is filing with the
proposed rule change between the
Commission a proposed rule change to
Commission and any person, other than Rule G–14 RTRS Procedures under Rule
those that may be withheld from the
G–14, Reports of Sales or Purchases, to
public in accordance with the
expand the usage of ‘‘list offering price’’
provisions of 5 U.S.C. 552, will be
transactions to include certain interavailable for inspection and copying in
dealer ‘‘takedown’’ transactions and to
the Commission’s Public Reference
require the reporting of these
Room. Copies of such filing also will be transactions as ‘‘list offering price’’
available for inspection and copying at
transactions on the first day of trading
the principal office of the Exchange. All of a new issue. The text of the proposed
rule change is available on the MSRB’s
comments received will be posted
Web site (https://www.msrb.org), at the
without change; the Commission does
MSRB’s principal office, and at the
not edit personal identifying
Commission’s Public Reference Room.
information from submissions. You
should submit only information that
you wish to make available publicly. All
II. Self-Regulatory Organization’s
submissions should refer to File
Statement of the Purpose of, and
Number SR–ISE–2004–17 and should be
Statutory Basis for, the Proposed Rule
submitted on or before October 5, 2006.
Change
For the Commission, by the Division of
In its filing with the Commission, the
Market Regulation, pursuant to delegated
MSRB included statements concerning
authority.8
the purpose of and basis for the
J. Lynn Taylor,
proposed rule change and discussed any
Assistant Secretary.
comments it received on the proposed
rule change. The text of these statements
[FR Doc. E6–15268 Filed 9–13–06; 8:45 am]
may be examined at the places specified
BILLING CODE 8010–01–P
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.
1 15
8 17
CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00061
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54323
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
MSRB Rule G–14 requires brokers,
dealers, and municipal securities
dealers (collectively ‘‘dealers’’) to report
information about each purchase and
sale transaction effected in municipal
securities to the Real-Time Transaction
Reporting System (‘‘RTRS’’) in the
manner prescribed by Rule G–14 RTRS
Procedures. Rule G–14 requires that
transactions effected with a time of
trade during the hours of the RTRS
business day be reported within fifteen
minutes of the time of trade to an RTRS
Portal.
Under MSRB Rule G–14 RTRS
Procedures, paragraph (a)(ii), there are
three exceptions to this fifteen minute
reporting requirement. The exception
addressed by the proposed rule change
currently allows syndicate managers,
syndicate members and selling group
members that effect trades in new issues
on the first day of trading at the list
offering price to report such trades by
the end of the day on which the trades
were executed.3 This exception is
known as the ‘‘List Offering Price’’
exception.
The ‘‘List Offering Price’’ is defined as
the publicly announced initial offering
price at which a new issue of municipal
securities is to be offered to the public.4
The MSRB provided the end-of-day
reporting deadline for these customer
transactions because of the substantial
operational difficulties underwriters
would face in reporting large numbers
of List Offering Price transactions
within a fifteen-minute window after
the formal award. The MSRB also
concluded that real-time dissemination
of large numbers of primary market
transactions occurring at the same price
would not offer a substantial benefit to
RTRS transparency objectives.
For purposes of RTRS transaction
reporting, a ‘‘Takedown’’ transaction is
3 The other two exceptions to the fifteen minute
reporting rule are: (1) A dealer effecting a trade in
a short-term instrument under nine months in
effective maturity (including variable rate
instruments, auction rate products, and commercial
paper) shall report such trades by the end of the
business day on which the trades were executed;
and (2) a dealer shall report a trade within three
hours of the time of trade if certain conditions
apply. See MSRB Rule G–14 RTRS Procedures
(a)(ii)(B) and (C).
4 If the price is not publicly disseminated (e.g., if
the security is a ‘‘not reoffered’’ maturity within a
serial issue), the price is not a List Offering Price.
See ‘‘Reminder Notice on List Offering Price and
Three-hour Exception for Real-Time Transaction
Reporting: Rule G–14,’’ MSRB Notice 2004–40
(December 10, 2004).
