Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Consisting of Amendments to MSRB Rules A-12, on Initial Fee, G-14, on Reports of Sales or Purchases, and the Facility for Real-Time Transaction Reporting and Price Dissemination (“RTRS Facility”); Deletion of Rules A-14, on Annual Fee, A-15, on Notification to the Board of Change in Status or Change of Name or Address, and G-40, on Electronic Mail Contacts; Deletion of References to RTRS Testing Requirements Under Rules G-14(b)(v), G-14(c), on RTRS Procedures, and in the RTRS Facility; Elimination of MSRB Forms RTRS and G-40; and Adoption of a Single, Consolidated Electronic Registration Form, New Form A-12, 2483-2489 [2014-00463]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 9 (Tuesday, January 14, 2014)]
[Notices]
[Pages 2483-2489]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00463]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71255; File No. SR-MSRB-2013-09]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of a Proposed Rule Change, as Modified by 
Amendment No. 1 Thereto, Consisting of Amendments to MSRB Rules A-12, 
on Initial Fee, G-14, on Reports of Sales or Purchases, and the 
Facility for Real-Time Transaction Reporting and Price Dissemination 
(``RTRS Facility''); Deletion of Rules A-14, on Annual Fee, A-15, on 
Notification to the Board of Change in Status or Change of Name or 
Address, and G-40, on Electronic Mail Contacts; Deletion of References 
to RTRS Testing Requirements Under Rules G-14(b)(v), G-14(c), on RTRS 
Procedures, and in the RTRS Facility; Elimination of MSRB Forms RTRS 
and G-40; and Adoption of a Single, Consolidated Electronic 
Registration Form, New Form A-12

January 8, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on December 24, 2013, the Municipal Securities Rulemaking Board 
(the ``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (the ``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the MSRB. On January 7, 2014, the Board filed Amendment No. 1 to the 
proposed rule change.\3\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as modified by Amendment 
No. 1 thereto, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ By Amendment No. 1, the Board: (1) Added footnote 5 to Item 
II(A)(1) explaining that Form A-12 included as Exhibit 3 to SR-MSRB-
2013-09 as filed with the SEC is a pre-production depiction of an 
electronic form and the final appearance of which may vary in non-
substantive respects; (2) added text and footnotes 6, 8, and 9 to 
Item II(A)(1) to clarify that the current requirement for all 
registrants to provide a Primary Electronic Mail Contact and for 
municipal securities dealers that report trades to the MSRB to 
provide a primary Trade Data Quality contact would be replaced by 
the requirement that all registrants provide a Primary Regulatory 
Contact, Master Account Administrator, Billing Contact, Compliance 
Contact, and Data Quality Contact. Additionally, the new text 
explains that the optional Trade Data Quality Contact, Optional 
Electronic Mail Contact, and optional Technical Contact would be 
replaced with the Optional Regulatory Contact, Optional Data Quality 
Contact, and Optional Technical Contact; and (3) included an 
additional graphic illustration on new Form A-12, found in Exhibit 3 
to SR-MSRB-2013-09 as filed with the SEC, that depicts where 
registrants would describe the reason(s) for the involuntary 
withdrawal of their registration with the MSRB on the new Form A-12.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing with the Commission a proposed rule change 
consisting of amendments to MSRB Rules A-12, on initial fee, Rule G-14, 
on reports of sales or purchases, and the Facility for Real-Time 
Transaction Reporting and Price Dissemination (``RTRS Facility''). The 
MSRB also proposes a deletion of the entire rule language (reserving 
the rule numbers for potential future use) for Rules A-14, on annual 
fee, A-15, on notification to the Board of change in status or change 
of name or address, and G-40, on electronic mail contacts. 
Additionally, references to RTRS testing requirements under G-14(b)(v), 
G-14(c), on RTRS Procedures, and in the RTRS Facility will be deleted. 
Finally, the MSRB proposes to eliminate two MSRB forms, Forms RTRS and 
G-40, and adopt a single, consolidated electronic registration form, 
new Form A-12 (collectively, the ``proposed rule change''). The MSRB 
will provide at least thirty days notice of the effective date, which 
shall be announced within ten days of SEC approval in a notice 
published on the MSRB Web site. The notice will also announce a 
compliance date for completion of new Form A-12 of ninety days from the 
effective date.\4\
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    \4\ The MSRB anticipates that the effective date will be on or 
about April 28, 2014 when new Form A-12 will be available and that 
registrants will have ninety days from such date to complete the 
form in accordance with the proposed rule change.
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    The text of the proposed rule change is available on the MSRB's Web 
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2013-Filings.aspx, at the MSRB's principal office, and at the Commission's 
Public Reference Room.

