Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change Concerning Certain Data Elements on Form G-45 Under MSRB Rule G-45, on Reporting of Information on Municipal Fund Securities, 64907-64909 [2018-27281]

Download as PDF Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Notices eligible for the Exemption, a brokerdealer must (1) provide an initial written notification to the customer of its ability to request delivery of immediate confirmations consistent with the written notification requirements of Exchange Act Rule 10b– 10(a), and (2) not receive any such request to receive immediate confirms from the customer. As of March 31, 2018, the Commission estimates there are approximately 162 broker-dealers that clear customer transactions or carry customer funds and securities who would be responsible for providing customer confirmations. The Commission estimates that the cost of the ongoing notification requirements would be minimal, approximately 5% of the initial burden which was previously estimated to be 36 hours per brokerdealer, or approximately 1.8 hours per broker-dealer per year to provide ongoing notifications or a total burden of 292 hours annually for the 162 carrying broker-dealers. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Lindsay.M.Abate@omb.eop.gov; and (ii) Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: December 12, 2018. Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2018–27267 Filed 12–17–18; 8:45 am] amozie on DSK3GDR082PROD with NOTICES BILLING CODE 8011–01–P VerDate Sep<11>2014 00:45 Dec 18, 2018 Jkt 247001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–84809; File No. SR–MSRB– 2018–08] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change Concerning Certain Data Elements on Form G–45 Under MSRB Rule G–45, on Reporting of Information on Municipal Fund Securities December 12, 2018. I. Introduction On October 15, 2018, the Municipal Securities Rulemaking Board (the ‘‘MSRB’’ or ‘‘Board’’) filed with the Securities and Exchange Commission (the ‘‘SEC’’ or ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend Form G–45 under MSRB Rule G–45, on reporting of information on municipal fund securities,3 to clarify a data element concerning the program management fee, to add a data element concerning the investment option closing date, and to delete data elements concerning annualized three-year performance information (the ‘‘proposed rule change’’). The proposed rule change was published for comment in the Federal Register on November 2, 2018.4 In the Notice of Filing, the MSRB requested that the proposed rule change become effective on June 30, 2019.5 The Commission did not receive any comment letters on the proposed rule change. II. Description of Proposed Rule Change In the Notice of Filing, the MSRB stated that the purpose of the proposed rule change is to refine and enhance certain of the investment option data that the MSRB collects under Rule G– 45 from underwriters to 529 savings plans 6 and ABLE programs.7 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 MSRB Form G–45 is an electronic form on which submissions of the information required by Rule G–45 are made to the MSRB. 4 Securities Exchange Act Release No. 84496 (October 29, 2018) (the ‘‘Notice of Filing’’), 83 FR 55214 (November 2, 2018). 5 See Notice of Filing. 6 Section 529 of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’) established savings plans (‘‘529 savings plans’’) to encourage saving for future education costs. 26 U.S.C. 529(b)(1)(A)(ii). 7 ABLE programs are programs designed to implement Section 529A to the Code. 26 U.S.C. 529A. Section 529A of the Code permits a state, or an agency or instrumentality thereof, to establish and maintain a tax-advantaged savings program to 2 17 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 64907 Specifically, the MSRB stated that it proposes to amend Form G–45 to (i) clarify a data element concerning the program management fee, (ii) add a data element concerning the investment option closing date, and (iii) delete data elements concerning annualized threeyear performance information.8 The MSRB also stated that the proposed rule change would provide information that would enhance the MSRB’s and other regulators’ ability to effectively and efficiently analyze 529 savings plans and ABLE programs to assess the impact of each 529 savings plan and ABLE program on the market, to evaluate trends and differences, and to gain an understanding of the aggregate risk taken by investors.9 The MSRB stated that throughout the seven reporting periods during which the MSRB has analyzed data submitted on Form G–45, the MSRB has observed anomalies in the data submitted under Investment Option information.10 The MSRB stated that those anomalies related to the program management fee and to investment options that closed during the reporting period. Form G–45 requires that an underwriter report the program management fee (expressed as an annual percentage of 529 savings plan or ABLE program assets) assessed by the 529 savings plan or ABLE program.11 The MSRB noted that the program management fee typically is a separately identifiable percentage that is shown in the fee table for the 529 savings plan or ABLE program, but for some 529 savings plans and ABLE programs, this is not the case.12 The MSRB stated that instead for those 529 savings plans or ABLE programs, the program management fee is assessed by the underlying mutual fund in which the investment option invests and this is typically done through a 529 or ABLE share class of the mutual fund.13 The MSRB further noted that underwriters for those 529 savings plans or ABLE programs generally report the program management fee as zero on Form G–45, and then may add explanatory information in the notes section of the form about the fee.14 The MSRB stated that such explanatory information, however, may or may not actually disclose the program management fee in a format that is typically used for help support individuals with disabilities in maintaining health, independence, and quality of life. See Notice of Filing. 