82 FR 49908 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change To Amend MSRB Form G-45 To Collect Additional Data About the Transactional Fees Primarily Assessed by Programs Established To Implement the ABLE Act
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 207 (October 27, 2017)
Federal Register Volume 82, Issue 207 (October 27, 2017)
| Page Range | 49908-49912 | |
| FR Document | 2017-23374 |
[Federal Register Volume 82, Number 207 (Friday, October 27, 2017)] [Notices] [Pages 49908-49912] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-23374] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81921; File No. SR-MSRB-2017-08] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change To Amend MSRB Form G- 45 To Collect Additional Data About the Transactional Fees Primarily Assessed by Programs Established To Implement the ABLE Act October 23, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on October 13, 2017 the Municipal Securities Rulemaking Board (the ``MSRB'' or ``Board'') filed with the Securities and Exchange Commission (the ``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the MSRB. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The MSRB filed with the Commission a proposed rule change to amend Form G-45 under MSRB Rule G-45, on reporting of information on municipal fund securities,\3\ to collect additional data about the transactional fees primarily assessed by programs established to implement the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (the ``ABLE Act'' and an ``ABLE program'') (the ``proposed rule change'').\4\ The MSRB requests that the proposed rule change become effective on June 30, 2018.\5\ --------------------------------------------------------------------------- \3\ Form G-45 is an electronic form on which submissions of the information required by Rule G-45 are made to the MSRB. \4\ The ABLE Act was enacted on December 19, 2014 as part of The Tax Increase Prevention Act of 2014 (Pub. L. 113-295). \5\ As noted under ``Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change'' below, the proposed rule change does not alter the date that underwriters to ABLE programs must submit data under Rule G-45 to the MSRB. --------------------------------------------------------------------------- The text of the proposed rule change is available on the MSRB's Web site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2017-Filings.aspx, at the MSRB's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The ABLE Act added Section 529A to the Internal Revenue Code of 1986, as amended (the ``Code''), to permit a state, or an agency or instrumentality thereof, to establish and maintain a new type of tax- advantaged savings program to help support individuals with disabilities in [[Page 49909]] maintaining health, independence, and quality of life.\6\ Section 529A was modeled, in part, on Section 529 of the Code.\7\ Section 529 established college savings plans (``529 college savings plans'') to encourage saving for future higher education costs.\8\ The SEC has determined that interests offered by such 529 college savings plans are municipal securities under Section 3(a)(29) of the Act.\9\ --------------------------------------------------------------------------- \6\ 26 U.S.C. 529A. \7\ Report to accompany H.R. 647, Committee on Ways and Means, H.R. Rept. No. 113-614, part 1 at 7 (2014). \8\ 26 U.S.C. 529(b)(1)(A)(ii). Section 529 also established prepaid tuition plans. 26 U.S.C. 529(b)(1)(A)(i). Under a prepaid tuition plan, an investor may purchase tuition credits or certificates on behalf of a designated beneficiary, which entitle the beneficiary to the waiver or payment of qualified higher education expenses. Prepaid tuition plans generally have residency requirements. Such credits or certificates generally are not viewed as being municipal securities, and dealers generally do not participate in the marketing of prepaid tuition plans. \9\ Exchange Act Release No. 70462 (Sept. 20, 2013), 78 FR 67468, 67472-73 (Nov. 12, 2013). See Letter from Catherine McGuire, Chief Counsel, Division of Market Regulation, U.S. Securities and Exchange Commission, to Diane G. Klinke, General Counsel, Municipal Securities Rulemaking Board (Feb. 26, 1999) (determining that at least some interests in higher education trusts are municipal securities under the Act). --------------------------------------------------------------------------- Given the similarities between the structure of ABLE accounts and 529 college savings plan accounts and the manner in which interests in ABLE accounts would be distributed, the MSRB requested and received interpretive guidance from the SEC staff about the status of interests in ABLE accounts under the federal securities laws.