80 FR 11706 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Amendment No. 1 and Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change Consisting of Proposed Amendments to MSRB Rules G-1, on Separately Identifiable Department or Division of a Bank; G-2, on Standards of Professional Qualification; G-3, on Professional Qualification Requirements; and D-13, on Municipal Advisory Activities
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 42 (March 4, 2015)
Federal Register Volume 80, Issue 42 (March 4, 2015)
| Page Range | 11706-11712 | |
| FR Document | 2015-04431 |
[Federal Register Volume 80, Number 42 (Wednesday, March 4, 2015)] [Notices] [Pages 11706-11712] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-04431] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74384; File No. SR-MSRB-2014-08] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Amendment No. 1 and Amendment No. 2 and Order Granting Accelerated Approval of a Proposed Rule Change Consisting of Proposed Amendments to MSRB Rules G-1, on Separately Identifiable Department or Division of a Bank; G-2, on Standards of Professional Qualification; G-3, on Professional Qualification Requirements; and D-13, on Municipal Advisory Activities February 26, 2015. I. Introduction On November 18, 2014, the Municipal Securities Rulemaking Board (the ``MSRB'' or ``Board'') filed with the Securities and Exchange Commission (the ``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change consisting of proposed amendments to MSRB Rules G-1, on separately identifiable department or division of a bank; G-2, on standards of professional qualification; G- 3, on professional qualification requirements; and D-13, on municipal advisory activities (the ``proposed rule change''). The proposed rule change was published for comment in the Federal Register on December 5, 2014.\3\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ Securities Exchange Act Release No. 73708 (December 1, 2014), 79 FR 72225 (December 5, 2014) (the ``Proposing Release''). --------------------------------------------------------------------------- The Commission received five comment letters on the proposed rule change.\4\ On February 5, 2015, the MSRB submitted a response to the comments on the proposed rule change \5\ and filed Amendment No. 1 (``Amendment No. 1'').\6\ --------------------------------------------------------------------------- \4\ See Letters from Anonymous, dated December 25, 2014; Leslie M. Norwood, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association (``SIFMA''), dated December 26, 2014 (``SIFMA Letter''); Anonymous Attorney, on behalf of a registered investment advisor and municipal advisor (``Anonymous Attorney''), dated December 26, 2014 (``Anonymous Letter''); Tamara K. Salmon, Senior Associate Counsel, Investment Company Institute (``ICI''), dated December 29, 2014 (``ICI Letter''); and Terri Heaton, President, National Association of Municipal Advisors (``NAMA''), dated January 27, 2015 (``NAMA Letter No. 1''). \5\ See Letter to Secretary, Commission, from Lawrence P. Sandor, Deputy General Counsel, MSRB, dated February 5, 2015 (``MSRB Response Letter No. 1''). \6\ See Letter to Secretary, Commission, from Lawrence P. Sandor, Deputy General Counsel, MSRB, dated February 5, 2015. Amendment No. 1 partially amends the text of the proposed rule change to revise Rules G-1(a)(ii)(B), G-3(a)(i)(A)(2) and G- 3(b)(i)(B) by deleting the following clause: ``Except to the extent a person must be qualified as a municipal advisor representative to perform such services.'' The MSRB believes that it would be premature to include such clause until certain foundational rules regarding municipal advisors are approved and effective. --------------------------------------------------------------------------- The Commission received two comment letters on Amendment No. 1.\7\ On February 20, 2015, the MSRB submitted a response to the comments on Amendment No.1.\8\ On February 25, 2015, the MSRB submitted Amendment No. 2 (``Amendment No. 2'' and together with Amendment No. 1, the ``Amendments'').\9\ The Commission is publishing this notice to solicit comments on the Amendments from interested persons and is approving the proposed rule change, as modified by the Amendments, on an accelerated basis. --------------------------------------------------------------------------- \7\ See Letters from Dave A. Sanchez Attorney at Law (``Sanchez''), dated February 12, 2015 (``Sanchez Letter''); and Terri Heaton, President, NAMA, dated February 12, 2015 (``NAMA Letter No. 2''). \8\ See Letter to Secretary, Commission, from Lawrence P. Sandor, Deputy General Counsel, MSRB, dated February 20, 2015 (``MSRB Response Letter No. 2'' and together with MSRB Response Letter No. 1, the ``MSRB Response Letters''). \9\ See Letter to Secretary, Commission, from Michael Cowart, Assistant General Counsel, MSRB, dated February 25, 2015. Amendment No. 2 partially amends Amendment No. 1 to correct a technical error in a quotation of rule text. --------------------------------------------------------------------------- II. Description of the Proposed Rule Change According to the MSRB, the purpose of the proposed rule change is to establish professional qualification requirements for municipal advisors and their associated persons and to make related changes to select MSRB rules.\10\ A full description of the proposed rule change is contained in the Proposing Release. --------------------------------------------------------------------------- \10\ See supra note 3 at 2. --------------------------------------------------------------------------- 1. Proposed Amendments to Rule G-1 The proposed amendments to Rule G-1 includes language to provide that, for purposes of its municipal advisory activities, the term ``separately identifiable department or division of a bank'' would have the same meaning as used in 17 CFR 240.15Ba1-1(d)(4).\11\ --------------------------------------------------------------------------- \11\ See Exhibit 5 of the Amendments. --------------------------------------------------------------------------- 2. Proposed Amendments to Rule G-2 The proposed amendments to Rule G-2 add a basic requirement that no municipal advisor shall engage in municipal advisory activities unless such municipal advisor and every natural person associated with such municipal advisor is qualified in accordance with the rules of the Board.\12\ --------------------------------------------------------------------------- \12\ Id. --------------------------------------------------------------------------- 3. Proposed Amendments to Rule G-3 Apprenticeship MSRB Rule G-3 currently requires a municipal securities representative to serve an apprenticeship period of 90 days before transacting business with any member of the public or receiving compensation for such activities.\13\ The MSRB believes that dealers and municipal advisors should determine the length and nature of the initial training for newly registered persons, consistent with industry feedback and the approach taken by Financial Industry Regulatory Authority (``FINRA'').\14\ Accordingly, the proposed amendments to Rule G-3 eliminate the apprenticeship requirement for municipal securities representatives and, similarly, do not propose an apprenticeship requirement for municipal advisor representatives.\15\ --------------------------------------------------------------------------- \13\ See supra note 3 at 9. \14\ Id. \15\ Id. --------------------------------------------------------------------------- New Registration Classifications The proposed amendments to Rule G-3 create two new registration classifications: (i) Municipal advisor representative; and (ii) municipal advisor principal.\16\ --------------------------------------------------------------------------- \16\ See supra note 11. --------------------------------------------------------------------------- The proposed amendments to Rule G-3 define a ``municipal advisor representative'' as a natural person associated with a municipal advisor who engages in municipal advisory activities on the municipal advisor's behalf, other than a person performing only clerical, administrative, support or similar functions.