Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Further Extend the Regulatory Relief and Permit Dealers To Conduct Office Inspections Remotely Until December 31, 2022 Pursuant to MSRB Rule G-27, on Supervision, 14596-14598 [2022-05372]
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14596
Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices
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increasing the number of decisions with
respect to unidentified companies that
SPAC investors would be required to
make, and determine whether or not to
exercise redemption rights, the
Exchange’s proposal could add
considerable complexity to the structure
and business combination strategies of
SPACs, and exacerbate the investor
protection concerns presented by
companies where the business plan is to
combine with another company that is
unidentified at the time of investment.44
Nasdaq has not addressed these risks
or how its proposal is consistent with
Section 6(b)(5) of the Exchange Act in
light of them, other than to state that
shareholders will not be adversely
affected because they still have the right
to redeem their full pro rata share of the
deposit account through more than one
transaction.45 Based on the above, the
Commission cannot find that the
proposal is consistent with the
requirement under Section 6(b)(5) of the
Act that the proposal be designed,
among other things, to protect investors
and the public interest.
As stated above, under the
Commission’s Rules of Practice, the
‘‘burden to demonstrate that a proposed
rule change is consistent with the
Exchange Act and the rules and
regulations issued thereunder . . . is on
the self-regulatory organization that
proposed the rule change.’’ 46 For the
foregoing reasons, the Exchange has not
met its burden to demonstrate that its
proposal is consistent with the
Exchange Act. In particular, the
Exchange has not adequately
demonstrated that its proposal to allow
a SPAC to contribute a portion of the
amount held in its deposit account to
protections. See id. at 44796–97. The Commission
has subsequently stated that ‘‘[b]ecause of their
unique structure, and the fact that at the outset
investors will not know the ultimate business of the
company similar to a blank check company, the
Commission approved Nasdaq listing standards for
SPACs that were similar in some respects to the
investor protection measures contained in Rule 419
under the Securities Act of 1933.’’ Securities
Exchange Act Release No. 63607 (December 23,
2010), 75 FR 82420, 82422 (December 30, 2010)
(order approving SR–NASDAQ–2010–137).
44 See supra note 43 (describing how Nasdaq’s
listing standards for SPACs are designed to address
additional investor protection concerns presented
by SPAC issuers given their unique structure). See
also Securities Exchange Act Release No. 57785
(May 6, 2008), 73 FR 27597, 27599 (May 13, 2008)
(SR–NYSE–2008–17) (approving listing standards
for SPACs on NYSE and stating that SPACs are
‘‘essentially shell companies’’ and that the
additional investor protection criteria on NYSE,
which are comparable to those in IM–5101–2,
‘‘should further the ability of investors to protect
and monitor their investment pending a [b]usiness
[c]ombination’’).
45 See Notice, supra note 3, at 36843; proposed
IM–5101–2(f)(vi).
46 17 CFR 201.700(b)(3).
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the deposit account of a new SpinCo
SPAC is consistent with investor
protection, the public interest, and other
relevant provisions of Section 6(b)(5) of
the Exchange Act. Accordingly, for the
reasons set forth above, the Commission
must disapprove the proposed rule
change because the Exchange has not
met its burden to demonstrate that the
proposal is consistent with Section
6(b)(5) of the Exchange Act.47
IV. Conclusion
The Commission does not find,
pursuant to Section 19(b)(2) of the
Exchange Act,48 that the proposed rule
change is consistent with the Exchange
Act and the rules and regulations
thereunder applicable to a national
securities exchange, and in particular,
Section 6(b)(5) of the Exchange Act.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,49
that the proposed rule change (SR–
NASDAQ–2021–054) be, and hereby is,
disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–05369 Filed 3–14–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94383; File No. SR–MSRB–
2022–01]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Further Extend the
Regulatory Relief and Permit Dealers
To Conduct Office Inspections
Remotely Until December 31, 2022
Pursuant to MSRB Rule G–27, on
Supervision
March 9, 2022.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
47 In disapproving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f). As described above,
two commenters expressed their belief that the
proposal would result in a more efficient SPAC
structure and use of capital. See supra notes 29–31
and accompanying text. For the reasons discussed
throughout, however, the Commission is
disapproving the proposed rule change because it
does not find that the proposed rule change is
consistent with the Exchange Act.
