[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28082-28090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10061]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88828; File No. SR-MSRB-2020-02]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed Rule Change To Align Certain MSRB
Rules to Securities Exchange Act Rule 15l-1, Regulation Best Interest
May 6, 2020.
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 May 1, 2020, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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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
consisting of amendments to MSRB Rule G-8, on books and records, MSRB
Rule G-9, on preservation of records, MSRB Rule G-19, on suitability of
recommendations and transactions, MSRB Rule G-20, on gifts, gratuities,
non-cash compensation and expenses of issuance, MSRB Rule G-48, on
transactions with Sophisticated Municipal Market Professionals
(``SMMPs''), and the deletion of an interpretation of MSRB Rule G-20
(the ``proposed rule change''). The proposed rule change would align
MSRB rules to the Commission's recently adopted Rule 15l-1 under the
Exchange Act (``Regulation Best Interest'').\3\
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\3\ 17 CFR 240.15l-1; see also Exchange Act Release No. 86031
(June 5, 2019), 84 FR 33318 (July 12, 2019) (File No. S7-07-18)
(``Regulation Best Interest Adopting Release'').
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The proposed rule change would result in the following changes to
MSRB rules:
MSRB Rule G-19 would apply only in circumstances in which
Regulation Best Interest does not apply;
MSRB Rule G-48 would make clear that the exception from
the requirement to perform a customer-specific suitability analysis
when making a recommendation to an SMMP, as defined in MSRB Rule D-15,
is available only for recommendations that are subject to MSRB Rule G-
19;
MSRB Rule G-20 would require any permissible non-cash
compensation to align with the requirements of Regulation Best
Interest; and
Dealers would be required to maintain books and records
required by Regulation Best Interest and the related SEC Form CRS
requirement.
The effective date of all of the amendments to MSRB rules included
in the proposed rule change will be the compliance date for Regulation
Best Interest.\4\ Dealers would not have an obligation to comply with
the proposed rule change until the effective date and the current
versions of MSRB Rules G-8, G-9, G-19, G-20, and G-48 would remain
applicable in the interim period between SEC approval and the effective
date.
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\4\ See Regulation Best Interest Adopting Release, 84 FR 33400
(setting June 30, 2020 as the compliance date for Regulation Best
Interest).
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The text of the proposed rule change is available on the MSRB's
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2020-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
[[Page 28083]]
comments it received on the proposed rule change. The text of these
statements may be examined at the places specified in Item IV below.
The MSRB has prepared summaries, set forth in Sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Background
On June 5, 2019, the SEC adopted Regulation Best Interest, which
establishes a new standard of conduct for broker-dealers \5\ and
natural persons who are associated persons of a broker-dealer
(collectively, ``broker-dealers'') when they make a recommendation to a
retail customer, defined generally as a natural person or the legal
representative of such person, who receives and uses a recommendation
from a broker-dealer primarily for personal, family, or household
purposes, of any securities transaction or investment strategy
involving securities. The Commission stated that Regulation Best
Interest enhances the broker-dealer standard of conduct beyond existing
suitability obligations, and aligns the standard of conduct with retail
customers' reasonable expectations by imposing certain new requirements
on broker-dealers.\6\ Specifically, Regulation Best Interest imposes
the following ``general obligation'':
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\5\ To effect transactions in municipal securities, a dealer
must be registered with the Commission as either a broker-dealer
under Section 15(b)(1) or a municipal securities dealer under
Section 15B(a)(2) of the Exchange Act. All dealers, other than bank
dealers, are broker-dealers and therefore are subject to Regulation
Best Interest. MSRB Rule D-8 defines a bank dealer as ``a municipal
securities dealer which is a bank or a separately identifiable
department or division of a bank.'' These dealers are registered
with the Commission under Exchange Section 15B(a)(2) and thus are
not subject to Regulation Best Interest. Because bank dealers can
make recommendations of municipal securities transactions or
investment strategies involving municipal securities to retail
customers, the Board plans to issue a separate Request for Comment
on whether the Board will apply the requirements of Regulation Best
Interest, through further amendments to MSRB rules, to bank dealers.
\6\ Regulation Best Interest Adopting Release, 84 FR 33319.
A broker, dealer, or a natural person who is an associated person of
a broker or dealer, when making a recommendation of any securities
transaction or investment strategy involving securities (including
account recommendations) to a retail customer, shall act in the best
interest of the retail customer at the time the recommendation is
made, without placing the financial or other interest of the broker,
dealer, or natural person who is an associated person of a broker or
dealer making the recommendation ahead of the interest of the retail
customer.\7\
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\7\ 17 CFR 240.15l-1(a)(1).
Regulation Best Interest provides that this general obligation is
satisfied only if a broker-dealer complies with four component
obligations: (i) An obligation to make certain prescribed disclosures,
before or at the time of the recommendation, about the recommendation
and the relationship between the retail customer and the broker-dealer
(the ``Disclosure Obligation''); \8\ (ii) an obligation to exercise
reasonable diligence, care, and skill in making a recommendation (the
``Care Obligation''); \9\ (iii) an obligation to establish, maintain,
and enforce written policies and procedures reasonably designed to
address conflicts of interest (the ``Conflict of Interest
Obligation''); \10\ and (iv) an obligation to establish, maintain, and
enforce written policies and procedures reasonably designed to achieve
compliance with Regulation Best Interest (the ``Compliance
Obligation'').\11\
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\8\ 17 CFR 240.15l-1(a)(2)(i).
\9\ 17 CFR 240.15l-1(a)(2)(ii).
\10\ 17 CFR 240.15l-1(a)(2)(iii).
\11\ 17 CFR 240.15l-1(a)(2)(iv).
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The MSRB has reviewed its rule book in light of the Commission's
adoption of Regulation Best Interest and the related Form CRS
requirement \12\ and, as further discussed below, is filing the
proposed rule change to harmonize the MSRB's rules with the
Commission's Regulation Best Interest and Form CRS and reduce the
potential for conflicting or duplicative regulation in the municipal
securities market.\13\ The MSRB has coordinated the proposed amendments
with FINRA, which has proposed similar amendments to its rules,\14\ in
order to harmonize requirements, to the extent possible, for dealers
that are subject to the rules of both the MSRB and FINRA.