8 See Notice of Filing. 9 Id. 10 Id. 11 Id. 12 Id. 13 Id. 14 Id. E:\FR\FM\18DEN1.SGM 18DEN1 64908 Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES comparison—i.e., as an annual percentage of 529 savings plan or ABLE program assets.15 The MSRB stated that the proposed rule change would clarify that the underwriter must report the program management fee as an annual percentage of assets (e.g., x.xx%) no matter whether the program management fee is assessed by the underlying mutual fund or by the 529 savings plan or ABLE program itself.16 The MSRB stated that the underwriter would not be able to report the program management fee as zero and then explain in a note that it is assessed by the underlying mutual fund.17 Thus, the MSRB stated, the proposed rule change would allow the MSRB, as well as other regulators, to analyze data in a uniform format that would facilitate (i) comparison among 529 savings plans and ABLE programs, (ii) the evaluation of trends and differences, and (iii) the identification of potential risks to investors that may affect those 529 savings plans and ABLE programs.18 In the Notice of Filing, the MSRB noted that an investment option offered in a 529 savings plan may close to new investors, but allow current account owners who have allocated account value to an investment option to continue to invest in that ‘‘closed’’ investment option.19 Alternatively, the MSRB stated, the 529 savings plan may close an investment option completely.20 In either case, the MSRB stated that the investment option data submitted for that investment option on Form G–45 can be contrary to what the MSRB would have expected for the investment option when compared to prior reporting periods, and the MSRB may not be able to easily determine why such variance occurred.21 The MSRB stated that, to address this issue, the proposed rule change would add ‘‘check-the-box’’ items to Form G–45 that would alert the MSRB about whether an investment option has closed to new investors, but allows current account owners to contribute funds, or whether the investment option has closed to all investors.22 The MSRB sought public comment about providing additional data concerning the investment options offered in 529 savings plans and ABLE programs.23 In response, the MSRB received the suggestion that the MSRB 15 Id. no longer require that an underwriter submit three-year annualized performance information for an investment option on Form G–45.24 Form G–45 requires that underwriters annually report (i) total returns, including sales charges, (ii) total returns, excluding sales charges, and (iii) benchmark return percent for specified periods, including annualized or annual three-year percent. The MSRB noted that at the time the MSRB approved Form G–45, the College Savings Plans Network’s (‘‘CSPN’’) voluntary disclosure principles that provide recommendations to the state entities that establish and maintain 529 savings plans (the ‘‘disclosure principles’’) and which commenters stated were the industry norm in other rulemakings, recommended that such disclosure be made.25 However, the MSRB noted, since that time, CSPN has updated the disclosure principles, and CSPN no longer recommends that a 529 savings plan include three-year performance information.26 Further, the MSRB noted that three-year annualized performance information is not required by the SEC for mutual funds.27 The MSRB has determined that Form G–45, even without the three-year performance data, would continue to provide the MSRB with sufficient performance information to assist the MSRB with its analysis of 529 savings plans and ABLE programs.28 Therefore, the MSRB stated that because it believes that it will have sufficient performance information, it is no longer an appropriate regulatory burden and should be eliminated to avoid unnecessary costs.29 III. Discussion and Commission Findings The Commission has carefully considered the proposed rule change. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB. In particular, the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act.30 Section 15B(b)(2)(C) of the Act states 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 16 Id. 17 Id. 24 Id. 18 Id. 25 Id. 19 Id. 26 Id. 20 Id. 27 Id. 21 Id. 28 Id. 22 Id. 29 Id. 23 Id. 30 15 VerDate Sep<11>2014 00:45 Dec 18, 2018 Jkt 247001 PO 00000 U.S.C. 78o–4(b)(2)(C). Frm 00100 Fmt 4703 Sfmt 4703 cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities and municipal financial products, to remove impediments to and perfect the mechanism of a free and open market in municipal securities and municipal financial products, and, in general, to protect investors, municipal entities, obligated persons, and the public interest.31 The Commission believes the proposed rule change is consistent with Section 15B(b)(2)(C) and necessary and appropriate to help the MSRB receive complete and reliable information about 529 savings plans and ABLE programs. The MSRB can use the data elements collected on Form G–45 to monitor these municipal fund securities and detect potential investor harm. The Commission believes that, for that data set to be complete and reliable, such data should include accurate data about the fees and expenses associated with an investment in a 529 savings plan or an ABLE program, including the program management fee, as provided in the proposed rule change. The Commission also believes that such data should include accurate information about the investment options available to existing and potential investors, as provided in the proposed rule change. The Commission believes the proposed rule change would help the MSRB to gather relevant data required to ensure the MSRB’s regulatory scheme is sufficient and/or to determine whether additional rulemaking is necessary to protect investors and the public interest. Further, the Commission believes that the deletion in the proposed rule change of the requirement that 529 savings plans and ABLE programs provide three-year annualized performance information would better align Rule G–45 reporting requirements with industry reporting standards, and therefore would 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. The Commission believes that the proposed rule change would improve the MSRB’s ability to analyze the market for 529 savings plans and ABLE programs as well as improve the MSRB’s ability to evaluate trends and differences among 529 savings plans and ABLE programs. Further, the Commission believes that the MSRB, as well as other financial regulators 31 15 E:\FR\FM\18DEN1.SGM U.S.C. 78o–4(b)(2)(C). 