\10\ SEC staff stated that ``at least some interests in ABLE accounts . . . may be `municipal securities' as defined in Section 3(a)(29) of the Exchange Act, depending on the facts and circumstances'' \11\ and that ``[i]f a dealer is acting as an `underwriter' (as defined in Rule 15c2-12(f)(8)) in connection with that primary offering, the dealer may be subject to the requirements of Rule 15c2-12.'' \12\ --------------------------------------------------------------------------- \10\ Letter dated March 31, 2016 from Jessica S. Kane, Director, Office of Municipal Securities, U.S. Securities and Exchange Commission to Robert A. Fippinger, Esq., Chief Legal Officer, Municipal Securities Rulemaking Board, in response to letter dated December 31, 2015 from Robert A. Fippinger to Jessica S. Kane, both letters are available at https://www.sec.gov/info/municipal/msrb-letter-033116-interests-in-able-accounts.pdf. \11\ Id. \12\ Id. --------------------------------------------------------------------------- After the MSRB received the SEC staff guidance, the MSRB provided interpretative guidance relating to interests in ABLE programs under MSRB Rule D-12, on the definition of ``municipal fund security.'' \13\ That guidance was followed by the August 2016 guidance published by the Board to address particular issues, including Rule G-45, applicable to the sale of interests in ABLE programs by brokers, dealers and municipal securities dealers (collectively, ``dealers'').\14\ --------------------------------------------------------------------------- \13\ MSRB Notice 2016-14 (Apr. 12, 2016). \14\ Id. --------------------------------------------------------------------------- Specifically, in August 2016, the MSRB filed for immediate effectiveness an amendment to Rule G-45 to delay, by two years from August 29, 2016 until August 29, 2018, the date that submissions are due under Rule G-45 from underwriters to ABLE programs (the ``August filing'').\15\ The MSRB believed that the delay would help ensure that the MSRB would receive reliable, complete and accurate filings on Form G-45 from such underwriters. The MSRB also believed that the delay would help ensure that the MSRB would receive more meaningful data about a larger set of ABLE programs on Form G-45.\16\ Similarly, to receive more meaningful data about ABLE programs, the MSRB submits the proposed rule change. However, this proposed rule change does not alter the date that underwriters to ABLE programs must begin to submit data to the MSRB under Rule G-45. --------------------------------------------------------------------------- \15\ See SR-MSRB-2016-11 (Aug. 12, 2016). \16\ Further, as part of that August filing, the MSRB provided guidance in supplementary material under (i) Rule G-42, that such rule applies to municipal advisors that engage in municipal advisory activities for sponsors or trustees of ABLE programs and (ii) Rule G-44, that such rule equally applies to municipal advisors that engage in municipal advisory activities for sponsors or trustees of 529 college savings plans, ABLE programs, and other municipal fund securities. That guidance provided clarity about the applicability of such rules to municipal advisors that engage in municipal advisory activities for sponsors or trustees of municipal fund securities. The MSRB provided that guidance in response to requests from industry groups in other Board rulemaking proposals. Id.; see also MSRB Notice 2016-20 (Aug. 12, 2016). --------------------------------------------------------------------------- (ii) The Collection of Additional Relevant Fee and Expense Data At the time the MSRB submitted the August filing, there were two ABLE programs that were operational. Since that time, the MSRB understands that 27 more ABLE programs have become operational. As each additional ABLE program has become operational, the MSRB has reviewed the disclosure booklet for the program to determine whether there is data about the programs that would be beneficial for the MSRB to analyze under Rule G-45 that an underwriter to an ABLE program would not be required to submit under current Form G-45. But for the program type, the review process of ABLE program fees was identical to the review process that the MSRB used in determining the data elements relating to the fees and expenses associated with an investment in a 529 college savings plan when the MSRB first developed Form G-45. While the MSRB believes that current Form G-45 would capture most of the data that would be informative to the MSRB, the MSRB noted that there are differences between the pricing structure of certain ABLE programs and the typical 529 college savings plan. Specifically, based on the MSRB's review, there are transactional fees assessed by ABLE programs that generally are not assessed by 529 college savings plans, and there is variance based on state residency in the level of the account maintenance fee assessed by ABLE programs that generally does not occur with 529 college savings plans.\17\ --------------------------------------------------------------------------- \17\ The MSRB believes that the transactional fees assessed by an ABLE program reflect the nature of an ABLE program as more of a short-term, rather than as a longer-term, savings vehicle when compared to a 529 college savings plan. Further, the MSRB believes that the variance in the level or amount of the account maintenance fee assessed by an ABLE program between an in-state and an out-of- state resident account owner reflects state disability policies. --------------------------------------------------------------------------- Rule G-45 requires dealers acting in the capacity as underwriters to ABLE programs or 529 college savings plans to submit on a semi- annual or annual basis (in the case of performance data) certain information about the programs or plans they underwrite. That information includes program or plan descriptive information, assets, asset allocation information (at the investment option level), contributions, withdrawals, fee and cost structure, performance, and other information. The MSRB and other regulatory authorities use this data to analyze 529 college savings plans (and will be able to use this data to analyze ABLE programs), monitor their growth rate, size and investment options, and compare 529 college savings plans based on fees, costs, and performance. By collecting this information, the MSRB enhances its understanding of 529 college savings plans (and will be able to enhance its understanding of ABLE programs). The Commission has agreed with the MSRB that the collection of information under Rule G-45 is intended to protect investors, municipal entities and the public interest and prevent fraudulent and manipulative acts and practices by allowing the MSRB to collect comprehensive, reliable, and consistent electronic data about such programs or [[Page 49910]] plans.