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\12\ When it adopted Regulation Best Interest, the Commission
also adopted a requirement for registered investment advisers and
registered broker-dealers to provide retail investors with a
relationship summary on new Form CRS, including information about
the ``types of client and customer relationships and services the
firm offers; the fees, costs, conflicts of interest, and required
standard of conduct associated with those relationships and
services; whether the firm and its financial professionals currently
have reportable legal or disciplinary history; and how to obtain
additional information about the firm.'' Exchange Act Release No.
86032 (June 5, 2019), 84 FR 33492 (July 12, 2019).
\13\ SEC staff frequently asked questions on Regulation Best
Interest are available at: https://www.sec.gov/tm/faq-regulation-best-interest.
\14\ See Exchange Act Release No. 88422, File No. SR-FINRA-2020-
007 (March 19, 2020), 85 FR 16974 (March 25, 2020).
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I. Suitability
A. MSRB Rule G-19
MSRB Rule G-19 provides that a dealer must have a reasonable basis
to believe that a recommended transaction or investment strategy
involving municipal securities is suitable for the customer, based on
the information obtained through the reasonable diligence of the dealer
to ascertain the customer's investment profile.\15\ MSRB Rule G-19 is
composed of three component obligations:
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\15\ MSRB Rule G-19 defines a customer's investment profile to
include the customer's age, other investments, financial situation
and needs, tax status, investment objectives, investment experience,
investment time horizon, liquidity needs, risk tolerance, and any
other information the customer may disclose to the dealer in
connection with such recommendation.
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Reasonable-basis suitability, which requires a dealer to
have a reasonable basis to believe, based on reasonable diligence, that
the recommendation is suitable for at least some investors; \16\
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\16\ MSRB Rule G-19, Supplementary Material .05(a).
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Customer-specific suitability, which requires a dealer to
have a reasonable basis to believe that the recommendation is suitable
for a particular customer based on that customer's investment profile;
\17\ and
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\17\ MSRB Rule G-19, Supplementary Material .05(b).
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Quantitative suitability, which requires a dealer who has
actual or de facto control over a customer account to have a reasonable
basis for believing that a series of recommended transactions, even if
suitable when viewed in isolation, are not excessive and unsuitable for
the customer when taken together in light of the customer's investment
profile.\18\
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\18\ MSRB Rule G-19(c).
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MSRB Rule G-19 applies to all dealers when making a recommendation
to a ``customer,'' which is defined in MSRB Rule D-9 as any person
other than a dealer acting in its capacity as a dealer or an issuer in
transactions involving the sale of a new issue of its securities.\19\
When a dealer reasonably concludes that a customer is an SMMP,\20\
however, the dealer is not
[[Page 28084]]
obligated to perform a customer-specific suitability analysis under
MSRB Rule G-19.\21\
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\19\ MSRB Rule D-9 states that, ``Except as otherwise
specifically provided by rule of the Board, the term `customer'
shall mean any person other than a broker, dealer, or municipal
securities dealer acting in its capacity as such or an issuer in
transactions involving the sale by the issuer of a new issue of its
securities.''
\20\ MSRB Rule D-15 defines a customer as an SMMP according to
three elements:
(a) Nature of the Customer. The customer must be:
(1) a bank, savings and loan association, insurance company, or
registered investment company;
(2) an investment adviser registered either with the Commission
under Section 203 of the Investment Advisers Act of 1940 or with a
state securities commission (or any agency or office performing like
functions); or
(3) any other person or entity with total assets of at least $50
million.
(b) Dealer Determination of Customer Sophistication. The dealer
must have a reasonable basis to believe that the customer is capable
of evaluating investment risks and market value independently, both
in general and with regard to particular transactions and investment
strategies in municipal securities.
(c) Customer Affirmation. The customer must affirmatively
indicate that it:
(1) is exercising independent judgment in evaluating:
(A) the recommendations of the dealer;
(B) the quality of execution of the customer's transactions by
the dealer; and
(C) the transaction price for non-recommended secondary market
agency transactions as to which (i) the dealer's services have been
explicitly limited to providing anonymity, communication, order
matching and/or clearance functions and (ii) the dealer does not
exercise discretion as to how or when the transactions are executed;
and
(2) has timely access to material information that is available
publicly through established industry sources as defined in Rule G-
47(b)(i) and (ii).
\21\ MSRB Rule G-48(c).
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Conceptually similar to MSRB Rule G-19, the Care Obligation of
Regulation Best Interest also requires a three-part analysis to
evaluate recommendations to retail customers but employs the higher
best interest standard instead of MSRB Rule G-19's suitability
standard. In addition, while Regulation Best Interest applies only to
recommendations to ``retail customers,'' defined generally as a natural
person or the legal representative of such person, who receives and
uses a recommendation from a broker-dealer primarily for personal,
family, or household purposes,\22\ MSRB Rule G-19 applies to
``customers'' (with an exception to the customer-specific suitability
requirement for recommendations to SMMPs).
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\22\ See 17 CFR 240.15l-1(b)(1).
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The proposed rule change includes two amendments to MSRB Rule G-19
designed to harmonize MSRB requirements with Regulation Best Interest.