18DEN1 Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Notices charged with enforcing the MSRB’s rules, can use the information submitted on MSRB Form G–45 to enhance their understanding of, and ability to monitor, 529 savings plans and ABLE programs. In approving the proposed rule change, the Commission also has considered the impact of the proposed rule change on efficiency, competition, and capital formation.32 The Commission does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The clarification regarding the collection of the program management fee information should reduce instances of the MSRB needing to have underwriters resubmit corrected information that is currently required to be submitted under Rule G–45. The Commission believes the deletion of the Rule G–45 requirement to report threeyear annualized performance data for each investment option and any related benchmarks will better align Rule G–45 reporting requirements with industry reporting standards and will likely reduce Rule G–45 reporting burdens. Additionally, with regard to the proposed requirement to report investment option closing date information, the Commission understands that this information is readily available to underwriters and the cost of submission of such information would be minor. The Commission believes that the additional information required to be submitted by the proposed rule change would be submitted on an equal and nondiscriminatory basis, and the requirement would apply equally to all dealers that serve as underwriters to 529 savings plans and/or ABLE programs. Furthermore, the Commission believes that the potential burdens created by the proposed rule change are likely to be outweighed by the benefits. For the reasons noted above, the Commission believes that the proposed rule change is consistent with the Act. amozie on DSK3GDR082PROD with NOTICES IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,33 that the proposed rule change (SR–MSRB–2018– 08) be, and hereby is, approved. U.S.C. 78c(f). 33 15 U.S.C. 78s(b)(2). For the Commission, pursuant to delegated authority.34 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2018–27281 Filed 12–17–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Extension: Rule 17Ad–11, SEC File No. 270–261, OMB Control No. 3235–0274 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the previously approved collection of information provided for in Rule 17Ad–11 (17 CFR 240.17Ad–11), under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). Rule 17Ad–11 requires every registered recordkeeping transfer agent to report to issuers and its appropriate regulatory agency in the event that the aggregate market value of an aged record difference exceeds certain thresholds. A record difference occurs when an issuer’s records do not agree with those of securityholders as indicated, for instance, on certificates presented to the transfer agent for purchase, redemption or transfer. An aged record difference is a record difference that has existed for more than 30 calendar days. In addition, the rule requires every recordkeeping transfer agent to report to its appropriate regulatory agency in the event of a failure to post certificate detail to the master securityholder file within five business days of the time required by Rule 17Ad–10 (17 CFR 240.17Ad–10). Also, a transfer agent must maintain a copy of any report required under Rule 17Ad–11 for a period of not less than three years following the date of the report, the first year in an easily accessible place. Because the information required by Rule 17Ad–11 is already available to transfer agents, any collection burden for small transfer agents is minimal. Based on a review of the number of Rule 17Ad–11 reports the Commission, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation received since 2012, the Commission staff estimates that 8 respondents will file a total of approximately 10 reports annually. The Commission staff estimates that, on average, each report can be completed in 30 minutes. Therefore, the total annual hourly burden to the entire transfer agent industry is approximately five hours (30 minutes × 10 reports). Assuming an average hourly rate of $25 for a transfer agent staff employee, the average total internal cost of the report is $12.50. The total annual internal cost of compliance for the approximate 8 respondents is approximately $125.00 (10 reports × $12.50). The retention period for the recordkeeping requirement under Rule 17Ad–11 is three years following the date of a report prepared pursuant to the rule. The recordkeeping requirement under Rule 17Ad–11 is mandatory to assist the Commission and other regulatory agencies with monitoring transfer agents and ensuring compliance with the rule. This rule does not involve the collection of confidential information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Lindsay.M.Abate@omb.eop.gov; and (ii) Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: December 12, 2018. Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2018–27266 Filed 12–17–18; 8:45 am] BILLING CODE 8011–01–P 32 15 VerDate Sep<11>2014 00:45 Dec 18, 2018 34 17 Jkt 247001 PO 00000 CFR 200.30–3(a)(12). Frm 00101 Fmt 4703 Sfmt 9990 64909 E:\FR\FM\18DEN1.SGM 18DEN1

