Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Proposed Rule Change Relating to MSRB Rule G-34, CUSIP Numbers and New Issue Requirements, To Require Underwriter Registration and Testing With Depository Trust and Clearing Corporation's New Issue Information Dissemination System, 29799-29800 [E8-11434]

Download as PDF Federal Register / Vol. 73, No. 100 / Thursday, May 22, 2008 / Notices Sections A, B, and C below, of the most significant aspects of such statements. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57830; File No. SR–MSRB– 2008–04] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Proposed Rule Change Relating to MSRB Rule G–34, CUSIP Numbers and New Issue Requirements, To Require Underwriter Registration and Testing With Depository Trust and Clearing Corporation’s New Issue Information Dissemination System May 16, 2008. 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 May 9, 2008, the Municipal Securities Rulemaking Board (‘‘MSRB’’) filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the MSRB. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 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 changes to Rule G–34, CUSIP Numbers and New Issue Requirements. The proposed rule change would require underwriters to register and conduct tests with the Depository Trust and Clearing Corporation’s New Issue Information Dissemination System. The text of the proposed rule change is available on the MSRB’s Web site (http://www.msrb.org), at the MSRB’s principal office, and at the Commission’s Public Reference Room. rwilkins on PROD1PC63 with NOTICES 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 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Aug<31>2005 17:03 May 21, 2008 Jkt 214001 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 require underwriters to register and conduct tests with the Depository Trust and Clearing Corporation’s (‘‘DTCC’’) New Issue Information Dissemination System (‘‘NIIDS’’). The proposed rule change would help ensure that dealers are prepared for the September 30, 2008 effective date of changes to other MSRB rules to require underwriters to participate in NIIDS.3 Accordingly, the proposed rule change would require all brokers, dealers and municipal securities dealers (collectively ‘‘dealers’’) that have acted as underwriter 4 in the last year on a new issue of municipal securities with nine months or greater effective maturity to register to use NIIDS with DTCC and successfully test NIIDS prior to September 15, 2008.5 On an ongoing basis the proposed rule change would require dealers to register to use NIIDS with DTCC and successfully test NIIDS prior to acting as underwriter on a new issue of municipal securities with nine months or greater effective maturity. DTCC NIIDS Implementation Plan NIIDS is a centralized system for collecting and communicating new issue securities information. NIIDS will act as a central collection point for standardized electronic files of new issue information provided by underwriters that will be disseminated in real-time to information vendors. NIIDS is a component of a larger initiative at DTCC to implement an updated system for making new issues depository eligible (‘‘UW SOURCE’’). While NIIDS will provide an improved mechanism for disseminating the new issue information necessary for trade processing, information submitted into 3 See Securities Exchange Act Release No. 57750 (May 1, 2008), 73 FR 25815 (May 7, 2008). 4 Rule G–34 defines ‘‘underwriter’’ very broadly to include a dealer acting as a placement agent as well as any dealer purchasing new issue securities from the issuer as principal. If there is an underwriting syndicate, the lead manager is considered to be the ‘‘underwriter’’ for purposes of Rule G–34. 5 Many underwriters have already registered with DTCC and initiated NIIDS testing. The proposed rule change would place a deadline on underwriters to register with DTCC and complete NIIDS testing. Underwriters that have already satisfied the requirements of the proposed rule change prior to SEC approval are not required to re-register or retest. PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 29799 NIIDS also will be used in UW SOURCE for making new issues depository eligible. Beginning September 2, 2008, DTCC will require underwriters to use NIIDS in connection with the filing of an application for depository eligibility in UW SOURCE for new issues of municipal securities.6 To allow underwriters to gain experience with UW SOURCE in advance of September 2, 2008, DTCC has made UW SOURCE available on an optional basis to allow all registered underwriters to test their ability to use UW SOURCE, including the NIIDS component. DTCC has developed educational training materials on UW SOURCE and NIIDS that are available on DTCC’s Web site. MSRB NIIDS Registration Requirement Under the proposed rule change, all dealers that underwrite municipal securities with nine months or greater effective maturity would be required to register to use NIIDS with DTCC. Registration with DTCC is required in order for an underwriter to gain access to UW SOURCE to test NIIDS. MSRB NIIDS