Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Consisting of Proposed Amendments to MSRB Rule G-11 and MSRB Rule G-32 and Form G-32 Regarding a Collection of Data Elements Provided in Electronic Format to the EMMA Dataport System in Connection With Primary Offerings, 31961-31968 [2019-14161]
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Federal Register / Vol. 84, No. 128 / Wednesday, July 3, 2019 / Notices
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 website 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 the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEAMER–2019–15 and
should be submitted on or before July
24, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–14165 Filed 7–2–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No 34–86219; File No. SR–MSRB–
2019–07]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing of Amendment
No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change,
as Modified by Amendment No. 1,
Consisting of Proposed Amendments
to MSRB Rule G–11 and MSRB Rule G–
32 and Form G–32 Regarding a
Collection of Data Elements Provided
in Electronic Format to the EMMA
Dataport System in Connection With
Primary Offerings
June 27, 2019.
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I. Introduction
On April 2, 2019, 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
10 17
CFR 200.30–3(a)(12).
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Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change consisting of proposed
amendments to MSRB Rule G–11
(‘‘Primary Offering Practices’’), MSRB
Rule G–32 (‘‘Disclosures in Connection
With Primary Offerings), and Form G–
32 regarding a collection of data
elements provided in electric format to
the Electronic Municipal Market Access
Dataport (the ‘‘EMMA Dataport’’) 3
system in connection with primary
offerings (the ‘‘proposed rule change’’).
The proposed rule change was
published for comment in the Federal
Register on April 12, 2019.4
The Commission received three
comment letters on the proposed rule
change.5 On June 6, 2019, the MSRB
responded to those comments 6 and
filed Amendment No. 1 to the proposed
rule change (‘‘Amendment No. 1’’).7 The
Commission is publishing this notice to
solicit comments on Amendment No. 1
to the proposed rule change from
interested parties and is approving the
proposed rule change, as modified by
Amendment No. 1, on an accelerated
basis.
II. Description of Proposed Rule Change
As described further below, the MSRB
proposes to amend MSRB Rule G–11
and MSRB Rule G–32, as well as Form
G–32 to update and enhance the general
practices undertaken by underwriters
and others, as applicable, in a primary
offering of municipal securities.8
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The EMMA Dataport is the submission portal
through which information is provided for display
to the public on EMMA.
4 Securities Exchange Act Release No. 85551
(Apr. 8, 2019) (the ‘‘Notice of Filing’’), 84 FR 14988
(Apr. 12, 2019).
5 See Letter to Secretary, Commission, from Leslie
M. Norwood, Managing Director and Associate
General Counsel, and Bernard V. Canepa, VicePresident and Assistant General Counsel, the
Securities Industry and Financial Market
Association (‘‘SIFMA’’) dated May 2, 2019 (the
‘‘SIFMA Letter’’); Letter to Secretary, Commission,
from Mike Nicholas, Chief Executive Officer, Bond
Dealers of America (‘‘BDA’’), dated May 3, 2019 (the
‘‘BDA Letter’’); and Letter to Secretary,
Commission, from Susan Gaffney, Executive
Director, National Association of Municipal
Advisors (‘‘NAMA’’), dated May 3, 2019 (the
‘‘NAMA Letter’’).
6 See Letter to Secretary, Commission, from
Margaret R. Blake, Associate Counsel, Municipal
Securities Rulemaking Board (‘‘MSRB’’), dated Jun.
6, 2019 (the ‘‘MSRB Response Letter’’).
7 Id. As discussed further below, in Amendment
No. 1, the MSRB proposed to amend the proposed
rule change with two technical amendments (to
MSRB Rule G–11(g) and MSRB Rule G–11(k)).
8 See Notice of Filing, 84 FR at 14988, and
Amendment No. 1.
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31961
A. Proposed Rule Change to MSRB Rule
G–11—Primary Offering Practices
1. Revisions to MSRB Rule G–11(f)
The proposed rule change would
amend MSRB Rule G–11(f) to codify an
existing obligation of selling group
members to comply with the written
communications they receive from the
senior syndicate manager relating to,
among other things, issuer
requirements, priority provisions and
order period requirements.9
MSRB Rule G–11(f) currently states
that prior to the first offer of any
securities by the syndicate, the senior
syndicate manager is required to
provide, in writing, to syndicate
members and selling group members, if
any, ‘‘(i) a written statement of all terms
and conditions required by the issuer,
(ii) a written statement of all of the
issuer’s retail order period
requirements, if any, [and] (iii) the
priority provisions . . . [.]’’ 10 The
senior syndicate manager must also
promptly furnish, in writing, to the
syndicate members and the selling
group members any changes in the
priority provisions or pricing
information.11
Additionally, the MSRB has stated
that the activities of all dealers should
be viewed in light of the basic fair
dealing principles of MSRB Rule G–17,
on conduct of municipal securities and
municipal advisor activities.12 In 2013,
the MSRB amended MSRB Rule G–11
to, among other things, address
concerns related to retail order period
practices and required expressly that the
senior syndicate manager’s written
statement of all terms and conditions
required by the issuer also be delivered
to selling group members.13 The
amendment also added MSRB Rule G–
11(k) to require that any dealer that
submits an order designated as retail
during a retail order period must
provide certain information that would
assist in determining if the order is a
bona fide retail order.14 The MSRB
stated that the 2013 amendments to
MSRB Rule G–11, coupled with the
MSRB Rule G–17 guidance,15 indicate
that selling group members are subject
9 See
Notice of Filing, 84 FR at 14990.
Rule G–11(f). See also id.
11 Notice of Filing, 84 FR at 14990.
12 See MSRB Notice 2009–42 (July 14, 2009).
13 See Securities Exchange Act Release No. 70532
(Sept. 26, 2013), 78 FR 60956 (Oct. 2, 2013) (File
No. SR–MSRB–2013–05).
14 Id.
15 See MSRB Notice 2009–42 (July 14, 2009).
10 MSRB
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to the issuer requirements in allocating
securities to their investors.16
By codifying this existing obligation,
the MSRB noted that the proposed rule
change would highlight that selling
group members must comply with the
priority provisions and other issuer
terms and conditions when they receive
written notification of such from the
syndicate manager.17
2. New MSRB Rule G–11(g)(ii)
The proposed rule change would also
amend MSRB Rule G–11(g) to add new
subsection (ii), which would require the
senior syndicate manager to notify all
members of the syndicate and selling
group, at the same time via free-to-trade
wire or electronically by other industryaccepted method of communication,
that the offering is free to trade at a price
other than the initial offering price.18
In a primary offering of municipal
securities where a syndicate is formed
(i.e., not a sole-managed offering), a freeto-trade wire is sent by the senior
syndicate manager to syndicate
members once all of the municipal
securities in the issue or a particular
maturity (or maturities) are free to
trade.19 The free-to-trade wire
communicates to members of the
syndicate that they may trade the bonds
in the secondary market at market prices
which could be the same or different
from the initial offering price.20
The MSRB stated that equal access to
information is important to the fair and
effective functioning of the market for
primary offerings of municipal
securities.21 Accordingly, the proposed
rule change would require the senior
syndicate manager to notify all members
of the syndicate and the selling group,
at the same time via a free-to-trade wire
or electronically by other industryaccepted method of communication,
that the offering is free to trade at a price
other than the initial offering. The
MSRB noted that requiring
dissemination of this information for
receipt by all syndicate and selling
group members at the same time would
prevent preferential access to the freeto-trade information.22 Specifically, the
MSRB wrote that this dissemination
would prevent access by some, while
other syndicate and selling group
members (who are unaware of the
information) are delayed in knowing
that they may transact at prices other
than the initial offering price.23
The MSRB stated that, as methods of
communication evolve, the
dissemination of free-to-trade
information eventually may be made by
methods other than the traditional ‘‘freeto-trade wire.’’ 24 While the MSRB did
not propose to dictate the timing of
when, or the form of how, the free-totrade communication should be sent,
the MSRB stated that requiring
dissemination of this information
electronically (by an industry-accepted
method that ensures all syndicate and
selling group members receive the
information simultaneously) would
level the playing field.25
MSRB Rule G–11(g)(ii) requires, in
part, the senior syndicate manager,
within two business days following the
date of sale, to disclose to the syndicate,
in writing, a summary by priority
category, of all allocations of securities
accorded priority over member orders.29
MSRB Rule G–11(g)(iii) requires the
senior syndicate manager to disclose, in
writing and as set forth in the rule, to
each member of the syndicate
information on the designations paid to
syndicate and non-syndicate
members.30
The MSRB stated that providing this
information to the issuer along with
information on group net sales credits
would better inform all issuers of the
orders and allocations of their primary
offerings.31 The MSRB noted that this
information would be valued
particularly by those issuers who are not
aware this information is available for
their review.32 The MSRB stated that an
issuer who does not wish to receive or
review this information could simply
delete the communication at its
discretion.33
3. Revisions to MSRB Rule G–11(g)(ii)
and MSRB Rule G–11(g)(iii) (new MSRB
Rule G–11(g)(iii) and MSRB Rule G–
11(g)(iv))
Currently, the senior syndicate
manager is not required to provide
information to issuers regarding
designations and allocations of
municipal securities in a primary
offering.26 The proposed rule change, as
amended by Amendment No. 1, would
amend MSRB Rule G–11(g)(ii) and
MSRB Rule G–11(g)(iii) 27 to require the
senior syndicate manager to comply
with the information-dissemination
provisions of this rule with respect to
issuers, in addition to just syndicate
members.28
4. Revisions to MSRB Rule G–11(j)
The proposed rule change would
amend Rule G–11(j) to align the
timeframe for the payment of group net
sales credits with the timeframe for the
payment of net designation sales credits
as set forth therein.34
Currently, MSRB Rule G–11(i) states
that the final settlement of a syndicate
or similar account shall be made within
30 calendar days following the date the
issuer delivers the securities to the
syndicate.35 Group net sales credits (i.e.,
those sales credits for orders in which
all syndicate members benefit according
to their participation in the account) are
paid out of the syndicate account when
it settles pursuant to MSRB Rule G–
11(i).36 As a result, syndicate members
may wait 30 calendar days following
receipt of the securities by the syndicate
before they receive their group net sales
credits.37 By contrast, MSRB Rule G–
22 Id.
23 Id.
24 Id.
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16 See
Notice of Filing, 84 FR at 14990. See also
MSRB Rule G–11(b) (requiring that every dealer that
submits an order to a syndicate or to a member of
a syndicate for the purchase of securities must
disclose at the time of submission if the order is for
its dealer account or a related account of the
dealer).
17 See Notice of Filing, 84 FR at 14990.
18 Id. The other provisions of Rule G–11(g) would
be renumbered accordingly to account for this
addition.
19 Id.
20 For purposes of reporting transactions after the
free-to-trade information has been disseminated, the
MSRB has indicated that once a new issue has been
released for trading (i.e., is free to trade), normal
transaction reporting rules will apply to the
syndicate managers, syndicate members and selling
group members. See Securities Exchange Act
Release No. 49902 (Jun. 22, 2004), 69 FR 38925
(Jun. 29, 2004) (File No. SR–MSRB–2004–02).
21 See Notice of Filing, 84 FR at 14990.
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25 Id.
26 Id. ‘‘Designation’’ typically refers to the
percentage of the takedown or spread that a buyer
directs the senior syndicate manager to credit to a
particular syndicate member (or members) in a net
designated order. ‘‘Allocation’’ generally refers to
the process of setting securities apart for the
purpose of distribution to syndicate and selling
group members. See MSRB Glossary of Municipal
Securities Terms.
27 Currently, these provisions are MSRB Rule G–
11(g)(ii) and MSRB Rule G–11(g)(iii). However, with
the proposed addition of MSRB Rule G–11(g)(ii)
noted above, these provisions would become MSRB
Rule G–11(g)(iii) and MSRB Rule G–11(g)(iv).