\18\ The Commission has stated that ``to fulfill its statutory responsibilities to investors and municipal entities in the context of 529 plans, the Commission believes that it is appropriate for the MSRB to possess basic, reliable information regarding 529 plans, including the underlying investment options.'' \19\ --------------------------------------------------------------------------- \18\ Exchange Act Release No. 71598 (Feb. 21, 2014), 79 FR 11161, 11167 (Feb. 27, 2014) (SR-MSRB-2013-04). \19\ Id. --------------------------------------------------------------------------- To help ensure that the MSRB continues to receive comprehensive information regarding ABLE programs and 529 college savings plans, the proposed rule change would amend Form G-45 to collect additional information relating to fees and expenses. This data would enhance the MSRB's understanding of the markets for ABLE programs and 529 college savings plans, including the differences among such programs or plans. Further, as discussed under ``Statutory Basis'' below, the additional fee and expense information would assist the MSRB in fulfilling its investor protection mission. The information about fees and expenses would continue to be submitted in a format that is consistent with the disclosure principles of the College Savings Plan Network (``CSPN''), an affiliate of the National Association of State Treasurers,\20\ which commenters on previous MSRB rulemaking proposals relating to Form G-45 have stated is the industry norm.\21\ --------------------------------------------------------------------------- \20\ CSPN published its voluntary Disclosure Principles Statement No. 6 (``Disclosure Principles No. 6'') on July 1, 2017 available at http://www.collegesavings.org/wp-content/uploads/2015/06/CSPN-Disclosure-Principles-Statement-No.-6.pdf. Disclosure Principles No. 6 recommends acceptable disclosure practices for state entities that establish and maintain 529 college savings plans. CSPN states that Disclosure Principles No. 6 also may be of use to qualified ABLE programs. See Disclosure Principles No. 6. To assist underwriters, the MSRB included subheadings in how certain investment options fees and expenses are displayed on Form G-45 to more closely correspond with the subheadings used in Disclosure Principles No. 6. The subheadings, however, do not change any of the data elements required to be submitted on Form G-45. \21\ See SR-MSRB-2013-04 (Jun. 10, 2013). --------------------------------------------------------------------------- Under the proposed rule change, an underwriter to an ABLE program or a 529 college savings plan would be required to submit data on Form G-45 about the following additional fees and expenses, as applicable:Account opening fee; investment administration fee; change in account owner fee; cancellation/withdrawal fee; change in investment option/transfer fee; rollover fee; returned excess aggregate contributions fee; rejected ACH or EFT fee; overnight delivery fee; in-network ATM fee; out-of-network ATM fee; ATM mini statement fee; international POS/ATM transaction fee; foreign transaction fee; overdraft fee; copy of check or statement fee (per request); copy of check images mailed with monthly statement fee; check fee (i.e., fee for blank checks); returned check fee; checking account option fee; re-issue of disbursement check fee; stop payment fee; debit card fee; debit card replacement fee; outgoing wire fee; expedited debit card rush delivery fee; paper fee; and miscellaneous fee (to address any miscellaneous transactional fee that is not otherwise specified on Form G-45). In addition, under the proposed rule change, the MSRB would collect data about any variance in the annual account maintenance fee due to the residency of the account owner. The proposed rule would apply to underwriters to ABLE programs as well as to underwriters to 529 college savings plans.\22\ --------------------------------------------------------------------------- \22\ The MSRB, however, anticipates that most of the data that would be collected by the proposed rule change would relate to ABLE programs. As noted, the MSRB believes that 529 college savings plans generally do not assess the fees and charges that are the subject of this proposed rule change. --------------------------------------------------------------------------- 2. Statutory Basis The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act,\23\ which provides that the MSRB's rules shall: --------------------------------------------------------------------------- \23\ 15 U.S.C. 78o-4(b)(2)(C). 