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

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

[[Page 2484]]

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

1. Purpose
    The proposed rule change would amend Rule A-12 to create new 
registration procedures for MSRB-regulated brokers, dealers and 
municipal securities dealers (``dealers'') and municipal advisors 
(dealers and municipal advisors are referred to herein collectively as 
``registrants'' or ``regulated entities''). These new procedures would 
be incorporated into new Form A-12.\5\ The proposed rule change would 
consolidate the MSRB registration process in Rule A-12 and delete the 
rule language under Rules A-14, A-15, and G-40; eliminating Forms RTRS 
and G-40; and amending Rule G-14(b)(iv). The MSRB believes, as 
explained below, that the proposed rule change will make it easier for 
registrants to complete the registration process and will provide the 
MSRB with additional information regarding registrants that will be 
useful for regulatory purposes.
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    \5\ The new Form A-12 found in Exhibit 3 to SR-MSRB-2013-09 as 
filed with the SEC is a pre-production depiction of an electronic 
form, the final appearance of which may vary in non-substantive 
respects.
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    Currently, regulated entities must reference a series of MSRB rules 
when registering with the MSRB, as there is no single ``registration'' 
rule. Prior to engaging in municipal securities or municipal advisory 
activities, regulated entities are required, consistent with current 
Rule A-12, to supply only basic identifying information to the MSRB and 
pay an initial fee. Each regulated entity that changes its name or 
address, or ceases to be engaged in municipal securities business, 
whether voluntarily or otherwise, must so notify the MSRB, pursuant to 
current Rule A-15. Under Rules G-14(b)(iv) and G-40, regulated entities 
must complete Forms RTRS and G-40 that require registrants to provide 
the MSRB with an official contact, certain business information, and 
certain other information necessary to process their transaction 
reports correctly. Additionally, Rule G-14(b)(v) requires registrants 
that submit transaction data to the MSRB to test their ability to 
interface with MSRB systems. Finally, under Rule A-14, regulated 
entities must pay an annual fee upon registration and annually 
thereafter. The proposed rule change reflects the MSRB's determination 
that additional rulemaking in this area is necessary to improve the 
efficiency by which regulated entities register, and maintain 
registration, with the MSRB.
    The proposed rule change addresses concerns expressed by 
registrants regarding the current registration process and the number 
of rules and forms governing that process. The MSRB believes that the 
proposed rule change would clarify and simplify the registration 
process for new registrants, who, as noted, currently must follow 
requirements spread across several rules and forms. In addition to 
increased efficiency, the proposed rule change would allow the MSRB to 
collect additional data from and about registrants. Such information 
would further support the MSRB and other appropriate regulators in 
their regulatory activities.
    The proposed rule change would require registrants to provide 
contact information (name, title, phone number, address, and email 
address) for several new contact persons on Form A-12. In addition to 
the Primary Regulatory Contact, Form A-12 would require all registrants 
to identify a Master Account Administrator, Billing Contact,\6\ 
Compliance Contact, and Data Quality Contact, as further described 
below under ``Form A-12.'' \7\ The Trade Data Quality Contact required 
for dealers engaged in certain business activities \8\ under the 
current Form RTRS would be replaced by the Data Quality Contact under 
the proposed rule change and would be required of all registrants 