28 See Notice of Filing, 84 FR at 14990;
Amendment No. 1. The MSRB stated in
Amendment No. 1 that it inadvertently deleted
language in the Notice of Filing that was necessary
to make the disclosure requirements of this rule
operate properly and within the prescribed
timeframes. Specifically, the MSRB noted that
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Amendment No. 1 amends the language of the
Notice of Filing to correct the deletions and
reinstate the timing distinction between: (i) The
initial disclosure of all available information within
10 business days following the date of sale; and (ii)
the disclosure of all available information with the
sending of designation checks 10 calendar days
following the date the issuer delivers the securities
to the syndicate.
29 MSRB Rule G–11(g)(ii).
30 MSRB Rule G–11(g)(iii).
31 See Notice of Filing, 84 FR at 14991.
32 Id.
33 Id.
34 Id.
35 Id.
36 Id.
37 Id.
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11(j) states that sales credits due to a
syndicate member as designated by an
investor in connection with the
purchase of securities (‘‘net designation
payments’’) shall be distributed within
10 calendar days following the date the
issuer delivers the securities to the
syndicate.38
The SEC approved amendments to
MSRB Rule G–11(i) in 2009 to, among
other things, shorten the timeframe for
settlement of the syndicate account from
60 calendar days to 30 calendar days
following the date the issuer delivers
the securities to the syndicate.39 The
amendments also shortened the
timeframe for the payment of net
designation orders in Rule G–11(j) from
30 calendar days to 10 calendar days.40
The MSRB noted that the shortened
timeframes were intended to reduce the
exposure of co-managers to the credit
risk of the senior manager pending
settlement of the accounts.41
The MSRB stated that the proposed
amendments would not impact the
timing of the settlement of the syndicate
account, but rather would merely align
the timeframe for the payment of group
net and net designation sales credits.42
The MSRB noted that aligning the time
frames for the payment and receipt of
sales credits would be a minor
adjustment that would ensure uniform
practice in making and receiving such
payments in a timely manner. 43 In
addition, the MSRB stated that this
proposed rule change would reduce
credit risk by decreasing the exposure of
syndicate trading account members to
the potential deterioration in the credit
of the syndicate or account manager
during the pendency of account
settlements.44 The MSRB also noted that
the time period of 10 calendar days
would provide balance between
reducing risk of exposure of comanagers and the credit risk of the
senior manager while still providing the
senior syndicate manager with the time
needed to process and pay the sales
credits.45
As a result of the alignment of these
payments, the MSRB stated that the
information that is currently provided
within 30 calendar days of delivery of
securities to the syndicate under MSRB
Rule G–11(h)(ii)(B) would now be
38 Id.
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39 Id.
40 See
Notice of Filing, 84 FR at 14991–92.
41 See Notice of Filing, 84 FR at 14992. See also
Securities Exchange Act Release No. 60725 (Sept.
28, 2009), 74 FR 50855 (Oct. 1, 2009) (File No. SR–
MSRB–2009–12).
42 See Notice of Filing, 84 FR at 14992.
43 Id.
44 Id.
45 Id.
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provided within 10 business days
following the date of sale under revised
MSRB Rule G–11(g)(iv).46 In addition,
the MSRB noted that the proposed rule
change would delete MSRB Rule G–
11(h)(ii)(B), and would re-designate
current MSRB Rule G–11(h)(ii)(C) as
MSRB Rule G–11(h)(ii)(B).47
5. Revisions to MSRB Rule G–11(k)
As amended by Amendment No. 1,
the proposed rule change would revise
MSRB Rule G–11(k) to codify existing
market practices with regard to retail
order period representations and
required disclosures.48 Currently, MSRB
Rule G–11(k) requires dealers that
submit orders during a retail order
period to provide certain
representations and disclosures ‘‘[f]rom
the end of the retail order period but no
later than the Time of Formal
Award.’’ 49
The MSRB agreed with a proposed
technical rule change to MSRB Rule G–
11(k) suggested in the SIFMA Letter.50
The MSRB stated that dealers using
electronic order entry systems typically
submit these representations and
disclosures earlier than the end of the
retail order period.51 The MSRB also
noted that the term ‘‘end of the retail
order period’’ is not, technically, within
the ‘‘four corners’’ of the timeframe
specified in MSRB Rule G–11(k).52 The
proposed rule change, as amended by
Amendment No. 1, would delete the
term ‘‘end of the retail order period’’
from the current preamble to MSRB
Rule G–11(k). The MSRB stated that this
revision would align the rule with
existing industry practice.53
B. Proposed Rule Change to MSRB Rule
G–32
1. Revisions to MSRB Rule G–32(b)(ii)
The proposed rule change would
amend MSRB Rule G–32(b)(ii) to require
that in an advance refunding,54 where
advance refunding documents are
prepared, the underwriter must provide
access to the documents and certain
46 Id.
31963
related information to the entire market
at the same time.55
The MSRB stated that this proposed
change would mean underwriters would
be precluded from disseminating
advance refunding documents and
information to any market participant,
without first submitting such
documents and information to the
EMMA Dataport (provided that this
restriction does not prohibit
communication with anyone that may
require such information for purposes of
facilitating the completion of the
transaction).56 Currently, MSRB Rule G–
32(b)(ii) requires the advance refunding
documents and applicable Form G–32
information be submitted to the EMMA
Dataport, no later than five business
days after the closing date for the
primary offering.57
The MSRB stated, however, that in
some instances, some market
participants may be informed of the
advance refunding details before the
information is submitted and made
public on EMMA.58 The MSRB noted
that equal access to advance refunding
information is important for the efficient
functioning of the primary and
secondary market for municipal
securities.59 The MSRB also stated that
requiring underwriters to provide
information to the market regarding
CUSIP numbers advance refunded in a
manner that allows access to the
information by the entire market at the
same time would support this effort.60
2. Revisions to MSRB Rule G–32(c)
The proposed rule change would
repeal the current requirement under
MSRB Rule G–32(c) that a dealer
financial advisor that prepares an
official statement (on behalf of an issuer
with respect to a primary offering of
municipal securities) make the official
statement available to the managing
underwriter or sole underwriter in a
designated electronic format, promptly
after the issuer approves its
distribution.61
The MSRB stated that several
participants in a primary offering may
be responsible for preparing the official
statement,62 and while dealers acting as
47 Id.
48 See
55 See
49 MSRB
56 Id.
Amendment No. 1 at 4.
Rule G–11(k).
50 See MSRB Response Letter at 2, Amendment
No. 1 at 4.
51 See Amendment No. 1 at 4.
52 Id.
53 Id. As discussed further below, the MSRB
stated that it proposed this revision in response to
the SIFMA Letter.
54 In general, advance refunding issues are those
municipal bonds issued more than 90 days before
the redemption of the refunded bonds. See MSRB
Interpretive Guidance—Current Refundings (Aug. 8,
1991).
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Notice of Filing, 84 FR at 14992.
57 Id.
58 Id.
59 Id.
60 Id.
61 Id.
62 For example, the MSRB stated that bond
counsel or underwriter’s counsel frequently
prepares the official statement on behalf of the
issuer and may seek input on various components
from the underwriter or the municipal advisor.
However, the MSRB noted that Rule G–32(c) does
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financial advisors and non-dealer
municipal advisors may be engaged to
review and contribute to portions of the
document, they are less frequently
engaged to ‘‘prepare’’ the official
statement as they might have been in
the past.63 The MSRB stated that, while
the goal of MSRB Rule G–32(c) is
consistent with the overall goal of
MSRB Rule G–32 and Exchange Act
Rule 15c2–12(b)(3) (that is, to facilitate
the prompt distribution of the official
statement to investors and other market
participants), the MSRB noted that the
section of the rule itself is limited in
such a way that its usefulness in the
current market is questionable.64 The
MSRB stated it understands that MSRB
Rule G–32(c) requirements apply to a
limited universe of market participants
(i.e., dealers acting as financial advisors
that prepare the official statement).65
The MSRB noted that this leaves a gap
such that MSRB Rule G–32(c) does not
extend to parties other than dealers
acting as financial advisors who prepare
the official statement.66
In reviewing MSRB Rule G–32(c) and
considering whether to expand the
section of the rule to include non-dealer
municipal advisors, the MSRB stated
that it considered whether the existing
rule and/or the expansion thereof would
resolve a harm in the market.67 After
discussions with various market
participants, and consideration of the
actual scope of the impact of the rule,
the MSRB noted that any harm in the
market related to the delivery of official
statements would not be resolved by
MSRB Rule G–32(c) regardless of
whether dealers acting as financial
advisors and non-dealer municipal
advisors are required to comply.68 The
MSRB stated that it understands that the
obligation under Exchange Act Rule
15c2–12(b)(3) for an underwriter to
contract with the issuer or its agent to
receive the official statement within a
defined period of time already ensures
that the underwriter would receive the
official statement within a certain
period of time regardless of the party
preparing it.69 The MSRB also stated
that the scope of MSRB Rule G–32(c)
may be too limited to have any
not apply to bond counsel or underwriter’s counsel,
and the MSRB does not have jurisdiction over these
parties in any event. Therefore, if these parties were
engaged to prepare the official statement for the
issuer, they would not be subject to the
requirements of Rule G–32(c). Id.
63 See Notice of Filing, 84 FR at 14992–93.
64 See Notice of Filing, 84 FR at 14993.
65 Id.
66 Id.
67 Id.
68 Id.
69 Id.
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significant impact on the official
statement delivery requirements.70
C. Proposed Changes to Form G–32
1. Inclusion of 57 Additional Data
Points Already Collected By NIIDS
The proposed rule change would
amend Form G–32 to include 57
additional data fields that would be
auto-populated with datapoints already
required to be input into to the
Depository Trust Company’s (DTC) New
Issue Information Dissemination Service
(NIIDS), as applicable, for NIIDS-eligible
offerings.71 These data fields are
currently available to regulators and
certain other industry participants that
have access to NIIDS.72 The MSRB
stated, however, that adding the data
fields to Form G–32 would ensure the
MSRB’s continued access to important
primary offering information, and
enhance its ability to oversee the
accuracy and distribution of the
information provided.73
At this time, however, the MSRB
stated that requiring the manual
completion of all the above data fields
for non-NIIDS-eligible issues such as
private placements and other restricted
offerings that are not intended for
secondary market trading would be
burdensome on underwriters.74 Thus,
for a non-NIIDS-eligible primary
offering, the MSRB noted that an
underwriter would continue to be
required to manually complete the same
data fields on Form G–32 that it
currently completes with the addition of
one of the 57 data fields discussed
above.75 The additional data field would
indicate the original minimum
denomination of the offering, as
applicable.76 As with the other data
points currently required on Form G–32,
once an underwriter provides the
information, it would be available to
regulators.77 The MSRB stated that
regulators could use this information to
70 Id.
71 Id.
72 Id.
73 Id.
74 The MSRB stated that non-NIIDS-eligible
securities are less likely to trade in the secondary
market because they typically are issued with
trading restrictions and, therefore, less liquid.
Notice of Filing, 84 FR at 14993 n.41. In the MSRB’s
view, such non-NIIDS eligible securities are
different from NIIDS-eligible securities, which by
their nature are DTC eligible, and are freely tradable
in the market. See id.; see also Notice of Filing, 84
FR at 14993 n.8. The MSRB stated it will continue
to monitor the need for specific information with
respect to non-NIIDS-eligible offerings to determine
whether any other additional data elements may be
required at a later time. Notice of Filing, 84 FR at
14993 n.41.