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, and, in general, to protect investors, --------------------------------------------------------------------------- municipal entities, obligated persons, and the public interest. The Act requires that the MSRB protect investors. To fulfill this responsibility, it is necessary for the MSRB to have a complete and reliable data set about ABLE programs and 529 college savings plans. That data includes data about the fees and expenses associated with an investment in an ABLE program or a 529 college savings plan. The proposed rule change would provide the MSRB with more meaningful data about the transactional fees primarily assessed by ABLE programs and about variances in the account maintenance fee due to the residency of the account owner. The additional information about fees and expenses associated with ABLE programs and 529 college savings plans would facilitate the MSRB's ability to analyze the market for ABLE programs and 529 college savings plans as well as to evaluate trends and differences among the ABLE programs and 529 college savings plans. The MSRB believes that understanding the costs associated with ABLE programs and 529 college savings plans as well as the other data collected under Rule G-45 are basic requirements for regulation and necessary to assist the MSRB with its evaluation as to whether its regulatory scheme for dealers that sell interests in or underwrite ABLE programs and/or 529 college savings plans is sufficient, or whether additional rulemaking is necessary to protect investors. Further, the information that would be collected by the proposed rule change would help the MSRB and other regulators that examine dealers prioritize their efforts with respect to those dealers that sell interests in or underwrite ABLE programs and 529 college savings plans. Those other regulators may use this information to determine the nature or timing of risk-based dealer examinations. In short, the MSRB believes that the information to be collected by the proposed rule change would better enable the MSRB to protect investors in these programs and plans and the public interest. Further, the MSRB has a statutory obligation to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade. In general, underwriters to ABLE programs and 529 college savings plans draft or participate in the drafting of the program or plan disclosure booklets, as well as the marketing materials for the ABLE program or 529 college savings plans. The MSRB or other regulators may use the information submitted on Form G-45 to, among other things, determine if the disclosure documents or marketing materials prepared or reviewed by underwriters are consistent with the data submitted to the MSRB for regulatory purposes. [[Page 49911]] B. Self-Regulatory Organization's Statement on Burden on Competition Section 15B(b)(2)(C) of the Act requires that MSRB rules not be designed to impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.\24\ In accordance with the Board's policy on the use of economic analysis in rulemaking, the Board has reviewed the proposed rule change.\25\ To fulfill its responsibility to protect investors, as ABLE programs and 529 college savings plans have significant retail investor components, the MSRB must become well informed about the fees and expenses assessed under such programs or plans and about the market for ABLE programs and 529 college savings plans as a whole. The proposed rule change is necessary for the MSRB to gather relevant data required to ensure the MSRB's regulatory scheme is sufficient and/or to determine whether additional rulemaking is necessary to protect investors and the public interest. --------------------------------------------------------------------------- \24\ Id. \25\ Policy on the Use of Economic Analysis in MSRB Rulemaking is available at http://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx. --------------------------------------------------------------------------- The proposed rule change would require an underwriter to submit additional information about the fees and expenses associated with the applicable ABLE program or 529 college savings plan. The proposed rule change would enable the MSRB to carry out its regulatory responsibilities under the Act and fulfill its mission to ensure efficiency in the market for these programs. The MSRB would realize substantial benefits in obtaining reliable and consistent information about the fees and expenses of ABLE programs and 529 college savings plans, promoting greater regulatory oversight and investor protection. Although there are costs associated with compliance with the proposed rule change, these costs should be minimal. The data that the MSRB wishes to collect are readily available and should be known to the underwriters of these plans. Additionally, underwriters are already required to submit certain information to the MSRB on Form G-45 on a semi-annual basis.