regardless of their business activities. These required contacts would 
alleviate the need for the MSRB to direct all communications through a 
Primary Electronic Mail Contact, as is currently the case under Rule G-
40.\9\ Instead, the MSRB would be able to communicate issues and make 
requests directly relevant to the contact person tasked with handling 
such matters. The MSRB believes that this will increase regulatory 
efficiency for the MSRB and reduce the burdens on registrants when 
responding to MSRB inquiries.
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    \6\ Currently, Form G-40 permits registrants to provide a 
billing contact; however, such a contact is not required under 
current MSRB rules.
    \7\ MSRB Rule G-14(b)(iv) currently requires only dealers to 
provide a data quality contact for trade submissions.
    \8\ Current Form RTRS requires a dealer to provide a primary 
Trade Data Quality Contact if such dealer (1) effects purchases and 
sales transactions in municipal securities, (2) clears and settles 
transactions as an NSCC participant, or (3) acts as a broker's 
broker. In addition, currently, registrants have the option of 
providing a secondary Trade Data Quality Contact and/or a Technical 
Contact.
    \9\ Currently, Rule G-40 permits registrants to provide an 
Optional Electronic Mail Contact; however, such a contact is not 
required under current MSRB rules.
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    The proposed rule change also would provide a waiver of the annual 
fee for dealers and municipal advisors that register in the last month 
of the MSRB's fiscal year. This relief would address concerns raised by 
regulated entities that they must pay two annual fees in a short period 
of time if they register with the MSRB near the end of the fiscal year. 
Finally, the proposed rule change would impose a late fee on those 
regulated entities that fail to pay MSRB assessments in a timely 
manner, as further described below under ``Summary of the Proposed Rule 
Change'' and under ``Discussion of Comments.'' The MSRB currently does 
not impose late fees and believes that this change will promote 
compliance with fee requirements and reduce the necessity for the MSRB 
to expend resources to collect untimely fees.
    The proposed rule change would eliminate the requirement for 
registrants who submit transaction data to the MSRB to test their 
ability to interface with MSRB systems. The MSRB has determined that 
testing is no longer necessary due to improvements in technology and 
the establishment of other controls, though dealers would still have 
the ability to test transaction submissions at their discretion.
    The MSRB will provide at least thirty days notice of the effective 
date, which shall be announced within ten days of SEC approval in a 
notice published on the MSRB Web site. The notice will also announce a 
compliance date for completion of new Form A-12 of ninety days from the 
effective date. This would allow the MSRB sufficient time to develop 
the automated system needed to support the new registration process. It 
also would allow new and existing registrants approximately three 
months to complete new Form A-12. The MSRB anticipates that the 
effective date will be on or about April 28, 2014 when new Form A-12 
will be available and that registrants will have ninety days from such 
date to complete the form in accordance with the proposed rule change.
Summary of the Proposed Rule Change
Rule A-12
    Proposed Rule A-12, as explained in detail below, would require 
regulated entities to register with the MSRB prior to engaging in any 
municipal securities or municipal advisory activities by completing the 
new electronic Form A-12. Note that, prior to registration with the 
MSRB, each dealer and municipal advisor must first register with and 
receive approval from the Commission.
    Rule A-12(a) would require each dealer, prior to engaging in 
municipal securities activities, and each municipal advisor, prior to 
engaging in municipal