E:\FR\FM\14SEN1.SGM
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Federal Register / Vol. 71, No. 178 / Thursday, September 14, 2006 / Notices
a primary market sale transaction
executed on the first day of trading of
a new issue by a sole underwriter or
syndicate manager to a syndicate or
selling group member at a discount from
the List Offering Price. In a 2004 notice,
the MSRB stated that these inter-dealer
transactions must be reported within
fifteen minutes of the time of execution
and that they do not fall within the List
Offering Price end-of-day exception.5 As
experience with real-time transaction
reporting has increased, however,
industry members have pointed out that
Takedown transactions share many of
the same characteristics as List Offering
Price transactions. A high volume of
Takedown transactions on the first day
of trading in a new issue, for example,
often presents operational difficulties
for underwriters attempting to report all
of their Takedown transactions within a
fifteen-minute window. It also has been
noted that prices for both Takedown
transactions and List Offering Price
transactions are set under an offering
price agreement for the new issue and
therefore do not necessarily reflect
market prices at the time the transaction
is effected. Thus, the proposed rule
change would expand the definition of
List Offering Price to include Takedown
transactions, require use of an indicator
on reports of all List Offering Price and
Takedown transactions, and retain the
end of the day exception from the
normal fifteen minute reporting
deadline for the expanded category of
‘‘List Offering Price/Takedown’’
transactions.6
The proposed List Offering Price/
Takedown indicator would be required
to be used by dealers when reporting
any primary market sale transaction
executed on the first day of trading of
a new issue:
• By a sole underwriter, syndicate
manager, syndicate member or selling
group member at the published list
offering price for the security (‘‘List
Offering Price Transaction’’); or
• By a sole underwriter or syndicate
manager to a syndicate or selling group
member at a discount from the
published list offering price for the
5 See
id.
List Offering Price/Takedown
transactions would be designated with the same
special condition indicator currently in use for List
Offering Price transactions. The technical
requirements for the current List Offering Price
indicator are summarized in the Specifications for
Real-Time Reporting of Municipal Securities
Transactions which is available on-line at https://
www.msrb.org. The draft revisions to the
Specifications for the indicator identifying the List
Offering Price/Takedown Transactions may be
found in ‘‘Request for Comment on Draft
Procedures for Reporting Special Condition
Indicators on Certain New Issue Transactions,’’
MSRB Notice 2006–10 (April 21, 2006).
rwilkins on PROD1PC63 with NOTICES
6 These
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20:23 Sep 13, 2006
Jkt 208001
security (‘‘RTRS Takedown
Transaction’’).
The indicator would be included on
MSRB price transparency reports to
designate to transparency report users
that the trade report does not represent
a normal secondary market transaction.
The proposed rule change recognizes
the similarities between List Offering
Price and Takedown transactions and
the dissimilarities between these
transactions and secondary market
transactions in a new issue. Since the
secondary market transactions in a new
issue are likely to provide the best gauge
of the current market value for a new
issue and may be reported to RTRS
simultaneously with List Offering Price
and Takedown transactions, the MSRB
believes that transparency reports on the
first day of trading for a new issue
would be more useful if List Offering
Price and Takedown transactions were
identified with a special condition
indicator.
2. Statutory Basis
The MSRB believes that the proposed
rule change is consistent with Section
15B(b)(2)(C) of the Act,7 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, to remove
impediments to and perfect the
mechanism of a free and open market in
municipal securities, and, in general, to
protect investors and the public interest.
The MSRB believes that the proposed
rule change is consistent with the Act
because it will allow the municipal
securities industry to produce more
accurate trade reporting and
transparency and will enhance
surveillance data used by enforcement
agencies.
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 since it would apply
equally to all dealers.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received from
Members, Participants, or Others
On April 21, 2006, the MSRB
published for comment a notice with
7 15
PO 00000
U.S.C. 78o–4(b)(2)(C).