\17\ The proposed amendments to Rule G-3 require each municipal advisor representative to take and pass the Municipal Advisor [[Page 11707]] Representative Qualification Examination prior to being qualified as a municipal advisor representative.\18\ --------------------------------------------------------------------------- \17\ Id. \18\ Id. --------------------------------------------------------------------------- The proposed amendments to Rule G-3 define a ``municipal advisor principal'' as a natural person associated with a municipal advisor who is qualified as a municipal advisor representative and is directly engaged in the management, direction or supervision of the municipal advisory activities of the municipal advisor and its associated persons.\19\ The proposed amendments to Rule G-3 require each municipal advisor to designate at least one municipal advisor principal.\20\ --------------------------------------------------------------------------- \19\ Id. \20\ Id. --------------------------------------------------------------------------- In addition, the proposed amendments to Rule G-3 require any person who ceases to be associated with a municipal advisor for two or more years (at any time after having qualified as a municipal advisor representative) to take and pass the Municipal Advisor Representative Qualification Examination prior to being qualified as a municipal advisor representative, unless a waiver is granted.\21\ --------------------------------------------------------------------------- \21\ Id. --------------------------------------------------------------------------- MSRB Waiver The proposed amendments to Rule G-3 and the Supplementary Material permit the MSRB to consider waiving the requirement that a municipal advisor representative or municipal advisor principal pass the Municipal Advisor Representative Qualification Examination in extraordinary cases: (1) Where the applicant participated in the development of the Municipal Advisor Representative Qualification Examination as a member of the MSRB's Professional Qualifications Advisory Committee (``PQAC''); or (2) where the applicant previously qualified as a municipal advisor representative by passing the Municipal Advisor Representative Qualification Examination and such qualification lapsed pursuant to Rule G-3(d)(ii)(B).\22\ --------------------------------------------------------------------------- \22\ Id. --------------------------------------------------------------------------- 4. Proposed Amendments to Rule D-13 Currently, Rule D-13 defines municipal advisory activities as the activities described in Section 15B(e)(4)(A)(i) and (ii) of the Act.\23\ The proposed amendments to Rule D-13 incorporate Commission rules into the definition by providing that the term ``municipal advisory activities'' means, except as otherwise specifically provided by rule of the Board, the activities described in Section 15B(e)(4)(A)(i) and (ii) of the Act and the rules and regulations promulgated thereunder.\24\ --------------------------------------------------------------------------- \23\ See supra note 3 at 5. \24\ See supra note 11. --------------------------------------------------------------------------- 5. Technical Amendments The proposed rule change would also make minor technical amendments to select MSRB rules, such as amending Rule G-3(a)(ii) to correctly re- letter G-3(a)(ii)(D) as G-3(a)(ii)(C).\25\ --------------------------------------------------------------------------- \25\ Id. --------------------------------------------------------------------------- 6. Effective Date The MSRB requested that the proposed rule change become effective 60 days following the date of Commission approval.\26\ The MSRB stated that the effective date of the Municipal Advisor Representative Qualification Examination will be announced by the MSRB with at least 30 days notice.\27\ The MSRB further stated that prospective municipal advisor representatives will have one year from the effective date of the Municipal Advisor Representative Qualification Examination to pass such examination.\28\ --------------------------------------------------------------------------- \26\ See supra note 3 at 10. \27\ Id. \28\ Id. at 6. --------------------------------------------------------------------------- III. Summary of Comments Received and the MSRB's Response The Commission received five comment letters in response to the proposed rule change (four of which provide substantive comments) and two comment letters in response to Amendment No. 1.\29\ The Commission received MSRB Response Letter No. 1 in response to comments regarding the proposed rule change and MSRB Response Letter No. 2 in response to comments regarding Amendment No. 1.\30\ A full description of the comments, MSRB responses, and amendments are contained in the comment letters, the MSRB Response Letters, and the Amendments, respectively. --------------------------------------------------------------------------- \29\ See supra notes 4 and 7. \30\ See supra notes 5 and 8. --------------------------------------------------------------------------- 1. SIFMA Letter Professional Qualifications Examination SIFMA believes that persons currently qualified to perform municipal securities activities should also be qualified to perform municipal advisor activities.\31\ In other words, SIFMA believes that after the effective date of the proposed rule change, the Series 52 qualification examination should be sufficient for both municipal securities representatives and municipal advisor representatives.\32\ --------------------------------------------------------------------------- \31\ See SIFMA Letter at 2. \32\ Id. --------------------------------------------------------------------------- Given the new regulatory regime for municipal advisors and the differences in the roles of municipal advisor and securities professionals, the MSRB does not believe the Series 52 examination (or the general securities representative examination that qualified municipal securities representatives before November 7, 2011) would sufficiently determine whether a municipal advisor professional meets a minimal level of competency to engage in municipal advisory activities.\33\ The MSRB stated that the focus of the Series 52 examination is not on municipal advisory activities.\34\ The MSRB further stated that the questions being developed for the Municipal Advisor Representative Qualification Examination target the job responsibilities of municipal advisor professionals.\35\ The MSRB noted that the roles and job responsibilities of municipal advisor representatives and municipal securities representatives are distinct, and the body of law that applies to each type of professional reflects the differences in such roles and responsibilities.\36\ --------------------------------------------------------------------------- \33\ See MSRB Response Letter No. 1 at 3. \34\ Id. at 3-4. \35\ Id. at 4. \36\ Id. --------------------------------------------------------------------------- SIFMA is concerned that development of a new qualification examination would take an additional two to three years.\37\ SIFMA states that because the Series 52 examination currently exists there would be no unnecessary delay in developing test material and administering the test, thereby avoiding an unnecessary delay in testing.\38\ SIFMA also contends it would be faster and more cost efficient for municipal advisor professionals to take the Series 52 examination.\39\ --------------------------------------------------------------------------- \37\ See SIFMA Letter at 3. \38\ Id. at 4. \39\ Id. at 3. --------------------------------------------------------------------------- The MSRB does not agree with SIFMA's assertion that developing a new qualification examination would take an additional two to three years.\40\ The MSRB stated that PQAC has been working expeditiously in developing the Municipal Advisor Representative Qualification Examination.