\26\ --------------------------------------------------------------------------- \26\ The proposed rule change would not impose any burden on non-underwriting dealers that only sell interests in either ABLE programs or 529 college savings plans, as the obligation to submit information semi-annually to the MSRB will only be imposed on underwriters. --------------------------------------------------------------------------- Among the possible alternatives to the proposed rule change are (a) a manual review of information in program or plan disclosure documents submitted to EMMA or on program or plan Web sites; or (b) a review of data supplied by information vendors voluntarily. However, neither of these alternatives would satisfy the regulatory needs of the MSRB. A manual review of information would be insufficient because some of the information sought by the MSRB is not disclosed in public documents in a uniform and consistent manner. Moreover, a manual review of information would be time consuming and inefficient, especially given that underwriters are already required to submit certain information to the MSRB on a semi-annual basis. In addition, while a review of information voluntarily submitted to informational vendors may be of interest, it is unreliable from a regulatory standpoint. Information supplied by dealers that are underwriters to ABLE programs and/or 529 college savings plans to information vendors may differ with respect to its reliability and quality. Essentially, the MSRB would be relying on such information vendors for important regulatory activities. For regulatory purposes, the MSRB seeks a consistent set of uniform, reliable and relevant information about ABLE programs and 529 college savings plans. On balance, the MSRB believes that semi-annual reporting of limited information, which is readily available to dealers that are underwriters to ABLE programs and/or 529 college savings plans, would not pose an unreasonable burden on such underwriters, and the likely benefits of the proposed amendments justify the likely associated costs in both the near and long term. The MSRB 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. The additional information would be submitted on an equal and non-discriminatory basis, and the requirement would apply equally to all dealers that serve as underwriters to ABLE programs and/or 529 college savings plans. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period of up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-MSRB-2017-08 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-2017-08. 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish [[Page 49912]] to make available publicly. All submissions should refer to File Number SR-MSRB-2017-08 and should be submitted on or before November 17, 2017. For the Commission, pursuant to delegated authority.\27\ --------------------------------------------------------------------------- \27\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-23374 Filed 10-26-17; 8:45 am] BILLING CODE 8011-01-P
![49908 Federal Register / Vol. 82, No. 207 / Friday, October 27, 2017 / Notices
technology integration that will amendments, all written statements have been prepared by the MSRB. The
ultimately reduce complexity for Users with respect to the proposed rule Commission is publishing this notice to
of the Exchange that are also change that are filed with the solicit comments on the proposed rule
participants on other CBOE Affiliated Commission, and all written change from interested persons.
Exchanges. communications relating to the
The Commission believes that waiver I. Self-Regulatory Organization’s
proposed rule change between the
of the 30-day operative delay is Statement of the Terms of Substance of
Commission and any person, other than
consistent with the protection of the Proposed Rule Change
those that may be withheld from the
investor and the public interest. The public in accordance with the The MSRB filed with the Commission
Commission notes that the proposed provisions of 5 U.S.C. 552, will be a proposed rule change to amend Form
rule change is based on rules of its available for Web site viewing and G–45 under MSRB Rule G–45, on
affiliated exchanges, CBOE and C2, and printing in the Commission’s Public reporting of information on municipal
thus does not raise any new or novel Reference Room, 100 F Street NE., fund securities,3 to collect additional
issues. Accordingly, the Commission Washington, DC 20549, on official data about the transactional fees
hereby waives the 30-day operative business days between the hours of primarily assessed by programs
delay and designates the proposed rule 10:00 a.m. and 3:00 p.m. Copies of the established to implement the Stephen
change as operative upon filing.20 filing also will be available for Beck, Jr., Achieving a Better Life
At any time within 60 days of the inspection and copying at the principal Experience Act of 2014 (the ‘‘ABLE Act’’
filing of the proposed rule change, the office of the Exchange. All comments and an ‘‘ABLE program’’) (the
Commission summarily may received will be posted without change. ‘‘proposed rule change’’).4 The MSRB
temporarily suspend such rule change if Persons submitting comments are requests that the proposed rule change
it appears to the Commission that such cautioned that we do not redact or edit become effective on June 30, 2018.5
action is: (1) Necessary or appropriate in personal identifying information from The text of the proposed rule change
the public interest; (2) for the protection comment submissions. You should is available on the MSRB’s Web site at
of investors; or (3) otherwise in submit only information that you wish www.msrb.org/Rules-and-
furtherance of the purposes of the Act. to make available publicly. All Interpretations/SEC-Filings/2017-
If the Commission takes such action, the submissions should refer to File Filings.aspx, at the MSRB’s principal
Commission shall institute proceedings Number SR–BatsBZX–2017–68 and office, and at the Commission’s Public
to determine whether the proposed rule should be submitted on or before Reference Room.
