81 FR 57960 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Consisting of Proposed Amendments to Rule G-12, on Uniform Practice, Regarding Close-Out Procedures for Municipal Securities
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 164 (August 24, 2016)
Federal Register Volume 81, Issue 164 (August 24, 2016)
| Page Range | 57960-57963 | |
| FR Document | 2016-20205 |
[Federal Register Volume 81, Number 164 (Wednesday, August 24, 2016)] [Notices] [Pages 57960-57963] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-20205] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78611; File No. SR-MSRB-2016-07] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, Consisting of Proposed Amendments to Rule G-12, on Uniform Practice, Regarding Close-Out Procedures for Municipal Securities August 18, 2016. I. Introduction On May 11, 2016, 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 Rule G-12, on uniform practice, regarding close-out procedures for municipal securities. The proposed rule change was published for comment in the Federal Register on June 1, 2016.\3\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ Securities Exchange Act Release No. 77903 (May 25, 2016) (the ``Proposing Release''), 81 FR 35111 (June 1, 2016). --------------------------------------------------------------------------- The Commission received three comment letters on the proposal.\4\ On July 25, 2016, the MSRB responded to the comments \5\ and filed Amendment No. 1 to the proposed rule change.\6\ The [[Page 57961]] Commission is publishing this notice to solicit comments on Amendment No. 1 to the proposed rule change from interested persons and is approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \4\ See Letters to Secretary, Commission, from Leslie M. Norwood, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association (``SIFMA''), dated June 22, 2016 (the ``SIFMA Letter''); Michael Nicholas, Chief Executive Officer, Bond Dealers of America (``BDA''), dated June 22, 2016 (the ``BDA Letter''); and David T. Bellaire, Esq., Executive Vice president and General Counsel, Financial Services Institute (``FSI''), dated June 22, 2016 (the ``FSI Letter''). \5\ See Letter to Secretary, Commission, from Michael Cowart, Deputy Director, Professional Qualifications and Assistant General Counsel, MSRB, dated July 25, 2016 (the ``MSRB Response and Amendment Letter''), available at https://www.sec.gov/comments/sr-msrb-2016-07/msrb201607-4.pdf. \6\ Id. In Amendment No. 1, the MSRB partially amended the text of the original proposed rule change to shorten the period in which firms are required to resolve an inter-dealer fail from 20 calendar days to 10 calendar days, and to permit the buyer to grant the seller a one-time 10 calendar day extension. --------------------------------------------------------------------------- II. Description of the Proposed Rule Change In the Proposing Release, the MSRB stated that a more timely resolution of inter-dealer fails would ultimately benefit customers by providing greater certainty that their fully paid for securities are in fact owned in their account, not allocated to a firm short, and would benefit dealers by reducing the risk and costs associated with inter- dealer fails. As further described in the Proposing Release and the MSRB Response and Amendment Letter, the MSRB states that the purpose of the proposed rule change is to significantly compress the timing to initiate and complete a close-out by allowing a close-out notice to be issued the day after the purchaser's original settlement date, with the last day by which the purchasing dealer must complete a close-out on an open transaction being reduced to 10 calendar days, with an option for the buyer to grant the seller a one-time 10 calendar day extension.\7\ --------------------------------------------------------------------------- \7\ See supra notes 3 and 5. The rule as initially proposed in the Proposing Release provided for a period of 20 days in which a close-out must be completed. --------------------------------------------------------------------------- With the vast majority of municipal securities in book entry form and the Depository Trust & Clearing Corporation's (``DTCC'') continued efforts to promote dematerialization, the MSRB proposed that firms should no longer have to provide a 10-day delivery window before implementing an execution period. The MSRB believes a three-day delivery window would be sufficient as the majority of inter-dealer fails are resolved within days of the original settlement and/or a fail situation is known prior to the original settlement date. Additionally, the current rule requires that the earliest day that can be specified as the