\41\ The MSRB also reiterated its position that it does not believe the Series 52 examination would test the basic competency of municipal advisor professionals.\42\ The MSRB believes that while it is hard to dispute that using an existing exam would be faster and less costly, such an approach would fail to demonstrate basic competency of municipal advisor [[Page 11708]] professionals to engage in municipal advisory activities.\43\ The MSRB stated that the costs, timing, and efficiency of the proposed rule change should only be appropriately compared to reasonable regulatory alternative--a criterion the Series 52 examination does not meet.\44\ --------------------------------------------------------------------------- \40\ See MSRB Response Letter No. 1 at 4. \41\ Id. \42\ Id. \43\ Id. 4-5. \44\ Id. at 5. --------------------------------------------------------------------------- SIFMA suggests that developing a separate test for municipal advisor professionals is an inefficient process and unfairly burdens the large percentage of municipal advisor professionals who are associated with municipal securities dealers.\45\ --------------------------------------------------------------------------- \45\ See SIFMA Letter at 5. --------------------------------------------------------------------------- The MSRB does not believe that such individuals would be unfairly burdened by a new test.\46\ To the contrary, the MSRB believes that failing to develop a separate test for municipal advisor professionals could place individuals not associated with dealers at a competitive disadvantage and could result in an undue burden on small municipal advisors.\47\ The MSRB stated that the market for municipal advisory services is separate and distinct from the market for the services of municipal securities brokers and dealers and, as such, it is both appropriate and reasonable that all professionals providing municipal advisory services should be evaluated according to identical criteria, regardless of the status of their employer.\48\ --------------------------------------------------------------------------- \46\ See MSRB Response Letter No. 1 at 5. \47\ Id. \48\ Id. --------------------------------------------------------------------------- Grandfathering Current Municipal Securities Representatives SIFMA suggests that if the MSRB decides to continue with the development of a new test for qualification as a municipal advisor representative, then associated persons currently qualified as municipal securities representatives should be grandfathered in as municipal advisor representatives, if they so choose.\49\ SIFMA believes that this methodology would be consistent with other major changes to qualifications examinations.\50\ --------------------------------------------------------------------------- \49\ See SIFMA Letter at 5. \50\ Id. --------------------------------------------------------------------------- The MSRB responded by reiterating its view that grandfathering would be inconsistent with the intent of Congress.\51\ The MSRB believes that requiring municipal advisor professionals to take and pass a basic qualification examination ensures that these individuals possess a minimum level of understanding of the role and responsibilities of municipal advisors and the applicable rules and regulations.\52\ The MSRB stated that investors, municipal entities, and the general public will be better served by a regulatory regime that requires all municipal advisor professionals to pass the same basic competency test.\53\ --------------------------------------------------------------------------- \51\ See MSRB Response Letter No. 1 at 5. \52\ Id. \53\ Id. --------------------------------------------------------------------------- Economic Analysis SIFMA believes that the cost-benefit analysis contained in in the Proposing Release was inadequate.\54\ SIFMA suggests that the MSRB conduct a full cost-benefit analysis of the proposed rule change prior to its approval.\55\ --------------------------------------------------------------------------- \54\ See SIFMA Letter at 6. \55\ Id. at 2. --------------------------------------------------------------------------- The MSRB responded by stating that it considered the costs and benefits of the proposed rule change and even utilized the cost estimate per individual test taker provided by SIFMA in determining the likely initial cost to the industry and the likely ongoing expense.\56\ The MSRB also refined its estimate of the initial cost based on the number of Form MA-Is filed with the SEC by registered municipal advisors (as of January 20, 2015), which the MSRB stated is not materially different from the cost estimate used in its economic analysis.\57\ The MSRB believes its economic analysis was sound and that no further analysis is warranted.\58\ --------------------------------------------------------------------------- \56\ See MSRB Response Letter No. 1 at 6. \57\ Id. \58\ Id. --------------------------------------------------------------------------- Continuing Education Requirement for Municipal Advisor Representatives SIFMA suggests that the MSRB develop continuing education requirements for municipal advisor representatives.\59\ SIFMA believes this concern was not addressed by the proposed rule change.\60\ --------------------------------------------------------------------------- \59\ See SIFMA Letter at 6. \60\ Id. --------------------------------------------------------------------------- The MSRB responded by stating that such suggestion is not relevant to the proposed rule change.\61\ The MSRB noted that the Act requires the MSRB to provide continuing education requirements for municipal advisors and it will likely consider rulemaking on this topic in the near future.\62\ --------------------------------------------------------------------------- \61\ See MSRB Response Letter No. 1 at 6. \62\ Id. --------------------------------------------------------------------------- PQAC Nomination Process SIFMA and its members believe that the process for nomination to the MSRB's PQAC should be fully transparent and the members of PQAC should be listed on the MSRB's Web site.\63\ Also, SIFMA further states that it is in the best interest of every industry member to ensure that the test questions that are developed are fair, even-handed and suitable for a basic competency examination.\64\ --------------------------------------------------------------------------- \63\ See SIFMA Letter at 6. \64\ Id. at 6-7. --------------------------------------------------------------------------- The MSRB stated that it understands the concern raised by SIFMA and believes that its examinations are developed in a fair, even-handed and suitable manner.\65\ The MSRB stated it contemplated publishing the names of PQAC members but is concerned that such transparency will undermine the test development process.\66\ The MSRB believes that it is not appropriate to publish the names of PQAC members given the importance of confidentiality and the integrity of the process.\67\ The MSRB further stated that it contracts with an external testing professional to ensure the overall integrity of the test development process, including the selection of PQAC members, is fair and in accordance with accepted standards for professional test development.\68\ Nevertheless, the MSRB stated that it will consider providing more information about the selection process and the criteria used by the MSRB to select PQAC members.\69\ --------------------------------------------------------------------------- \65\ See MSRB Response Letter No. 1 at 6. \66\ Id. \67\ Id. at 7. \68\ Id. \69\ Id. --------------------------------------------------------------------------- 2. ICI Letter ICI recommends that the MSRB reconsider its current approach to develop only one examination for representatives because such approach will result in use of an examination that does not sufficiently test competencies relevant to the advisory representative's business and is inconsistent with the approach taken by other self-regulatory organizations.