[[Page 2485]]

advisory activities, to register with the MSRB. Rule A-12(a) also would 
require registrants to notify, as appropriate, a registered securities 
association or appropriate regulatory agency \10\ of their intent to 
engage in municipal securities and/or municipal advisory activities and 
provide the MSRB, on their Form A-12, with a written statement 
evidencing such notification.\11\ Registration with the MSRB would be 
effective only after the MSRB notifies a registrant that its Form A-12 
is complete and all fees have been received and processed.
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    \10\ The term ``appropriate regulatory agency,'' as used in this 
filing and proposed Rule A-12(a) means the Comptroller of the 
Currency, Board of Governors of the Federal Reserve System, the 
Federal Deposit Insurance Corporation, or SEC as defined in 15 
U.S.C. 78c(a)(34)(A).
    \11\ This requirement would only be applicable to dealers or 
municipal advisors first registering on or after April 28, 2014. 
Registrants would have the flexibility to submit any form of 
documentation, such as a letter on company letterhead, evidencing 
notice to a registered securities association or appropriate 
regulatory agency, as applicable, of their intent to engage in 
municipal securities and/or municipal advisory activities.
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    Rule A-12(b) would provide for the amount and method of payment of 
the initial registration fee. New registrants would be required to pay 
an initial fee of $100 to the MSRB in the manner prescribed by the MSRB 
Registration Manual. Rule A-12(c) would provide that the annual 
registration fee would continue to be $500 and would be paid in 
accordance with the method described in the MSRB Registration Manual. 
The MSRB Registration Manual would provide specifications for complying 
with the registration process set forth in proposed Rule A-12 and would 
be available in advance of the Form A-12 release date. The MSRB 
Registration Manual would contain instructions for completion of Form 
A-12, as well as graphical representations of the form. It would not, 
however, contain any substantive requirements not contained in MSRB 
rules or fairly and reasonably implied from those rules. Rule A-12(d) 
would establish late fees for any assessment due under Rule A-12 or A-
13. Although the initial and annual fee amounts would remain unchanged, 
the MSRB reviews its fee structure periodically in connection with its 
budget. The annual fee would continue to be due by October 31 each 
year, but proposed Rule A-12 would provide that a regulated entity that 
registers in September and pays an annual fee at the time of 
registration need not pay the annual fee for the following fiscal year, 
beginning October 1. Any registrant that fails to pay any fee due under 
Rules A-12 or A-13 (underwriting, transaction or technology fee) would 
be assessed a monthly late fee computed based on the overdue balance 
and the prime rate plus an additional $25 per month.
    Rule A-12(e) would permit registrants to use the designation ``MSRB 
registered'' when referencing their registrant status. The MSRB has 
received inquiries from registrants regarding the proper manner for 
denoting their registration status in their advertising material and on 
their Web sites. The MSRB has been informed of instances where 
registrants have used various designations, such as ``MSRB member.'' 
This designation is inappropriate because the MSRB is not a membership 
organization. Section (e) would provide clarity to registrants and the 
general public in this regard.
    Rule A-12(f), rather than the current requirement to provide only a 
primary electronic mail contact, would require the provision of a 
primary regulatory contact, master account administrator, billing 
contact, compliance contact, and primary data quality contact. MSRB 
registrants could also provide an optional regulatory contact, data 
quality contact and technical contact. For dealers, the primary 
regulatory contact would be required to be a registered principal. It 
would be the responsibility of the primary regulatory contact to 
receive official communications from the MSRB, similar to the role of 
the primary electronic mail contact under current Rule G-40.
    Rule A-12(g) would require dealers, prior to registering with the 
MSRB, to provide trade reporting information so that their trade 
reports can be processed correctly, or notify the MSRB that they are 
exempt from the trade reporting requirements, as further described 
below under ``Rule G-14(b)(iv).''
    Rule A-12(h), similar to current Rule G-40(d), would require 
dealers and municipal advisors to comply, within 15 days or such longer 
period as may be agreed to by the requesting authority, with any 
request from the MSRB, a registered securities association or other 
appropriate regulatory authority, for information required as a 
function of their registration with the MSRB. The MSRB requirement of 
registrants to comply with such requests from the MSRB or a registered 
securities association, as applicable, would be a new obligation not 
required under current Rule G-40(d).
    Sections (i)-(k) of proposed Rule A-12 establish the requirements 
for completing, updating, and annually affirming the information on new 
electronic Form A-12, as further described below under ``Form A-12.'' 
The proposed rule provides for an annual affirmation process, similar 
to the current process under Rule G-40(c), which would require 
registrants to review, update and affirm the information on Form A-12 
during the first seventeen business days of each calendar year. Similar 
to the current requirement in Rule A-15, registrants would be required 
to update Form A-12, within 30 days, if any information on the form 
becomes inaccurate or the firm ceases to be engaged in municipal 
securities or municipal advisory activities either voluntarily or 
involuntarily through a regulatory or judicial bar, suspension or 
otherwise. Registrants that involuntarily cease to be engaged in 
municipal securities or municipal advisory activities would be required 
to provide a written explanation, on their Form A-12, of the 
circumstances that lead to, and resulted in, the involuntary cessation 
of such activities. Finally, to collect more complete data concerning 
the activities engaged in by MSRB registrants, regulated entities would 
be required to inform the MSRB of the types of municipal securities and 
municipal advisory activities engaged in by such firms. Currently, the 
MSRB collects similar information from municipal advisor registrants on 
Form G-40, and from dealers on Form RTRS. Finally, MSRB registrants 
would be able to withdraw their registration, either fully or 
partially, by amending Form A-12.
    The instructions for completing and amending Form A-12, as well as 
information about the method of payment under Rule A-12, would be 
located in the MSRB Registration Manual as described in section (l) of 
the proposed rule.
Form A-12
    The information required by Form A-12 would be submitted 
electronically by each registrant through a web portal located on the 
MSRB's Web site. In order to mitigate the burden on current registrants 
and ease the transition process, information from registrants' current 
Forms RTRS and G-40 would be pre-populated on new Form A-12, as 
feasible. To the extent that any part of a registrant's Form A-12 is 
pre-populated, the registrant would be able to amend, edit or delete 
such information prior to submitting the completed form. Form A-12 
would require the submission of the following information:
     Registration Categories: Form A-12 would require the 
registrant to identify its registration category, such as dealer or 
municipal advisor. Registrants would be permitted to select both 
registration

[[Page 2486]]