Frm 00062
Fmt 4703
Sfmt 4703
respect to reporting procedures for List
Offering Price and Takedown
transactions.8 In response, the MSRB
received six comment letters from: The
Bond Market Association (‘‘TBMA’’),
Jerry L. Chapman, Private Investor
(‘‘Chapman’’), Digital Assurance
Certification LLC (‘‘DAC’’), First
Southwest Company (‘‘First
Southwest’’), Nuveen Investments
(‘‘Nuveen’’) and Wulff, Hansen & Co.
(‘‘Wulff, Hansen’’).9
TBMA, Chapman, DAC and Nuveen
all indicated support for including
Takedown trades in the definition of list
price transactions and allowing such
transactions to be reported by the end of
the day. Chapman stated that he is
‘‘happy to see the MSRB is * * *
recognizing [that] a takedown trade is a
list trade.’’ First Southwest supported
the proposal to include Takedown
transactions ‘‘within the definition of
List Offering Price’’ and giving such
transactions the end-of-day exception
from real-time reporting.10
After reviewing these comments, the
MSRB approved the draft amendments
for filing with the SEC.
III. Date of Effectiveness of the
Proposed Rule Change and Timing For
Commission Action
The MSRB proposes an effective date
for the proposed rule change of January
8, 2007. Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
A. By order approve such proposed
rule change, or
B. Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
8 MSRB
Notice 2006–10 (April 21, 2006).
comment letter from Wulff, Hansen did not
address the issues relating to List Offering Price and
Takedown transactions in MSRB Notice 2006–10
(April 21, 2006). Rather, the comment letter
discussed other aspects of the Notice that are not
relevant to this rule filing.
10 First Southwest, however, opposed the
proposal in MSRB Notice 2006–10 (April 21, 2006)
that dealers would be required to use a special
condition indicator for these transactions. The
indicator, however, must be mandatory in order to
be useful in distinguishing List Offering Price and
Takedown transactions from secondary market
transactions.
9 The
E:\FR\FM\14SEN1.SGM
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Federal Register / Vol. 71, No. 178 / Thursday, September 14, 2006 / Notices
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
DEPARTMENT OF STATE
DEPARTMENT OF TRANSPORTATION
[Public Notice 5545]
Office of the Secretary
[Docket OST–2006–25612]
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–2006–07 on the
subject line.
Culturally Significant Objects Imported
for Exhibition Determinations: ‘‘Royal
Collections’’
rwilkins on PROD1PC63 with NOTICES
SUMMARY: Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
2459), Executive Order 12047 of March
27, 1978, the Foreign Affairs Reform and
Paper Comments
Restructuring Act of 1998 (112 Stat.
• Send paper comments in triplicate
2681, et seq.; 22 U.S.C. 6501 note, et
to Nancy M. Morris, Secretary,
seq.), Delegation of Authority No. 234 of
Securities and Exchange Commission,
October 1, 1999, Delegation of Authority
Station Place, 100 F Street, NE.,
No. 236 of October 19, 1999, as
Washington, DC 20549–1090.
amended, and Delegation of Authority
No. 257 of April 15, 2003 [68 FR 19875],
All submissions should refer to File
I hereby determine that the objects to be
Number SR–MSRB–2006–07. This file
included in the exhibition ‘‘Royal
number should be included on the
subject line if e-mail is used. To help the Collections,’’ imported from abroad for
temporary exhibition within the United
Commission process and review your
States, are of cultural significance. The
comments more efficiently, please use
only one method. The Commission will objects are imported pursuant to a loan
post all comments on the Commission’s agreement with the foreign owner or
custodian. I also determine that the
Internet Web site (https://www.sec.gov/
exhibition or display of the exhibit
rules/sro.shtml). Copies of the
objects at the High Museum of Art,
submission, all subsequent
Atlanta, Georgia, from on or about
amendments, all written statements
October 14, 2006, until on or about
with respect to the proposed rule
September 2, 2007, at the Denver Art
change that are filed with the
Museum, Denver, Colorado, beginning
Commission, and all written
on or about October 13, 2007, until on
communications relating to the
or about January 8, 2008, and at possible
proposed rule change between the
Commission and any person, other than additional venues yet to be determined,
is in the national interest. Public Notice
those that may be withheld from the
of these Determinations is ordered to be
public in accordance with the
published in the Federal Register.