execution date is 11 days after telephonic notice. The proposed amendments would amend the current allowable execution time frame from 11 days to four days after electronic notification. Accelerating the execution date could improve a firm's likelihood of finding a security for a buy-in, lower overall counter- party risk and may further reduce accrual, capital and other expenses. Under the proposed rule change, a purchasing dealer notifying the selling dealer of an intent to close out an inter-dealer fail would continue to prompt DTCC to ``exit'' the position from DTCC's continuous net settlement (``CNS'') and the two parties are responsible for effecting the close-out. Because a municipal security may not be available for purchase, incorporating the buy-in procedures of a registered clearing agency will often not solve the inter-dealer fail. The MSRB expects firms to not solely rely upon the CNS system or the services of a registered clearing agency to resolve inter-dealer fails and take prompt action to close out inter-dealer fails in a timely manner. Under the proposed rule change, regardless of the date the positions are exited from CNS, the inter-dealer fail must be resolved within 20 calendar days of the purchasing dealer's original settlement date. The MSRB is also proposing to retire the Manual on Close-Out Procedures.\8\ --------------------------------------------------------------------------- \8\ See Manual on Close-Out Procedures. The Manual on Close-Out Procedures will be retired because such procedures would be outdated and, given the proposed rule change's overall simplicity, developing an updated version of the manual is not warranted. --------------------------------------------------------------------------- Proposed Amendments to MSRB Rule G-12(h) Rule G-12, on uniform practice, establishes uniform industry practices for processing, clearance and settlement of transactions in municipal securities between a broker, dealer or municipal securities dealer and any other broker, dealer or municipal securities dealer. The proposed amendments would amend Rule G-12(h) by requiring close-outs to be settled no later than 20 calendar days after the settlement date. The proposed amendments to G-12(h)(i)(B) would allow for the close-out process to continue to provide three options to the purchasing dealer. The three options include: (1) Purchase (``buy-in'') at the current market all or any part of the securities necessary to complete the transaction for the account and liability of the seller; (2) accept from the seller in satisfaction of the seller's obligation under the original contract (which shall be concurrently cancelled) the delivery of municipal securities that are comparable to those originally bought in quantity, quality, yield or price, and maturity, with any additional expenses or any additional cost of acquiring such substituted securities being borne by the seller; or (3) require the seller to repurchase the securities on terms which provide that the seller pay an amount which includes accrued interest and bear the burden of any change in market price or yield. Firms must coordinate internally to determine which of the three close-out options are appropriate for any given fail-to-deliver situation. While a buy-in may be the most preferred method, Rule G- 12(h) provides two other options to a purchaser in the event a buy-in is not feasible. Firms are reminded that, regardless of the option agreed upon by the counterparties, including a cancelation of the original transaction, the close-out transaction is reportable to the Real-time Transaction Reporting System (``RTRS'') as currently required pursuant to Rule G-14. Additionally, the proposed amendments to Rule G-12(h)(i)(A) would allow a purchaser to notify the seller of the purchaser's intent to close-out the transaction the first business day following the purchaser's original transaction settlement date, instead of waiting five business days as currently required in Rule G-12(h)(i)(A). Currently Rule G-12(h) references use of the telephone and mail as part of the notification process. The proposed amendments would update Rule G-12(h) throughout, to reflect modern communication methods and widely-used industry practices that would facilitate more timely and efficient close-outs. For example, DTCC's SMART/Track is available for use by any existing NSCC clearing firm or DTCC settling member, allowing users to create, retransmit, respond, update, cancel and view a notice. The proposed amendments to Rule G-12(h)(i)(D) would require sellers to use their best efforts to locate the securities that are subject to a close-out notice from a purchaser. The proposed amendments to Rule G- 12(h)(i)(E)(1) would