48 15 U.S.C. 78s(b)(2).
49 Id.
50 17 CFR 200.30–3(a)(12).
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or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on March 1, 2022, the Municipal
Securities Rulemaking Board (‘‘MSRB’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the MSRB. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The MSRB filed with the Commission
a proposed rule change to amend
Supplementary Material .01, Temporary
Relief for Completing Office
Inspections, of MSRB Rule G–27, on
supervision, to further extend the
regulatory relief and permit brokers,
dealers and municipal securities dealers
(collectively, ‘‘dealers’’) to conduct
office inspections, due to be completed
during calendar year 2022, remotely
until December 31, 2022 (the ‘‘proposed
rule change’’).
The MSRB has designated the
proposed rule change as constituting a
‘‘noncontroversial’’ rule change under
Section 19(b)(3)(A) 3 of the Act and Rule
19b–4(f)(6) 4 thereunder, which renders
the proposal effective upon receipt of
this filing by the Commission. The
MSRB proposes an operative date of
May 2, 2022.
The text of the proposed rule change
is available on the MSRB’s website at
www.msrb.org/Rules-andInterpretations/SEC-Filings/2022Filings.aspx, at the MSRB’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
MSRB included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The MSRB has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
2 17
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Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The MSRB continues to closely
monitor the impact on municipal
market participants resulting from the
coronavirus disease (‘‘COVID–19’’ or
‘‘pandemic’’) and believes the
additional six-month extension of time
to conduct office inspections remotely,
due to be completed in calendar year
2022, would allow dealers to better
address ongoing operational challenges
caused by the pandemic. In light of
these operational challenges and
disruptions to normal business
functions as a result of the pandemic,
the MSRB previously filed a proposed
rule change for immediate effectiveness
with the SEC in April 2020,5 a second
proposed rule change in December
2020,6 and a third proposed rule change
in October 2021 7 (‘‘April relief,’’
‘‘December relief,’’ and ‘‘October
relief’’). In connection with the April
relief, the MSRB provided an extension
of time for dealers to complete certain
supervisory obligations, including,
among other things, that office
inspections due to be conducted during
calendar year 2020 could be conducted
by March 31, 2021, but with the
expectation that dealers would conduct
their inspections on-site. The December
relief provided dealers with the option
to conduct their office inspections
remotely that were due to be completed
by March 31, 2021 (for calendar year
2020) and those for calendar year 2021,
subject to certain conditions being met.
The October relief provided an
additional extension of time permitting
dealers to continue to conduct office
inspections remotely until June 30,
2022, for their office inspections that are
due to be completed for calendar year
2022.8
Through stakeholder engagement, the
MSRB notes that dealers have delayed
their return to office plans due to the
5 See Exchange Act Release No. 88694 (April 20,
2020), 85 FR 23088 (April 24, 2020) (File No. SR–
MSRB–2020–01).
6 See Exchange Act Release No. 90621 (December
9, 2020), 85 FR 81254 (December 15, 2020) (File No.
SR–MSRB–2020–09).
7 See Exchange Act Release No. 93435 (October
27, 2021), 86 FR 60522 (November 2, 2021) (File
No. SR–MSRB–2021–06).
8 The MSRB noted in the October relief that it
would continue to monitor the effectiveness of
remote office inspections on dealers’ overall
supervisory systems and would consider more longterm regulatory initiatives that align with and
promote the evolving ways dealers are doing
business and supervising the activities of the dealer
and its associated persons. Id. The MSRB is still
undertaking such review.