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
FOR FURTHER INFORMATION CONTACT: For
the Commission’s Public Reference
further information, including a list of
Room. Copies of such filing also will be the exhibit objects, contact Wolodymyr
available for inspection and copying at
Sulzynsky, Attorney-Adviser, Office of
the MSRB’s offices. All comments
the Legal Adviser, U.S. Department of
received will be posted without change; State (telephone: 202/453–8050). The
the Commission does not edit personal
address is U.S. Department of State, SA–
identifying information from
44, 301 4th Street, SW., Room 700,
submissions. You should submit only
Washington, DC 20547–0001.
information that you wish to make
Dated: September 1, 2006.
available publicly. All submissions
C. Miller Crouch,
should refer to File Number SR–MSRB–
2006–07 and should be submitted on or Principal Deputy Assistant Secretary for
Educational and Cultural Affairs, Department
before October 5, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–15230 Filed 9–13–06; 8:45 am]
of State.
[FR Doc. E6–15259 Filed 9–13–06; 8:45 am]
BILLING CODE 4710–05–P
BILLING CODE 8010–01–P
11 17
CFR 200.30–3(a)(12).
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20:23 Sep 13, 2006
54325
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Notice of Extension for Filing
Comments; Request by Hawaiian
Airlines for Declaratory Order
Concerning Hawaiian’s American
Samoa Service
Office of the Secretary,
Department of Transportation.
SUMMARY: The Department is changing
the due dates for comments and reply
comments on the legal and policy
questions presented by a petition
submitted by Hawaiian Airlines for a
declaratory order regarding an Executive
Order issued by the Honorable Togiola
T.A. Tulafono, the Governor of
American Samoa. The Governor’s order
proposes to block Hawaiian from
continuing to serve American Samoa if
another airline replaces Hawaiian’s
service between Honolulu and Pago
Pago. Comments will now be due
October 31, and reply comments will be
due November 21, 2006.
DATES: Comments must be submitted on
or before October 31, 2006. Replies must
be filed by November 21, 2006.
ADDRESSES: Objections and answers to
objections must be filed in Docket
number OST–2006–25612 by one of the
following means:
(1) By mail to the Docket Management
Facility, U.S. Department of
Transportation, Room PL–401, 400
Seventh Street, SW., Washington, DC
20590–0001.
(2) By hand delivery to Room PL–401
on the Plaza level of the Nassif Building,
400 Seventh Street, SW., Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The telephone number is 202–366–
9329.
(3) Electronically through the Web
site for the Docket Management System
at https://dms.dot.gov. Comments must
be filed in Docket OST–2006–25612.
FOR FURTHER INFORMATION CONTACT:
Thomas Ray, Office of the General
Counsel (C–30, Room 4102), U.S.
Department of Transportation, 400
Seventh St., SW., Washington, DC
20590, (202) 366–4731, or Nancy
Kessler, Office of the General Counsel
(C–10, Room 10102), U.S. Department of
Transportation, 400 Seventh St., SW.,
Washington, DC 20590, (202) 366–9301.
SUPPLEMENTARY INFORMATION: On August
10, 2006, Hawaiian Airlines, the only
airline currently providing scheduled
passenger service between American
Samoa and another U.S. State or
territory, filed a petition asking for a
AGENCY:
E:\FR\FM\14SEN1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 178 (Thursday, September 14, 2006)]
[Notices]
[Pages 54323-54325]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-15230]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54416; File No. SR-MSRB-2006-07]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Proposed Rule Change to MSRB Rule G-14 RTRS
Procedures Relating to ``List Offering Price'' and ``Takedown''
Transactions
September 8, 2006.