also require the seller to bear any burden in the market price, with any benefit from any change in the market price remaining with the purchaser. The proposed amendments would also require a purchasing dealer that has multiple counterparties, to utilize the FIFO (first-in-first-out) method for determining the contract date for the failing quantity. Amendments to Rule G-12(h)(iv) would require dealers to maintain all records regarding the close-out transaction as part of the firm's books and records. III. Summary of Comments Received and the MSRB's Response As noted previously, the Commission received three comment letters on the proposed rule change and a response [[Page 57962]] letter from the MSRB.\9\ The commenters generally support the proposed rule change.\10\ However, some commenters asked for further clarification and provided suggested amendments to the proposed rule change.\11\ The MSRB has responded to the commenters, as discussed below.\12\ --------------------------------------------------------------------------- \9\ See supra notes 4 and 5. \10\ Id. \11\ Id. \12\ See MSRB Response and Amendment Letter. --------------------------------------------------------------------------- 1. Shorter Close-Out Deadline As noted above, the original proposed rule change provided for a close-out deadline of 20 calendar days. Both BDA and SIFMA commented that they would support an even shorter close-out period, with both suggesting a period of 10 calendar days, with an option for the buyer to consent to a 10-day extension, for a maximum aggregate total of 20 days.\13\ --------------------------------------------------------------------------- \13\ See BDA Letter and SIFMA Letter. --------------------------------------------------------------------------- In response to comments, the MSRB proposed, in Amendment No. 1, to amend the original proposed rule change to require firms to resolve an inter-dealer fail from 20 calendar days to 10 calendar days and permit the buyer to grant the seller a one-time 10 calendar day extension, which would allow the buyer flexibility, while still ensuring that inter-dealer fails would be closed-out in a maximum of 20 calendar days. The MSRB stated in the Proposing Release that ``a more timely resolution of inter-dealer fails would ultimately benefit customers by providing greater certainty that their fully paid for securities are in fact owned in their account and not allocated to a firm short, and would also benefit dealers by reducing the risk and costs associated with inter-dealer fails.'' \14\ The MSRB states in the MSRB Response and Amendment Letter that shortening the close-out period from 20 calendar days, as stated in the original proposed rule change, to 10 calendar days will further reduce the risk and cost associated with inter-dealer fails. --------------------------------------------------------------------------- \14\ See supra note 3. --------------------------------------------------------------------------- 2. Requests for Clarification and Guidance BDA commented that its member firms still have outstanding questions about how the proposed rule change would impact close-out processes related to accounts transferred to a broker-dealer via the Automated Customer Account Transfer Service (``ACATS''), and requested additional guidance from the MSRB regarding close-outs through ACATS.\15\ SIFMA requested further guidance from the MSRB regarding close-outs with respect to self-directed customer accounts, in which broker-dealers are not allowed to use discretion.\16\ --------------------------------------------------------------------------- \15\ See BDA Letter. \16\ See SIFMA Letter. --------------------------------------------------------------------------- The MSRB responded that both of these requests for guidance are beyond the scope of the proposed rule change, both as originally proposed and as amended by Amendment No. 1.\17\ --------------------------------------------------------------------------- \17\ See MSRB Response and Amendment Letter. --------------------------------------------------------------------------- IV. Discussion and Commission Findings The Commission has carefully considered the proposed rule change, as modified by Amendment No. 1, as well as the three comment letters received and the MSRB's response. The Commission finds that the proposed rule change, as amended by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB. In particular, the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act. Section 15B(b)(2)(C) of the Act requires that the MSRB's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities and municipal financial products, to remove impediments to and perfect the mechanism of a free and open market in municipal securities and municipal financial products, in general, to protect investors, municipal entities, obligated persons, and the public interest.