\70\ ICI suggests that the MSRB utilize at least two examinations--one for representatives of a municipal advisor whose advisory activities are limited to municipal fund securities, and one for representatives whose advice is limited to municipal securities other than municipal fund securities.\71\ --------------------------------------------------------------------------- \70\ See ICI Letter at 2. \71\ Id. --------------------------------------------------------------------------- The MSRB responded by stating that it believes that individuals who engage in municipal advisory activities regarding municipal fund securities should demonstrate knowledge of all of the rules and regulations governing municipal advisors.\72\ The MSRB stated that these rules and regulations [[Page 11709]] generally will apply to all municipal advisors, regardless of the product that is the subject of the advice provided.\73\ As such, the MSRB believes that all municipal advisors should have knowledge of the regulatory framework and the basic obligations of municipal advisors.\74\ --------------------------------------------------------------------------- \72\ See MSRB Response Letter No. 1 at 7. \73\ Id. \74\ Id. --------------------------------------------------------------------------- ICI stated that it recognizes its recommendation of two examinations may impose additional burdens, however, ICI believes such approach is consistent with the manner in which self-regulatory organizations have long implemented examination requirements.\75\ ICI further stated that there is a long-standing self-regulatory organization practice of developing discrete examinations based on the nature of the business conducted.\76\ --------------------------------------------------------------------------- \75\ See ICI Letter at 3-4. \76\ Id. --------------------------------------------------------------------------- The MSRB responded by noting that self-regulatory organizations have developed a number of qualification examinations; however, most of these examinations are focused on the role of the investment professional, such as compliance officer (Series 14), investment adviser (Series 65), operations professional (Series 99), research analyst (Series 86 and 87), equity trader (Series 55), financial and operations principal (Series 27), general securities principal (Series 24), general securities sales supervisor (Series 9 and 10), and general securities representative (Series 7).\77\ The MSRB stated that for each of these examinations, a test taker may be required to demonstrate knowledge of a variety of products, consistent with the role of the individual; even where an examination is limited a candidate is expected to be familiar with a variety of products.\78\ Consequently, the MSRB believes its approach to the Municipal Advisor Representative Qualification Examination is consistent with its prior practice and the practice of other self-regulatory organizations.\79\ --------------------------------------------------------------------------- \77\ See MSRB Response Letter at 7-8. \78\ Id. \79\ Id. at 8. --------------------------------------------------------------------------- 3. Anonymous Letter Anonymous Attorney believes that individuals who are Chartered Financial Analyst (``CFA'') charterholders should be exempt from the proposed Municipal Advisor Representative Qualification Examination requirement in the manner suggested by the CFA Institute (``CFAI'') in the CFAI's response to MSRB Regulatory Notice 2014-08.\80\ CFAI proposed that the examination requirement be constructed in a modular fashion with one component focusing on the knowledge of business and the second component devoted to the rules and regulations of the municipal securities market.\81\ CFAI also requested that CFA charterholders be granted a waiver from the examination component focusing on the knowledge of business.\82\ Anonymous Attorney believes that separating the examination into two modules can be undertaken with minimal effort.\83\ Anonymous Attorney also stated that the examination requirement is burdensome and concluded that such examination could drive some CFA charterholders out of the municipal advisory business.\84\ --------------------------------------------------------------------------- \80\ See Anonymous Letter No. 1 at 1. \81\ Id. \82\ Id. \83\ Id. at 2. \84\ Id. at 3. --------------------------------------------------------------------------- The MSRB stated that it recognizes the requirements established by CFAI for CFA charterholders and understands that fixed income securities are covered on its examinations.\85\ However, the MSRB explained that the Municipal Advisor Representative Qualification Examination will focus on the role and responsibilities of municipal advisor professionals and the rules and regulations governing their conduct.\86\ The MSRB highlighted that the Municipal Advisor Representative Qualification Examination will not solely test a candidate's knowledge of municipal securities.\87\ In addition, the MSRB stated that Anonymous Attorney has not provided any evidence that the CFA examinations (Levels I, II or III) test an individual's knowledge of the role and responsibilities of a municipal advisor.\88\ The MSRB believes the assertion that CFA charterholders may be driven out of the market because of the new test is purely speculative.\89\ The MSRB further stated that Anonymous Attorney offers no information regarding the number of CFA charterholders that are engaged in municipal advisory activities or why they would be in any different position than individuals who passed other qualification examinations.\90\ Given that the costs and time associated with receiving and maintaining a CFA charter exceed any reasonable estimate of the costs to complete a new municipal advisor examination, the MSRB stated its expectation that the new exam would add only marginally to a CFA charterholder's professional qualification expenses.\91\ For the foregoing reasons, the MSRB does not believe that a modular examination for municipal advisor professionals would be appropriate.\92\ --------------------------------------------------------------------------- \85\ See MSRB Response Letter No. 1 at 8. \86\ Id. \87\ Id. \88\ Id. \89\ Id. \90\ Id. \91\ Id. at 8-9. \92\ Id. at 9. --------------------------------------------------------------------------- 4. NAMA Letter No. 1 NAMA supports the efforts of the MSRB to set professional qualification standards for municipal advisor professionals.\93\ NAMA believes the MSRB has taken the most cost-effective approach at this time.\94\ Additionally, NAMA supports the decision by the MSRB to have a uniform competency requirement for all persons deemed to be municipal advisor representatives regardless of whether such persons have passed other examinations (such as the Series 52 or Series 7 examinations).\95\ Consistent with the proposed rule change, NAMA does not believe that the MSRB should grandfather individuals who have passed such examinations.\96\ NAMA suggests, however, that the MSRB continue to evaluate the feasibility and wisdom of supplemental or targeted subject matter examinations.\97\ --------------------------------------------------------------------------- \93\ See NAMA Letter No. 1 at 1. \94\ Id. at 2. \95\ Id. at 1. \96\ Id. at 2. \97\ Id. --------------------------------------------------------------------------- The MSRB does not believe that a supplemental or targeted subject area examination approach is appropriate.\98\ The MSRB believes it has a demonstrated commitment to seeking ways to improve regulatory efficiency generally and would be open to assessing alternative approaches to the assessment of professional qualifications once the municipal advisor regulatory framework is fully implemented.\99\ --------------------------------------------------------------------------- \98\ See MSRB Response Letter No. 1 at 9. \99\ Id. --------------------------------------------------------------------------- 5. Sanchez Letter and NAMA Letter No. 2 Sanchez expressed concern that Amendment No. 1 will effectively create an exemption for municipal securities representatives who engage in financial advisory and consultant services for issuers in connection with the issuance of municipal securities (the ``subject activity'') from having to pass the Municipal Advisor Representative Qualification Examination to qualify as municipal advisor representatives.