Agencies

[Federal Register Volume 83, Number 242 (Tuesday, December 18, 2018)]
[Notices]
[Pages 64907-64909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27281]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84809; File No. SR-MSRB-2018-08]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Order Granting Approval of a Proposed Rule Change Concerning 
Certain Data Elements on Form G-45 Under MSRB Rule G-45, on Reporting 
of Information on Municipal Fund Securities

December 12, 2018.

I. Introduction

    On October 15, 2018, the Municipal Securities Rulemaking Board (the 
``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (the ``SEC'' or ``Commission''), pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ a proposed rule change to amend Form G-45 under 
MSRB Rule G-45, on reporting of information on municipal fund 
securities,\3\ to clarify a data element concerning the program 
management fee, to add a data element concerning the investment option 
closing date, and to delete data elements concerning annualized three-
year performance information (the ``proposed rule change''). The 
proposed rule change was published for comment in the Federal Register 
on November 2, 2018.\4\ In the Notice of Filing, the MSRB requested 
that the proposed rule change become effective on June 30, 2019.\5\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ MSRB Form G-45 is an electronic form on which submissions of 
the information required by Rule G-45 are made to the MSRB.
    \4\ Securities Exchange Act Release No. 84496 (October 29, 2018) 
(the ``Notice of Filing''), 83 FR 55214 (November 2, 2018).
    \5\ See Notice of Filing.
---------------------------------------------------------------------------

    The Commission did not receive any comment letters on the proposed 
rule change.

II. Description of Proposed Rule Change

    In the Notice of Filing, the MSRB stated that the purpose of the 
proposed rule change is to refine and enhance certain of the investment 
option data that the MSRB collects under Rule G-45 from underwriters to 
529 savings plans \6\ and ABLE programs.\7\ Specifically, the MSRB 
stated that it proposes to amend Form G-45 to (i) clarify a data 
element concerning the program management fee, (ii) add a data element 
concerning the investment option closing date, and (iii) delete data 
elements concerning annualized three-year performance information.\8\ 
The MSRB also stated that the proposed rule change would provide 
information that would enhance the MSRB's and other regulators' ability 
to effectively and efficiently analyze 529 savings plans and ABLE 
programs to assess the impact of each 529 savings plan and ABLE program 
on the market, to evaluate trends and differences, and to gain an 
understanding of the aggregate risk taken by investors.\9\
---------------------------------------------------------------------------

    \6\ Section 529 of the Internal Revenue Code of 1986, as amended 
(the ``Code'') established savings plans (``529 savings plans'') to 
encourage saving for future education costs. 26 U.S.C. 
529(b)(1)(A)(ii).
    \7\ ABLE programs are programs designed to implement Section 
529A to the Code. 26 U.S.C. 529A. Section 529A of the Code permits a 
state, or an agency or instrumentality thereof, to establish and 
maintain a tax-advantaged savings program to help support 
individuals with disabilities in maintaining health, independence, 
and quality of life. See Notice of Filing.
    \8\ See Notice of Filing.
    \9\ Id.
---------------------------------------------------------------------------