\18\ --------------------------------------------------------------------------- \18\ See 15 U.S.C. 78o-4(b)(2)(C). --------------------------------------------------------------------------- The MSRB states that the proposed rule change would benefit investors, dealers and issuers. Specifically, the MSRB states that dealers may benefit from clarifications and revisions that more closely reflect actual market practices. In addition, dealers may be able to more quickly and efficiently resolve inter-dealer fails, which may reduce dealer risk, reduce the likelihood and duration that dealers are required to pay ``substitute interest'' to customers and reduce systemic risk. The MSRB further states that the proposed rule change may also reduce the likelihood and duration of firm short positions that allocate to customer long positions, reduce investor tax exposure and increase investor confidence in the market. According to the MSRB, issuers and the market as a whole may benefit from increased investor confidence. In approving the proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation.\19\ The Commission believes the proposed rule change will improve efficiency in the municipal securities market. The Commission notes that all of the commenters stated that the proposed rule change would have positive effects on municipal market efficiency.\20\ 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. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78c(f). \20\ See supra note 4. --------------------------------------------------------------------------- As noted above, the Commission received three comment letters on the filing. The Commission believes that the MSRB, through its responses and through proposed changes in Amendment No. 1, has addressed commenters' concerns. For the reasons noted above, including those discussed in the MSRB Response and Amendment Letter, the Commission believes that the proposed rule change, as amended by Amendment No. 1, is consistent with the Act. V. Solicitation of Comments on Amendment No. 1 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 to the proposed rule change is 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-2016-07 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-2016-07. 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 [[Page 57963]] 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-2016-07 and should be submitted on or before September 14, 2016. VI. Accelerated Approval of Proposed Rule Change as Modified by Amendment No. 1 The Commission finds good cause for approving the proposed rule change, as amended by Amendment No. 1, prior to the 30th day after the date of publication of notice in the Federal Register. As discussed above, Amendment No. 1 amends the proposed rule change by shortening the required time frame for firms to resolve an inter-dealer fail from 20 calendar days to 10 calendar days, and permitting the buyer to grant the seller a one-time 10 calendar day extension. The MSRB has proposed the revisions included in Amendment No. 1 to further reduce the risk and cost associated with inter-dealer fails. As noted by the MSRB, the only substantive change to the proposed amendment, the shortening of the close-out period, was made to address concerns raised during the comment period. The MSRB has further noted that, in light of the stated goal of the original proposal to compress the timing for initiating and completing a close-out, the revisions are consistent with the original proposal and are unlikely to be controversial. For the foregoing reasons, the Commission finds good cause for approving the proposed rule change, as modified by Amendment No. 1, 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,\21\ that the proposed rule change (SR-MSRB-2016-07), as modified by Amendment No. 1, be, and hereby is, approved on an accelerated basis. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(2). For the Commission, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-20205 Filed 8-23-16; 8:45 am] BILLING CODE 8011-01-P
![57960 Federal Register / Vol. 81, No. 164 / Wednesday, August 24, 2016 / Notices
protection of investors and the public SECURITIES AND EXCHANGE For the Commission, by the Division of
interest, in the context of the limited COMMISSION Trading and Markets, pursuant to delegated
authority.6
permitted activities of CABs. Although
FINRA is providing flexibility to CABs, Robert W. Errett,
[Release No. 34–78610; File No. SR–
we note that FINRA states that a CAB’s NYSEArca–2016–82] Deputy Secretary.