should be approved or disapproved. November 17, 2017. II. Self-Regulatory Organization’s
IV. Solicitation of Comments For the Commission, by the Division of Statement of the Purpose of, and
Trading and Markets, pursuant to delegated Statutory Basis for, the Proposed Rule
Interested persons are invited to authority.21 Change
submit written data, views, and Eduardo A. Aleman,
arguments concerning the foregoing, In its filing with the Commission, the
Assistant Secretary. MSRB included statements concerning
including whether the proposed rule
[FR Doc. 2017–23372 Filed 10–26–17; 8:45 am] the purpose of and basis for the
change is consistent with the Act.
Comments may be submitted by any of BILLING CODE 8011–01–P proposed rule change and discussed any
the following methods: comments it received on the proposed
rule change. The text of these statements
Electronic Comments SECURITIES AND EXCHANGE may be examined at the places specified
• Use the Commission’s Internet COMMISSION in Item IV below. The MSRB has
comment form (http://www.sec.gov/ [Release No. 34–81921; File No. SR–MSRB– prepared summaries, set forth in
rules/sro.shtml); or 2017–08] Sections A, B, and C below, of the most
• Send an email to rule-comments@ significant aspects of such statements.
sec.gov. Please include File Number SR– Self-Regulatory Organizations;
Municipal Securities Rulemaking A. Self-Regulatory Organization’s
BatsBZX–2017–68 on the subject line.
Board; Notice of Filing of a Proposed Statement of the Purpose of, and
Paper Comments Rule Change To Amend MSRB Form Statutory Basis for, the Proposed Rule
• Send paper comments in triplicate G–45 To Collect Additional Data About Change
to Brent J. Fields, Secretary, Securities the Transactional Fees Primarily 1. Purpose
and Exchange Commission, 100 F Street Assessed by Programs Established To
The ABLE Act added Section 529A to
NE., Washington, DC 20549–1090. Implement the ABLE Act
the Internal Revenue Code of 1986, as
All submissions should refer to File amended (the ‘‘Code’’), to permit a state,
October 23, 2017.
Number SR–BatsBZX–2017–68. This file or an agency or instrumentality thereof,
Pursuant to Section 19(b)(1) of the
number should be included on the to establish and maintain a new type of
Securities Exchange Act of 1934 (the
subject line if email is used. To help the tax-advantaged savings program to help
‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule
Commission process and review your 19b–4 thereunder,2 notice is hereby support individuals with disabilities in
comments more efficiently, please use given that on October 13, 2017 the
only one method. The Commission will Municipal Securities Rulemaking Board 3 Form G–45 is an electronic form on which
post all comments on the Commission’s
asabaliauskas on DSKBBXCHB2PROD with NOTICES
submissions of the information required by Rule G–
(the ‘‘MSRB’’ or ‘‘Board’’) filed with the 45 are made to the MSRB.
Internet Web site (http://www.sec.gov/ Securities and Exchange Commission 4 The ABLE Act was enacted on December 19,
rules/sro.shtml). Copies of the (the ