[Federal Register: May 22, 2008 (Volume 73, Number 100)]
[Notices]
[Page 29799-29800]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22my08-94]
[[Page 29799]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57830; File No. SR-MSRB-2008-04]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Proposed Rule Change Relating to MSRB Rule
G-34, CUSIP Numbers and New Issue Requirements, To Require Underwriter
Registration and Testing With Depository Trust and Clearing
Corporation's New Issue Information Dissemination System
May 16, 2008.
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 May 9, 2008, the Municipal Securities Rulemaking Board (``MSRB'')
filed with the Securities and Exchange Commission (``Commission'' or
``SEC'') the proposed rule change as described in Items I, II, and III
below, which Items have been substantially 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 is filing with the Commission a proposed rule change
consisting of changes to Rule G-34, CUSIP Numbers and New Issue
Requirements. The proposed rule change would require underwriters to
register and conduct tests with the Depository Trust and Clearing
Corporation's New Issue Information Dissemination System. The text of
the proposed rule change is available on the MSRB's Web site (http://
www.msrb.org), 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The proposed rule change would require underwriters to register and
conduct tests with the Depository Trust and Clearing Corporation's
(``DTCC'') New Issue Information Dissemination System (``NIIDS''). The
proposed rule change would help ensure that dealers are prepared for
the September 30, 2008 effective date of changes to other MSRB rules to
require underwriters to participate in NIIDS.\3\ Accordingly, the
proposed rule change would require all brokers, dealers and municipal
securities dealers (collectively ``dealers'') that have acted as
underwriter \4\ in the last year on a new issue of municipal securities
with nine months or greater effective maturity to register to use NIIDS
with DTCC and successfully test NIIDS prior to September 15, 2008.\5\
On an ongoing basis the proposed rule change would require dealers to
register to use NIIDS with DTCC and successfully test NIIDS prior to
acting as underwriter on a new issue of municipal securities with nine
months or greater effective maturity.
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\3\ See Securities Exchange Act Release No. 57750 (May 1, 2008),
73 FR 25815 (May 7, 2008).
\4\ Rule G-34 defines ``underwriter'' very broadly to include a
dealer acting as a placement agent as well as any dealer purchasing
new issue securities from the issuer as principal. If there is an
underwriting syndicate, the lead manager is considered to be the
``underwriter'' for purposes of Rule G-34.
\5\ Many underwriters have already registered with DTCC and
initiated NIIDS testing. The proposed rule change would place a
deadline on underwriters to register with DTCC and complete NIIDS
testing. Underwriters that have already satisfied the requirements
of the proposed rule change prior to SEC approval are not required
to re-register or re-test.
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DTCC NIIDS Implementation Plan
NIIDS is a centralized system for collecting and communicating new
issue securities information. NIIDS will act as a central collection
point for standardized electronic files of new issue information
provided by underwriters that will be disseminated in real-time to
information vendors. NIIDS is a component of a larger initiative at
DTCC to implement an updated system for making new issues depository
eligible (``UW SOURCE''). While NIIDS will provide an improved
mechanism for disseminating the new issue information necessary for
trade processing, information submitted into NIIDS also will be used in
UW SOURCE for making new issues depository eligible.
Beginning September 2, 2008, DTCC will require underwriters to use
NIIDS in connection with the filing of an application for depository
eligibility in UW SOURCE for new issues of municipal securities.\6\ To
allow underwriters to gain experience with UW SOURCE in advance of
September 2, 2008, DTCC has made UW SOURCE available on an optional
basis to allow all registered underwriters to test their ability to use
UW SOURCE, including the NIIDS component. DTCC has developed
educational training materials on UW SOURCE and NIIDS that are
available on DTCC's Web site.
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\6\ See Securities Exchange Act Release No. 57768 (May 2, 2008),
73 FR 26181 (May 8, 2008).
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MSRB NIIDS Registration Requirement
Under the proposed rule change, all dealers that underwrite
municipal securities with nine months or greater effective maturity
would be required to register to use NIIDS with DTCC. Registration with
DTCC is required in order for an underwriter to gain access to UW
SOURCE to test NIIDS.
MSRB NIIDS Testing Requirement
Once an underwriter has completed DTCC NIIDS registration
requirements, the underwriter is allowed to submit test data into
NIIDS. DTCC has published a test plan that underwriters can use to gain
familiarity with NIIDS. DTCC's UW SOURCE Testing and Implementation
Plan is available on DTCC's Web site.
DTCC's UW SOURCE Testing and Implementation Plan includes the
capability for underwriters to test the submission of information for
several different types of securities. The proposed rule change only
requires underwriters to test submitting information about securities
with nine months or greater effective maturity since the changes to
MSRB rules to require underwriter participation with NIIDS that become
effective on September 30, 2008 provide an exception for short-term
instruments with less than nine months in effective maturity.
Two methods of inputting new issue information into NIIDS are
provided by DTCC: (i) NIIDS Web Interface and (ii) NIIDS ``Autofeed''
Interface. The NIIDS Web Interface allows underwriters to input
information about a new issue using an Internet portal manually or by
uploading a formatted Excel spreadsheet. The proposed rule change would
require all underwriters to
[[Page 29800]]
submit two test new issues using the NIIDS Web Interface.
The NIIDS Autofeed Interface allows underwriters to establish
computer-to-computer connections with DTCC either directly or through a
vendor to submit automated files directly to NIIDS. For underwriters
planning to use the NIIDS Autofeed Interface, the proposed rule change
would require underwriters to submit two test new issues using
computer-to-computer connections.
DTCC will monitor underwriter testing and provide status updates to
the MSRB. For purposes of determining whether an underwriter has
successfully tested the NIIDS Web Interface or the NIIDS Autofeed
Interface, underwriters must be able to submit a test new issue in
NIIDS and achieve ``Trade Eligibility'' status in less than two hours.
To assist in monitoring whether a test was successful, underwriters
should enter a ``Time of Formal Award'' in NIIDS that reflects the time
that the underwriter begins submitting data into NIIDS so that the Time
of Formal Award can be compared with the time at which Trade
Eligibility status is achieved.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act,\7\ which provides that the MSRB's
rules shall:
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\7\ 15 U.S.C. 78o-4(b)(2)(C).
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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, to remove
impediments to and perfect the mechanism of a free and open market
in municipal securities, and, in general, to protect investors and
the public interest.
The MSRB believes that the proposed rule change is consistent with
the Act because it will allow the municipal securities industry to
produce more accurate trade reporting and transparency.
B. Self-Regulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act since it would apply equally to
all brokers, dealers and municipal securities dealers.
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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date 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 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 e-mail to rule-comments@sec.gov. Please include
File Number SR-MSRB-2008-04 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MSRB-2008-04. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (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 inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the MSRB. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-MSRB-2008-04 and should be
submitted on or before June 12, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary. 8
[FR Doc. E8-11434 Filed 5-21-08; 8:45 am]
BILLING CODE 8010-01-P