\100\ Similarly, NAMA expressed concern that Amendment No. 1 would provide municipal securities representatives [[Page 11710]] who engage in the subject activity an exemption from having to pass the Municipal Advisor Representative Qualification Examination because the subject activity would be considered municipal securities representative activity.\101\ NAMA also stated that Amendment No. 1 expands the definition of municipal advisory activity, as provided by the Act and Commission rules, because it appears to allow dealers and bank dealers to engage in municipal advisory activity without proper registration.\102\ --------------------------------------------------------------------------- \100\ See Sanchez Letter at 1. \101\ See NAMA Letter No. 2 at 1. \102\ Id. at 1-2. --------------------------------------------------------------------------- The MSRB responded by clarifying that Amendment No. 1 would not have the effect of limiting, and was not intended to limit, the applicability of the municipal advisor regulatory regime, including MSRB rules governing the municipal advisory activities of municipal advisors, or to alter the definition of municipal advisory activities.\103\ The MSRB noted that the determination of whether an individual is engaged in municipal advisory activities is based on the scope of the individual's activities, and not the individual's status.\104\ The MSRB stated that due to such principle, a dealer and its associated persons could simultaneously be subject to MSRB rules applicable to dealers and MSRB rules applicable to municipal advisors.\105\ --------------------------------------------------------------------------- \103\ See MSRB Response Letter No. 2 at 2. \104\ Id. \105\ Id. --------------------------------------------------------------------------- The MSRB stated that Amendment No. 1 would retain the current language in the MSRB professional qualification rules to prevent any confusion regarding the application of MSRB rules governing dealers to the financial advisory activities of municipal securities representatives while MSRB rules governing municipal advisors are developed and implemented and until the MSRB makes any future determinations regarding the application of such rules.\106\ The MSRB further stated that any individual engaged in or supervising municipal advisory activities must comply with the professional qualification requirements for municipal advisor representatives, which will include at a future date the taking and passing of the Municipal Advisor Representative Qualification Examination.\107\ The MSRB also represented that Amendment No. 1 has no bearing on the definition of municipal advisory activities.\108\ --------------------------------------------------------------------------- \106\ Id. \107\ Id. at 2-3. \108\ Id. at 3. --------------------------------------------------------------------------- IV. Discussion and Commission Findings The Commission has carefully considered the proposed rule change, as modified by the Amendments, as well as the comments received, and the responses by the MSRB to such comments. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB. In particular, the Commission finds that the proposed rule change is consistent with Section 15B(b)(2)(A) of the Act, which provides that the MSRB's rules shall provide that no municipal securities broker or municipal securities dealer shall effect any transaction in, or induce or attempt to induce the purchase or sale of, any municipal security, and no broker, dealer, municipal securities dealer, or municipal advisor shall provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, unless . . . such municipal securities broker or municipal securities dealer and every natural person associated with such municipal securities broker or municipal securities dealer meet such standards of training, experience, competence, and such other qualifications as the Board finds necessary or appropriate in the public interest or for the protection of investors and municipal entities or obligated persons.\109\ Section 15B(b)(2)(A) of the Act also provides that, in connection with the definition and application of such standards, the MSRB may appropriately classify municipal advisors and their associated persons, specify that all or any portion of such standards shall be applicable to any such class, and require persons in any such class to pass an examination regarding such standards of competence.\110\ The Commission believes that the proposed rule change is consistent with Section 15B(b)(2)(A) of the Act because the proposed rule change requires individuals who engage in or supervise municipal advisory activities to pass a professional qualification examination which is an established means for determining the basic competency of individuals in a particular class. The Commission believes that requiring prospective municipal advisor representatives to pass a basic qualification examination will protect investors, municipal entities, and obligated persons by ensuring such representatives have a basic understanding of the role of a municipal advisor representative and the rules and regulations governing such individuals. --------------------------------------------------------------------------- \109\ 15 U.S.C. 78o-4(b)(2)(A). \110\ Id. --------------------------------------------------------------------------- Additionally, Section 15B(b)(2)(L)(iii) of the Act provides that the MSRB's rules shall provide professional standards with respect to municipal advisors.\111\ The Commission believes that the proposed rule change is consistent with Section 15B(b)(2)(L)(iii) of the Act because it would establish professional standards for those individuals engaged in or supervising municipal advisory activities by requiring such individuals to demonstrate a basic competency regarding the role of municipal advisor representatives and the rules and regulations governing the conduct of such persons. --------------------------------------------------------------------------- \111\ 15 U.S.C. 78o-4(b)(2)(L)(iii). --------------------------------------------------------------------------- Section 15B(b)(2)(L)(iv) of the Act requires that MSRB rules not impose a regulatory burden on small municipal advisors that is not necessary or appropriate in the public interest and for the protection of investors, municipal entities, and obligated persons, provided that there is robust protection of investors against fraud.\112\ The Commission believes that the proposed rule change is consistent with Section 15B(b)(2)(L)(iv) of the Act. While the proposed rule change would affect all municipal advisors, including small municipal advisors, it is a necessary and appropriate regulatory burden in order to establish the baseline competence of those individuals engaged in municipal advisory activities. Establishing a baseline competence is necessary for the protection of investors, municipal entities, and obligated persons. The Commission also believes such baseline competence is in the public interest because it promotes compliance with the rules and regulations governing the conduct of municipal advisors. --------------------------------------------------------------------------- \112\ 15 U.S.C. 78o-4(b)(2)(L)(iv). --------------------------------------------------------------------------- In approving the proposed rule change, the Commission has considered the proposed rule change's impact on efficiency, competition, and capital formation.