supervisory procedures must be [FR Doc. 2016–20204 Filed 8–23–16; 8:45 am]
appropriate for the member’s business, Self-Regulatory Organizations; NYSE BILLING CODE 8011–01–P
size, structure and customers, and that Arca, Inc.; Notice of Designation of a
FINRA will monitor, as part of its Longer Period for Commission Action
on a Proposed Rule Change To List SECURITIES AND EXCHANGE
examination and surveillance process, COMMISSION
the development and operation of CABs’ and Trade Shares of the JPMorgan
business to identify emergency or Diversified Event Driven ETF Under [Release No. 34–78611; File No. SR–MSRB–
NYSE Arca Equities Rule 8.600 2016–07]
business disruptions at CABs that affect
the ability of the members to meet their August 18, 2016. Self-Regulatory Organizations;
existing obligations to investors and On June 20, 2016, NYSE Arca, Inc. Municipal Securities Rulemaking
issuers. Accordingly, the Commission filed with the Securities and Exchange Board; Notice of Filing of Amendment
believes that the proposed rule change Commission (‘‘Commission’’), pursuant No. 1 and Order Granting Accelerated
is reasonably designed to prevent to Section 19(b)(1) of the Securities Approval of a Proposed Rule Change,
fraudulent and manipulative acts and Exchange Act of 1934 (‘‘Act’’) 1 and Rule as Modified by Amendment No. 1,
practices, to promote just and equitable 19b–4 thereunder,2 a proposed rule Consisting of Proposed Amendments
principles of trade, and, in general, to change to list and trade shares of the to Rule G–12, on Uniform Practice,
protect investors and the public interest JPMorgan Diversified Event Driven ETF Regarding Close-Out Procedures for
consistent with Section 15A(b)(6) of the under NYSE Arca Equities Rule 8.600. Municipal Securities
Exchange Act. The proposed rule change was
published for comment in the Federal August 18, 2016.
IV. Conclusion Register on July 7, 2016.3 The I. Introduction
Commission received no comment
For the reasons discussed above, the On May 11, 2016, the Municipal
letters on the proposed rule change.
Commission finds that the rule change, Securities Rulemaking Board (the
Section 19(b)(2) of the Act 4 provides
as modified by Amendment Nos. 1 and ‘‘MSRB’’ or ‘‘Board’’) filed with the
that, within 45 days of the publication
2, is consistent with the Exchange Act Securities and Exchange Commission
of notice of the filing of a proposed rule
and the rules and regulations (the ‘‘SEC’’ or ‘‘Commission’’), pursuant
change, or within such longer period up to Section 19(b)(1) of the Securities
thereunder, in particular with Section to 90 days as the Commission may
15A(b)(6) of the Exchange Act, which Exchange Act of 1934 (‘‘Act’’) 1 and Rule
designate if it finds such longer period 19b-4 thereunder,2 a proposed rule
requires in part that FINRA’s rules be to be appropriate and publishes its
designed to prevent fraudulent and change consisting of proposed
reasons for so finding or as to which the amendments to Rule G–12, on uniform
manipulative acts and practices, to self-regulatory organization consents, practice, regarding close-out procedures
promote just and equitable principles of the Commission shall either approve the for municipal securities. The proposed
trade, and, in general, to protect proposed rule change, disapprove the rule change was published for comment
investors and the public interest.121 proposed rule change, or institute in the Federal Register on June 1, 2016.3
It Is Therefore Ordered, pursuant to proceedings to determine whether the The Commission received three
Section 19(b)(2) of the Act,122 that the proposed rule change should be comment letters on the proposal.4 On
rule change, SR–FINRA–2015–054, as disapproved. The 45th day after July 25, 2016, the MSRB responded to
modified by Amendment Nos. 1 and 2, publication of the notice for this the comments 5 and filed Amendment
proposed rule change is August 21, No. 1 to the proposed rule change.6 The
be, and hereby is, approved.
2016. The Commission is extending this
For the Commission, by the Division of 45-day time period. 6 17 CFR 200.30–3(a)(31).
Trading and Markets, pursuant to delegated The Commission finds that it is 1 15 U.S.C. 78s(b)(1).
authority.123 appropriate to designate a longer period 2 17 CFR 240.19b-4.
3 Securities Exchange Act Release No. 77903 (May
Robert Errett, within which to take action on the
25, 2016) (the ‘‘Proposing Release’’), 81 FR 35111
Deputy Secretary. proposed rule change so that it has (June 1, 2016).