75 See Notice of Filing, 84 FR at 14993.
76 Id.
77 Id.
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determine whether a new issue of
municipal securities is trading at the
appropriate minimum denomination in
the secondary market.78 Additionally, as
with the other NIIDS data points
discussed above, the MSRB noted that it
may disseminate this information in the
future.79
The MSRB stated that, at this time,
requiring this additional information on
Form G–32, as applicable, for NIIDSeligible offerings, and requiring the
single additional data point for nonNIIDS-eligible offerings would not only
assist the MSRB in ensuring its
continued access to new issue
information but would enhance MSRB
regulatory transparency initiatives.80
2. Inclusion of Nine Additional Data
Fields Not Currently Collected by NIIDS
The proposed rule change would
amend Form G–32 to include nine
additional data fields, set forth below,
for manual completion (i.e., not autopopulated from NIIDS), as applicable,
by underwriters in NIIDS-eligible
primary offerings of municipal
securities.81 The MSRB stated that
underwriters in non-NIIDS-eligible
primary offerings would be required to
manually complete two of these data
fields: (i) The ‘‘yes’’ or ‘‘no’’ indicator
regarding whether the original
minimum denomination for a new issue
has the ability to change; and (ii) the
‘‘yes’’ or ‘‘no’’ indicator regarding
whether the new issue has any
restrictions.82 The MSRB noted that,
however, underwriters in non-NIIDSeligible offerings would not be required
to complete the other seven data
fields.83
The MSRB stated that the information
collected by these data fields would
enhance MSRB regulatory transparency
initiatives as all of the additional data
elements would be immediately
available to regulators to perform
regulatory oversight of primary offerings
and subsequent secondary market
trading practices to ensure a fair and
efficient market.84 Additionally, the
MSRB noted that it may disseminate
some or all of this information in the
future.85 The proposed rule change
would amend Form G–32 to add the
following data fields:
a. Ability for original minimum
denomination to change—The MSRB
stated it believes providing a ‘‘yes’’ or
78 Id.
79 Id.
80 Id.
81 Id.
82 Id.
83 Id.
84 Id.
85 Id.
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‘‘no’’ indicator at the time of issuance as
to whether the original minimum
denomination for an issue can change
would immediately enhance regulatory
transparency and provide useful
information to investors, should the
MSRB disseminate this information in
the future.86 The MSRB stated that
having this indicator would highlight
the need to check relevant disclosure
documents for developments that could
trigger a change in the original
minimum denominations.87
b. Additional syndicate managers—
The MSRB stated that having a data
field that indicates all the syndicate
managers (senior and co-managers) on
an underwriting would provide useful
information for regulators.88
Additionally, the MSRB stated that,
should the MSRB disseminate this
information in the future, it could be
used to evaluate the experience of a
syndicate manager for an upcoming
offering.89 The MSRB noted that the
complete list of underwriters typically
is known at or before the pricing of an
issue and, therefore, senior and comanager information is readily available
to the senior underwriter before Form
G–32 is due.90
c. Call schedule—The MSRB stated
that requiring call schedule information
on Form G–32 would include, for
example, premium call dates and prices,
and the par call date.91 The MSRB
stated that this information would
immediately increase regulatory
transparency, providing regulators with
intermediate premium call dates and
prices, and, where applicable, a means
to differentiate between a call price
represented in dollars as opposed to
CAV.92 Additionally, the MSRB noted
that, if the MSRB disseminated this
information in the future, access to all
the relevant call information could help
investors make more informed
investment decisions.93
d. Identity of obligated person(s),
other than the issuer—The MSRB stated
that it believes that providing the
name(s) of the obligated person(s) (other
than the issuer) for a primary offering of
municipal securities is important
because such obligated person(s)
86 Id.
87 Id.
88 See
89 See
Notice of Filing, 84 FR at 14993–94.
Notice of Filing, 84 FR at 14994.
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90 Id.
91 Id. As part of its discussion of call schedules
in the Notice of Filing, the MSRB noted that, for
primary offerings with call prices stated as a
percentage of the compound accreted value (CAV),
the underwriter would enter the premium call dates
and percentage of CAV the new issue can be called
at as well as the par call date.
92 Id.
93 Id.
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generally will have continuing
disclosure obligations associated with
the issue, and the identity of such
obligated person(s) is sometimes not
easily identifiable for regulatory
transparency purposes.94 Also, the
MSRB noted that having more ways of
identifying those obligated to support
payment of all or part of a primary
offering would increase transparency
(should it disseminate this information
in the future).95 The MSRB stated that
there may be confusion in identifying
other obligated persons in a consistent
manner.96 The MSRB noted that, as a
result, the identity of the other obligated
person(s) should be input on Form G–
32 the same as it appears on the official
statement, or if there is no official
statement, in the manner it appears in
the applicable offering documents for
the issue.97 The MSRB stated that this
practice would ensure consistent
identification of the obligated person(s),
other than the issuer, with respect to
that issue.98
e. LEI 99 for credit enhancers and
obligated person(s), other than the
issuer, if readily available—The MSRB
stated that LEI provides a method to
uniquely identify legally distinct
entities that engage in financial
transactions.100 The MSRB noted that
the goal of this global identification
system is to precisely identify parties to
a financial transaction to assist
regulators, policymakers and financial
market participants in identifying and
better understanding risk exposure in
the financial markets and to allow
monitoring of areas of concern.101 The
MSRB stated that requiring this
information for credit enhancers and
obligated persons, other than the issuer,
if readily available, would promote the
value of obtaining LEIs and encourage
industry participants to obtain them as
a matter of course.102 As stated by the
MSRB, an LEI is ‘‘readily available’’ if
94 Id.
95 Id.
96 Id.
97 Id.
98 Id.
99 An LEI is a 20-digit alpha-numeric code that
connects to key reference information providing
unique identification of legal entities participating
in financial transactions. Only organizations duly
accredited by GLEIF are authorized to issue LEIs.
The MSRB believes that, at this time, except for
credit enhancers and obligated person(s), other than
the issuer, the LEI information being sought is not
critical in evaluating the financial risks of an issuer,
and because issuers typically do not obtain an LEI,
the likely time and costs associated with having to
conduct a search to determine if LEI information is
readily available for an issuer, would exceed any
potential benefits. Id.
100 Id.
101 Id.
102 Id.
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it is easily obtainable via a general
search on the internet (e.g., web pages
such as https://www.gleif.org/en/lei/
search).103 The MSRB also noted that
obtaining this information, when readily
available, on credit enhancers and other
obligated persons would help advance
the goal of having a global identification
method for these parties and improve
the quality of municipal market
financial data and reporting.104
f. Dollar amount of each CUSIP
number advance refunded—The MSRB
stated that requiring information
regarding the dollar amount of each
CUSIP number advance refunded on
Form G–32 would provide regulators
important information regarding
material changes to a bond’s structure
and value and should the MSRB
disseminate this information in the
future, may assist investors in making
more informed investment
determinations.105 Upon review of
comments and discussions with certain
market participants, the MSRB stated
that it believes requiring the dollar
amount of each CUSIP number advance
refunded instead of the percentage
advance refunded would be more useful
in understanding the value of the
portion of an issue being advance
refunded and would be less burdensome
for underwriters to calculate.106
g. Retail order period by CUSIP
number—Currently, primary offerings
are flagged in the EMMA Dataport to
indicate whether there is/was a retail
order period.107 The MSRB noted that,
quite often, however, not every maturity
related to the offering is subject to a
retail order period.108 The MSRB stated
that requiring underwriters to mark a
primary offering with a flag to indicate
the existence of a retail order period for
each CUSIP number would provide
greater regulatory transparency as to the
amount and types of bonds being
offered in that retail order period.109
h. Name of municipal advisor—The
MSRB stated that including this
information would enhance regulatory
transparency as key market participants
would be more easily identifiable to
regulators.110 The MSRB also noted that,
should the MSRB disseminate this
information in the future, it could also
assist certain market participants in
evaluating the experience of the
municipal advisor when reviewing
103 Id.
104 Id.
105 Id.
106 Id.
107 Id.
108 Id.
109 Id.
110 Id.
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primary offerings, especially for similar
credits and structures.111 Finally, the
MSRB stated that it intends to make this
field autofill as the underwriter begins
to input the name of the municipal
advisor into the applicable text box.112
i. Restrictions on the issue—The
MSRB stated that adding a ‘‘yes’’ or
‘‘no’’ flag to Form G–32 for an
underwriter to indicate whether the
primary offering is being made with
restrictions would help regulators and,
should the MSRB disseminate this
information in the future, it could help
certain other market participants more
easily identify this information.113
III. Summary of Comments Received
and MSRB’s Responses to Comments
As noted previously, the Commission
received three comment letters on the
proposed rule change, as well as the
MSRB Response Letter and Amendment
No. 1.
A.Technical Correction to Rule G–11(k)
SIFMA requested that the MSRB make
a technical correction to MSRB Rule G–
11(k), which was not otherwise
amended by the Proposed Rule
Change.114 SIFMA requested that the
MSRB change the requirement that
dealers provide certain representations
and disclosures ‘‘from the end of the
retail order period but no later than the
Time of Formal Award’’ to ‘‘by the time
of the formal award.’’ 115 In SIFMA’s
view, these disclosures are often made
earlier than the end of the retail order
period and there is no reason to
discourage that practice.116
The MSRB stated that it agreed with
SIFMA regarding MSRB Rule G–11(k),
and made corresponding changes in
Amendment No. 1.117
B. Additional Data Fields to be Required
on Form G–32
1. Comments About Data Fields
Generally
SIFMA, BDA, and NAMA commented
on the requirement in the proposed rule
change that underwriters complete
additional fields on Form G–32.118
Generally, both SIFMA and BDA stated
that the MSRB has drastically
underestimated the time and costs of
compliance with these new
requirements.119 Further, SIFMA and
BDA believe that the MSRB has
overestimated the benefits of the
additional fields in Form G–32, because
this information is generally available in
the Official Statement that is already
accessible on the MSRB’s EMMA
system.120 BDA suggested that
additional burdens on dealers have, and
could, continue to lead to contraction in
the market.121 SIFMA additionally
requested that the specifications of the
new fields should be available for
comment prior to implementation, and
that the MSRB provide a bulk data
uploader such as those provided by
FINRA and DTC.122 SIFMA also noted
that changes will need to be made to the
MSRB’s Form G–32 Manual, and offered
to meet with MSRB staff to discuss.123
In the MSRB Response Letter, the
MSRB responded to the general
comments from SIFMA, BDA, and
NAMA about the additional data fields.
The MSRB stated that the nine data
fields requiring manual completion (as
applicable) for NIIDS-eligible offers are
necessary to enhance the MSRB’s
regulatory transparency initiatives.124
The MSRB also noted that the time and
resources required for compliance with
this requirement would not be unduly
burdensome.125 The MSRB
acknowledged that commenters raised
concerns with the MSRB’s economic
analysis, but responded that the
commenters did not provide data to
illustrate or support such concerns.126
The MSRB stated that this data would
enhance its ability to perform oversight
of primary offerings and secondary
market trading practices, as well as
assist it in ensuring a fair and efficient
market.127 The MSRB noted that it plans
to publish the data in the future to help
investors with their investment
decisions.128
The MSRB also stated that it
appreciated the commenters’ concerns
about the need to assure the quality of
the data they provide, but the MSRB
concluded that the importance of such
data outweighs any attendant burden.129
The MSRB also noted that it appreciated
commenters’ willingness to meet to
discuss suggestions to support technical
aspects of implementing the proposed
rule change, but that the MSRB does not
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113 Id.
114 See
115 See
SIFMA Letter at 3–4; BDA Letter at 2.
BDA Letter at 2–3.
122 See SIFMA Letter at 4.
123 See SIFMA Letter at 6.
124 See MSRB Response Letter at 6.
125 See MSRB Response Letter at 6–7.
126 See MSRB Response Letter at 7.
127 Id.
128 Id.
129 Id.
121 See
112 Id.
SIFMA Letter at 2–3.
SIFMA Letter at 3.
116 Id.
117 See
MSRB Response Letter.
SIFMA Letter; BDA Letter; NAMA Letter.