\113\ The Commission believes that the proposed rule change includes accommodations that help promote efficiency. Specifically, the MSRB has provided a one-year grace period for passing the examination. As noted by the MSRB, the grace period provides [[Page 11711]] municipal advisor representatives with sufficient time to study and take the examination without causing an undue disruption to the business of the municipal advisor. The Commission does not believe that the proposed rule change would impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act since it would apply equally to all municipal advisor representatives who engage in municipal advisory activities. Furthermore, the Commission believes that the potential burdens created by the proposed rule change are to be likely outweighed by the benefits of establishing baseline professional qualification standards and promoting compliance with the rules and regulations governing the conduct of municipal advisors. The Commission has reviewed the record for the proposed rule change and notes that the record does not contain any information to indicate that the proposed rule change would have a negative effect on capital formation. --------------------------------------------------------------------------- \113\ 15 U.S.C. 78c(f). --------------------------------------------------------------------------- As noted above, the Commission received five comment letters on the proposed rule change and two comment letters on Amendment No. 1. The Commission believes that the MSRB considered carefully and responded adequately to the comments and concerns regarding the proposed rule change and Amendment No. 1. For the reasons noted above, including those discussed in the Amendments and the MSRB Response Letters, the Commission believes that the proposed rule change, as amended by the Amendments, is consistent with the Act. V. Solicitation of Comments on the Amendments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the Amendments to the proposed rule change are consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse 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-2014-08 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-2014-08. 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 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 Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the MSRB. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-MSRB-2014-08 and should be submitted on or before March 25, 2015. VI. Accelerated Approval of the Proposed Rule Change as Modified by the Amendments The Commission finds good cause for approving the proposed rule change, as amended by the Amendments, prior to the 30th day after the date of publication of notice in the Federal Register. Amendment No. 1 partially amends the text of the proposed rule change to revise Rules G-1(a)(ii)(B), G-3(a)(i)(A)(2), and G-3(b)(i)(B) by deleting the following clause: ``Except to the extent a person must be qualified as a municipal advisor representative to perform such services.'' \114\ Amendment No. 2 partially amends Amendment No. 1 to correct a technical error in a quotation of rule text.\115\ --------------------------------------------------------------------------- \114\ See supra note 6. \115\ See supra note 9. --------------------------------------------------------------------------- The MSRB believes Amendment No. 1 will clarify and ensure that municipal securities representatives or principals who engage in the subject activity remain covered by applicable dealer regulations until such time as the MSRB may determine that such activities are appropriately covered by the developing municipal advisor regulatory framework.\116\ The MSRB believes Amendment No. 2 would make a mere technical correction.\117\ The MSRB does not believe Amendment No. 2 raises significant new issues or alters the substance of the proposed rule change.\118\ --------------------------------------------------------------------------- \116\ See supra note 6. \117\ See supra note 9. \118\ Id. --------------------------------------------------------------------------- As previously noted, Sanchez and NAMA expressed concern that Amendment No. 1 will effectively provide an exemption for currently qualified municipal securities representative from having to take and pass the Municipal Advisor Representative Qualification Examination.\119\ NAMA also believes that the Amendment No. 1 expands the definition of municipal advisory activity because it appears to allow dealers and bank dealers to engage in municipal advisory activity without proper registration.\120\ The MSRB responded by clarifying that Amendment No. 1 would not have the effect of limiting, and was not intended to limit, the applicability of the municipal advisor regulatory regime, including MSRB rules governing the municipal advisory activities of municipal advisors, or to alter the definition of municipal advisory activities.\121\ According to the MSRB, Amendment No. 1 would retain the current language in the MSRB professional qualification rules to prevent any confusion regarding the application of MSRB rules governing dealers to the financial advisory activities of municipal securities representatives while MSRB rules governing municipal advisors are developed and implemented.\122\ --------------------------------------------------------------------------- \119\ See supra note 7. \120\ See NAMA Letter No. 2 at 1-2. \121\ See MSRB Response Letter No. 2 at 2. \122\ Id. --------------------------------------------------------------------------- The Commission believes that the revisions in Amendment No. 1 are being made to address the perception of a regulatory gap and are consistent with the purpose of the proposed rule change. The Commission believes that the revision in Amendment No. 2 is being made to correct a technical error. The Commission does not believe the revisions included in the Amendments raise significant new issues or alter the substance of the proposed rule change because the proposed rule change will retain the current rule language in Rules G-1(a)(ii)(B), G- 3(a)(i)(A)(2), and G-3(b)(i)(B). Accordingly, the Commission finds good cause for approving the proposed rule change, as modified by [[Page 11712]] the Amendments, on an accelerated basis, pursuant to Section 19(b)(2) of the Act. VII. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\123\ that the proposed rule change (SR-MSRB-2014-08), as modified by the Amendments, be, and hereby is, approved. --------------------------------------------------------------------------- \123\ 15 U.S.C. 78s(b)(2). For the Commission, pursuant to delegated authority.\124\ --------------------------------------------------------------------------- \124\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-04431 Filed 3-3-15; 8:45 am] BILLING CODE 8011-01-P
![11706 Federal Register / Vol. 80, No. 42 / Wednesday, March 4, 2015 / Notices
V. Conclusion MSRB submitted a response to the 1. Proposed Amendments to Rule G–1
It is therefore ordered pursuant to comments on the proposed rule change 5 The proposed amendments to Rule G–
section 19(b)(2) of the Act 196 that the and filed Amendment No. 1 1 includes language to provide that, for
proposed rule change (SR–FINRA– (‘‘Amendment No. 1’’).6 purposes of its municipal advisory
2014–028) be and hereby is approved. The Commission received two activities, the term ‘‘separately
For the Commission, by the Division of comment letters on Amendment No. 1.7 identifiable department or division of a
Trading and Markets, pursuant to delegated On February 20, 2015, the MSRB bank’’ would have the same meaning as
authority.197 submitted a response to the comments used in 17 CFR 240.15Ba1–1(d)(4).11
Jill M. Peterson, on Amendment No.1.8 On February 25, 2. Proposed Amendments to Rule G–2
Assistant Secretary. 2015, the MSRB submitted Amendment The proposed amendments to Rule G–
[FR Doc. 2015–04419 Filed 3–3–15; 8:45 am] No. 2 (‘‘Amendment No. 2’’ and together 2 add a basic requirement that no
BILLING CODE 8011–01–P with Amendment No. 1, the municipal advisor shall engage in
‘‘Amendments’’).9 The Commission is municipal advisory activities unless
publishing this notice to solicit such municipal advisor and every
SECURITIES AND EXCHANGE comments on the Amendments from natural person associated with such
COMMISSION interested persons and is approving the municipal advisor is qualified in
[Release No. 34–74384; File No. SR–MSRB– proposed rule change, as modified by accordance with the rules of the
2014–08] the Amendments, on an accelerated Board.12
basis.