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 August 15, 2006, the Municipal Securities Rulemaking Board (``MSRB''
or ``Board'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been substantially
prepared by the MSRB. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB is filing with the Commission a proposed rule change to
Rule G-14 RTRS Procedures under Rule G-14, Reports of Sales or
Purchases, to expand the usage of ``list offering price'' transactions
to include certain inter-dealer ``takedown'' transactions and to
require the reporting of these transactions as ``list offering price''
transactions on the first day of trading of a new issue. 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
MSRB Rule G-14 requires brokers, dealers, and municipal securities
dealers (collectively ``dealers'') to report information about each
purchase and sale transaction effected in municipal securities to the
Real-Time Transaction Reporting System (``RTRS'') in the manner
prescribed by Rule G-14 RTRS Procedures. Rule G-14 requires that
transactions effected with a time of trade during the hours of the RTRS
business day be reported within fifteen minutes of the time of trade to
an RTRS Portal.
Under MSRB Rule G-14 RTRS Procedures, paragraph (a)(ii), there are
three exceptions to this fifteen minute reporting requirement. The
exception addressed by the proposed rule change currently allows
syndicate managers, syndicate members and selling group members that
effect trades in new issues on the first day of trading at the list
offering price to report such trades by the end of the day on which the
trades were executed.\3\ This exception is known as the ``List Offering
Price'' exception.
---------------------------------------------------------------------------
\3\ The other two exceptions to the fifteen minute reporting
rule are: (1) A dealer effecting a trade in a short-term instrument
under nine months in effective maturity (including variable rate
instruments, auction rate products, and commercial paper) shall
report such trades by the end of the business day on which the
trades were executed; and (2) a dealer shall report a trade within
three hours of the time of trade if certain conditions apply. See
MSRB Rule G-14 RTRS Procedures (a)(ii)(B) and (C).
---------------------------------------------------------------------------
The ``List Offering Price'' is defined as the publicly announced
initial offering price at which a new issue of municipal securities is
to be offered to the public.\4\ The MSRB provided the end-of-day
reporting deadline for these customer transactions because of the
substantial operational difficulties underwriters would face in
reporting large numbers of List Offering Price transactions within a
fifteen-minute window after the formal award. The MSRB also concluded
that real-time dissemination of large numbers of primary market
transactions occurring at the same price would not offer a substantial
benefit to RTRS transparency objectives.
---------------------------------------------------------------------------
\4\ If the price is not publicly disseminated (e.g., if the
security is a ``not reoffered'' maturity within a serial issue), the
price is not a List Offering Price. See ``Reminder Notice on List
Offering Price and Three-hour Exception for Real-Time Transaction
Reporting: Rule G-14,'' MSRB Notice 2004-40 (December 10, 2004).
---------------------------------------------------------------------------
For purposes of RTRS transaction reporting, a ``Takedown''
transaction is
[[Page 54324]]
a primary market sale transaction executed on the first day of trading
of a new issue by a sole underwriter or syndicate manager to a
syndicate or selling group member at a discount from the List Offering
Price. In a 2004 notice, the MSRB stated that these inter-dealer
transactions must be reported within fifteen minutes of the time of
execution and that they do not fall within the List Offering Price end-
of-day exception.\5\ As experience with real-time transaction reporting
has increased, however, industry members have pointed out that Takedown
transactions share many of the same characteristics as List Offering
Price transactions. A high volume of Takedown transactions on the first
day of trading in a new issue, for example, often presents operational
difficulties for underwriters attempting to report all of their
Takedown transactions within a fifteen-minute window. It also has been
noted that prices for both Takedown transactions and List Offering
Price transactions are set under an offering price agreement for the
new issue and therefore do not necessarily reflect market prices at the
time the transaction is effected. Thus, the proposed rule change would
expand the definition of List Offering Price to include Takedown
transactions, require use of an indicator on reports of all List
Offering Price and Takedown transactions, and retain the end of the day
exception from the normal fifteen minute reporting deadline for the
expanded category of ``List Offering Price/Takedown'' transactions.\6\
---------------------------------------------------------------------------
\5\ See id.