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21:10 Mar 14, 2022
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continued pandemic and are
considering, or have implemented,
hybrid work arrangements dependent
on functions and regulatory
requirements, which has created
logistical challenges to conducting inperson office inspections. To that end,
in order to address ongoing industrywide concerns regarding having to
conduct in-person office inspections
while safety concerns related to the
pandemic persist 9 and to align with the
ongoing pandemic-related regulatory
relief provided by FINRA,10 the MSRB
is proposing amendments to
Supplementary Material .01 of MSRB
Rule G–27. The proposed amendments
to Supplementary Material .01 of MSRB
Rule G–27 would allow dealers to
satisfy their office inspection obligations
by permitting dealers to conduct
calendar year 2022 office inspections
remotely for the remainder of calendar
year 2022—extending the current relief
for an additional six months from June
30, 2022, to December 31, 2022.11
The conditions required to be met for
dealers to avail themselves of the option
to conduct office inspections remotely
remain unchanged; however,
amendments are being proposed to
paragraph (a) and (d) to reflect the
additional extension of time under the
proposed rule change. Pursuant to
paragraphs (b)–(d) of Supplementary
Material .01 of MSRB Rule G–27, in
dealers electing to conduct their office
inspections remotely, such dealers must
(i) amend or supplement their written
9 See The Centers for Disease Control and
Prevention (‘‘CDC’’), Omicron Variant: What You
Need to Know (stating, in part, that ‘‘the Omicron
variant spreads more easily than the original virus
that causes COVID–19 and the Delta variant. [The]
CDC expects that anyone with Omicron infection
can spread the virus to others, even if they are
vaccinated or don’t have symptoms.’’) available at
https://www.cdc.gov/coronavirus/2019-ncov/
variants/omicron-variant.html (updated February 2,
2022).
10 On January 10, 2022, FINRA made a filing with
the SEC for immediate effectiveness having noted
that amendments to FINRA Rule 3110.17 provides
a tailored regulatory alternative for their member
firms to have the option, subject to specified
conditions, to complete their inspection obligations
remotely. See Exchange Act Release No. 94018
(January 20, 2022), 87 FR 4072 (January 26, 2022)
(File No. SR–FINRA–2022–001). Previously, on
September 13, 2021, FINRA made a filing with the
SEC for immediate effectiveness, noting that while
some firms have taken affirmative steps to develop
and implement phased-in office re-entry plans
based on local conditions, there are many other
firms that have not. See Exchange Act Release No.
93002 (September 15, 2021), 86 FR 52508
(September 21, 2021) (File No. SR–FINRA–2021–
023).
11 As previously noted, a temporary location
established in response to the implementation of a
business continuity plan is not deemed an office for
purposes of complying with the office inspection
obligations, under MSRB Rule G–27. See supra note
5.
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14597
supervisory procedures as appropriate
to provide for remote inspections that
are reasonably designed to assist in
detecting and preventing violations of,
and achieving compliance with,
applicable securities laws and
regulations, and with applicable Board
rules; (ii) use remote office inspections
as part of an effective supervisory
system, which would include the
ongoing review of activities and
functions occurring at all offices and
locations whether or not the dealer
conducts inspections remotely; and (iii)
make and maintain the required records
for all offices or locations that had
inspections that were conducted
remotely; and any offices or locations
for which the dealer determined to
impose additional supervisory
procedures or more frequent
monitoring.
2. Statutory Basis
The MSRB believes that the proposed
rule change is consistent with Section
15B(b)(2)(C) of the Exchange Act,12
which provides that the MSRB’s rules
shall:
be designed to prevent fraudulent and
manipulative acts and practices, to promote
just and equitable principles of trade, to
foster cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with respect
to, and facilitating transactions in municipal
securities and municipal financial products,
to remove impediments to and perfect the
mechanism of a free and open market in
municipal securities and municipal financial
products, and, in general, to protect
investors, municipal entities, obligated
persons, and the public interest.
The proposed rule change is designed
to provide dealers additional time to
comply with certain obligations under
MSRB rules for a temporary period of
time; it does not relieve dealers from
compliance with their core regulatory
obligations to establish and maintain a
system to supervise the activities of
each of its associated persons that is
reasonably designed to achieve
compliance with applicable rules and
regulations, and with applicable MSRB
rules, which serve to protect investors,
municipal entities, obligated persons,
and the public interest. The MSRB
continues to believe extending the relief
and affording dealers the option to
conduct remote inspections due to be
completed in calendar year 2022, an
additional six-month extension, until
December 31, 2022, is a prudent
regulatory approach allowing dealers
more time to assess when and how to
have their employees safely return to
12 15
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U.S.C. 78o–4(b)(2)(C).
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Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices
their offices while continuing to serve
the important investor protection
objectives of the inspection obligations
under these unique circumstances.