Self-Regulatory Organizations; 3. Proposed Amendments to Rule G–3
Municipal Securities Rulemaking II. Description of the Proposed Rule Apprenticeship
Board; Notice of Filing of Amendment Change
No. 1 and Amendment No. 2 and Order MSRB Rule G–3 currently requires a
Granting Accelerated Approval of a According to the MSRB, the purpose municipal securities representative to
Proposed Rule Change Consisting of of the proposed rule change is to serve an apprenticeship period of 90
Proposed Amendments to MSRB Rules establish professional qualification days before transacting business with
G–1, on Separately Identifiable requirements for municipal advisors any member of the public or receiving
Department or Division of a Bank; and their associated persons and to compensation for such activities.13 The
G–2, on Standards of Professional make related changes to select MSRB MSRB believes that dealers and
Qualification; G–3, on Professional rules.10 A full description of the municipal advisors should determine
Qualification Requirements; and D–13, proposed rule change is contained in the length and nature of the initial
on Municipal Advisory Activities training for newly registered persons,
the Proposing Release.
consistent with industry feedback and
February 26, 2015. the approach taken by Financial
dated December 26, 2014 (‘‘SIFMA Letter’’);
I. Introduction Anonymous Attorney, on behalf of a registered
Industry Regulatory Authority
investment advisor and municipal advisor (‘‘FINRA’’).14 Accordingly, the proposed
On November 18, 2014, the Municipal (‘‘Anonymous Attorney’’), dated December 26, 2014 amendments to Rule G–3 eliminate the
Securities Rulemaking Board (the (‘‘Anonymous Letter’’); Tamara K. Salmon, Senior apprenticeship requirement for
‘‘MSRB’’ or ‘‘Board’’) filed with the Associate Counsel, Investment Company Institute municipal securities representatives
Securities and Exchange Commission (‘‘ICI’’), dated December 29, 2014 (‘‘ICI Letter’’); and
Terri Heaton, President, National Association of and, similarly, do not propose an
(the ‘‘SEC’’ or ‘‘Commission’’), pursuant Municipal Advisors (‘‘NAMA’’), dated January 27, apprenticeship requirement for
to Section 19(b)(1) of the Securities 2015 (‘‘NAMA Letter No. 1’’). municipal advisor representatives.15
Exchange Act of 1934 (‘‘Act’’) 1 and Rule 5 See Letter to Secretary, Commission, from
19b–4 thereunder,2 a proposed rule Lawrence P. Sandor, Deputy General Counsel, New Registration Classifications
MSRB, dated February 5, 2015 (‘‘MSRB Response
change consisting of proposed Letter No. 1’’).
The proposed amendments to Rule G–
amendments to MSRB Rules G–1, on 6 See Letter to Secretary, Commission, from 3 create two new registration
separately identifiable department or Lawrence P. Sandor, Deputy General Counsel, classifications: (i) Municipal advisor
division of a bank; G–2, on standards of MSRB, dated February 5, 2015. Amendment No. 1 representative; and (ii) municipal
professional qualification; G–3, on partially amends the text of the proposed rule advisor principal.16
change to revise Rules G–1(a)(ii)(B), G–3(a)(i)(A)(2)
professional qualification requirements; and G–3(b)(i)(B) by deleting the following clause: The proposed amendments to Rule G–
and D–13, on municipal advisory ‘‘Except to the extent a person must be qualified as 3 define a ‘‘municipal advisor
activities (the ‘‘proposed rule change’’). a municipal advisor representative to perform such representative’’ as a natural person
The proposed rule change was services.’’ The MSRB believes that it would be associated with a municipal advisor
premature to include such clause until certain
published for comment in the Federal foundational rules regarding municipal advisors are who engages in municipal advisory
Register on December 5, 2014.3 approved and effective. activities on the municipal advisor’s
The Commission received five 7 See Letters from Dave A. Sanchez Attorney at behalf, other than a person performing
comment letters on the proposed rule Law (‘‘Sanchez’’), dated February 12, 2015 only clerical, administrative, support or
change.4 On February 5, 2015, the (‘‘Sanchez Letter’’); and Terri Heaton, President,
NAMA, dated February 12, 2015 (‘‘NAMA Letter
similar functions.17 The proposed
No. 2’’). amendments to Rule G–3 require each
196 15 U.S.C. 78s(b)(2). 8 See Letter to Secretary, Commission, from municipal advisor representative to take
197 17 CFR 200.30–3(a)(12). Lawrence P. Sandor, Deputy General Counsel, and pass the Municipal Advisor
mstockstill on DSK4VPTVN1PROD with NOTICES
1 15 U.S.C. 78s(b)(1).
MSRB, dated February 20, 2015 (‘‘MSRB Response
2 17 CFR 240.19b–4. Letter No. 2’’ and together with MSRB Response 11 See Exhibit 5 of the Amendments.
3 Securities Exchange Act Release No. 73708 Letter No. 1, the ‘‘MSRB Response Letters’’). 12 Id.
(December 1, 2014), 79 FR 72225 (December 5, 9 See Letter to Secretary, Commission, from
13 See
2014) (the ‘‘Proposing Release’’). Michael Cowart, Assistant General Counsel, MSRB, supra note 3 at 9.
14 Id.
4 See Letters from Anonymous, dated December dated February 25, 2015. Amendment No. 2
15 Id.
25, 2014; Leslie M. Norwood, Managing Director partially amends Amendment No. 1 to correct a
and Associate General Counsel, Securities Industry technical error in a quotation of rule text. 16 See supra note 11.
and Financial Markets Association (‘‘SIFMA’’), 10 See supra note 3 at 2. 17 Id.
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![11712 Federal Register / Vol. 80, No. 42 / Wednesday, March 4, 2015 / Notices
the Amendments, on an accelerated The text of the proposed rule change option. Therefore, the Exchange
basis, pursuant to Section 19(b)(2) of the is available at the Exchange’s Web site proposes to delete the ROLF routing
Act. at www.batstrading.com, at the option under Rule 11.11(g)(7) as well as
principal office of the Exchange, and at a reference to the ROLF routing option
VII. Conclusion
the Commission’s Public Reference under Rule 11.11(g)(15).