119 See SIFMA Letter at 3; BDA Letter at 2.
118 See
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2. Comments About Specific Data Fields
With respect to specific fields on
proposed amended Form G–32:
a. LEI: Both SIFMA and BDA raised
concerns about the requirement to
include the LEI for Credit Enhancers
and Obligated persons ‘‘if readily
available.’’ 131 SIFMA suggested that
only the names and LEIs of Obligated
Persons would be useful to the
market.132 Both SIFMA and BDA
expressed concerns about the vagueness
of ‘‘if readily available,’’ and believe
that this qualifier does not provide
enough guidance to dealers as to where
and how to search.133 BDA further
expressed concerns about errors in data
entry.134
In the MSRB Response Letter, the
MSRB responded to these comments
about LEI data.135 The MSRB stated that
LEI information (when readily available)
on credit enhancers and obligated
persons (other than the issuer) would
advance the goal of establishing a global
identification method for these
parties.136 The MSRB noted that such
LEI information could improve the
quality of municipal market financial
data reporting.137 The MSRB stated that
a LEI could be considered ‘‘readily
available’’ if it were easily obtainable
via a general search on the internet.138
The MSRB also noted that, if, after
searching via Form G–32’s LEI search
page, an LEI did not result for a
particular credit enhancer or obligated
person, the underwriter could conclude
that the LEI was not ‘‘readily
available.’’ 139
b. Dollar amount of CUSIPs refunded:
BDA expressed concern that the manual
entry of this data could lead to a high
risk of errors.140
The MSRB stated that it understands
concerns about quality assurance
regarding data input, but that the MSRB
concluded that the importance of such
data outweighs any associated
burdens.141
c. Restrictions on the Issue: SIFMA
requested clarifications on what types of
restrictions would require a yes or no
answer, and believes that restrictions
130 See
MSRB Response Letter at 9.
SIFMA Letter at 5; BDA Letter at 2.
132 See SIFMA Letter at 5.
133 Id.; BDA Letter at 2.
134 See BDA Letter at 2.
135 See MSRB Response Letter at 7.
136 Id.
137 Id.
138 Id.
139 Id.
140 See BDA Letter at 2.
141 Id.
131 See
120 See
111 Id.
believe meeting to discuss such
suggestions should delay approval.130
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should be limited to the types of
investors.142 Further, SIFMA requested
that checkboxes be offered in the form
instead of ‘‘yes’’ and ‘‘no’’ choices.143
In response, the MSRB stated its
continued belief that the ‘‘yes’’ or ‘‘no’’
indicator for whether the offering is
being made with a restriction would
provide useful information to regulators,
allowing regulators to identify
transactions involving municipal
securities more easily.144 The MSRB
also noted that if such information is
made available via EMMA in the future,
market participants could identify
primary offerings with restrictions and
make any inquiries deemed
appropriate.145 The MSRB stated that it
is not necessary ‘‘at this time’’ to require
an underwriter to provide additional
information regarding the specific types
of investors to which an offering is
limited.146
d. Municipal Advisor: NAMA
requested that a number of elements to
the Municipal Advisor field be clarified,
including:
i. Will the drop down box display the
list of firms registered with the SEC,
MSRB, or both? 147 NAMA believed this
change is a good opportunity to
reconcile any differences.148
ii. How will the underwriter
determine who should be listed as the
Municipal Advisor? 149
iii. Will there be an option for ‘‘No
Municipal Advisor?’’ 150
iv. Will there be an ability to correct/
revise the form? 151
v. How will the MSRB handle DBA
Names? 152
The MSRB responded that it
anticipates implementing a method for
populating the ‘‘municipal advisor’’
data field that would cause the field to
autofill or provide a drop-down of
municipal advisors by name.153 The
MSRB added that the autofill or dropdown would include all municipal
advisors registered with the SEC, as well
as with the MSRB, and would include
a ‘‘no municipal advisor’’ option.154 The
MSRB also noted that an underwriter
would look to the municipal advisor
named in the Official Statement, or if
none is listed, the underwriter would
142 See
SIFMA Letter at 5.
143 Id.
144 See
MSRB Response Letter at 8.
145 Id.
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146 Id.
147 See
NAMA Letter at 1.
148 Id.
149 Id.
150 Id.
rely on its knowledge of the municipal
advisor’s identity.155 The MSRB stated
that it anticipates Form G–32 would
allow for an underwriter to add a
municipal advisor, if more than one
municipal advisor is known.156
IV. Discussion and Commission
Findings
The Commission has carefully
considered the proposed rule change,
the comment letters received, the MSRB
Response Letter, and Amendment No. 1.
The Commission finds that the
proposed rule change, as modified by
Amendment No. 1, is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to the MSRB.
In particular, the Commission
believes that the proposed rule change,
as modified by Amendment No. 1, is
consistent with the provisions of
Section 15B(b)(2)(C) of the Act, which
provides in part that the MSRB’s rules
shall be designed 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, and to remove
impediments to and perfect the
mechanism of a free and open market in
municipal securities and municipal
financial products.157
The Commission believes that the
proposed rule change to MSRB Rule G–
11(f) would promote just and equitable
principles of trade by codifying the
obligation of selling group members, in
addition to syndicate members, to
comply with the issuer’s terms and
conditions in a primary offering of
municipal securities, particularly in
light of the obligations of selling group
members to comply with the priority
provisions, as well as other issuer terms
and conditions.
The Commission believes that the
proposed rule changes to MSRB Rule G–
11(g) also would promote just and
equitable principles of trade by
removing any unfair advantage in the
secondary market of having advance
knowledge of when an issue is free-totrade, as well as by ensuring issuers in
a primary offering have material
information regarding the designations
and allocations of their offerings.
Additionally, the Commission believes
that providing this information to
issuers removes impediments to a free
and open market in municipal securities
151 Id.
152 Id.
153 See
155 Id.
MSRB Response Letter at 8.
156 Id.
154 Id.
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by giving issuers valuable information
they otherwise may not know is
available. By reducing information
asymmetry among market participants
in primary offerings of municipal
securities, this proposed rule change
would reduce the potential for an unfair
advantage in the secondary sales of
municipal securities.
Similarly, the Commission believes
that by requiring the underwriter in an
advance refunding to disclose advance
refunding information, the proposed
rule change to MSRB Rule G–32(b)(ii)
would remove impediments to and
perfect the mechanism of a free and
open market, by ensuring that all market
participants have access to such
information at the same time. The
proposed rule change to MSRB Rule G–
11(j) also would foster cooperation and
coordination with persons engaged in
processing information with respect to
transactions in municipal securities and
municipal financial products, by
aligning the timing of payment of sales
credits in net designation and group net
sales transactions. Additionally,
aligning these payments would remove
impediments to a free and open market
in municipal securities and municipal
financial products by reducing credit
risk in the market and allowing group
net sales credit payments to be made to
syndicate members on a shortened
timeframe.
The Commission believes that the
deletion of MSRB Rule G–32(c) in the
proposed rule change would remove
impediments to and perfect the
mechanism of a free and open market in
municipal securities. The Commission
believes that, by eliminating a rule that
no longer resolves a market harm, the
proposed rule change will more
appropriately reflect actual market
practices, reduce regulatory burdens
and thus encourage compliance with a
more appropriate process by which the
underwriter receives the official
statement in a primary offering of
municipal securities. Further, because
Exchange Act Rule 15c2–12(b)(3)
requires an underwriter to contract with
the issuer or its agent to receive the
official statement within a defined
period of time, the Commission believes
that the deletion of MSRB Rule G–32(c)
will not adversely affect investors or the
public interest.
The Commission believes that the
inclusion on Form G–32 of additional
data fields will foster cooperation with
persons engaged in regulating and
processing information with respect to
transactions in municipal securities and
municipal financial products, by
providing more transparency with
respect to municipal securities offerings.
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For example, by obtaining this
information, the MSRB and other
regulators will have access to more
fulsome and useful market data to help
inform their regulation of the municipal
securities markets.
In approving the proposed rule
change, the Commission has considered
the proposed rule change’s impact on
efficiency, competition, and capital
formation.158 Section 15B(b)(2)(C) of the
Act 159 requires that MSRB rules not be
designed to impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act. The Commission
does not believe that the proposed rule
change would impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act, because it would
apply equally to all dealers of new
issues of municipal securities in
primary offerings.
Furthermore, the Commission
believes that the potential burdens
created by the proposed rule change are
likely to be outweighed by the benefits
of increasing regulatory transparency in
the primary offering process and
secondary market trading. The
Commission has reviewed the record for
the proposed rule change and notes that
the record does not contain any
information to indicate that the
proposed rule change would have a
negative effect on capital formation. The
Commission believes that the proposed
rule change includes provisions that
help promote efficiency. The
amendments requiring that the senior
syndicate manager to notify all members
of the syndicate and selling group at the
same time that the offering is free to
trade, and requiring underwriters to
provide access to advance refunding
documents to the entire market at the
same time, would promote efficiency in
the market by reducing information
asymmetry among market participants.
Additionally, the amendments aligning
the timeframes for the payment of group
net sales credits and net designation
sales credit would promote efficiency by
reducing credit risk in the market.
As noted above, the Commission
received three comment letters on the
filing. The Commission believes that the
MSRB, through its responses and
through Amendment No. 1, has
addressed commenters’ concerns. For
the reasons noted above, the
Commission believes that the proposed
rule change, as modified by Amendment
No. 1, is consistent with the Act.
158 15
159 15
U.S.C. 78c(f).
U.S.C. 78o–4(b)(2)(C).
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V. Solicitation of Comments on
Amendment No. 1
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether Amendment No. 1 to
the proposed rule change is consistent
with the Act. Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use of 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–2019–07 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–MSRB–2019–07. 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 website (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 website 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 the
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–
2019–07 and should be submitted on or
before July 24, 2019.
VI. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause for
approving the proposed rule change, as
PO 00000
Frm 00137
Fmt 4703
Sfmt 4703
amended by Amendment No. 1, prior to
the 30th day after the date of
publication of notice of Amendment No.
1 in the Federal Register. As noted by
the MSRB, Amendment No. 1 does not
raise any significant issues with respect
to the proposed rule change and only
provides minor technical changes. The
proposed rule change to MSRB Rule G–
11(g)(iv) corrects an inadvertent drafting
error and the proposed rule change to
MSRB Rule G–11(k) aligns the current
rule to existing industry practice and is
directly responsive to comments
received.
For the foregoing reasons, the
Commission finds good cause for
approving the proposed rule change, as
modified by Amendment No. 1, on an
accelerated basis, pursuant to Section
19(b)(2) of the Act.
VIII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,160 that the
proposed rule change, as modified by
Amendment No. 1 (SR–MSRB–2019–07)
be, and hereby is, approved on an
accelerated basis.
For the Commission, pursuant to delegated
authority.161
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–14161 Filed 7–2–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86220; File No. SR–
NYSEArca–2019–14]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change Relating to the Permitted
Investments of the PGIM Ultra Short
Bond ETF
June 27, 2019.
On March 13, 2019, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (‘‘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 make certain changes to the
listing rule for shares (‘‘Shares’’) of the
PGIM Ultra Short Bond ETF (‘‘Fund’’).
The proposed rule change was
published for comment in the Federal
160 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
161 17
E:\FR\FM\03JYN1.SGM
03JYN1
]]>Agencies
[Federal Register Volume 84, Number 128 (Wednesday, July 3, 2019)]
[Notices]
[Pages 31961-31968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-14161]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No 34-86219; File No. SR-MSRB-2019-07]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, Consisting of Proposed Amendments to MSRB Rule G-11
and MSRB Rule G-32 and Form G-32 Regarding a Collection of Data
Elements Provided in Electronic Format to the EMMA Dataport System in
Connection With Primary Offerings
June 27, 2019.
I. Introduction
On April 2, 2019, 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 consisting of proposed
amendments to MSRB Rule G-11 (``Primary Offering Practices''), MSRB
Rule G-32 (``Disclosures in Connection With Primary Offerings), and
Form G-32 regarding a collection of data elements provided in electric
format to the Electronic Municipal Market Access Dataport (the ``EMMA
Dataport'') \3\ system in connection with primary offerings (the
``proposed rule change''). The proposed rule change was published for
comment in the Federal Register on April 12, 2019.\4\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The EMMA Dataport is the submission portal through which
information is provided for display to the public on EMMA.
\4\ Securities Exchange Act Release No. 85551 (Apr. 8, 2019)
(the ``Notice of Filing''), 84 FR 14988 (Apr. 12, 2019).
---------------------------------------------------------------------------
The Commission received three comment letters on the proposed rule
change.\5\ On June 6, 2019, the MSRB responded to those comments \6\
and filed Amendment No. 1 to the proposed rule change (``Amendment No.