categories, either initially or at a later date. Similarly, registrants 
that are registered as both dealers and municipal advisors would be 
permitted to withdraw either of these categories or submit a complete 
withdrawal. Registered entities that would like to add a category would 
be required to update Form A-12 to change their status prior to 
engaging in activities in the additional category. Moreover, those 
registered in multiple categories would be required to amend Form A-12 
if they cease to engage in either municipal securities or municipal 
advisory activities. The registrants would be able to designate their 
firm as a broker-dealer, municipal securities dealer (e.g., bank 
dealer), or municipal advisor, or as both a broker-dealer or municipal 
securities dealer and municipal advisor. In instances of complete 
withdrawal, the registrant would select the indicator on Form A-12 for 
a complete withdrawal.
     General Firm Information:
     Firm Identifiers: Each registrant would be required to 
enter the 1) name of the firm or individual, if registrant is a sole 
proprietorship, 2) dealer SEC identification number, if applicable, 3) 
municipal advisor SEC identification number, if applicable, 4) FINRA 
identification (Central Registration Depository) number, if applicable, 
and 5) legal entity identifier, if any.
     Intent to Engage in Municipal Securities and/or Municipal 
Advisory Activities: Registrants would be required to upload an 
electronic copy (PDF format) of the documentation evidencing the 
registrant's notification to a registered securities association or 
appropriate regulatory agency (bank regulator), as applicable, of its 
intent to engage in municipal securities and/or municipal advisory 
activities.
     Business Information: Registrants would provide their 
firm's physical address and Web site address, if any.
     Form of Organization: Each registrant would be required to 
disclose its legal form from a list that includes: Corporation, Sole 
Proprietorship (for individuals), Limited Liability Partnership, 
Partnership, Limited Liability Company, Limited Partnership, or Other 
(registrant would be required to specify). This list is identical to 
the list of organization types on the Commission's Form MA, which will 
be completed by municipal advisors. Registrants would also be required 
to provide the city and state in which they are incorporated, organized 
or established.
     Types of Business Activity: Each registrant would be 
required to identify its types of business activities. Multiple 
activities may be selected. The types of business activities a 
registrant would be able to select from are based on the registration 
category or categories selected by the registrant (i.e., dealer and/or 
municipal advisor). The municipal advisor business activities 
substantially mirror the business activity categories available on the 
Commission's Form MA. However, abbreviated titles are used in Form A-
12. Detailed descriptions of each business activity would be provided 
in the MSRB Registration Manual. The following are the business 
activities that would be available on Form A-12 for each registration 
category:
     Business Activities of Broker/Dealers--Municipal Fund 
Securities: 529 Plan Underwriting, 529 Plan Sales, Local Government 
Investment Pool Distributor/Sales, Other (registrant to specify).
     Business Activities of Broker/Dealers--Sales/Trading: 
Retail Sales, Institutional Sales, Trading--Proprietary, Trading--
Inter-Dealer, Broker's Broker Activities, Online Brokerage.
     Business Activities of Broker/Dealer--Other: Underwriting, 
Clear and settle transactions as National Securities Clearing 
Corporation (NSCC) participant, Alternative Trading System, Remarket 
Variable Rate Demand Obligations (VRDOs), Auction Rate Securities (ARS) 
Program Dealer, Research, Engage in other activities that require 
registration (registrant to specify).
     Business Activities of Municipal Advisors: Issuance 
Advice, Investment Advice--Proceeds of Municipal Securities, Investment 
Advice--Funds of Municipal Entity, Municipal Escrow Investment Advice, 
Municipal Escrow Investment Brokerage, Guaranteed Investment Contracts 
Advice, Municipal Derivatives Advice, Solicitation of Business--
Investment Advisory, Solicitation of Business--Other than Investment 
Advisory, Municipal Advisor/Underwriter Selection Advice, Other 
(registrant to specify).
     Contact Information: Rather than provide a primary 
electronic mail contact as is required currently, registrants would 
provide contact information on Form A-12 for a primary regulatory 
contact, master account administrator, billing contact, compliance 
contact, and data quality contact. Registrants may also provide an 
optional regulatory contact, optional data quality contact and/or 
optional technical contact. Registrants would be required to provide 
the name, title, address, phone number, and email address of each 
contact entered on the form. Registrants would be permitted to 
designate one individual for any or all of the contacts required under 
the proposed rule change. Below are brief descriptions of each contact:
     Primary & Optional Regulatory Contact: For dealers, the 
primary regulatory contact would be required to be a registered 
principal. It would be the responsibility of the primary regulatory 
contact to receive official communications from the MSRB, similar to 
the role of the primary electronic mail contact under current Rule G-
40. Also, the primary regulatory contact, optional regulatory contact 
or compliance contact would be required to annually affirm the 
information in Form A-12.
     Master Account Administrator: The master account 
administrators would maintain each registrant's MSRB Gateway account (a 
web portal containing all MSRB Market Transparency submission services, 
applications and the associated forms), ensure only appropriate 
personnel of the registrant have access to MSRB systems, and serve as 
the MSRB's primary contact for any and all issues that may arise 
regarding the account.
     Billing Contact: Each registrant would provide a billing 
contact who is responsible for receiving electronic statements and 
invoices from the MSRB that relate to fees assessed under MSRB Rules A-
12 and A-13, facilitating payment of such invoices, and acting as the 
MSRB's first point of contact regarding billing and payment questions 
for such fees. The addition of this contact would assist registrants by 
directing the MSRB's billing questions to the individual at the 
registered entity, thereby avoiding unnecessary communications with the 
primary regulatory contact.
     Compliance Contact: The compliance contact would be an 
individual capable of competently responding to inquiries from the MSRB 
about registrants' monitoring of day-to-day operations, internal 
controls, and policies and procedures established to comply with 
applicable rules and regulations. Also, the compliance contact, primary 
regulatory contact or optional regulatory contact would be required to 
annually affirm the information in Form A-12.
     Primary & Optional Data Quality Contact: Each registrant 
would be required to identify an individual that would respond to MSRB 
inquiries relating to the quality and control of the data the 
registrant transmits to the MSRB as part of its trade reporting and