First, to avoid unnecessary regulatory complexity, the applicability of
MSRB Rule G-19 would be limited only to circumstances in which
Regulation Best Interest does not apply. Second, to conform the
quantitative suitability component of MSRB Rule G-19, for circumstances
in which MSRB Rule G-19 applies, to the analogous requirement in
Regulation Best Interest, the proposed rule change would remove the
limitation that requires a quantitative suitability determination only
when a dealer has ``actual or de facto control'' over the customer's
account. These proposed amendments are discussed below.
i. Eliminate Applicability of MSRB Rule G-19 to Recommendations Subject
to Regulation Best Interest
As noted above, Regulation Best Interest addresses generally the
same conduct that is addressed by MSRB Rule G-19 but employs a best
interest, rather than a suitability, standard. Absent action by the
Board, a dealer would be required to reconcile compliance with both
Regulation Best Interest and MSRB Rule G-19 in many circumstances. In
such circumstances, the MSRB believes that compliance with Regulation
Best Interest would result in compliance with MSRB Rule G-19 because a
dealer who ``act[s] in the best interest of the retail customer'' \23\
when making a recommendation to a retail customer of any securities
transaction or investment strategy involving securities would
necessarily also meet the MSRB Rule G-19 requirement to ``have a
reasonable basis to believe that [the recommendation] is suitable for
the customer.'' Accordingly, in order to reduce the potential for
duplicative regulation and unnecessary complexity, the Board is
proposing to limit the application of MSRB Rule G-19 to circumstances
in which Regulation Best Interest does not apply. To do so, the Board
would add new text to MSRB Rule G-19 that states that MSRB Rule G-19
does not apply to recommendations subject to Regulation Best Interest.
MSRB Rule G-19 would thus apply only to:
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\23\ 17 CFR 240.15l-1(a)(1).
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Recommendations to customers that are not ``retail
customers,'' as defined by Regulation Best Interest, and
Recommendations to any customers by bank dealers.\24\
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\24\ As noted above, the MSRB plans to issue a Request for
Comment on whether the MSRB will apply the requirements of
Regulation Best Interest to bank dealers through further amendments
to MSRB rules.
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Regulation Best Interest defines a retail customer as a natural
person, or the legal representative of such natural person (regardless
of net worth), who receives a recommendation from a broker-dealer and
uses that recommendation primarily for personal, family, or household
purposes. Accordingly, if the dealer making a recommendation is subject
to Regulation Best Interest, MSRB Rule G-19 would not apply when the
dealer makes a recommendation to such persons. The Board believes this
approach will provide regulatory clarity about the applicability and
requirements of MSRB Rule G-19 and Regulation Best Interest to market
participants in an effective and efficient manner.
ii. Align MSRB Rule G-19's Quantitative Suitability Obligation to the
Requirements of Regulation Best Interest
Currently, MSRB Rule G-19's quantitative suitability obligation
requires a dealer to have a reasonable basis for believing that a
series of recommended transactions are not excessive and unsuitable for
the customer when taken together in light of the customer's profile,
but only if the dealer has actual or de facto control over the
customer's account.\25\ In contrast, the quantitative care obligation
of Regulation Best Interest applies regardless of whether the broker-
dealer exercises actual or de facto control over the customer's
account.\26\ In the Regulation Best Interest Adopting Release, the
Commission stated:
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\25\ MSRB Rule G-19, Supplementary Material .05(c).
\26\ See 17 CFR 240.15l-1(a)(2)(ii)(C); see also Regulation Best
Interest Adopting Release, 84 FR at 33327.
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[I]mposing the quantitative care obligation without a ``control''
element would provide consistency in the investor protections provided
to retail customers by requiring a broker-dealer to always form a
reasonable basis as to the recommended frequency of trading in a retail
customer's account--irrespective of whether the broker-dealer
``controls'' or exercises ``de facto control'' over the retail
customer's account. This would also be consistent with the other
obligations of the Care Obligation, which apply regardless of whether a
broker-dealer ``controls'' or exercises ``de facto control'' over the
retail customers' account.\27\
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\27\ Regulation Best Interest Adopting Release, 84 FR at 33384
(citation omitted).
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For the same reasons, the proposed rule change eliminates the
control element of the quantitative suitability obligation prescribed
in Supplementary Material .05(c) of MSRB Rule G-19.
B. MSRB Rule G-48
As described above, MSRB Rule G-48(c) provides that a dealer making
a municipal securities recommendation to an SMMP does not have any
obligation under MSRB Rule G-19 to perform a customer-specific
suitability analysis. An SMMP is defined by three components:
The customer must fit within a prescribed category of
institutional investor or be a natural person or entity
[[Page 28085]]
with total assets of at least $50 million; \28\
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\28\ MSRB Rule D-15(a).
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The dealer must have a reasonable basis to believe that
the customer is capable of evaluating investment risks and market value
independently; \29\ and
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\29\ MSRB Rule D-15(b).
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The customer must make certain affirmations regarding the
exercise of independent judgment and access to information.\30\
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\30\ MSRB Rule D-15(c).
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As a result of this definition, a dealer making a recommendation to
a natural person with at least $50 million in assets and who otherwise
meets the definition of SMMP, would be required by MSRB Rule G-19 to
conduct reasonable basis and quantitative suitability analyses but not
a customer-specific suitability analysis.
In contrast, Regulation Best Interest applies when a broker-dealer
makes a recommendation to a ``retail customer.'' A ``retail customer''
is a natural person or the legal representative of such natural person
(regardless of net worth) who receives a recommendation from a broker-
dealer and uses that recommendation primarily for personal, family, or
household purposes.\31\ Whenever Regulation Best Interest applies, it
applies in full; there is no exception from the customer-specific care
obligation for high-net worth individuals.
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\31\ 17 CFR 240.15l-1(b)(1).
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As described above, under the proposed amendments to MSRB Rule G-
19, MSRB Rule G-19 would not apply to recommendations subject to
Regulation Best Interest. Accordingly, the proposed rule change
includes an amendment to MSRB Rule G-48(c) stating that the exception
from the customer-specific suitability requirement is available only
when a recommendation is subject to MSRB Rule G-19 and not Regulation
Best Interest.
II. Non-Cash Compensation
MSRB Rule G-20(g) broadly prohibits dealers and their associated
persons from directly or indirectly accepting or making payments or
offers of payments of any non-cash compensation in connection with the
sale and distribution of a primary offering of municipal securities,
subject to certain limited exceptions. Described generally, these
exceptions are:
Gifts that do not exceed $100 per individual per year and
are not preconditioned on achievement of a sales target; \32\
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\32\ MSRB Rule G-20(d)(i).