1'').\7\ The Commission is publishing this notice to solicit comments
on Amendment No. 1 to the proposed rule change from interested parties
and is approving the proposed rule change, as modified by Amendment No.
1, on an accelerated basis.
---------------------------------------------------------------------------
\5\ See Letter to Secretary, Commission, from Leslie M. Norwood,
Managing Director and Associate General Counsel, and Bernard V.
Canepa, Vice-President and Assistant General Counsel, the Securities
Industry and Financial Market Association (``SIFMA'') dated May 2,
2019 (the ``SIFMA Letter''); Letter to Secretary, Commission, from
Mike Nicholas, Chief Executive Officer, Bond Dealers of America
(``BDA''), dated May 3, 2019 (the ``BDA Letter''); and Letter to
Secretary, Commission, from Susan Gaffney, Executive Director,
National Association of Municipal Advisors (``NAMA''), dated May 3,
2019 (the ``NAMA Letter'').
\6\ See Letter to Secretary, Commission, from Margaret R. Blake,
Associate Counsel, Municipal Securities Rulemaking Board (``MSRB''),
dated Jun. 6, 2019 (the ``MSRB Response Letter'').
\7\ Id. As discussed further below, in Amendment No. 1, the MSRB
proposed to amend the proposed rule change with two technical
amendments (to MSRB Rule G-11(g) and MSRB Rule G-11(k)).
---------------------------------------------------------------------------
II. Description of Proposed Rule Change
As described further below, the MSRB proposes to amend MSRB Rule G-
11 and MSRB Rule G-32, as well as Form G-32 to update and enhance the
general practices undertaken by underwriters and others, as applicable,
in a primary offering of municipal securities.\8\
---------------------------------------------------------------------------
\8\ See Notice of Filing, 84 FR at 14988, and Amendment No. 1.
---------------------------------------------------------------------------
A. Proposed Rule Change to MSRB Rule G-11--Primary Offering Practices
1. Revisions to MSRB Rule G-11(f)
The proposed rule change would amend MSRB Rule G-11(f) to codify an
existing obligation of selling group members to comply with the written
communications they receive from the senior syndicate manager relating
to, among other things, issuer requirements, priority provisions and
order period requirements.\9\
---------------------------------------------------------------------------
\9\ See Notice of Filing, 84 FR at 14990.
---------------------------------------------------------------------------
MSRB Rule G-11(f) currently states that prior to the first offer of
any securities by the syndicate, the senior syndicate manager is
required to provide, in writing, to syndicate members and selling group
members, if any, ``(i) a written statement of all terms and conditions
required by the issuer, (ii) a written statement of all of the issuer's
retail order period requirements, if any, [and] (iii) the priority
provisions . . . [.]'' \10\ The senior syndicate manager must also
promptly furnish, in writing, to the syndicate members and the selling
group members any changes in the priority provisions or pricing
information.\11\
---------------------------------------------------------------------------
\10\ MSRB Rule G-11(f). See also id.
\11\ Notice of Filing, 84 FR at 14990.
---------------------------------------------------------------------------
Additionally, the MSRB has stated that the activities of all
dealers should be viewed in light of the basic fair dealing principles
of MSRB Rule G-17, on conduct of municipal securities and municipal
advisor activities.\12\ In 2013, the MSRB amended MSRB Rule G-11 to,
among other things, address concerns related to retail order period
practices and required expressly that the senior syndicate manager's
written statement of all terms and conditions required by the issuer
also be delivered to selling group members.\13\ The amendment also
added MSRB Rule G-11(k) to require that any dealer that submits an
order designated as retail during a retail order period must provide
certain information that would assist in determining if the order is a
bona fide retail order.\14\ The MSRB stated that the 2013 amendments to
MSRB Rule G-11, coupled with the MSRB Rule G-17 guidance,\15\ indicate
that selling group members are subject
[[Page 31962]]
to the issuer requirements in allocating securities to their
investors.\16\
---------------------------------------------------------------------------
\12\ See MSRB Notice 2009-42 (July 14, 2009).
\13\ See Securities Exchange Act Release No. 70532 (Sept. 26,
2013), 78 FR 60956 (Oct. 2, 2013) (File No. SR-MSRB-2013-05).
\14\ Id.
\15\ See MSRB Notice 2009-42 (July 14, 2009).
\16\ See Notice of Filing, 84 FR at 14990. See also MSRB Rule G-
11(b) (requiring that every dealer that submits an order to a
syndicate or to a member of a syndicate for the purchase of
securities must disclose at the time of submission if the order is
for its dealer account or a related account of the dealer).
---------------------------------------------------------------------------
By codifying this existing obligation, the MSRB noted that the
proposed rule change would highlight that selling group members must
comply with the priority provisions and other issuer terms and
conditions when they receive written notification of such from the
syndicate manager.\17\
---------------------------------------------------------------------------
\17\ See Notice of Filing, 84 FR at 14990.
---------------------------------------------------------------------------
2. New MSRB Rule G-11(g)(ii)
The proposed rule change would also amend MSRB Rule G-11(g) to add
new subsection (ii), which would require the senior syndicate manager
to notify all members of the syndicate and selling group, at the same
time via free-to-trade wire or electronically by other industry-
accepted method of communication, that the offering is free to trade at
a price other than the initial offering price.\18\
---------------------------------------------------------------------------
\18\ Id. The other provisions of Rule G-11(g) would be
renumbered accordingly to account for this addition.
---------------------------------------------------------------------------
In a primary offering of municipal securities where a syndicate is
formed (i.e., not a sole-managed offering), a free-to-trade wire is
sent by the senior syndicate manager to syndicate members once all of
the municipal securities in the issue or a particular maturity (or
maturities) are free to trade.\19\ The free-to-trade wire communicates
to members of the syndicate that they may trade the bonds in the
secondary market at market prices which could be the same or different
from the initial offering price.\20\
---------------------------------------------------------------------------
\19\ Id.
\20\ For purposes of reporting transactions after the free-to-
trade information has been disseminated, the MSRB has indicated that
once a new issue has been released for trading (i.e., is free to
trade), normal transaction reporting rules will apply to the
syndicate managers, syndicate members and selling group members. See
Securities Exchange Act Release No. 49902 (Jun. 22, 2004), 69 FR
38925 (Jun. 29, 2004) (File No. SR-MSRB-2004-02).
---------------------------------------------------------------------------
The MSRB stated that equal access to information is important to
the fair and effective functioning of the market for primary offerings
of municipal securities.\21\ Accordingly, the proposed rule change
would require the senior syndicate manager to notify all members of the
syndicate and the selling group, at the same time via a free-to-trade
wire or electronically by other industry-accepted method of
communication, that the offering is free to trade at a price other than
the initial offering. The MSRB noted that requiring dissemination of
this information for receipt by all syndicate and selling group members
at the same time would prevent preferential access to the free-to-trade
information.\22\ Specifically, the MSRB wrote that this dissemination
would prevent access by some, while other syndicate and selling group
members (who are unaware of the information) are delayed in knowing
that they may transact at prices other than the initial offering
price.\23\
---------------------------------------------------------------------------
\21\ See Notice of Filing, 84 FR at 14990.
\22\ Id.
\23\ Id.
---------------------------------------------------------------------------
The MSRB stated that, as methods of communication evolve, the
dissemination of free-to-trade information eventually may be made by
methods other than the traditional ``free-to-trade wire.'' \24\ While
the MSRB did not propose to dictate the timing of when, or the form of
how, the free-to-trade communication should be sent, the MSRB stated
that requiring dissemination of this information electronically (by an
industry-accepted method that ensures all syndicate and selling group
members receive the information simultaneously) would level the playing
field.\25\
---------------------------------------------------------------------------
\24\ Id.
\25\ Id.
---------------------------------------------------------------------------
3. Revisions to MSRB Rule G-11(g)(ii) and MSRB Rule G-11(g)(iii) (new
MSRB Rule G-11(g)(iii) and MSRB Rule G-11(g)(iv))
Currently, the senior syndicate manager is not required to provide
information to issuers regarding designations and allocations of
municipal securities in a primary offering.\26\ The proposed rule
change, as amended by Amendment No. 1, would amend MSRB Rule G-
11(g)(ii) and MSRB Rule G-11(g)(iii) \27\ to require the senior
syndicate manager to comply with the information-dissemination
provisions of this rule with respect to issuers, in addition to just
syndicate members.\28\
---------------------------------------------------------------------------
\26\ Id. ``Designation'' typically refers to the percentage of
the takedown or spread that a buyer directs the senior syndicate
manager to credit to a particular syndicate member (or members) in a
net designated order. ``Allocation'' generally refers to the process
of setting securities apart for the purpose of distribution to
syndicate and selling group members. See MSRB Glossary of Municipal
Securities Terms.
\27\ Currently, these provisions are MSRB Rule G-11(g)(ii) and
MSRB Rule G-11(g)(iii). However, with the proposed addition of MSRB
Rule G-11(g)(ii) noted above, these provisions would become MSRB
Rule G-11(g)(iii) and MSRB Rule G-11(g)(iv).
\28\ See Notice of Filing, 84 FR at 14990; Amendment No. 1. The
MSRB stated in Amendment No. 1 that it inadvertently deleted
language in the Notice of Filing that was necessary to make the
disclosure requirements of this rule operate properly and within the
prescribed timeframes. Specifically, the MSRB noted that Amendment
No. 1 amends the language of the Notice of Filing to correct the
deletions and reinstate the timing distinction between: (i) The
initial disclosure of all available information within 10 business
days following the date of sale; and (ii) the disclosure of all
available information with the sending of designation checks 10
calendar days following the date the issuer delivers the securities
to the syndicate.
---------------------------------------------------------------------------
MSRB Rule G-11(g)(ii) requires, in part, the senior syndicate
manager, within two business days following the date of sale, to
disclose to the syndicate, in writing, a summary by priority category,
of all allocations of securities accorded priority over member
orders.\29\ MSRB Rule G-11(g)(iii) requires the senior syndicate
manager to disclose, in writing and as set forth in the rule, to each
member of the syndicate information on the designations paid to
syndicate and non-syndicate members.\30\
---------------------------------------------------------------------------
\29\ MSRB Rule G-11(g)(ii).
\30\ MSRB Rule G-11(g)(iii).
---------------------------------------------------------------------------
The MSRB stated that providing this information to the issuer along
with information on group net sales credits would better inform all
issuers of the orders and allocations of their primary offerings.\31\
The MSRB noted that this information would be valued particularly by
those issuers who are not aware this information is available for their
review.\32\ The MSRB stated that an issuer who does not wish to receive
or review this information could simply delete the communication at its
discretion.\33\
---------------------------------------------------------------------------
\31\ See Notice of Filing, 84 FR at 14991.
\32\ Id.
\33\ Id.
---------------------------------------------------------------------------
4. Revisions to MSRB Rule G-11(j)
The proposed rule change would amend Rule G-11(j) to align the
timeframe for the payment of group net sales credits with the timeframe
for the payment of net designation sales credits as set forth
therein.\34\
---------------------------------------------------------------------------
\34\ Id.
---------------------------------------------------------------------------
Currently, MSRB Rule G-11(i) states that the final settlement of a
syndicate or similar account shall be made within 30 calendar days
following the date the issuer delivers the securities to the
syndicate.\35\ Group net sales credits (i.e., those sales credits for
orders in which all syndicate members benefit according to their
participation in the account) are paid out of the syndicate account
when it settles pursuant to MSRB Rule G-11(i).\36\ As a result,
syndicate members may wait 30 calendar days following receipt of the
securities by the syndicate before they receive their group net sales
credits.\37\ By contrast, MSRB Rule G-
[[Page 31963]]
11(j) states that sales credits due to a syndicate member as designated
by an investor in connection with the purchase of securities (``net
designation payments'') shall be distributed within 10 calendar days
following the date the issuer delivers the securities to the
syndicate.\38\
---------------------------------------------------------------------------
\35\ Id.
\36\ Id.
\37\ Id.
\38\ Id.