[[Page 2487]]

other regulatory obligations.\12\ Registrants would also have the 
option to provide a second contact person capable of responding to MSRB 
communications regarding the quality and control of the registrant's 
data transmissions.
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    \12\ There are no data submission requirements for municipal 
advisors or dealers exempt from the transaction reporting 
requirements under current Rule G-14(b)(vi) (proposed Rule G-
14(b)(v)) at this time. However, these registrants must designate a 
data quality contact because future rulemaking may impose new data 
submission requirements on these registrants.
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     Optional Technical Contact: Registrants would have the 
option of providing a technical contact that would be able to respond 
to inquiries from the MSRB related to a registrant's technical 
capabilities and any technical issues in connection with trade 
reporting and other programs.
     Trade Reporting: Form A-12 would require registrants to 
select a prescribed method for reporting municipal securities 
transactions to the MSRB and receiving and responding to transaction 
and error feedback messages from the MSRB.
     Submission Information: Registrants would select among 
three manners of reporting transactions to the MSRB: (1) Self-report 
trades using a message-based trade portal operated by the NSCC and RTTM 
Web (an electronic platform maintained by NSCC-Fixed Income Services 
for the submission, collection and monitoring of trade data); (2) have 
their trades reported by another dealer acting as agent; or (3) self-
report through RTRS Web (a web based reporting mechanism maintained by 
the MSRB for submitting, modifying and canceling municipal securities 
transactions as well as for modifications to regulatory data on inter-
dealer transactions). If a registrant chooses to submit trades through 
another dealer acting as agent, the registrant must include the 
identity of such intermediary dealer to be used as a submitter.
     Feedback Information: Registrants would be required to 
select among three methods to receive and respond to transaction status 
and error feedback messages from the MSRB: (1) Email; (2) Process MT509 
messages (a standardized electronic messaging format used by dealers 
when reporting trade data from computer to computer); or (3) RTRS Web. 
If registrants select to receive transaction status and error feedback 
messages through email, the registrant would be required to include the 
email address that would receive such messages.
     Trade Reporting Identifiers: Registrants would continue to 
be required to provide certain trade reporting identifiers, as 
currently required under Rule G-14. These include their Executing 
Broker Symbols (EBS) (also known as Market Participant Identifiers or 
MPIDs) assigned by NASDAQ and, for registrants that report transactions 
using a message-based portal operated by the NSCC, their NSCC 
Participant Identifier.
Rules A-14, A-15 and G-40
    The entire rule language for Rules A-14, A-15 and G-40 would be 
deleted.
Forms RTRS and G-40
    Forms RTRS and G-40 would be discontinued.
Rule G-14(b)(iv)
    Amended Rule G-14(b)(iv) would replace a requirement to provide a 
completed Form RTRS with a provision exempting dealers from all of the 
requirements listed in Rule G-14(b), related to trade reporting, if the 
dealer does not effect any municipal securities transactions or if the 
dealer's transactions in municipal securities are limited to (1) 
transactions in securities without assigned CUSIP numbers, (2) 
transactions in municipal fund securities, or (3) inter-dealer 
transactions for principal movement of securities between dealers that 
are not inter-dealer transactions eligible for comparison in a clearing 
agency registered with the Commission.\13\ Furthermore, the amended 
rule would require dealers to confirm that they qualified for the 
exemption as provided in proposed Rule A-12(g).\14\
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    \13\ MSRB Rule G-14(b)(vi).
    \14\ In connection with the proposed rules change, as a result 
of the proposed deletion of Form RTRS, the MSRB proposes deleting 
the following sentence in the description of the Facility for Real-
Time Transaction Reporting and Price Dissemination (the ``REAL-TIME 
TRANSACTION REPORTING SYSTEM'' or ``RTRS''): ``The requirement for 
testing and submission of a ``Form RTRS'' with the name of a contact 
person is reflected in Rule G-14.''
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Rule G-14(b)(v)
    The entire language from this section would be deleted.
Rule G-14(c)
    The reference to the testing procedures contained in the RTRS Users 
Manual would be deleted.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act,\15\ which provides that the MSRB's 
rules shall:
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    \15\ 15 U.S.C. 78o-4(b)(2)(C).

be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect 
to, and facilitating transactions in municipal securities and 
municipal financial products, to remove impediments to and perfect 
the mechanism of a free and open market in municipal securities and 
municipal financial products, and, in general, to protect investors, 
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municipal entities, obligated persons, and the public interest.