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Occasional gifts of meals or tickets to theatrical,
sporting, and other entertainments, provided that such gifts are not so
frequent or so extensive as to raise any question of propriety and are
not preconditioned on achievement of a sales target; \33\
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\33\ MSRB Rule G-20(d)(ii).
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Payment or reimbursement by offerors (generally, the
issuer and any advisors to the issuer, the underwriters, and their
affiliates) in connection with training or education meetings, subject
to specified conditions, including that the payment is not conditioned
on achieving a sales target; \34\
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\34\ MSRB Rule G-20(d)(iii).
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Internal non-cash compensation arrangements between the
dealer and its associated persons, subject to specified conditions
including that any non-cash compensation related to a sales contest
must be based on the total production of all associated persons with
respect to all municipal securities within respective product types
distributed by the dealer and credit for those sales must be weighted
equally; \35\ and
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\35\ MSRB Rule G-20(d)(iv).
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Contributions by any person other than the dealer to a
non-cash compensation arrangement between a dealer and its associated
persons, subject to the same conditions for permissible internal non-
cash compensation arrangements, described above.\36\
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\36\ MSRB Rule G-20(d)(v).
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Regulation Best Interest's Conflict of Interest Obligation requires
broker-dealers to establish, maintain and enforce written policies and
procedures reasonably designed to, among other things, identify and
eliminate sales contests, sales quotas, bonuses, and non-cash
compensation that are based on the sale of specific securities or
specific types of securities within a limited period of time.\37\ As
described above, MSRB Rule G-20 permits certain sales contests in
connection with primary offerings. Accordingly, the MSRB is proposing
to clarify in MSRB Rule G-20(g) that any non-cash compensation
permitted by MSRB Rule G-20(g), including any sales contests, must also
be consistent with the applicable requirements of Regulation Best
Interest.
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\37\ 17 CFR 240.15l-1(a)(2)(iii)(D). The Conflict of Interest
Obligation also requires broker-dealers to (1) identify and at a
minimum disclose or eliminate all conflicts of interest associated
with a recommendation of any securities transaction or investment
strategy involving securities to a retail customer; (2) identify and
mitigate any conflicts of interest associated with such
recommendations that create an incentive for a natural person who is
an associated person of a broker-dealer to place the interest of the
broker-dealer or such natural person ahead of the interest of the
retail customer; and (3) identify and disclose any material
limitations placed on the securities or investment strategies
involving securities that may be recommended to a retail customer
and any conflicts of interest associated with such limitations and
prevent such limitations and associated conflicts of interest from
causing the broker-dealer, or a natural person who is an associated
person of the broker-dealer, to make recommendations that place the
interest of the broker-dealer or such natural person ahead of the
interest of the retail customer. 17 CFR 240.15l-1(a)(3)(A)-(C).
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Additionally, in June 1982, the MSRB published interpretive
guidance under MSRB Rule G-20 stating that sales contests offered by an
underwriter to participating members of a syndicate constitute
compensation for services and, therefore, must meet the requirements of
the then-current version of MSRB Rule G-20.\38\ The MSRB proposes to
delete this interpretation from 1982 because, with respect to dealers
that make recommendations to retail customers, such sales contests may
be inconsistent, depending on the particular facts and circumstances,
with the requirements of Regulation Best Interest's Conflict of
Interest Obligation, which requires broker-dealers to establish,
maintain and enforce written policies and procedures reasonably
designed to ``[i]dentify and eliminate any sales contests, sales
quotas, bonuses, and non-cash compensation that are based on the sales
of specific securities or specific types of securities within a limited
period of time.'' \39\ In adopting Regulation Best Interest, the
Commission stated that ``[s]ales contests, sales quotas, bonuses and
non-cash compensation that are based on the sales of specific
securities within a limited period of time create high-pressure
situations for associated persons to increase the sales of specific
securities or specific types of securities within a limited period of
time and thus compromise the best interests of their retail
customers.'' \40\ The MSRB believes the same policy concerns apply with
respect to non-retail customers. Specifically, the high-pressure sales
situations described above have the potential to compromise the best
interests of non-retail customers as well. Accordingly, the Board is
proposing to delete this interpretation.
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\38\ See Rule G-20 Interpretive Guidance, ``Authorization of
Sales Contests'' (June 25, 1982).
\39\ See 17 CFR 240.15l-1(a)(2)(iii).
\40\ Regulation Best Interest Adopting Release, 84 FR at 33331.
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III. Books and Records
A. MSRB Rule G-8
MSRB Rule G-8 directs dealers to make and keep current specified
books and records to the extent they are applicable to a dealer's
business. For
[[Page 28086]]
dealers subject to Exchange Act Rule 17a-3, MSRB Rule G-8(f) provides
that compliance with Exchange Act Rule 17a-3 under the Act will be
deemed compliance with MSRB Rule G-8, provided that certain records
required by MSRB Rule G-8 must be maintained in any event. Exchange Act
Rule 17a-3 requires broker-dealers to make and keep current specified
books and records and provides that for purposes of transactions in
municipal securities by dealers, compliance with MSRB Rule G-8 will be
deemed compliance with Exchange Act Rule 17a-3.\41\
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\41\ 17 CFR 240.17a-3.
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When the Commission adopted Regulation Best Interest, it amended
Exchange Act Rule 17a-3 to require broker-dealers to maintain a record
of all information collected from and provided to a retail customer
pursuant to Regulation Best Interest, along with the identity of each
natural person who is an associated person, if any, responsible for the
account.\42\ The Commission also adopted a related requirement for
broker-dealers to provide retail investors with Form CRS \43\ and
amended Exchange Act Rule 17a-3 to require broker-dealers to maintain a
record of the date each Form CRS was provided.\44\
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\42\ 17 CFR 240.17a-3(a)(35).
\43\ 17 CFR 240.17a-14.
\44\ 17 CFR 240.17a-3(a)(24).