---------------------------------------------------------------------------
The SEC approved amendments to MSRB Rule G-11(i) in 2009 to, among
other things, shorten the timeframe for settlement of the syndicate
account from 60 calendar days to 30 calendar days following the date
the issuer delivers the securities to the syndicate.\39\ The amendments
also shortened the timeframe for the payment of net designation orders
in Rule G-11(j) from 30 calendar days to 10 calendar days.\40\ The MSRB
noted that the shortened timeframes were intended to reduce the
exposure of co-managers to the credit risk of the senior manager
pending settlement of the accounts.\41\
---------------------------------------------------------------------------
\39\ Id.
\40\ See Notice of Filing, 84 FR at 14991-92.
\41\ See Notice of Filing, 84 FR at 14992. See also Securities
Exchange Act Release No. 60725 (Sept. 28, 2009), 74 FR 50855 (Oct.
1, 2009) (File No. SR-MSRB-2009-12).
---------------------------------------------------------------------------
The MSRB stated that the proposed amendments would not impact the
timing of the settlement of the syndicate account, but rather would
merely align the timeframe for the payment of group net and net
designation sales credits.\42\ The MSRB noted that aligning the time
frames for the payment and receipt of sales credits would be a minor
adjustment that would ensure uniform practice in making and receiving
such payments in a timely manner. \43\ In addition, the MSRB stated
that this proposed rule change would reduce credit risk by decreasing
the exposure of syndicate trading account members to the potential
deterioration in the credit of the syndicate or account manager during
the pendency of account settlements.\44\ The MSRB also noted that the
time period of 10 calendar days would provide balance between reducing
risk of exposure of co-managers and the credit risk of the senior
manager while still providing the senior syndicate manager with the
time needed to process and pay the sales credits.\45\
---------------------------------------------------------------------------
\42\ See Notice of Filing, 84 FR at 14992.
\43\ Id.
\44\ Id.
\45\ Id.
---------------------------------------------------------------------------
As a result of the alignment of these payments, the MSRB stated
that the information that is currently provided within 30 calendar days
of delivery of securities to the syndicate under MSRB Rule G-
11(h)(ii)(B) would now be provided within 10 business days following
the date of sale under revised MSRB Rule G-11(g)(iv).\46\ In addition,
the MSRB noted that the proposed rule change would delete MSRB Rule G-
11(h)(ii)(B), and would re-designate current MSRB Rule G-11(h)(ii)(C)
as MSRB Rule G-11(h)(ii)(B).\47\
---------------------------------------------------------------------------
\46\ Id.
\47\ Id.
---------------------------------------------------------------------------
5. Revisions to MSRB Rule G-11(k)
As amended by Amendment No. 1, the proposed rule change would
revise MSRB Rule G-11(k) to codify existing market practices with
regard to retail order period representations and required
disclosures.\48\ Currently, MSRB Rule G-11(k) requires dealers that
submit orders during a retail order period to provide certain
representations and disclosures ``[f]rom the end of the retail order
period but no later than the Time of Formal Award.'' \49\
---------------------------------------------------------------------------
\48\ See Amendment No. 1 at 4.
\49\ MSRB Rule G-11(k).
---------------------------------------------------------------------------
The MSRB agreed with a proposed technical rule change to MSRB Rule
G-11(k) suggested in the SIFMA Letter.\50\ The MSRB stated that dealers
using electronic order entry systems typically submit these
representations and disclosures earlier than the end of the retail
order period.\51\ The MSRB also noted that the term ``end of the retail
order period'' is not, technically, within the ``four corners'' of the
timeframe specified in MSRB Rule G-11(k).\52\ The proposed rule change,
as amended by Amendment No. 1, would delete the term ``end of the
retail order period'' from the current preamble to MSRB Rule G-11(k).
The MSRB stated that this revision would align the rule with existing
industry practice.\53\
---------------------------------------------------------------------------
\50\ See MSRB Response Letter at 2, Amendment No. 1 at 4.
\51\ See Amendment No. 1 at 4.
\52\ Id.
\53\ Id. As discussed further below, the MSRB stated that it
proposed this revision in response to the SIFMA Letter.
---------------------------------------------------------------------------
B. Proposed Rule Change to MSRB Rule G-32
1. Revisions to MSRB Rule G-32(b)(ii)
The proposed rule change would amend MSRB Rule G-32(b)(ii) to
require that in an advance refunding,\54\ where advance refunding
documents are prepared, the underwriter must provide access to the
documents and certain related information to the entire market at the
same time.\55\
---------------------------------------------------------------------------
\54\ In general, advance refunding issues are those municipal
bonds issued more than 90 days before the redemption of the refunded
bonds. See MSRB Interpretive Guidance--Current Refundings (Aug. 8,
1991).
\55\ See Notice of Filing, 84 FR at 14992.
---------------------------------------------------------------------------
The MSRB stated that this proposed change would mean underwriters
would be precluded from disseminating advance refunding documents and
information to any market participant, without first submitting such
documents and information to the EMMA Dataport (provided that this
restriction does not prohibit communication with anyone that may
require such information for purposes of facilitating the completion of
the transaction).\56\ Currently, MSRB Rule G-32(b)(ii) requires the
advance refunding documents and applicable Form G-32 information be
submitted to the EMMA Dataport, no later than five business days after
the closing date for the primary offering.\57\
---------------------------------------------------------------------------
\56\ Id.
\57\ Id.
---------------------------------------------------------------------------
The MSRB stated, however, that in some instances, some market
participants may be informed of the advance refunding details before
the information is submitted and made public on EMMA.\58\ The MSRB
noted that equal access to advance refunding information is important
for the efficient functioning of the primary and secondary market for
municipal securities.\59\ The MSRB also stated that requiring
underwriters to provide information to the market regarding CUSIP
numbers advance refunded in a manner that allows access to the
information by the entire market at the same time would support this
effort.\60\
---------------------------------------------------------------------------
\58\ Id.
\59\ Id.
\60\ Id.
---------------------------------------------------------------------------
2. Revisions to MSRB Rule G-32(c)
The proposed rule change would repeal the current requirement under
MSRB Rule G-32(c) that a dealer financial advisor that prepares an
official statement (on behalf of an issuer with respect to a primary
offering of municipal securities) make the official statement available
to the managing underwriter or sole underwriter in a designated
electronic format, promptly after the issuer approves its
distribution.\61\
---------------------------------------------------------------------------
\61\ Id.
---------------------------------------------------------------------------
The MSRB stated that several participants in a primary offering may
be responsible for preparing the official statement,\62\ and while
dealers acting as
[[Page 31964]]
financial advisors and non-dealer municipal advisors may be engaged to
review and contribute to portions of the document, they are less
frequently engaged to ``prepare'' the official statement as they might
have been in the past.\63\ The MSRB stated that, while the goal of MSRB
Rule G-32(c) is consistent with the overall goal of MSRB Rule G-32 and
Exchange Act Rule 15c2-12(b)(3) (that is, to facilitate the prompt
distribution of the official statement to investors and other market
participants), the MSRB noted that the section of the rule itself is
limited in such a way that its usefulness in the current market is
questionable.\64\ The MSRB stated it understands that MSRB Rule G-32(c)
requirements apply to a limited universe of market participants (i.e.,
dealers acting as financial advisors that prepare the official
statement).\65\ The MSRB noted that this leaves a gap such that MSRB
Rule G-32(c) does not extend to parties other than dealers acting as
financial advisors who prepare the official statement.\66\
---------------------------------------------------------------------------
\62\ For example, the MSRB stated that bond counsel or
underwriter's counsel frequently prepares the official statement on
behalf of the issuer and may seek input on various components from
the underwriter or the municipal advisor. However, the MSRB noted
that Rule G-32(c) does not apply to bond counsel or underwriter's
counsel, and the MSRB does not have jurisdiction over these parties
in any event. Therefore, if these parties were engaged to prepare
the official statement for the issuer, they would not be subject to
the requirements of Rule G-32(c). Id.
\63\ See Notice of Filing, 84 FR at 14992-93.
\64\ See Notice of Filing, 84 FR at 14993.
\65\ Id.
\66\ Id.
---------------------------------------------------------------------------
In reviewing MSRB Rule G-32(c) and considering whether to expand
the section of the rule to include non-dealer municipal advisors, the
MSRB stated that it considered whether the existing rule and/or the
expansion thereof would resolve a harm in the market.\67\ After
discussions with various market participants, and consideration of the
actual scope of the impact of the rule, the MSRB noted that any harm in
the market related to the delivery of official statements would not be
resolved by MSRB Rule G-32(c) regardless of whether dealers acting as
financial advisors and non-dealer municipal advisors are required to
comply.\68\ The MSRB stated that it understands that the obligation
under Exchange Act Rule 15c2-12(b)(3) for an underwriter to contract
with the issuer or its agent to receive the official statement within a
defined period of time already ensures that the underwriter would
receive the official statement within a certain period of time
regardless of the party preparing it.\69\ The MSRB also stated that the
scope of MSRB Rule G-32(c) may be too limited to have any significant
impact on the official statement delivery requirements.\70\
---------------------------------------------------------------------------
\67\ Id.
\68\ Id.
\69\ Id.
\70\ Id.
---------------------------------------------------------------------------
C. Proposed Changes to Form G-32
1. Inclusion of 57 Additional Data Points Already Collected By NIIDS
The proposed rule change would amend Form G-32 to include 57
additional data fields that would be auto-populated with datapoints
already required to be input into to the Depository Trust Company's
(DTC) New Issue Information Dissemination Service (NIIDS), as
applicable, for NIIDS-eligible offerings.\71\ These data fields are
currently available to regulators and certain other industry
participants that have access to NIIDS.\72\ The MSRB stated, however,
that adding the data fields to Form G-32 would ensure the MSRB's
continued access to important primary offering information, and enhance
its ability to oversee the accuracy and distribution of the information
provided.\73\
---------------------------------------------------------------------------
\71\ Id.
\72\ Id.
\73\ Id.
---------------------------------------------------------------------------
At this time, however, the MSRB stated that requiring the manual
completion of all the above data fields for non-NIIDS-eligible issues
such as private placements and other restricted offerings that are not
intended for secondary market trading would be burdensome on
underwriters.\74\ Thus, for a non-NIIDS-eligible primary offering, the
MSRB noted that an underwriter would continue to be required to
manually complete the same data fields on Form G-32 that it currently
completes with the addition of one of the 57 data fields discussed
above.\75\ The additional data field would indicate the original
minimum denomination of the offering, as applicable.\76\ As with the
other data points currently required on Form G-32, once an underwriter
provides the information, it would be available to regulators.\77\ The
MSRB stated that regulators could use this information to determine
whether a new issue of municipal securities is trading at the
appropriate minimum denomination in the secondary market.\78\
Additionally, as with the other NIIDS data points discussed above, the
MSRB noted that it may disseminate this information in the future.\79\
---------------------------------------------------------------------------
\74\ The MSRB stated that non-NIIDS-eligible securities are less
likely to trade in the secondary market because they typically are
issued with trading restrictions and, therefore, less liquid. Notice
of Filing, 84 FR at 14993 n.41. In the MSRB's view, such non-NIIDS
eligible securities are different from NIIDS-eligible securities,
which by their nature are DTC eligible, and are freely tradable in
the market. See id.; see also Notice of Filing, 84 FR at 14993 n.8.
The MSRB stated it will continue to monitor the need for specific
information with respect to non-NIIDS-eligible offerings to
determine whether any other additional data elements may be required
at a later time. Notice of Filing, 84 FR at 14993 n.41.
\75\ See Notice of Filing, 84 FR at 14993.
\76\ Id.
\77\ Id.
\78\ Id.
\79\ Id.
---------------------------------------------------------------------------
The MSRB stated that, at this time, requiring this additional
information on Form G-32, as applicable, for NIIDS-eligible offerings,
and requiring the single additional data point for non-NIIDS-eligible
offerings would not only assist the MSRB in ensuring its continued
access to new issue information but would enhance MSRB regulatory
transparency initiatives.\80\
---------------------------------------------------------------------------
\80\ Id.