    The MSRB stated that throughout the seven reporting periods during 
which the MSRB has analyzed data submitted on Form G-45, the MSRB has 
observed anomalies in the data submitted under Investment Option 
information.\10\ The MSRB stated that those anomalies related to the 
program management fee and to investment options that closed during the 
reporting period. Form G-45 requires that an underwriter report the 
program management fee (expressed as an annual percentage of 529 
savings plan or ABLE program assets) assessed by the 529 savings plan 
or ABLE program.\11\ The MSRB noted that the program management fee 
typically is a separately identifiable percentage that is shown in the 
fee table for the 529 savings plan or ABLE program, but for some 529 
savings plans and ABLE programs, this is not the case.\12\ The MSRB 
stated that instead for those 529 savings plans or ABLE programs, the 
program management fee is assessed by the underlying mutual fund in 
which the investment option invests and this is typically done through 
a 529 or ABLE share class of the mutual fund.\13\ The MSRB further 
noted that underwriters for those 529 savings plans or ABLE programs 
generally report the program management fee as zero on Form G-45, and 
then may add explanatory information in the notes section of the form 
about the fee.\14\ The MSRB stated that such explanatory information, 
however, may or may not actually disclose the program management fee in 
a format that is typically used for

[[Page 64908]]

comparison--i.e., as an annual percentage of 529 savings plan or ABLE 
program assets.\15\ The MSRB stated that the proposed rule change would 
clarify that the underwriter must report the program management fee as 
an annual percentage of assets (e.g., x.xx%) no matter whether the 
program management fee is assessed by the underlying mutual fund or by 
the 529 savings plan or ABLE program itself.\16\ The MSRB stated that 
the underwriter would not be able to report the program management fee 
as zero and then explain in a note that it is assessed by the 
underlying mutual fund.\17\ Thus, the MSRB stated, the proposed rule 
change would allow the MSRB, as well as other regulators, to analyze 
data in a uniform format that would facilitate (i) comparison among 529 
savings plans and ABLE programs, (ii) the evaluation of trends and 
differences, and (iii) the identification of potential risks to 
investors that may affect those 529 savings plans and ABLE 
programs.\18\
---------------------------------------------------------------------------

    \10\ Id.
    \11\ Id.
    \12\ Id.
    \13\ Id.
    \14\ Id.
    \15\ Id.
    \16\ Id.
    \17\ Id.
    \18\ Id.
---------------------------------------------------------------------------

    In the Notice of Filing, the MSRB noted that an investment option 
offered in a 529 savings plan may close to new investors, but allow 
current account owners who have allocated account value to an 
investment option to continue to invest in that ``closed'' investment 
option.\19\ Alternatively, the MSRB stated, the 529 savings plan may 
close an investment option completely.\20\ In either case, the MSRB 
stated that the investment option data submitted for that investment 
option on Form G-45 can be contrary to what the MSRB would have 
expected for the investment option when compared to prior reporting 
periods, and the MSRB may not be able to easily determine why such 
variance occurred.\21\ The MSRB stated that, to address this issue, the 
proposed rule change would add ``check-the-box'' items to Form G-45 
that would alert the MSRB about whether an investment option has closed 
to new investors, but allows current account owners to contribute 
funds, or whether the investment option has closed to all 
investors.\22\
---------------------------------------------------------------------------

    \19\ Id.
    \20\ Id.
    \21\ Id.
    \22\ Id.
---------------------------------------------------------------------------

    The MSRB sought public comment about providing additional data 
concerning the investment options offered in 529 savings plans and ABLE 
programs.\23\ In response, the MSRB received the suggestion that the 
MSRB no longer require that an underwriter submit three-year annualized 
performance information for an investment option on Form G-45.\24\
---------------------------------------------------------------------------

    \23\ Id.
    \24\ Id.
---------------------------------------------------------------------------

    Form G-45 requires that underwriters annually report (i) total 
returns, including sales charges, (ii) total returns, excluding sales 
charges, and (iii) benchmark return percent for specified periods, 
including annualized or annual three-year percent. The MSRB noted that 
at the time the MSRB approved Form G-45, the College Savings Plans 
Network's (``CSPN'') voluntary disclosure principles that provide 
recommendations to the state entities that establish and maintain 529 
savings plans (the ``disclosure principles'') and which commenters 
stated were the industry norm in other rulemakings, recommended that 
such disclosure be made.\25\ However, the MSRB noted, since that time, 
CSPN has updated the disclosure principles, and CSPN no longer 
recommends that a 529 savings plan include three-year performance 
information.\26\ Further, the MSRB noted that three-year annualized 
performance information is not required by the SEC for mutual 
funds.\27\
---------------------------------------------------------------------------