In a time when faced with unique
challenges resulting from the sustained
pandemic, the proposed rule change
will afford dealers the ability to
safeguard the health and safety of their
personnel and to more effectively
allocate resources to serve and promote
the protection of investors, municipal
entities, obligated persons and the
public interest while much uncertainty
still remains. In addition, the proposed
rule change will also alleviate some of
the operational challenges dealers may
be experiencing, which will allow them
to more effectively allocate resources to
the operations that facilitate
transactions in municipal securities and
municipal financial products, to remove
impediments to and perfect the
mechanism of a free and open market in
municipal securities and municipal
financial products.13
khammond on DSKJM1Z7X2PROD with NOTICES
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Section 15B(b)(2)(C) of the Act
requires that MSRB rules be designed
not to impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.14 In fact, the MSRB
does not believe that the proposed rule
change will have any burden on
competition because the proposed rule
change treats all dealers equally in that
all dealers have the option to elect to
conduct remote inspections remotely
through December 31, 2022. The goal of
the proposed rule change is to grant
additional time for dealers to assess
their resources, establish office
inspection schedules for the second half
of 2022 and meet their office inspection
obligations, under Supplementary
Material .01 of Rule G–27, while also
determining how to best implement
their return to office plans in a safe and
effective manner during the exigent
circumstances of the COVID–19
pandemic. The temporary relief afforded
does not alter dealers underlying
obligations under the rule and with
applicable MSRB rules that directly
serve investor protection.
13 The proposed amendments only create the
option for dealers to conduct office inspections
remotely through December 31, 2022. With that in
mind, dealers should consider whether, under their
particular operating conditions, reliance on remote
inspections would be reasonable under the
circumstances.
14 15 U.S.C. 78o–4(b)(2)(C).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 15 and Rule 19b–
4(f)(6) 16 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
MSRB–2022–01 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–MSRB–2022–01. 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.
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–MSRB–2022–01 and should
be submitted on or before April 5, 2022.
For the Commission, by the Office of
Municipal Securities, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–05372 Filed 3–14–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94384; File No. SR–MIAX–
2022–11]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend the MIAX Options
Fee Schedule To Adopt Fees for a New
Data Product Called the Liquidity Taker
Event Report—Complex Orders
March 9, 2022.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
25, 2022, Miami International Securities
Exchange, LLC (‘‘MIAX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
17 17
15 15
U.S.C. 78s(b)(3)(A).
16 17 CFR 240.19b–4(f)(6).
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CFR 200.30–3a(a)(2).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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]]>Agencies
[Federal Register Volume 87, Number 50 (Tuesday, March 15, 2022)]
[Notices]
[Pages 14596-14598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05372]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94383; File No. SR-MSRB-2022-01]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Further Extend the Regulatory Relief and Permit Dealers To
Conduct Office Inspections Remotely Until December 31, 2022 Pursuant to
MSRB Rule G-27, on Supervision
March 9, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 1, 2022, the Municipal Securities
Rulemaking Board (``MSRB'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the proposed rule change as
described in Items I, II, and III below, which Items have been prepared
by the MSRB. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB filed with the Commission a proposed rule change to amend
Supplementary Material .01, Temporary Relief for Completing Office
Inspections, of MSRB Rule G-27, on supervision, to further extend the
regulatory relief and permit brokers, dealers and municipal securities
dealers (collectively, ``dealers'') to conduct office inspections, due
to be completed during calendar year 2022, remotely until December 31,
2022 (the ``proposed rule change'').
The MSRB has designated the proposed rule change as constituting a
``noncontroversial'' rule change under Section 19(b)(3)(A) \3\ of the
Act and Rule 19b-4(f)(6) \4\ thereunder, which renders the proposal
effective upon receipt of this filing by the Commission. The MSRB
proposes an operative date of May 2, 2022.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
The text of the proposed rule change is available on the MSRB's
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2022-Filings.aspx, at the MSRB's principal office, and at the Commission's
Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The MSRB has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.