---------------------------------------------------------------------------
2. Inclusion of Nine Additional Data Fields Not Currently Collected by
NIIDS
The proposed rule change would amend Form G-32 to include nine
additional data fields, set forth below, for manual completion (i.e.,
not auto-populated from NIIDS), as applicable, by underwriters in
NIIDS-eligible primary offerings of municipal securities.\81\ The MSRB
stated that underwriters in non-NIIDS-eligible primary offerings would
be required to manually complete two of these data fields: (i) The
``yes'' or ``no'' indicator regarding whether the original minimum
denomination for a new issue has the ability to change; and (ii) the
``yes'' or ``no'' indicator regarding whether the new issue has any
restrictions.\82\ The MSRB noted that, however, underwriters in non-
NIIDS-eligible offerings would not be required to complete the other
seven data fields.\83\
---------------------------------------------------------------------------
\81\ Id.
\82\ Id.
\83\ Id.
---------------------------------------------------------------------------
The MSRB stated that the information collected by these data fields
would enhance MSRB regulatory transparency initiatives as all of the
additional data elements would be immediately available to regulators
to perform regulatory oversight of primary offerings and subsequent
secondary market trading practices to ensure a fair and efficient
market.\84\ Additionally, the MSRB noted that it may disseminate some
or all of this information in the future.\85\ The proposed rule change
would amend Form G-32 to add the following data fields:
---------------------------------------------------------------------------
\84\ Id.
\85\ Id.
---------------------------------------------------------------------------
a. Ability for original minimum denomination to change--The MSRB
stated it believes providing a ``yes'' or
[[Page 31965]]
``no'' indicator at the time of issuance as to whether the original
minimum denomination for an issue can change would immediately enhance
regulatory transparency and provide useful information to investors,
should the MSRB disseminate this information in the future.\86\ The
MSRB stated that having this indicator would highlight the need to
check relevant disclosure documents for developments that could trigger
a change in the original minimum denominations.\87\
---------------------------------------------------------------------------
\86\ Id.
\87\ Id.
---------------------------------------------------------------------------
b. Additional syndicate managers--The MSRB stated that having a
data field that indicates all the syndicate managers (senior and co-
managers) on an underwriting would provide useful information for
regulators.\88\ Additionally, the MSRB stated that, should the MSRB
disseminate this information in the future, it could be used to
evaluate the experience of a syndicate manager for an upcoming
offering.\89\ The MSRB noted that the complete list of underwriters
typically is known at or before the pricing of an issue and, therefore,
senior and co-manager information is readily available to the senior
underwriter before Form G-32 is due.\90\
---------------------------------------------------------------------------
\88\ See Notice of Filing, 84 FR at 14993-94.
\89\ See Notice of Filing, 84 FR at 14994.
\90\ Id.
---------------------------------------------------------------------------
c. Call schedule--The MSRB stated that requiring call schedule
information on Form G-32 would include, for example, premium call dates
and prices, and the par call date.\91\ The MSRB stated that this
information would immediately increase regulatory transparency,
providing regulators with intermediate premium call dates and prices,
and, where applicable, a means to differentiate between a call price
represented in dollars as opposed to CAV.\92\ Additionally, the MSRB
noted that, if the MSRB disseminated this information in the future,
access to all the relevant call information could help investors make
more informed investment decisions.\93\
---------------------------------------------------------------------------
\91\ Id. As part of its discussion of call schedules in the
Notice of Filing, the MSRB noted that, for primary offerings with
call prices stated as a percentage of the compound accreted value
(CAV), the underwriter would enter the premium call dates and
percentage of CAV the new issue can be called at as well as the par
call date.
\92\ Id.
\93\ Id.
---------------------------------------------------------------------------
d. Identity of obligated person(s), other than the issuer--The MSRB
stated that it believes that providing the name(s) of the obligated
person(s) (other than the issuer) for a primary offering of municipal
securities is important because such obligated person(s) generally will
have continuing disclosure obligations associated with the issue, and
the identity of such obligated person(s) is sometimes not easily
identifiable for regulatory transparency purposes.\94\ Also, the MSRB
noted that having more ways of identifying those obligated to support
payment of all or part of a primary offering would increase
transparency (should it disseminate this information in the
future).\95\ The MSRB stated that there may be confusion in identifying
other obligated persons in a consistent manner.\96\ The MSRB noted
that, as a result, the identity of the other obligated person(s) should
be input on Form G-32 the same as it appears on the official statement,
or if there is no official statement, in the manner it appears in the
applicable offering documents for the issue.\97\ The MSRB stated that
this practice would ensure consistent identification of the obligated
person(s), other than the issuer, with respect to that issue.\98\
---------------------------------------------------------------------------
\94\ Id.
\95\ Id.
\96\ Id.
\97\ Id.
\98\ Id.
---------------------------------------------------------------------------
e. LEI \99\ for credit enhancers and obligated person(s), other
than the issuer, if readily available--The MSRB stated that LEI
provides a method to uniquely identify legally distinct entities that
engage in financial transactions.\100\ The MSRB noted that the goal of
this global identification system is to precisely identify parties to a
financial transaction to assist regulators, policymakers and financial
market participants in identifying and better understanding risk
exposure in the financial markets and to allow monitoring of areas of
concern.\101\ The MSRB stated that requiring this information for
credit enhancers and obligated persons, other than the issuer, if
readily available, would promote the value of obtaining LEIs and
encourage industry participants to obtain them as a matter of
course.\102\ As stated by the MSRB, an LEI is ``readily available'' if
it is easily obtainable via a general search on the internet (e.g., web
pages such as https://www.gleif.org/en/lei/search).\103\ The MSRB also
noted that obtaining this information, when readily available, on
credit enhancers and other obligated persons would help advance the
goal of having a global identification method for these parties and
improve the quality of municipal market financial data and
reporting.\104\
---------------------------------------------------------------------------
\99\ An LEI is a 20-digit alpha-numeric code that connects to
key reference information providing unique identification of legal
entities participating in financial transactions. Only organizations
duly accredited by GLEIF are authorized to issue LEIs. The MSRB
believes that, at this time, except for credit enhancers and
obligated person(s), other than the issuer, the LEI information
being sought is not critical in evaluating the financial risks of an
issuer, and because issuers typically do not obtain an LEI, the
likely time and costs associated with having to conduct a search to
determine if LEI information is readily available for an issuer,
would exceed any potential benefits. Id.
\100\ Id.
\101\ Id.
\102\ Id.
\103\ Id.
\104\ Id.
---------------------------------------------------------------------------
f. Dollar amount of each CUSIP number advance refunded--The MSRB
stated that requiring information regarding the dollar amount of each
CUSIP number advance refunded on Form G-32 would provide regulators
important information regarding material changes to a bond's structure
and value and should the MSRB disseminate this information in the
future, may assist investors in making more informed investment
determinations.\105\ Upon review of comments and discussions with
certain market participants, the MSRB stated that it believes requiring
the dollar amount of each CUSIP number advance refunded instead of the
percentage advance refunded would be more useful in understanding the
value of the portion of an issue being advance refunded and would be
less burdensome for underwriters to calculate.\106\
---------------------------------------------------------------------------
\105\ Id.
\106\ Id.
---------------------------------------------------------------------------
g. Retail order period by CUSIP number--Currently, primary
offerings are flagged in the EMMA Dataport to indicate whether there
is/was a retail order period.\107\ The MSRB noted that, quite often,
however, not every maturity related to the offering is subject to a
retail order period.\108\ The MSRB stated that requiring underwriters
to mark a primary offering with a flag to indicate the existence of a
retail order period for each CUSIP number would provide greater
regulatory transparency as to the amount and types of bonds being
offered in that retail order period.\109\
---------------------------------------------------------------------------
\107\ Id.
\108\ Id.
\109\ Id.
---------------------------------------------------------------------------
h. Name of municipal advisor--The MSRB stated that including this
information would enhance regulatory transparency as key market
participants would be more easily identifiable to regulators.\110\ The
MSRB also noted that, should the MSRB disseminate this information in
the future, it could also assist certain market participants in
evaluating the experience of the municipal advisor when reviewing
[[Page 31966]]
primary offerings, especially for similar credits and structures.\111\
Finally, the MSRB stated that it intends to make this field autofill as
the underwriter begins to input the name of the municipal advisor into
the applicable text box.\112\
---------------------------------------------------------------------------
\110\ Id.
\111\ Id.
\112\ Id.
---------------------------------------------------------------------------
i. Restrictions on the issue--The MSRB stated that adding a ``yes''
or ``no'' flag to Form G-32 for an underwriter to indicate whether the
primary offering is being made with restrictions would help regulators
and, should the MSRB disseminate this information in the future, it
could help certain other market participants more easily identify this
information.\113\
---------------------------------------------------------------------------
\113\ Id.
---------------------------------------------------------------------------
III. Summary of Comments Received and MSRB's Responses to Comments
As noted previously, the Commission received three comment letters
on the proposed rule change, as well as the MSRB Response Letter and
Amendment No. 1.
A.Technical Correction to Rule G-11(k)
SIFMA requested that the MSRB make a technical correction to MSRB
Rule G-11(k), which was not otherwise amended by the Proposed Rule
Change.\114\ SIFMA requested that the MSRB change the requirement that
dealers provide certain representations and disclosures ``from the end
of the retail order period but no later than the Time of Formal Award''
to ``by the time of the formal award.'' \115\ In SIFMA's view, these
disclosures are often made earlier than the end of the retail order
period and there is no reason to discourage that practice.\116\
---------------------------------------------------------------------------
\114\ See SIFMA Letter at 2-3.
\115\ See SIFMA Letter at 3.
\116\ Id.
---------------------------------------------------------------------------
The MSRB stated that it agreed with SIFMA regarding MSRB Rule G-
11(k), and made corresponding changes in Amendment No. 1.\117\
---------------------------------------------------------------------------
\117\ See MSRB Response Letter.
---------------------------------------------------------------------------
B. Additional Data Fields to be Required on Form G-32
1. Comments About Data Fields Generally
SIFMA, BDA, and NAMA commented on the requirement in the proposed
rule change that underwriters complete additional fields on Form G-
32.\118\ Generally, both SIFMA and BDA stated that the MSRB has
drastically underestimated the time and costs of compliance with these
new requirements.\119\ Further, SIFMA and BDA believe that the MSRB has
overestimated the benefits of the additional fields in Form G-32,
because this information is generally available in the Official
Statement that is already accessible on the MSRB's EMMA system.\120\
BDA suggested that additional burdens on dealers have, and could,
continue to lead to contraction in the market.\121\ SIFMA additionally
requested that the specifications of the new fields should be available
for comment prior to implementation, and that the MSRB provide a bulk
data uploader such as those provided by FINRA and DTC.\122\ SIFMA also
noted that changes will need to be made to the MSRB's Form G-32 Manual,
and offered to meet with MSRB staff to discuss.\123\
---------------------------------------------------------------------------
\118\ See SIFMA Letter; BDA Letter; NAMA Letter.
\119\ See SIFMA Letter at 3; BDA Letter at 2.
\120\ See SIFMA Letter at 3-4; BDA Letter at 2.
\121\ See BDA Letter at 2-3.
\122\ See SIFMA Letter at 4.
\123\ See SIFMA Letter at 6.
---------------------------------------------------------------------------
In the MSRB Response Letter, the MSRB responded to the general
comments from SIFMA, BDA, and NAMA about the additional data fields.
The MSRB stated that the nine data fields requiring manual completion
(as applicable) for NIIDS-eligible offers are necessary to enhance the
MSRB's regulatory transparency initiatives.\124\ The MSRB also noted
that the time and resources required for compliance with this
requirement would not be unduly burdensome.\125\ The MSRB acknowledged
that commenters raised concerns with the MSRB's economic analysis, but
responded that the commenters did not provide data to illustrate or
support such concerns.\126\ The MSRB stated that this data would
enhance its ability to perform oversight of primary offerings and
secondary market trading practices, as well as assist it in ensuring a
fair and efficient market.\127\ The MSRB noted that it plans to publish
the data in the future to help investors with their investment
decisions.\128\
---------------------------------------------------------------------------
\124\ See MSRB Response Letter at 6.