    As summarized above, the proposed rule change removes impediments 
to dealers and municipal advisors by streamlining the registration 
process for new registrants. The MSRB believes that the consolidation 
into a single rule of requirements currently located in multiple rules 
will clarify and simplify the identification of regulatory 
requirements. The MSRB also believes that the new electronic form will 
reduce the burden on registrants who currently must complete multiple 
forms to register with the MSRB. The proposed rule change also would 
allow the MSRB to collect information on the business activities of 
registrants, which would assist the MSRB and other appropriate 
regulatory authorities in regulating dealers and municipal advisors.
    The MSRB also believes that the proposed rule change is consistent 
with Section 15B(b)(2)(J) of the Act,\16\ which provides that the 
MSRB's rules shall:
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    \16\ 15 U.S.C. 78o-4(b)(2)(J).

provide that each municipal securities broker, municipal securities 
dealer, and municipal advisor shall pay to the Board such reasonable 
fees and charges as may be necessary or appropriate to defray the 
costs and expenses of operating and administering the Board. Such 
rules shall specify the amount of such fees and charges, which may 
include charges for failure to submit to the Board, or to any 
information system operated by the Board, within the prescribed 
timeframes, any items of information or documents required to be 
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submitted under any rule issued by the Board.

    The MSRB regards the obligation to pay late fees for failure to pay 
any fee assessed under Rules A-12 and A-13 as reasonable for several 
reasons. No dealer or municipal advisor will be obligated to pay a late 
fee if it remits the applicable fee under Rules A-12 or A-13 in the 
timeframe required by MSRB rules. Furthermore, the MSRB believes that 
the existence of late fee provisions will promote timely compliance 
with MSRB rules on fees.

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

    The MSRB does not believe that the proposed rule change would 
impose any

[[Page 2488]]

burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act. The MSRB solicited comments on the potential 
burden of the proposed rule change in a request for comment.\17\ Among 
the questions asked were:
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    \17\ See MSRB Notice 2013-19 (August 19, 2013) (the ``August 
Notice'').
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     Would the proposed changes make it easier for regulated 
entities to understand and follow the registration requirements of the 
MSRB? Are there other ways for the MSRB to assist new registrants in 
meeting their registration requirements?
     Relative to the process for registration today, do the 
proposed changes offer any benefits to regulated entities?
     To the extent the proposed changes would impose any new 
burdens on regulated entities, please describe those burdens in detail 
and quantify them, to the extent possible.
     Would the waiver of the following year's annual fee for 
firms that register in September be appropriate relief for firms that 
seek to register at the end of a fiscal year?
     Would the assessment of late fees impose any undue burden 
on firms that fail to pay the requisite fees in a timely fashion? If 
so, what alternatives should the MSRB consider as means to promote the 
payment of fees in a timely manner?
     Are there any other provisions in MSRB rules that should 
be consolidated into the proposed new registration rule?
    The specific comments and responses that were received to these 
questions are discussed below. The MSRB believes that the proposed rule 
change would benefit dealers and municipal advisors by improving the 
efficiency by which they register with the MSRB. Specifically, the 
proposed rule change would consolidate and clarify the registration 
process through a single rule and form, rather than multiple rules and 
forms, as is the case currently. The MSRB believes that the proposed 
rule and form would reduce the amount of inquiries by registrants to 
the MSRB about the registration process, thereby reducing the amount of 
time and expense incurred by registrants when registering and 
maintaining their registration. In addition, registrants would benefit 
from the changes proposed to the assessment of the annual fee by 
permitting regulated entities that register and pay the annual fee in 
September to avoid the annual fee for the following fiscal year. This 
change would reduce costs to new registrants by eliminating the need to 
pay for the entire year when registering in the last month of the 
fiscal year.
    The MSRB recognizes that there are costs of compliance associated 
with the proposed rule change. The MSRB notes, however, that the 
requirement to submit additional information about each regulated 
entity and its business activities would apply equally to all 
registered entities. Moreover, the MSRB believes that other elements of 
the proposed rule change, including the consolidation of various 
``registration'' rules and forms would serve to make the registration 
process more efficient for dealers and municipal advisors.
    The MSRB notes that several commenters have stated that the 
proposed rule change would improve the municipal securities market and 
its efficient operation, and that any burden created by the proposed 
rule change is outweighed by the benefits received by registrants and 
the municipal securities marketplace.