[[Page 14597]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The MSRB continues to closely monitor the impact on municipal
market participants resulting from the coronavirus disease (``COVID-
19'' or ``pandemic'') and believes the additional six-month extension
of time to conduct office inspections remotely, due to be completed in
calendar year 2022, would allow dealers to better address ongoing
operational challenges caused by the pandemic. In light of these
operational challenges and disruptions to normal business functions as
a result of the pandemic, the MSRB previously filed a proposed rule
change for immediate effectiveness with the SEC in April 2020,\5\ a
second proposed rule change in December 2020,\6\ and a third proposed
rule change in October 2021 \7\ (``April relief,'' ``December relief,''
and ``October relief''). In connection with the April relief, the MSRB
provided an extension of time for dealers to complete certain
supervisory obligations, including, among other things, that office
inspections due to be conducted during calendar year 2020 could be
conducted by March 31, 2021, but with the expectation that dealers
would conduct their inspections on-site. The December relief provided
dealers with the option to conduct their office inspections remotely
that were due to be completed by March 31, 2021 (for calendar year
2020) and those for calendar year 2021, subject to certain conditions
being met. The October relief provided an additional extension of time
permitting dealers to continue to conduct office inspections remotely
until June 30, 2022, for their office inspections that are due to be
completed for calendar year 2022.\8\
---------------------------------------------------------------------------
\5\ See Exchange Act Release No. 88694 (April 20, 2020), 85 FR
23088 (April 24, 2020) (File No. SR-MSRB-2020-01).
\6\ See Exchange Act Release No. 90621 (December 9, 2020), 85 FR
81254 (December 15, 2020) (File No. SR-MSRB-2020-09).
\7\ See Exchange Act Release No. 93435 (October 27, 2021), 86 FR
60522 (November 2, 2021) (File No. SR-MSRB-2021-06).
\8\ The MSRB noted in the October relief that it would continue
to monitor the effectiveness of remote office inspections on
dealers' overall supervisory systems and would consider more long-
term regulatory initiatives that align with and promote the evolving
ways dealers are doing business and supervising the activities of
the dealer and its associated persons. Id. The MSRB is still
undertaking such review.
---------------------------------------------------------------------------
Through stakeholder engagement, the MSRB notes that dealers have
delayed their return to office plans due to the continued pandemic and
are considering, or have implemented, hybrid work arrangements
dependent on functions and regulatory requirements, which has created
logistical challenges to conducting in-person office inspections. To
that end, in order to address ongoing industry-wide concerns regarding
having to conduct in-person office inspections while safety concerns
related to the pandemic persist \9\ and to align with the ongoing
pandemic-related regulatory relief provided by FINRA,\10\ the MSRB is
proposing amendments to Supplementary Material .01 of MSRB Rule G-27.
The proposed amendments to Supplementary Material .01 of MSRB Rule G-27
would allow dealers to satisfy their office inspection obligations by
permitting dealers to conduct calendar year 2022 office inspections
remotely for the remainder of calendar year 2022--extending the current
relief for an additional six months from June 30, 2022, to December 31,
2022.\11\
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\9\ See The Centers for Disease Control and Prevention
(``CDC''), Omicron Variant: What You Need to Know (stating, in part,
that ``the Omicron variant spreads more easily than the original
virus that causes COVID-19 and the Delta variant. [The] CDC expects
that anyone with Omicron infection can spread the virus to others,
even if they are vaccinated or don't have symptoms.'') available at
https://www.cdc.gov/coronavirus/2019-ncov/variants/omicron-variant.html (updated February 2, 2022).
\10\ On January 10, 2022, FINRA made a filing with the SEC for
immediate effectiveness having noted that amendments to FINRA Rule
3110.17 provides a tailored regulatory alternative for their member
firms to have the option, subject to specified conditions, to
complete their inspection obligations remotely. See Exchange Act
Release No. 94018 (January 20, 2022), 87 FR 4072 (January 26, 2022)
(File No. SR-FINRA-2022-001). Previously, on September 13, 2021,
FINRA made a filing with the SEC for immediate effectiveness, noting
that while some firms have taken affirmative steps to develop and
implement phased-in office re-entry plans based on local conditions,
there are many other firms that have not. See Exchange Act Release
No. 93002 (September 15, 2021), 86 FR 52508 (September 21, 2021)
(File No. SR-FINRA-2021-023).
\11\ As previously noted, a temporary location established in
response to the implementation of a business continuity plan is not
deemed an office for purposes of complying with the office
inspection obligations, under MSRB Rule G-27. See supra note 5.