It is therefore ordered, pursuant to Room.
Section 19(b)(2) of the Act,123 that the 2. Statutory Basis
proposed rule change (SR–MSRB–2014– II. Self-Regulatory Organization’s
Statement of the Purpose of, and The Exchange believes that its
08), as modified by the Amendments, proposal is consistent with Section 6(b)
be, and hereby is, approved. Statutory Basis for, the Proposed Rule
Change of the Act 7 in general, and furthers the
For the Commission, pursuant to delegated objectives of Section 6(b)(5) of the Act 8
authority.124 In its filing with the Commission, the in particular, in that it is designed to
Jill M. Peterson, Exchange included statements promote just and equitable principles of
concerning the purpose of and basis for trade, to foster cooperation and
Assistant Secretary.
the proposed rule change and discussed coordination with persons engaged in
[FR Doc. 2015–04431 Filed 3–3–15; 8:45 am]
any comments it received on the facilitating transactions in securities, to
BILLING CODE 8011–01–P
proposed rule change. The text of these remove impediments to and perfect the
statements may be examined at the mechanism of a free and open market
places specified in Item IV below. The and a national market system and, in
SECURITIES AND EXCHANGE
Exchange has prepared summaries, set general, to protect investors and the
COMMISSION forth in Sections A, B, and C below, of public interest. The Exchange does not
[Release No. 34–74380; File No. SR–EDGA– the most significant parts of such believe that this proposal will permit
2015–12] statements.
unfair discrimination among customers,
Self-Regulatory Organizations; EDGA A. Self-Regulatory Organization’s brokers, or dealers because the ROLF
Exchange, Inc.; Notice of Filing and Statement of the Purpose of, and the routing option will no longer be
Immediate Effectiveness of a Proposed Statutory Basis for, the Proposed Rule available to all Users. The proposed
Rule Change To Amend Rule 11.11, Change change is in response to LavaFlow ECN
Routing to Away Trading Centers, To ceasing market operations on Friday,
1. Purpose
Delete References to the ROLF January 30, 2015. As of February 2,
The Exchange proposes to amend 2015, the Exchange, via BATS Trading,
Routing Option, Which Routed Orders
Rule 11.11, Routing to Away Trading was no longer able to route orders to
to LavaFlow ECN
Centers, to delete references under LavaFlow ECN and, therefore, proposes
February 26, 2015. subparagraphs (7) and (15) to the ROLF to delete references to the ROLF routing
Pursuant to Section 19(b)(1) of the routing option, which routed to option under Rules 11.11(g)(7) and (15).
Securities Exchange Act of 1934 (the LavaFlow ECN. These changes are being The proposal is intended to make the
‘‘Act’’),1 and Rule 19b–4 thereunder,2 proposed in response to LavaFlow ECN Exchange’s rules clearer and less
notice is hereby given that on February ceasing market operations on Friday, confusing for investors by eliminating a
23, 2015, EDGA Exchange, Inc. (the January 30, 2015. Under Rule routing option that is no longer
‘‘Exchange’’ or ‘‘EDGA’’) filed with the 11.11(g)(7), an order utilizing the ROLF available; thereby removing
Securities and Exchange Commission routing option first checked the impediments to and perfecting the
(‘‘Commission’’) the proposed rule System 5 for available shares and was mechanism of a free and open market
change as described in Items I and II then routed to the LavaFlow ECN. If and a national market system, and, in
below, which Items have been prepared shares remained unexecuted after being general, protecting investors and the
by the Exchange. The Exchange has routed, they were cancelled, unless public interest.
designated this proposal as a ‘‘non- otherwise instructed by the User.6 In
controversial’’ proposed rule change addition, under Rule 11.11(g)(15), a B. Self-Regulatory Organization’s
pursuant to Section 19(b)(3)(A) of the User was able to couple the Post to Statement on Burden on Competition
Act 3 and Rule 19b–4(f)(6)(iii) Away option and ROLF routing option. The Exchange does not believe that
thereunder,4 which renders it effective The grouping of the Post to Away and the proposal will impose any burden on
upon filing with the Commission. The ROLF routing options instructed the competition not necessary or
Commission is publishing this notice to System to route and post the order on appropriate in furtherance of the
solicit comments on the proposed rule LavaFlow ECN. As of February 2, 2015, purposes of the Act. The proposed rule
change from interested persons. the Exchange, via BATS Trading, the change is not designed to address any
Exchange’s affiliated routing broker- competitive issues but rather avoid
I. Self-Regulatory Organization’s dealer, was no longer able to route
Statement of the Terms of Substance of investor confusion by eliminating a
orders to LavaFlow ECN because it routing option that is no longer made
the Proposed Rule Change ceased operations. As a result, the available by the Exchange.
The Exchange filed a proposal to Exchange no longer offers the ROLF
amend Rule 11.11, Routing to Away routing option nor permit [sic] it to be C. Self-Regulatory Organization’s
Trading Centers, to delete references to coupled with a Post to Away routing Statement on Comments on the
the ROLF routing option, which routed Proposed Rule Change Received From
mstockstill on DSK4VPTVN1PROD with NOTICES
orders to LavaFlow ECN. 5 Exchange Rule 1.5(cc) defines ‘‘System’’ as ‘‘the Members, Participants, or Others
electronic communications and trading facility
123 15 designated by the Board through which securities The Exchange has neither solicited
U.S.C. 78s(b)(2).
124 17CFR 200.30–3(a)(12).
orders of Users are consolidated for ranking, nor received written comments on the
execution and, when applicable, routing away.’’ proposed rule change.
1 15 U.S.C. 78s(b)(1).
6 The term ‘‘User’’ is defined as ‘‘any Member or
2 17 CFR 240.19b–4.
Sponsored Participant who is authorized to obtain
3 15 U.S.C. 78s(b)(3)(A). 7 15 U.S.C. 78f(b).
access to the System pursuant to Rule 11.3.’’ See
4 17 CFR 240.19b–4(f)(6)(iii). Exchange Rule 1.5(ee). 8 15 U.S.C. 78f(b)(5).
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Document Created: 2018-02-21 09:31:56
Document Modified: 2018-02-21 09:31:56
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 11706 |
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