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Because dealers may comply with Exchange Act Rule 17a-3 for
purposes of transactions in municipal securities by complying with MSRB
Rule G-8, the proposed rule change includes amendments to MSRB Rule G-8
that parallel the new Exchange Act Rule 17a-3 requirements relating to
Regulation Best Interest and Form CRS. These amendments are necessary
to ensure that dealers subject to Regulation Best Interest and the Form
CRS requirement are required to maintain the records regardless of
which books and records rule they comply with.
B. MSRB Rule G-9
MSRB Rule G-9 prescribes the periods of time that records must be
preserved by dealers. Similar to MSRB Rule G-8, MSRB Rule G-9 provides
that dealers who are subject to and comply with Exchange Act Rules 17a-
3 and 17a-4 under the Act will be deemed to comply with MSRB Rule G-9,
provided that certain specified records are preserved for the
applicable time periods specified in Rule G-9 in any event. Exchange
Act Rule 17a-4 under the Act sets forth record preservation
requirements for broker-dealers and, like Exchange Act Rule 17a-3,
provides that for purposes of transactions in municipal securities by
dealers, compliance with MSRB Rule G-9 will be deemed compliance with
Exchange Act Rule 17a-4.
The Commission amended Exchange Act Rule 17a-4 to require broker-
dealers to retain the records related to Regulation Best Interest and
Form CRS described above, as well as a copy of each Form CRS for six
years.\45\ Accordingly, the proposed rule change includes amendments to
MSRB Rule G-9 that parallel these new requirements. These amendments
are necessary to ensure that dealers are subject to similar
requirements regardless of which record preservation rule they comply
with.
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\45\ 17 CFR 240.17a-4(e)(5), (e)(10).
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2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2) of the Act,\46\ which provides that:
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\46\ 15 U.S.C. 78o-4(b)(2).
The Board shall propose and adopt rules to effect the purposes
of this title with respect to transactions in municipal securities
effected by brokers, dealers, and municipal securities dealers and
advice provided to or on behalf of municipal entities or obligated
persons by brokers, dealers, municipal securities dealers, and
municipal advisors with respect to municipal financial products, the
issuance of municipal securities, and solicitations of municipal
entities or obligated persons undertaken by brokers, dealers,
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municipal securities dealers, and municipal advisors.
Section 15B(b)(2)(C) of the Act \47\ provides that the MSRB's rules
shall:
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\47\ 15 U.S.C. 78o-4(b)(2)(C).
[B]e 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 consistent with Section 15B(b)(2)(C) of
the Act because it is designed to prevent fraudulent and manipulative
practices by dealers, foster cooperation and coordination among
regulators, promote just and equitable principles of trade, and protect
investors.
I. Statutory Basis for Amendments Related to Suitability
The proposed amendments to MSRB Rules G-19 and G-48 are consistent
with Section 15B(b)(2) of the Act because the amendments will foster
cooperation and coordination with regulators, facilitate transactions
in municipal securities and municipal financial products, remove
impediments to and perfect the mechanism of a free and open market in
municipal securities and municipal financial products, and protect
investors, as described below.
A. Eliminating the Applicability of MSRB Rule G-19 to Recommendations
Subject to Regulation Best Interest
The proposed amendments to MSRB Rule G-19 eliminating the
applicability of MSRB Rule G-19's suitability requirements to
recommendations subject to Regulation Best Interest will foster
cooperation and coordination with regulators by harmonizing MSRB rules
with the Commission's Regulation Best Interest. Consequently, these
amendments will also facilitate transactions in municipal securities
and municipal financial products and remove impediments to and perfect
the mechanism of a free and open market in municipal securities and
municipal financial products by eliminating potential regulatory
duplication and complexity, which will ease potential regulatory
burdens on dealers associated with complying with two regulatory
schemes. Dealers will be able to more efficiently analyze and
operationalize compliance with Regulation Best Interest and MSRB Rule
G-19. For example, dealers can proceed in conforming their municipal
securities activities to Regulation Best Interest without engaging in a
more extensive analysis of how the obligations of Regulation Best
Interest may overlap, exceed, or differ from those of MSRB Rule G-19.
Consequently, dealers will be able to more efficiently execute
transactions in the municipal securities market with greater regulatory
certainty under the proposed amendments.
These proposed amendments to MSRB Rule G-19 will also protect
investors by ensuring dealers comply with the heightened regulatory
requirements of the Commission's Regulation Best Interest, while
maintaining the existing regulatory scheme under MSRB Rule G-19 for
transactions not subject to Regulation Best Interest. As stated by the
Commission in its adopting of Regulation Best Interest:
The enhancements contained in Regulation Best Interest are
designed to improve investor protection by enhancing the quality of
broker-dealer recommendations to retail customers and reducing the
potential harm to
[[Page 28087]]
retail customers that may be caused by conflicts of interest.\48\
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\48\ Regulation Best Interest Adopting Release, 83 FR at 33321.
For the same reasons, the MSRB believes that these amendments in
the proposed rule change are consistent with the investor protection
requirements of Section 15B(b)(2)(C) of the Act.\49\
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\49\ 15 U.S.C. 78o-4(b)(2)(C).
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B. Aligning MSRB Rule G-19's Quantitative Suitability Obligation to the
Requirements of Regulation Best Interest
The proposed amendments to MSRB Rule G-19 aligning MSRB Rule G-19's
quantitative suitability obligation to the requirements of Regulation
Best Interest will foster cooperation and coordination with regulators
by harmonizing MSRB rules with the Commission's Regulation Best
Interest. Consequently, these amendments will also facilitate
transactions in municipal securities and municipal financial products
and remove impediments to and perfect the mechanism of a free and open
market in municipal securities and municipal financial products by
eliminating potential regulatory duplication and complexity, which will
ease potential regulatory burdens on dealers associated with complying
with two regulatory schemes. Conforming the quantitative suitability
requirement of MSRB Rule G-19 with Regulation Best Interest's Care
Obligation will allow dealers to more efficiently operationalize
compliance with their obligations under both requirements, and to more
efficiently execute transactions in the municipal securities market
with greater regulatory certainty.
The proposed amendment to the quantitative suitability obligation
of MSRB Rule G-19 will also protect investors by heightening the
requirements of MSRB Rule G-19 for recommendations not subject to
Regulation Best Interest.\50\ Accordingly, the MSRB believes that these
amendments are consistent with the investor protection requirements of
Section 15B(b)(2)(C) of the Act.\51\
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\50\ See, e.g., Regulation Best Interest Adopting Release, 83 FR
at 33321.
\51\ 15 U.S.C. 78o-4(b)(2)(C).
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C. Amending MSRB Rule G-48(c) To State That the Exception From the
Customer-Specific Suitability Requirement Is Available Only When a
Recommendation Is Subject to MSRB Rule G-19
The proposed amendments to MSRB Rule G-48(c) to state that the
exception from the customer-specific suitability requirement is
available only when a recommendation is subject to MSRB Rule G-19 will
foster cooperation and coordination with regulators by harmonizing MSRB
rules with Regulation Best Interest. Consequently, these amendments
will also facilitate transactions in municipal securities and municipal
financial products and remove impediments to and perfect the mechanism
of a free and open market in municipal securities and municipal
financial products by eliminating potential regulatory duplication and,
thereby, ease potential regulatory burdens on dealers associated with
complying with two regulatory schemes. More specifically, dealers will
not have to analyze whether aspects of complying with MSRB Rule G-19's
suitability obligations in some circumstances could fail to satisfy the
requirements of Regulation Best Interest. Consequently, dealers will be
able to more efficiently execute transactions in the municipal
securities market with greater regulatory certainty under the proposed
amendments.
II. Statutory Basis for Amendments Related to Non-Cash Compensation
The proposed amendments to MSRB Rule G-20 related to non-cash
compensation are consistent with Section 15B(b)(2) of the Act because
the amendments will foster cooperation and coordination with regulators
by harmonizing MSRB rules. Consequently, these amendments will also
facilitate transactions in municipal securities and municipal financial
products and remove impediments to and perfect the mechanism of a free
and open market in municipal securities and municipal financial
products by eliminating potential regulatory duplication and, thereby,
ease potential regulatory burdens on dealers associated with complying
with two regulatory schemes. Consequently, dealers will be able to more
efficiently execute transactions in the municipal securities market
with greater regulatory certainty under the proposed amendments.
III. Statutory Basis for Amendments Related to Books and Records
The proposed amendments to MSRB Rules G-8 and G-9 are consistent
with Section 15B(b)(2) of the Act because the amendments will foster
cooperation and coordination with regulators, facilitate transactions
in municipal securities and municipal financial products, remove
impediments to and perfect the mechanism of a free and open market in
municipal securities and municipal financial products, and protect
investors.
A. Amending MSRB Rule G-8 to Align With Exchange Act Rule 17a-3
Because dealers may comply with Exchange Act Rule 17a-3 for
purposes of transactions in municipal securities by complying with MSRB
Rule G-8, the proposed rule change includes amendments to MSRB Rule G-8
that parallel the new Exchange Act Rule 17a-3 requirements relating to
Regulation Best Interest and Form CRS. These amendments will foster
cooperation and coordination with regulators by harmonizing MSRB rules
with the Commission's record-keeping requirements under Exchange Rule
Act Rule 17a-3, as amended by Regulation Best Interest. Consequently,
these amendments will also facilitate transactions in municipal
securities and municipal financial products and remove impediments to
and perfect the mechanism of a free and open market in municipal
securities and municipal financial products by providing greater
regulatory certainty to dealers in the application of record-keeping
requirements associated with municipal securities transactions. In this
way, the proposed rule change will ease certain regulatory burdens on
dealers when attempting to comply with the record-keeping requirements
under MSRB Rule G-8 and Exchange Act Rule 17a-3.
The proposed amendments to MSRB Rule G-8 will also protect
investors by requiring dealers to create and maintain books and
records, as applicable, to demonstrate compliance with Regulation Best
Interest and the SEC's Form CRS requirements.\52\ These proposed
amendments are coordinated with SEC books and records requirements to
ensure that dealers are subject to similar requirements, whether under
MSRB rules or the rules of the SEC.
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\52\ See Regulation Best Interest Adopting Release, 83 FR at
33398 (``The Commission notes that the proposed new requirements of
Rule 17a-3 are not designed to create additional, standalone burdens
for broker-dealers but instead to provide a means by which they can
demonstrate, and Commission examiners can confirm, their compliance
with the new substantive requirements of Regulation Best
Interest.'').
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B. Amending MSRB Rule G-9 To Align With Exchange Act Rule 17a-4
In its adoption of Regulation Best Interest, the Commission amended
Exchange Act Rule 17a-4 to require dealers to retain the records
related to Regulation Best Interest and Form CRS described above, as
well as a copy of
[[Page 28088]]
each Form CRS for six years.\53\ Accordingly, the proposed rule change
includes amendments to MSRB Rule G-9 that parallel these new
requirements. These amendments will foster cooperation and coordination
with regulators by harmonizing MSRB rules with the Commission's record-
keeping requirements under Exchange Rule Act Rule 17a-4, as amended by
Regulation Best Interest. These amendments will also facilitate
transactions in municipal securities and municipal financial products
and remove impediments to and perfect the mechanism of a free and open
market in municipal securities and municipal financial products by
providing greater regulatory certainty to dealers in the application of
record-keeping requirements associated with municipal securities
transactions. In this way, the proposed rule change will ease
regulatory burdens on dealers when complying with the record-keeping
requirements under MSRB Rule G-9 and Exchange Act Rule 17a-4.
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\53\ 17 CFR 240.17a-4(e)(5), (e)(10). As described above,
registered broker-dealers and investment advisers are required to
provide retail investors with a relationship summary on new Form
CRS. Pursuant to this requirement, ``[r]etail investors will receive
a relationship summary at the beginning of a relationship with a
firm, communications of updated information following a material
change to the relationship summary, and an updated relationship
summary upon certain events.'' Exchange Act Release No. 86032 (June
5, 2019), 84 FR 33492 (July 12, 2019).
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The proposed amendments to MSRB Rule G-9 will protect investors by
requiring dealers to create and maintain books and records, as
applicable, to demonstrate compliance with Regulation Best Interest and
the SEC's Form CRS requirements.\54\ These proposed amendments are
coordinated with SEC books and records requirements to ensure that
dealers are subject to similar requirements, whether under MSRB rules
or the rules of the SEC.
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\54\ See Regulation Best Interest Adopting Release, 83 FR at
33400 (``. . . the Commission believes it is important, including
for examination purposes, that broker-dealers separately retain
records that specifically demonstrate compliance with Regulation
Best Interest and new paragraph (a)(35) of Rule 17a-3 . . .'').
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B. Self-Regulatory Organization's Statement on Burden on Competition
Section 15B(b)(2)(C) of the Exchange Act requires that MSRB rules
not be designed to impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act.\55\ As
discussed below, the proposed rule change would align MSRB rules with,
or otherwise clarify the applicability of MSRB rules in relation to,
the requirements of Regulation Best Interest. For those dealers that
are already subject to Regulation Best Interest, the MSRB does not
believe that the proposed rule change would result in any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Exchange Act because the proposed rule change would
apply equally to all these dealers.\56\
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\55\ 15 U.S.C. 78o-4(b)(2)(C).
\56\ For bank dealers that are not subject to Regulation Best
Interest, to the extent these bank dealers are currently making
recommendations of municipal securities to retail customers, the
MSRB believes that a potential regulatory imbalance between bank
dealers and dealers other than bank dealers likely will exist as of
the compliance date of Regulation Best Interest. However, the MSRB
plans to issue a Request for Comment on whether it will apply the
requirements of Regulation Best Interest to bank dealers through
further amendments to MSRB rules.
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1. Need for Proposed Rule Change
The adoption of Regulation Best Interest necessitates the proposed
rule change consisting of amendments to MSRB Rules G-8, G-9, G-19, G-20
and G-48 described above. The proposed rule change is needed to
harmonize Regulation Best Interest and relevant MSRB rules, to clarify
and enhance dealers' regulatory obligations under MSRB rules when
making recommendations involving municipal securities to retail
investors, and thus to enhance investor protection. In addition, the
proposed rule change is designed to better harmonize MSRB requirements
with relevant FINRA rules.
Specifically, the proposed rule change would eliminate the
applicability of Rule G-19 with regard to recommendations subject to
Regulation Best Interest, align Rule G-19's quantitative suitability
obligation with the requirements of Regulation Best Interest, amend
Rule G-48 to make clear that the exception from the requirement to
conduct a customer-specific suitability obligation when making a
recommendation to an SMMP does not apply to recommendations that are
subject to Regulation Best Interest, and align Rule G-20's permissible
non-cash compensation to the requirements of Regulation Best Interest.
In addition, the proposed rule change includes amendments to MSRB Rule
G-8 and Rule G-9 on books and records that parallel the new Exchange
Act Rule 17a-3 and 17a-4 requirements related to Regulation Best
Interest and Form CRS under the Exchange Act.
2. Baseline for Evaluation
In order to evaluate the potential economic impact of any proposed
rule change, a baseline must be established as a point of reference.
This baseline enables a comparison to the expected state with the
proposed rule change in effect. The economic impact of the proposed
change is therefore viewed as the difference between the baseline state
and the expected state. Typically, the baseline is defined as the
present state before any proposed rule change is approved and
implemented. For dealers subject to Regulation Best Interest, however,
the future state after the Regulation Best Interest compliance date is
a more appropriate baseline, as the MSRB's proposed rule change is in
response to and closely tied to the future implementation of Regulation
Best Interest.
3. Alternative Approaches
The MSRB identified and reviewed two options as alternatives to the
changes outlined previously. In one alternative approach, the MSRB
would eliminate MSRB Rule G-19 on suitability. However, Regulation Best
Interest is only applicable to recommendations made to retail customers
and is not applicable to recommendations made to other customers, such
as institutions. If Rule G-19 were eliminated, no suitability rule
would apply when dealers make recommendations regarding municipal
securities that are not covered by Regulation Best Interest. In
addition, Regulation Best Interest does not apply to bank dealers,
while MSRB Rule G-19 applies to all dealers, including bank dealers.
Consequently, this alternative would likely reduce protection to
investors and thus be inferior to the proposed rule change. The second
alternative is to require bank dealers to also comply with Regulation
Best Interest, in addition to the proposed changes described above. As
noted above, the MSRB plans to issue a Request for Comment on applying
the requirements of Regulation Best Interest to bank dealers through
further amendments to MSRB rules to further inform its consideration of
this approach.
4. Benefits, Costs and Effect on Competition
Pursuant to the MSRB's policy on economic analysis in rulemaking,
economic analysis should address the likely costs and benefits of the
draft amendments. The economic analysis assesses the draft amendments
as if they were fully implemented against the
[[Page 28089]]
context of the economic baselines discussed above. In considering these
costs, benefits, and impacts, the Board addresses reasonable
alternatives, where applicable.
The SEC estimated in its filing that there was a total of 2,766
broker-dealers who had retail customers at the end of 2018. By
comparison, the MSRB's Real-Time Transaction Reporting System
(``RTRS'') trading records indicate that there are 768 dealers that are
subject to Regulation Best Interest and had at least one municipal
security trade with customers in 2019 with a trade size of $100,000 par
amount or lower, a proxy for retail-sized trades.\57\
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\57\ While not a perfect proxy for a retail trade, the MSRB
believes that the relatively low par amount is more indicative of a
trade with a retail customer than an institutional investor.
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Since all dealers other than bank dealers are required to be in
full compliance with Regulation Best Interest, the cost and benefit
assessment focuses on the incremental impact of the proposed MSRB rule
changes, beyond the costs and benefits of compliance with Regulation
Best Interest.