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The conditions required to be met for dealers to avail themselves
of the option to conduct office inspections remotely remain unchanged;
however, amendments are being proposed to paragraph (a) and (d) to
reflect the additional extension of time under the proposed rule
change. Pursuant to paragraphs (b)-(d) of Supplementary Material .01 of
MSRB Rule G-27, in dealers electing to conduct their office inspections
remotely, such dealers must (i) amend or supplement their written
supervisory procedures as appropriate to provide for remote inspections
that are reasonably designed to assist in detecting and preventing
violations of, and achieving compliance with, applicable securities
laws and regulations, and with applicable Board rules; (ii) use remote
office inspections as part of an effective supervisory system, which
would include the ongoing review of activities and functions occurring
at all offices and locations whether or not the dealer conducts
inspections remotely; and (iii) make and maintain the required records
for all offices or locations that had inspections that were conducted
remotely; and any offices or locations for which the dealer determined
to impose additional supervisory procedures or more frequent
monitoring.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Exchange Act,\12\ which provides that the
MSRB's rules shall:
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\12\ 15 U.S.C. 78o-4(b)(2)(C).
be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities and
municipal financial products, to remove impediments to and perfect
the mechanism of a free and open market in municipal securities and
municipal financial products, and, in general, to protect investors,
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municipal entities, obligated persons, and the public interest.
The proposed rule change is designed to provide dealers additional
time to comply with certain obligations under MSRB rules for a
temporary period of time; it does not relieve dealers from compliance
with their core regulatory obligations to establish and maintain a
system to supervise the activities of each of its associated persons
that is reasonably designed to achieve compliance with applicable rules
and regulations, and with applicable MSRB rules, which serve to protect
investors, municipal entities, obligated persons, and the public
interest. The MSRB continues to believe extending the relief and
affording dealers the option to conduct remote inspections due to be
completed in calendar year 2022, an additional six-month extension,
until December 31, 2022, is a prudent regulatory approach allowing
dealers more time to assess when and how to have their employees safely
return to
[[Page 14598]]
their offices while continuing to serve the important investor
protection objectives of the inspection obligations under these unique
circumstances.
In a time when faced with unique challenges resulting from the
sustained pandemic, the proposed rule change will afford dealers the
ability to safeguard the health and safety of their personnel and to
more effectively allocate resources to serve and promote the protection
of investors, municipal entities, obligated persons and the public
interest while much uncertainty still remains. In addition, the
proposed rule change will also alleviate some of the operational
challenges dealers may be experiencing, which will allow them to more
effectively allocate resources to the operations that facilitate
transactions in municipal securities and municipal financial products,
to remove impediments to and perfect the mechanism of a free and open
market in municipal securities and municipal financial products.\13\
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\13\ The proposed amendments only create the option for dealers
to conduct office inspections remotely through December 31, 2022.
With that in mind, dealers should consider whether, under their
particular operating conditions, reliance on remote inspections
would be reasonable under the circumstances.
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B. Self-Regulatory Organization's Statement on Burden on Competition
Section 15B(b)(2)(C) of the Act requires that MSRB rules be
designed not to impose any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act.\14\ In fact,
the MSRB does not believe that the proposed rule change will have any
burden on competition because the proposed rule change treats all
dealers equally in that all dealers have the option to elect to conduct
remote inspections remotely through December 31, 2022. The goal of the
proposed rule change is to grant additional time for dealers to assess
their resources, establish office inspection schedules for the second
half of 2022 and meet their office inspection obligations, under
Supplementary Material .01 of Rule G-27, while also determining how to
best implement their return to office plans in a safe and effective
manner during the exigent circumstances of the COVID-19 pandemic. The
temporary relief afforded does not alter dealers underlying obligations
under the rule and with applicable MSRB rules that directly serve
investor protection.
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\14\ 15 U.S.C. 78o-4(b)(2)(C).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) \16\ thereunder. At any time within 60 days of the filing of
the proposed rule change, the Commission summarily may temporarily
suspend such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MSRB-2022-01 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-MSRB-2022-01. 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. 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-MSRB-2022-01 and should be submitted on
or before April 5, 2022.
For the Commission, by the Office of Municipal Securities,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3a(a)(2).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-05372 Filed 3-14-22; 8:45 am]
BILLING CODE 8011-01-P