\6\ These List Offering Price/Takedown transactions would be
designated with the same special condition indicator currently in
use for List Offering Price transactions. The technical requirements
for the current List Offering Price indicator are summarized in the
Specifications for Real-Time Reporting of Municipal Securities
Transactions which is available on-line at https://www.msrb.org. The
draft revisions to the Specifications for the indicator identifying
the List Offering Price/Takedown Transactions may be found in
``Request for Comment on Draft Procedures for Reporting Special
Condition Indicators on Certain New Issue Transactions,'' MSRB
Notice 2006-10 (April 21, 2006).
---------------------------------------------------------------------------
The proposed List Offering Price/Takedown indicator would be
required to be used by dealers when reporting any primary market sale
transaction executed on the first day of trading of a new issue:
By a sole underwriter, syndicate manager, syndicate member
or selling group member at the published list offering price for the
security (``List Offering Price Transaction''); or
By a sole underwriter or syndicate manager to a syndicate
or selling group member at a discount from the published list offering
price for the security (``RTRS Takedown Transaction'').
The indicator would be included on MSRB price transparency reports
to designate to transparency report users that the trade report does
not represent a normal secondary market transaction. The proposed rule
change recognizes the similarities between List Offering Price and
Takedown transactions and the dissimilarities between these
transactions and secondary market transactions in a new issue. Since
the secondary market transactions in a new issue are likely to provide
the best gauge of the current market value for a new issue and may be
reported to RTRS simultaneously with List Offering Price and Takedown
transactions, the MSRB believes that transparency reports on the first
day of trading for a new issue would be more useful if List Offering
Price and Takedown transactions were identified with a special
condition indicator.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act,\7\ 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, 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.
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\7\ 15 U.S.C. 78o-4(b)(2)(C).
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The MSRB believes that the proposed rule change is consistent with
the Act because it will allow the municipal securities industry to
produce more accurate trade reporting and transparency and will enhance
surveillance data used by enforcement agencies.
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 since it would apply equally to
all dealers.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
On April 21, 2006, the MSRB published for comment a notice with
respect to reporting procedures for List Offering Price and Takedown
transactions.\8\ In response, the MSRB received six comment letters
from: The Bond Market Association (``TBMA''), Jerry L. Chapman, Private
Investor (``Chapman''), Digital Assurance Certification LLC (``DAC''),
First Southwest Company (``First Southwest''), Nuveen Investments
(``Nuveen'') and Wulff, Hansen & Co. (``Wulff, Hansen'').\9\
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\8\ MSRB Notice 2006-10 (April 21, 2006).
\9\ The comment letter from Wulff, Hansen did not address the
issues relating to List Offering Price and Takedown transactions in
MSRB Notice 2006-10 (April 21, 2006). Rather, the comment letter
discussed other aspects of the Notice that are not relevant to this
rule filing.
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TBMA, Chapman, DAC and Nuveen all indicated support for including
Takedown trades in the definition of list price transactions and
allowing such transactions to be reported by the end of the day.
Chapman stated that he is ``happy to see the MSRB is * * * recognizing
[that] a takedown trade is a list trade.'' First Southwest supported
the proposal to include Takedown transactions ``within the definition
of List Offering Price'' and giving such transactions the end-of-day
exception from real-time reporting.\10\
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\10\ First Southwest, however, opposed the proposal in MSRB
Notice 2006-10 (April 21, 2006) that dealers would be required to
use a special condition indicator for these transactions. The
indicator, however, must be mandatory in order to be useful in
distinguishing List Offering Price and Takedown transactions from
secondary market transactions.
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After reviewing these comments, the MSRB approved the draft
amendments for filing with the SEC.
III. Date of Effectiveness of the Proposed Rule Change and Timing For
Commission Action
The MSRB proposes an effective date for the proposed rule change of
January 8, 2007. Within 35 days of the date of publication of this
notice in the Federal Register or within such longer period (i) as the
Commission may designate up to 90 days of such date if it finds such
longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
A. By order approve such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
[[Page 54325]]
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-2006-07 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-MSRB-2006-07. 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 MSRB's
offices. 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-2006-07 and should be submitted on or before October 5, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-15230 Filed 9-13-06; 8:45 am]
BILLING CODE 8010-01-P