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

    The proposed rule change was developed with input from a diverse 
group of market participants. On August 19, 2013, the MSRB published 
the August Notice soliciting comment on the rule proposals regarding 
registration under Rule A-12, Rule G-14 and Form A-12. The MSRB 
received four letters in response to the August Notice.\18\
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    \18\ Comment Letters were received from: Financial Services 
Institute (``FSI''); National Association of Independent Public 
Finance Advisors (``NAIPFA''); Securities Industry and Financial 
Markets Association (``SIFMA''); and Herbert Neufeld of U.S. Bancorp 
Investments, Inc. (``Neufeld/U.S. Bancorp'').
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Discussion of Comments
Support for the Consolidation of the Registration Rules
    Comments: SIFMA, NAIPFA and FSI expressed support of the 
consolidation of the registration process, the proposed rules and the 
new electronic registration form. SIFMA stated that the proposed rule 
change makes ``the registration process easier to understand, and that 
is a benefit to regulated entities'' and that there were no additional 
provisions in the MSRB rules that needed to be consolidated into the 
new rule. NAIPFA and FSI expressed their support of the consolidation 
and wrote that the proposed rule change would simplify the registration 
process and add clarity to the registration rules and process. In 
expressing its support for the proposed rule change, FSI stated that 
the provision of the proposed rule change that allows registrants who 
register in the last month of the fiscal year to not pay the annual fee 
for the following fiscal year would ``allow flexibility and relief for 
some new registered entities.'' FSI also stated that the proposed rule 
change is a ``net positive'' that would ``increase the uniformity 
between [the] information collected by the MSRB and other self-
regulatory organizations.'' Mr. Neufeld of U.S. Bancorp stated that he 
supported a simplification of the registration process that removes 
ambiguities.
    MSRB Response: The MSRB acknowledges these comments.
Application and Structure of Fees
    Comments: SIFMA sought clarification that the initial fee assessed 
under Rule A-12 would be required only of new MSRB registrants and not 
of current registrants that have already paid the $100 initial fee and 
would be submitting a new Form A-12 in compliance with the proposed 
Rule A-12.
    MSRB Response: MSRB would not charge existing registrants an 
additional $100 initial fee for completing the new form, if such 
registrants have already paid the initial fee.
Creation of a New Fee: Late Fees
    Comments: While FSI expressed a general concern about fee 
increases, it stated that it is not opposed to the MSRB charging the 
late fees because such fees are ``de minimis in nature.''
    MSRB Response: The MSRB acknowledges these comments but notes that 
the applicable standard under the Act for these fees is that they be 
reasonable.
Functions of Form A-12
    Comments: SIFMA asked for clarification on whether registrants 
would be able to enter multiple business activity types on Form A-12. 
SIFMA expressed concern that the part of Form A-12 that requires 
regulated entities to provide the ``type of business activity'' in 
which the regulated entity plans to conduct is singular and does not 
consider the fact that many regulated entities engage in multiple types 
of business activities. SIFMA recommended that Form A-12 permit a 
singular registration by a regulated entity for multiple business 
activities.
    MSRB Response: On the new Form A-12, registrants would be able to 
indicate that they engage in multiple types of municipal securities 
and/or municipal advisory activities. Therefore, regulated entities 
need only complete a single Form A-12, even for multiple types of 
municipal securities activities and/or

[[Page 2489]]

multiple types of municipal advisory activities, and even if 
registering as both a dealer and municipal advisor.
Improvements to Registration Forms and Process
    Comments: SIFMA suggested that the MSRB use a spreadsheet to 
maintain the registrant contact information similar to a spreadsheet 
purportedly used by the Financial Industry Regulatory Authority (FINRA) 
to collect contact information for submitters to FINRA's Trade 
Reporting and Compliance Engine (TRACE) system.
    MSRB Response: MSRB staff has been informed by FINRA that it no 
longer collects contact information in the manner described by SIFMA. 
Under the proposed rule change, the trade reporting information would 
be entered directly on Form A-12, thereby streamlining the registration 
process.
    Comments: NAIPFA stated that it would welcome additional efforts by 
the MSRB to harmonize its registration process with that of the SEC in 
terms of developing a more standardized or uniform initial registration 
form/system designed to avoid the current duplicative SEC and MSRB 
registration process. Also, NAIPFA suggested that the MSRB standardize 
its forms and process for updating registrant information between the 
MSRB and the SEC.
    MSRB Response: The MSRB has reviewed the SEC forms and process 
established for registering municipal advisors in creating new Form A-
12 and has harmonized the business activities on Form A-12 with SEC 
Form MA.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period of up to 90 days (i) as 
the Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Amendment No. 1 thereto, 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 email to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2013-09 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2013-09. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of 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-2013-09, and should be 
submitted on or before February 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00463 Filed 1-13-14; 8:45 am]
BILLING CODE 8011-01-P