Testing Requirement Once an underwriter has completed DTCC NIIDS registration requirements, the underwriter is allowed to submit test data into NIIDS. DTCC has published a test plan that underwriters can use to gain familiarity with NIIDS. DTCC’s UW SOURCE Testing and Implementation Plan is available on DTCC’s Web site. DTCC’s UW SOURCE Testing and Implementation Plan includes the capability for underwriters to test the submission of information for several different types of securities. The proposed rule change only requires underwriters to test submitting information about securities with nine months or greater effective maturity since the changes to MSRB rules to require underwriter participation with NIIDS that become effective on September 30, 2008 provide an exception for short-term instruments with less than nine months in effective maturity. Two methods of inputting new issue information into NIIDS are provided by DTCC: (i) NIIDS Web Interface and (ii) NIIDS ‘‘Autofeed’’ Interface. The NIIDS Web Interface allows underwriters to input information about a new issue using an Internet portal manually or by uploading a formatted Excel spreadsheet. The proposed rule change would require all underwriters to 6 See Securities Exchange Act Release No. 57768 (May 2, 2008), 73 FR 26181 (May 8, 2008). E:\FR\FM\22MYN1.SGM 22MYN1 29800 Federal Register / Vol. 73, No. 100 / Thursday, May 22, 2008 / Notices submit two test new issues using the NIIDS Web Interface. The NIIDS Autofeed Interface allows underwriters to establish computer-tocomputer connections with DTCC either directly or through a vendor to submit automated files directly to NIIDS. For underwriters planning to use the NIIDS Autofeed Interface, the proposed rule change would require underwriters to submit two test new issues using computer-to-computer connections. DTCC will monitor underwriter testing and provide status updates to the MSRB. For purposes of determining whether an underwriter has successfully tested the NIIDS Web Interface or the NIIDS Autofeed Interface, underwriters must be able to submit a test new issue in NIIDS and achieve ‘‘Trade Eligibility’’ status in less than two hours. To assist in monitoring whether a test was successful, underwriters should enter a ‘‘Time of Formal Award’’ in NIIDS that reflects the time that the underwriter begins submitting data into NIIDS so that the Time of Formal Award can be compared with the time at which Trade Eligibility status is achieved. 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. rwilkins on PROD1PC63 with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The MSRB does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act since it would apply equally to all brokers, dealers and municipal securities dealers. 7 15 U.S.C. 78o–4(b)(2)(C). VerDate Aug<31>2005 17:03 May 21, 2008 Jkt 214001 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 Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: A. By order approve such proposed rule change, or B. Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–MSRB–2008–04 on the subject line. Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the MSRB. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–MSRB–2008–04 and should be submitted on or before June 12, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–11434 Filed 5–21–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57822; File No. SR– NASDAQ–2008–045] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Modify the Opening of Trading on the NASDAQ Options Market May 15, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 • Send paper comments in triplicate notice is hereby given that on May 13, to Nancy M. Morris, Secretary, 2008, The NASDAQ Stock Market LLC Securities and Exchange Commission, (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 100 F Street, NE., Washington, DC Securities and Exchange Commission 20549–1090. (‘‘Commission’’) the proposed rule All submissions should refer to File change as described in Items I, II, and Number SR–MSRB–2008–04. This file III below, which Items have been number should be included on the substantially prepared by the Exchange. subject line if e-mail is used. To help the Nasdaq has filed the proposal pursuant Commission process and review your to Section 19(b)(3)(A) of the Act 3 and comments more efficiently, please use Rule 19b–4(f)(5) thereunder,4 which only one method. The Commission will renders the proposal effective upon post all comments on the Commission’s filing with the Commission. The Internet Web site (http://www.sec.gov/ Commission is publishing this notice to rules/sro.shtml). Copies of the solicit comments on the proposed rule submission, all subsequent change from interested persons. amendments, all written statements with respect to the proposed rule 8 17 CFR 200.30–3(a)(12). change that are filed with the 1 15 U.S.C. 78s(b)(1). Commission, and all written 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). communications relating to the 4 17 CFR 240.19b–4(f)(5). proposed rule change between the Paper Comments PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 E:\FR\FM\22MYN1.SGM 22MYN1