\125\ See MSRB Response Letter at 6-7.
\126\ See MSRB Response Letter at 7.
\127\ Id.
\128\ Id.
---------------------------------------------------------------------------
The MSRB also stated that it appreciated the commenters' concerns
about the need to assure the quality of the data they provide, but the
MSRB concluded that the importance of such data outweighs any attendant
burden.\129\ The MSRB also noted that it appreciated commenters'
willingness to meet to discuss suggestions to support technical aspects
of implementing the proposed rule change, but that the MSRB does not
believe meeting to discuss such suggestions should delay approval.\130\
---------------------------------------------------------------------------
\129\ Id.
\130\ See MSRB Response Letter at 9.
---------------------------------------------------------------------------
2. Comments About Specific Data Fields
With respect to specific fields on proposed amended Form G-32:
a. LEI: Both SIFMA and BDA raised concerns about the requirement to
include the LEI for Credit Enhancers and Obligated persons ``if readily
available.'' \131\ SIFMA suggested that only the names and LEIs of
Obligated Persons would be useful to the market.\132\ Both SIFMA and
BDA expressed concerns about the vagueness of ``if readily available,''
and believe that this qualifier does not provide enough guidance to
dealers as to where and how to search.\133\ BDA further expressed
concerns about errors in data entry.\134\
---------------------------------------------------------------------------
\131\ See SIFMA Letter at 5; BDA Letter at 2.
\132\ See SIFMA Letter at 5.
\133\ Id.; BDA Letter at 2.
\134\ See BDA Letter at 2.
---------------------------------------------------------------------------
In the MSRB Response Letter, the MSRB responded to these comments
about LEI data.\135\ The MSRB stated that LEI information (when readily
available) on credit enhancers and obligated persons (other than the
issuer) would advance the goal of establishing a global identification
method for these parties.\136\ The MSRB noted that such LEI information
could improve the quality of municipal market financial data
reporting.\137\ The MSRB stated that a LEI could be considered
``readily available'' if it were easily obtainable via a general search
on the internet.\138\ The MSRB also noted that, if, after searching via
Form G-32's LEI search page, an LEI did not result for a particular
credit enhancer or obligated person, the underwriter could conclude
that the LEI was not ``readily available.'' \139\
---------------------------------------------------------------------------
\135\ See MSRB Response Letter at 7.
\136\ Id.
\137\ Id.
\138\ Id.
\139\ Id.
---------------------------------------------------------------------------
b. Dollar amount of CUSIPs refunded: BDA expressed concern that the
manual entry of this data could lead to a high risk of errors.\140\
---------------------------------------------------------------------------
\140\ See BDA Letter at 2.
---------------------------------------------------------------------------
The MSRB stated that it understands concerns about quality
assurance regarding data input, but that the MSRB concluded that the
importance of such data outweighs any associated burdens.\141\
---------------------------------------------------------------------------
\141\ Id.
---------------------------------------------------------------------------
c. Restrictions on the Issue: SIFMA requested clarifications on
what types of restrictions would require a yes or no answer, and
believes that restrictions
[[Page 31967]]
should be limited to the types of investors.\142\ Further, SIFMA
requested that checkboxes be offered in the form instead of ``yes'' and
``no'' choices.\143\
---------------------------------------------------------------------------
\142\ See SIFMA Letter at 5.
\143\ Id.
---------------------------------------------------------------------------
In response, the MSRB stated its continued belief that the ``yes''
or ``no'' indicator for whether the offering is being made with a
restriction would provide useful information to regulators, allowing
regulators to identify transactions involving municipal securities more
easily.\144\ The MSRB also noted that if such information is made
available via EMMA in the future, market participants could identify
primary offerings with restrictions and make any inquiries deemed
appropriate.\145\ The MSRB stated that it is not necessary ``at this
time'' to require an underwriter to provide additional information
regarding the specific types of investors to which an offering is
limited.\146\
---------------------------------------------------------------------------
\144\ See MSRB Response Letter at 8.
\145\ Id.
\146\ Id.
---------------------------------------------------------------------------
d. Municipal Advisor: NAMA requested that a number of elements to
the Municipal Advisor field be clarified, including:
i. Will the drop down box display the list of firms registered with
the SEC, MSRB, or both? \147\ NAMA believed this change is a good
opportunity to reconcile any differences.\148\
---------------------------------------------------------------------------
\147\ See NAMA Letter at 1.
\148\ Id.
---------------------------------------------------------------------------
ii. How will the underwriter determine who should be listed as the
Municipal Advisor? \149\
---------------------------------------------------------------------------
\149\ Id.
---------------------------------------------------------------------------
iii. Will there be an option for ``No Municipal Advisor?'' \150\
---------------------------------------------------------------------------
\150\ Id.
---------------------------------------------------------------------------
iv. Will there be an ability to correct/revise the form? \151\
---------------------------------------------------------------------------
\151\ Id.
---------------------------------------------------------------------------
v. How will the MSRB handle DBA Names? \152\
---------------------------------------------------------------------------
\152\ Id.
---------------------------------------------------------------------------
The MSRB responded that it anticipates implementing a method for
populating the ``municipal advisor'' data field that would cause the
field to autofill or provide a drop-down of municipal advisors by
name.\153\ The MSRB added that the autofill or drop-down would include
all municipal advisors registered with the SEC, as well as with the
MSRB, and would include a ``no municipal advisor'' option.\154\ The
MSRB also noted that an underwriter would look to the municipal advisor
named in the Official Statement, or if none is listed, the underwriter
would rely on its knowledge of the municipal advisor's identity.\155\
The MSRB stated that it anticipates Form G-32 would allow for an
underwriter to add a municipal advisor, if more than one municipal
advisor is known.\156\
---------------------------------------------------------------------------
\153\ See MSRB Response Letter at 8.
\154\ Id.
\155\ Id.
\156\ Id.
---------------------------------------------------------------------------
IV. Discussion and Commission Findings
The Commission has carefully considered the proposed rule change,
the comment letters received, the MSRB Response Letter, and Amendment
No. 1. The Commission finds that the proposed rule change, as modified
by Amendment No. 1, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to the MSRB.
In particular, the Commission believes that the proposed rule
change, as modified by Amendment No. 1, is consistent with the
provisions of Section 15B(b)(2)(C) of the Act, which provides in part
that the MSRB's rules shall be designed 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, and to remove impediments
to and perfect the mechanism of a free and open market in municipal
securities and municipal financial products.\157\
---------------------------------------------------------------------------
\157\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------
The Commission believes that the proposed rule change to MSRB Rule
G-11(f) would promote just and equitable principles of trade by
codifying the obligation of selling group members, in addition to
syndicate members, to comply with the issuer's terms and conditions in
a primary offering of municipal securities, particularly in light of
the obligations of selling group members to comply with the priority
provisions, as well as other issuer terms and conditions.
The Commission believes that the proposed rule changes to MSRB Rule
G-11(g) also would promote just and equitable principles of trade by
removing any unfair advantage in the secondary market of having advance
knowledge of when an issue is free-to-trade, as well as by ensuring
issuers in a primary offering have material information regarding the
designations and allocations of their offerings. Additionally, the
Commission believes that providing this information to issuers removes
impediments to a free and open market in municipal securities by giving
issuers valuable information they otherwise may not know is available.
By reducing information asymmetry among market participants in primary
offerings of municipal securities, this proposed rule change would
reduce the potential for an unfair advantage in the secondary sales of
municipal securities.
Similarly, the Commission believes that by requiring the
underwriter in an advance refunding to disclose advance refunding
information, the proposed rule change to MSRB Rule G-32(b)(ii) would
remove impediments to and perfect the mechanism of a free and open
market, by ensuring that all market participants have access to such
information at the same time. The proposed rule change to MSRB Rule G-
11(j) also would foster cooperation and coordination with persons
engaged in processing information with respect to transactions in
municipal securities and municipal financial products, by aligning the
timing of payment of sales credits in net designation and group net
sales transactions. Additionally, aligning these payments would remove
impediments to a free and open market in municipal securities and
municipal financial products by reducing credit risk in the market and
allowing group net sales credit payments to be made to syndicate
members on a shortened timeframe.
The Commission believes that the deletion of MSRB Rule G-32(c) in
the proposed rule change would remove impediments to and perfect the
mechanism of a free and open market in municipal securities. The
Commission believes that, by eliminating a rule that no longer resolves
a market harm, the proposed rule change will more appropriately reflect
actual market practices, reduce regulatory burdens and thus encourage
compliance with a more appropriate process by which the underwriter
receives the official statement in a primary offering of municipal
securities. Further, because Exchange Act Rule 15c2-12(b)(3) requires
an underwriter to contract with the issuer or its agent to receive the
official statement within a defined period of time, the Commission
believes that the deletion of MSRB Rule G-32(c) will not adversely
affect investors or the public interest.
The Commission believes that the inclusion on Form G-32 of
additional data fields will foster cooperation with persons engaged in
regulating and processing information with respect to transactions in
municipal securities and municipal financial products, by providing
more transparency with respect to municipal securities offerings.
[[Page 31968]]
For example, by obtaining this information, the MSRB and other
regulators will have access to more fulsome and useful market data to
help inform their regulation of the municipal securities markets.
In approving the proposed rule change, the Commission has
considered the proposed rule change's impact on efficiency,
competition, and capital formation.\158\ Section 15B(b)(2)(C) of the
Act \159\ requires that MSRB rules not be designed to impose any burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act. The Commission does not believe that the proposed
rule change would impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act, because it would
apply equally to all dealers of new issues of municipal securities in
primary offerings.
---------------------------------------------------------------------------
\158\ 15 U.S.C. 78c(f).
\159\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------
Furthermore, the Commission believes that the potential burdens
created by the proposed rule change are likely to be outweighed by the
benefits of increasing regulatory transparency in the primary offering
process and secondary market trading. The Commission has reviewed the
record for the proposed rule change and notes that the record does not
contain any information to indicate that the proposed rule change would
have a negative effect on capital formation. The Commission believes
that the proposed rule change includes provisions that help promote
efficiency. The amendments requiring that the senior syndicate manager
to notify all members of the syndicate and selling group at the same
time that the offering is free to trade, and requiring underwriters to
provide access to advance refunding documents to the entire market at
the same time, would promote efficiency in the market by reducing
information asymmetry among market participants. Additionally, the
amendments aligning the timeframes for the payment of group net sales
credits and net designation sales credit would promote efficiency by
reducing credit risk in the market.
As noted above, the Commission received three comment letters on
the filing. The Commission believes that the MSRB, through its
responses and through Amendment No. 1, has addressed commenters'
concerns. For the reasons noted above, the Commission believes that the
proposed rule change, as modified by Amendment No. 1, is consistent
with the Act.
V. Solicitation of Comments on Amendment No. 1
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
to the proposed rule change is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use of the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MSRB-2019-07 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2019-07. 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 website (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 website 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 the 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-2019-07 and should be submitted on
or before July 24, 2019.
VI. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause for approving the proposed rule
change, as amended by Amendment No. 1, prior to the 30th day after the
date of publication of notice of Amendment No. 1 in the Federal
Register. As noted by the MSRB, Amendment No. 1 does not raise any
significant issues with respect to the proposed rule change and only
provides minor technical changes. The proposed rule change to MSRB Rule
G-11(g)(iv) corrects an inadvertent drafting error and the proposed
rule change to MSRB Rule G-11(k) aligns the current rule to existing
industry practice and is directly responsive to comments received.
For the foregoing reasons, the Commission finds good cause for
approving the proposed rule change, as modified by Amendment No. 1, on
an accelerated basis, pursuant to Section 19(b)(2) of the Act.
VIII. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\160\ that the proposed rule change, as modified by Amendment No. 1
(SR-MSRB-2019-07) be, and hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------
\160\ 15 U.S.C. 78s(b)(2).
For the Commission, pursuant to delegated authority.\161\
---------------------------------------------------------------------------
\161\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-14161 Filed 7-2-19; 8:45 am]
BILLING CODE 8011-01-P