[FR Doc. 2016–20211 Filed 8–23–16; 8:45 am] sufficient time to consider the proposed 4 See Letters to Secretary, Commission, from
rule change. Accordingly, the Leslie M. Norwood, Managing Director and
BILLING CODE 8011–01–P
Commission, pursuant to Section Associate General Counsel, Securities Industry and
19(b)(2) of the Act,5 designates October Financial Markets Association (‘‘SIFMA’’), dated
June 22, 2016 (the ‘‘SIFMA Letter’’); Michael
5, 2016, as the date by which the Nicholas, Chief Executive Officer, Bond Dealers of
Commission should either approve or America (‘‘BDA’’), dated June 22, 2016 (the ‘‘BDA
disapprove or institute proceedings to Letter’’); and David T. Bellaire, Esq., Executive Vice
president and General Counsel, Financial Services
determine whether to disapprove the Institute (‘‘FSI’’), dated June 22, 2016 (the ‘‘FSI
proposed rule change (File Number SR– Letter’’).
mstockstill on DSK3G9T082PROD with NOTICES
NYSEArca–2016–82). 5 See Letter to Secretary, Commission, from
Michael Cowart, Deputy Director, Professional
1 15
Qualifications and Assistant General Counsel,
U.S.C. 78s(b)(1).
MSRB, dated July 25, 2016 (the ‘‘MSRB Response
2 17 CFR 240.19b–4. and Amendment Letter’’), available at https://
3 See Securities Exchange Act Release No. 78218
121 See
www.sec.gov/comments/sr-msrb-2016-07/
15 U.S.C. 78o–3(b)(6). (Jul. 1, 2016), 81 FR 44339. msrb201607-4.pdf.
122 15 U.S.C. 78s(b)(2). 4 15 U.S.C. 78s(b)(2). 6 Id. In Amendment No. 1, the MSRB partially
123 17 CFR 200.30–3(a)(12). 5 Id. amended the text of the original proposed rule
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![Federal Register / Vol. 81, No. 164 / Wednesday, August 24, 2016 / Notices 57963
submission, all subsequent VII. Conclusion standardized records, Commission, SRO
amendments, all written statements It Is Therefore Ordered, pursuant to and state examiners could be unable to
with respect to the proposed rule Section 19(b)(2) of the Act,21 that the determine whether broker-dealers are in
change that are filed with the proposed rule change (SR–MSRB–2016– compliance with the Commission’s
Commission, and all written 07), as modified by Amendment No. 1, antifraud and anti-manipulation rules,
communications relating to the be, and hereby is, approved on an financial responsibility program, and
proposed rule change between the accelerated basis. other Commission, SRO, and State laws,
Commission and any person, other than rules, and regulations.
For the Commission, pursuant to delegated As of April 1, 2016 there were 4,104
those that may be withheld from the
authority.22
public in accordance with the broker-dealers registered with the
Robert W. Errett, Commission. The Commission estimates
provisions of 5 U.S.C. 552, will be
available for Web site viewing and Deputy Secretary. that these broker-dealer respondents
printing in the Commission’s Public [FR Doc. 2016–20205 Filed 8–23–16; 8:45 am] incur a total burden of 2,763,566 hours
Reference Room, 100 F Street NE., BILLING CODE 8011–01–P per year to comply with Rule 17a–3.
Washington, DC 20549 on official In addition, Rule 17a–3 contains
business days between the hours of ongoing operation and maintenance
10:00 a.m. and 3:00 p.m. Copies of the SECURITIES AND EXCHANGE costs for broker-dealers, including the
filing also will be available for COMMISSION cost of postage to provide customers
inspection and copying at the principal with account information, and costs for
Proposed Collection; Comment equipment and systems development.