Agencies

[Federal Register Volume 73, Number 100 (Thursday, May 22, 2008)]
[Notices]
[Pages 29799-29800]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-11434]



[[Page 29799]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57830; File No. SR-MSRB-2008-04]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Proposed Rule Change Relating to MSRB Rule 
G-34, CUSIP Numbers and New Issue Requirements, To Require Underwriter 
Registration and Testing With Depository Trust and Clearing 
Corporation's New Issue Information Dissemination System

May 16, 2008.
    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 May 9, 2008, the Municipal Securities Rulemaking Board (``MSRB'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') the proposed rule change as described in Items I, II, and III 
below, which Items have been substantially prepared by the MSRB. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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 
consisting of changes to Rule G-34, CUSIP Numbers and New Issue 
Requirements. The proposed rule change would require underwriters to 
register and conduct tests with the Depository Trust and Clearing 
Corporation's New Issue Information Dissemination System. The text of 
the proposed rule change is available on the MSRB's Web site (http://
www.msrb.org), at the MSRB's principal office, and at the Commission's 
Public Reference Room.

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 require underwriters to register and 
conduct tests with the Depository Trust and Clearing Corporation's 
(``DTCC'') New Issue Information Dissemination System (``NIIDS''). The 
proposed rule change would help ensure that dealers are prepared for 
the September 30, 2008 effective date of changes to other MSRB rules to 
require underwriters to participate in NIIDS.\3\ Accordingly, the 
proposed rule change would require all brokers, dealers and municipal 
securities dealers (collectively ``dealers'') that have acted as 
underwriter \4\ in the last year on a new issue of municipal securities 
with nine months or greater effective maturity to register to use NIIDS 
with DTCC and successfully test NIIDS prior to September 15, 2008.\5\ 
On an ongoing basis the proposed rule change would require dealers to 
register to use NIIDS with DTCC and successfully test NIIDS prior to 
acting as underwriter on a new issue of municipal securities with nine 
months or greater effective maturity.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 57750 (May 1, 2008), 
73 FR 25815 (May 7, 2008).
    \4\ Rule G-34 defines ``underwriter'' very broadly to include a 
dealer acting as a placement agent as well as any dealer purchasing 
new issue securities from the issuer as principal. If there is an 
underwriting syndicate, the lead manager is considered to be the 
``underwriter'' for purposes of Rule G-34.
    \5\ Many underwriters have already registered with DTCC and 
initiated NIIDS testing. The proposed rule change would place a 
deadline on underwriters to register with DTCC and complete NIIDS 
testing. Underwriters that have already satisfied the requirements 
of the proposed rule change prior to SEC approval are not required 
to re-register or re-test.
---------------------------------------------------------------------------

DTCC NIIDS Implementation Plan

    NIIDS is a centralized system for collecting and communicating new 
issue securities information. NIIDS will act as a central collection 
point for standardized electronic files of new issue information 
provided by underwriters that will be disseminated in real-time to 
information vendors. NIIDS is a component of a larger initiative at 
DTCC to implement an updated system for making new issues depository 
eligible (``UW SOURCE''). While NIIDS will provide an improved 
mechanism for disseminating the new issue information necessary for 
trade processing, information submitted into NIIDS also will be used in 
UW SOURCE for making new issues depository eligible.
    Beginning September 2, 2008, DTCC will require underwriters to use 
NIIDS in connection with the filing of an application for depository 
eligibility in UW SOURCE for new issues of municipal securities.\6\ To 
allow underwriters to gain experience with UW SOURCE in advance of 
September 2, 2008, DTCC has made UW SOURCE available on an optional 
basis to allow all registered underwriters to test their ability to use 
UW SOURCE, including the NIIDS component. DTCC has developed 
educational training materials on UW SOURCE and NIIDS that are 
available on DTCC's Web site.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 57768 (May 2, 2008), 
73 FR 26181 (May 8, 2008).
---------------------------------------------------------------------------

MSRB NIIDS Registration Requirement

    Under the proposed rule change, all dealers that underwrite 
municipal securities with nine months or greater effective maturity 
would be required to register to use NIIDS with DTCC. Registration with 
DTCC is required in order for an underwriter to gain access to UW 
SOURCE to test NIIDS.

MSRB NIIDS Testing Requirement

    Once an underwriter has completed DTCC NIIDS registration 
requirements, the underwriter is allowed to submit test data into 
NIIDS. DTCC has published a test plan that underwriters can use to gain 
familiarity with NIIDS. DTCC's UW SOURCE Testing and Implementation 
Plan is available on DTCC's Web site.
    DTCC's UW SOURCE Testing and Implementation Plan includes the 
capability for underwriters to test the submission of information for 
several different types of securities. The proposed rule change only 
requires underwriters to test submitting information about securities 
with nine months or greater effective maturity since the changes to 
MSRB rules to require underwriter participation with NIIDS that become 
effective on September 30, 2008 provide an exception for short-term 
instruments with less than nine months in effective maturity.
    Two methods of inputting new issue information into NIIDS are 
provided by DTCC: (i) NIIDS Web Interface and (ii) NIIDS ``Autofeed'' 
Interface. The NIIDS Web Interface allows underwriters to input 
information about a new issue using an Internet portal manually or by 
uploading a formatted Excel spreadsheet. The proposed rule change would 
require all underwriters to

[[Page 29800]]

submit two test new issues using the NIIDS Web Interface.
    The NIIDS Autofeed Interface allows underwriters to establish 
computer-to-computer connections with DTCC either directly or through a 
vendor to submit automated files directly to NIIDS. For underwriters 
planning to use the NIIDS Autofeed Interface, the proposed rule change 
would require underwriters to submit two test new issues using 
computer-to-computer connections.
    DTCC will monitor underwriter testing and provide status updates to 
the MSRB. For purposes of determining whether an underwriter has 
successfully tested the NIIDS Web Interface or the NIIDS Autofeed 
Interface, underwriters must be able to submit a test new issue in 
NIIDS and achieve ``Trade Eligibility'' status in less than two hours. 
To assist in monitoring whether a test was successful, underwriters 
should enter a ``Time of Formal Award'' in NIIDS that reflects the time 
that the underwriter begins submitting data into NIIDS so that the Time 
of Formal Award can be compared with the time at which Trade 
Eligibility status is achieved.
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:
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    Be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in municipal securities, 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.

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

    The MSRB does not believe that the proposed rule change will impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act since it would apply equally to 
all brokers, dealers and municipal securities dealers.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2008-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2008-04. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the MSRB. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MSRB-2008-04 and should be 
submitted on or before June 12, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary. 8
 [FR Doc. E8-11434 Filed 5-21-08; 8:45 am]
BILLING CODE 8010-01-P