A. Benefits
The MSRB believes that the proposed rule change would benefit
dealers by clarifying and harmonizing their regulatory obligations
under MSRB rules considering the upcoming implementation of Regulation
Best Interest. Dealer compliance with the proposed rule change would
provide greater certainty to dealers about when Regulation Best
Interest applies rather than MSRB Rule G-19. This would in turn enhance
investor protection as a result of dealers being clearer about when
Regulation Best Interest applies.
The proposed rule change would also foster cooperation and
coordination by harmonizing MSRB rules with Regulation Best Interest
and related FINRA rules. The MSRB generally considers it desirable and
efficient to improve the clarity and consistency of MSRB rules in
relation to the rules of other regulators, particularly to the extent
such changes may eliminate inconsistencies between rules of different
regulators, ease the burdens of dealer compliance and lessen instances
of confusion among dealers without reducing investor protections.
Specifically, the proposed rule change will allow dealers to conform
their policies and procedures and related business practices to
Regulation Best Interest, MSRB Rule G-19 and FINRA's suitability rule
without engaging in a more extensive analysis of how the obligations of
each rule may overlap, exceed, or differ from each other.
B. Costs
For dealers, the MSRB believes the costs of complying with the
proposed rule change that are incremental to the already allotted and
absorbed costs of complying with Regulation Best Interest will be
minor, given that dealers other than bank dealers are assumed to be in
full compliance with Regulation Best Interest already when the proposed
MSRB rule changes become effective. Bank dealers would not incur costs
in complying with Regulation Best Interest and would continue to comply
with MSRB Rule G-19, as amended to remove the control element from the
quantitative suitability obligation.
The proposed rule change would trigger one-time policy and
procedure revisions by all dealers (including bank dealers) in relation
to the changes to MSRB Rule G-19's quantitative suitability
requirement. Therefore, there would be upfront costs associated with
revising the policies and procedures to comply with the new
requirements. It is possible that the one-time revision cost may be
proportionately higher for smaller-size dealers than larger-size
dealers as a smaller firm may have to rely on outside legal counsel and
technology support to review changes on policies and procedures. The
MSRB, however, believes the revisions of policies and procedures by
dealers would not be overly burdensome or expensive, and on balance,
the aggregate benefits expected to accumulate to dealers and retail
investors associated with the proposed rule change should outweigh the
one-time policy and procedure revision costs over time.\58\
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\58\ The proposed amendments to MSRB Rules G-8 and G-9 would not
impose costs on dealers because these amendments impose no new
requirements on dealers beyond those already imposed by Rules 17a-3
and 17a-4, as amended in light of Regulation Best Interest and the
Form CRS requirement. Dealers not subject to Regulation Best
Interest or the Form CRS requirement would not be required to
maintain these records under MSRB Rules G-8 and G-9, as amended by
the proposed rule change. Similarly, the proposed amendment to MSRB
Rule G-20 would not impose costs on dealers because it imposes no
new requirements on dealers beyond those already imposed by
Regulation Best Interest. The proposed deletion of the
interpretation of MSRB Rule G-20 would similarly impose no costs
because it does not impose requirements on dealers beyond those of
MSRB Rule G-20. Finally, the proposed amendment to MSRB Rule G-48
states that the existing exception to the MSRB Rule G-19 customer
specific suitability obligation is only available in circumstances
when MSRB Rule G-19, rather than Regulation Best Interest, applies
and imposes no new obligations on dealers. Accordingly, this
proposed amendment should not impose costs on dealers.
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C. Effect on Competition, Efficiency and Capital Formation
The MSRB believes the proposed rule change may improve dealers'
regulatory certainty by promoting clarity and consistency on issues
related to suitability and permissible non-cash compensation. The MSRB
also believes the proposed rule change would not result in undue burden
on competition for dealers subject to Regulation Best Interest, as the
proposed rule change would have a relatively mild impact on dealers who
are in full compliance with Regulation Best Interest. For these
dealers, the incremental impact of the proposed rule change should be
limited to the need to update their policies and procedures to reflect
the removal of the control element from the quantitative suitability
obligation of MSRB Rule G-19, as noted above. Since this proposed
amendment to Rule G-19 conforms with the care obligation of Regulation
Best Interest, dealers likely have already implemented necessary
changes to policies and procedures to comply with the obligation in the
context of Regulation Best Interest.
For bank dealers that are not subject to Regulation Best Interest,
to the extent these bank dealers are currently offering recommendations
of municipal securities to retail customers, the MSRB believes that
they could gain an advantage over dealers (other than bank dealers) by
incurring less compliance costs, unless MSRB rules apply Regulation
Best Interest to bank dealers. While this cohort of bank dealers makes
up a relatively small percentage of all dealers that transact in
municipal securities,\59\ the MSRB plans to issue a Request for Comment
on whether it will apply Regulation Best Interest to bank dealers
through further amendments to MSRB rules to address this regulatory
imbalance.
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\59\ See, e.g., Broker-Dealers and Bank Dealers Registered with
the MSRB, available at http://www.msrb.org/BDRegistrants.aspx. Using
retail-sized dealer-to-customer trades (par value at $100,000 or
less in this case) from MSRB's RTRS database as a proxy for the
degree of interaction with retail customers, the MSRB found that
only 17 bank dealers conducted at least one retail-sized trade in
2019.
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The MSRB believes the proposed rule change would not impose
barriers on capital formation, as the intention is to harmonize MSRB
rules with Regulation Best Interest and related FINRA rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Board did not solicit comment on the proposed rule change.
Therefore,
[[Page 28090]]
there are no comments on the proposed rule change received from
members, participants, or others.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period of up to 90 days (i) as
the Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MSRB-2020-02 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-2020-02. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for 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-2020-02 and should be submitted on
or before June 2, 2020.
For the Commission, pursuant to delegated authority.\60\
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\60\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10061 Filed 5-11-20; 8:45 am]
BILLING CODE 8011-01-P