office of the MSRB. All comments
Request The Commission estimates that under
received will be posted without change;
the Commission does not edit personal Upon Written Request, Copies Available Rule 17a–3(a)(17), approximately
identifying information from From: Securities and Exchange 41,143,233 customers will need to be
submissions. You should submit only Commission, Office of FOIA Services, provided with information regarding
information that you wish to make 100 F Street NE., Washington, DC their account on a yearly basis. The
available publicly. All submissions 20549–2736. Commission estimates that the postage
should refer to File Number SR–MSRB– costs associated with providing those
Extension:
2016–07 and should be submitted on or Rule 17a–3, SEC File No. 270–026, OMB customers with copies of their account
before September 14, 2016. Control No. 3235–0033. record information would be
approximately $13,577,267 per year
VI. Accelerated Approval of Proposed Notice is hereby given that pursuant (41,143,233 × $0.33).1 The staff
Rule Change as Modified by to the Paperwork Reduction Act of 1995 estimates that broker-dealers
Amendment No. 1 (‘‘PRA’’) (44 U.S.C. 3501 et seq.) the establishing liquidity, credit, and
Securities and Exchange Commission market risk management controls
The Commission finds good cause for (‘‘Commission’’) is soliciting comments pursuant to Rule 17a–3(a)(23) incur one-
approving the proposed rule change, as on the existing collection of information time startup costs of $924,000, or
amended by Amendment No. 1, prior to provided for in Rule 17a–3 (17 CFR $308,000 amortized over a three-year
the 30th day after the date of 240.17a–3), under the Securities approval period, to hire outside counsel
publication of notice in the Federal Exchange Act of 1934 (15 U.S.C. 78a et to review the controls. The staff further
Register. As discussed above, seq.). The Commission plans to submit estimates that the ongoing equipment
Amendment No. 1 amends the proposed this existing collection of information to and systems development costs relating
rule change by shortening the required the Office of Management and Budget to Rule 17a–3 for the industry would be
time frame for firms to resolve an inter- (‘‘OMB’’) for extension and approval. about $30,677,094 per year.
dealer fail from 20 calendar days to 10 Rule 17a–3 under the Securities
Consequently, the total cost burden
calendar days, and permitting the buyer Exchange Act of 1934 establishes
associated with Rule 17a–3 would be
to grant the seller a one-time 10 minimum standards with respect to
approximately $44,562,361 per year.
calendar day extension. business records that broker-dealers Written comments are invited on: (a)
The MSRB has proposed the revisions registered with the Commission must Whether the proposed collection of
included in Amendment No. 1 to further make and keep current. These records information is necessary for the proper
reduce the risk and cost associated with are maintained by the broker-dealer (in performance of the functions of the
inter-dealer fails. As noted by the accordance with a separate rule), so they Commission, including whether the
MSRB, the only substantive change to can be used by the broker-dealer and information shall have practical utility;
the proposed amendment, the reviewed by Commission examiners, as (b) the accuracy of the Commission’s
shortening of the close-out period, was well as other regulatory authority estimate of the burden of the proposed
made to address concerns raised during examiners, during inspections of the collection of information; (c) ways to
the comment period. The MSRB has broker-dealer. enhance the quality, utility, and clarity
further noted that, in light of the stated The collections of information
of the information to be collected; and
goal of the original proposal to compress included in Rule 17a–3 are necessary to
(d) ways to minimize the burden of the
the timing for initiating and completing provide Commission, self-regulatory
collection of information on
a close-out, the revisions are consistent organization (‘‘SRO’’) and state
respondents, including through the use
with the original proposal and are examiners to conduct effective and
of automated collection techniques or
mstockstill on DSK3G9T082PROD with NOTICES
unlikely to be controversial. efficient examinations to determine
other forms of information technology.
whether broker-dealers are complying
For the foregoing reasons, the Consideration will be given to
with relevant laws, rules, and
Commission finds good cause for comments and suggestions submitted in
regulations. If broker-dealers were not
approving the proposed rule change, as required to create these baseline, 1 Estimates of postage costs are derived from past
modified by Amendment No. 1, on an
conversations with industry representatives and
accelerated basis, pursuant to Section 21 15 U.S.C. 78s(b)(2). have been adjusted to account for inflation and
19(b)(2) of the Act. 22 17 CFR 200.30–3(a)(12). increases in postage costs.
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Document Created: 2016-08-24 03:03:03
Document Modified: 2016-08-24 03:03:03
| 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 | 81 FR 57960 |
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