    \25\ Id.
    \26\ Id.
    \27\ Id.
---------------------------------------------------------------------------

    The MSRB has determined that Form G-45, even without the three-year 
performance data, would continue to provide the MSRB with sufficient 
performance information to assist the MSRB with its analysis of 529 
savings plans and ABLE programs.\28\ Therefore, the MSRB stated that 
because it believes that it will have sufficient performance 
information, it is no longer an appropriate regulatory burden and 
should be eliminated to avoid unnecessary costs.\29\
---------------------------------------------------------------------------

    \28\ Id.
    \29\ Id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change. 
The Commission finds that the proposed rule change is consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to the MSRB.
    In particular, the proposed rule change is consistent with Section 
15B(b)(2)(C) of the Act.\30\ Section 15B(b)(2)(C) of the Act states 
that the MSRB's rules shall be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in municipal 
securities and municipal financial products, to remove impediments to 
and perfect the mechanism of a free and open market in municipal 
securities and municipal financial products, and, in general, to 
protect investors, municipal entities, obligated persons, and the 
public interest.\31\ The Commission believes the proposed rule change 
is consistent with Section 15B(b)(2)(C) and necessary and appropriate 
to help the MSRB receive complete and reliable information about 529 
savings plans and ABLE programs. The MSRB can use the data elements 
collected on Form G-45 to monitor these municipal fund securities and 
detect potential investor harm. The Commission believes that, for that 
data set to be complete and reliable, such data should include accurate 
data about the fees and expenses associated with an investment in a 529 
savings plan or an ABLE program, including the program management fee, 
as provided in the proposed rule change. The Commission also believes 
that such data should include accurate information about the investment 
options available to existing and potential investors, as provided in 
the proposed rule change. The Commission believes the proposed rule 
change would help the MSRB to gather relevant data required to ensure 
the MSRB's regulatory scheme is sufficient and/or to determine whether 
additional rulemaking is necessary to protect investors and the public 
interest. Further, the Commission believes that the deletion in the 
proposed rule change of the requirement that 529 savings plans and ABLE 
programs provide three-year annualized performance information would 
better align Rule G-45 reporting requirements with industry reporting 
standards, and therefore would 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.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78o-4(b)(2)(C).
    \31\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change would improve 
the MSRB's ability to analyze the market for 529 savings plans and ABLE 
programs as well as improve the MSRB's ability to evaluate trends and 
differences among 529 savings plans and ABLE programs. Further, the 
Commission believes that the MSRB, as well as other financial 
regulators

[[Page 64909]]

charged with enforcing the MSRB's rules, can use the information 
submitted on MSRB Form G-45 to enhance their understanding of, and 
ability to monitor, 529 savings plans and ABLE programs.
    In approving the proposed rule change, the Commission also has 
considered the impact of the proposed rule change on efficiency, 
competition, and capital formation.\32\ The Commission does not believe 
that the proposed rule change will impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Act. The 
clarification regarding the collection of the program management fee 
information should reduce instances of the MSRB needing to have 
underwriters resubmit corrected information that is currently required 
to be submitted under Rule G-45. The Commission believes the deletion 
of the Rule G-45 requirement to report three-year annualized 
performance data for each investment option and any related benchmarks 
will better align Rule G-45 reporting requirements with industry 
reporting standards and will likely reduce Rule G-45 reporting burdens. 
Additionally, with regard to the proposed requirement to report 
investment option closing date information, the Commission understands 
that this information is readily available to underwriters and the cost 
of submission of such information would be minor. The Commission 
believes that the additional information required to be submitted by 
the proposed rule change would be submitted on an equal and non-
discriminatory basis, and the requirement would apply equally to all 
dealers that serve as underwriters to 529 savings plans and/or ABLE 
programs. Furthermore, the Commission believes that the potential 
burdens created by the proposed rule change are likely to be outweighed 
by the benefits.
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    \32\ 15 U.S.C. 78c(f).
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    For the reasons noted above, the Commission believes that the 
proposed rule change is consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\33\ that the proposed rule change (SR-MSRB-2018-08) be, and hereby 
is, approved.
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    \33\ 15 U.S.C. 78s(b)(2).

    For the Commission, pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27281 Filed 12-17-18; 8:45 am]
 BILLING CODE 8011-01-P
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