On April 30, 2002, pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), and Rule 19b-4 thereunder, the Municipal Securities Rulemaking Board (“Board” or “MSRB”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) a proposed rule change (File No. SR-MSRB-2002-05). The proposed rule change relating to electronic mail contacts.
17 CFR 240.19b-4.
The Commission published the proposed rule change for comment in the Federal Register on May 6, 2002. The Commission did not receive comment letters relating to the forgoing proposed rule change. This order approves the Board's proposal.
See Release No. 34-45881 (May 14, 2002), 67 FR 34507.
I. Description of the Proposed Rule Change
The events of September 11th, as well as the weeks that followed, emphasized the importance of, and need for, a formalized business continuity plan that includes an efficient and reliable means of official communication between regulators and the industry. The Board's establishment of a reliable method for electronic communication will allow it to efficiently alert dealers to official communications, including time-sensitive developments, rule changes, notices, etc., and will facilitate dealers' internal distribution of such information. To ensure that all MSRB communications continue to reach each broker, dealer and municipal securities dealer, the MSRB proposed the creation of Rule G-40, on Electronic Mail Contacts, and amendments to Rule G-8, on Books and Records to be Made by Brokers, Dealers and Municipal Securities Dealers, and Rule G-9, on Preservation of Records.
Paragraph (a) of Rule G-40 requires that each dealer appoint an “Electronic Mail Contact” to serve as its official contact person for purposes of communicating with the MSRB, and that such person be a registered municipal securities principal of the dealer. Paragraph (b) requires that each dealer, upon completion of its Rule A-12 submissions and assignment of an MSRB Registration Number, submit by mail to the MSRB a completed Form G-40 setting forth the dealer's name, date, MSRB Registration Number, name of its E-mail Contact and his/her e-mail address, telephone number and Individual Central Registration Depository (CRD) Number, and the name, title, signature and telephone number of the person who prepared the Form G-40. Paragraph (b) also provides that the dealer may change its E-mail Contact or other information previously submitted by sending an amended Form G-40 to the MSRB by e-mail. Paragraph (c) requires each dealer to update information on its E-mail Contact as periodically requested and prescribed by the MSRB and to submit such information to the MSRB by e-mail.
Rule A-12, on initial fee, requires each dealer, prior to effecting any transaction in or inducing or attempting to induce the purchase or sale of any municipal security, to pay to the MSRB an initial fee of $100, accompanied by a written statement setting forth the dealer's name, address and SEC registration number.
Upon Commission approval of the proposed rule change, the MSRB will contact its current list of dealers (since these dealers will have previously satisfied their Rule A-12 submissions) to obtain completed Forms G-40. Thereafter, any new dealer will be required to send its initial Form G-40 by mail when the dealer completes its Rule A-12 submissions, as noted above.
The MSRB will assign passwords in order to limit access to each dealer's Form G-40 and to maintain the integrity of the information contained therein. Therefore, each dealer will be required to submit its initial Form G-40 by mail. The MSRB will then issue a password to the designated E-mail Contact that will be used to electronically submit to the MSRB any required updates and amendments to the form.
The proposed rule change also amends Rule G-8, on books and records, to require that dealers maintain records reflecting copies of Form G-40 and any amended forms, as required by Rule G-40. The proposed rule change amends Rule G-9, on preservation of records, to require that dealers retain these records for a period of three years.
II. Summary of Comments
The Commission did not receive comment letters relating to this proposal.
III. Discussion
The Commission must approve a proposed MSRB rule change if the Commission finds that the proposal is consistent with the requirements set forth under the Exchange Act and the rules and regulations thereunder, which govern the MSRB. The language of section 15B(b)(2)(C) of the Exchange Act requires that the MSRB's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principals of trade, to foster cooperation and coordination with persons engaged in regulating, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national system, and, in general, to protect investors and the public interest.
Additionally, in approving this rule, the Commission notes that it has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f).
15 U.S.C. 78o-4(b)(2)(C).
After careful review, the Commission finds that the Board's proposed rule change consisting of the creation of Rule G-40, on Electronic Mail Contacts, and amendments to Rule G-8, on Books and Records to be Made by Brokers, Dealers and Municipal Securities Dealers, and Rule G-9, on Preservation of Records, meets the requisite statutory standard. The Commission believes that this proposed rule change is consistent with the requirements of the Act, and the rules and regulations thereunder. In addition, the Commission finds that the proposed rule is consistent with the requirements of section 15B(b)(2)(C) of the Act, as set forth above.
IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act, that the proposed rule change (File No. MSRB-2002-05) be and hereby is, approved.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-14947 Filed 6-12-02; 8:45 am]
BILLING CODE 8010-01-P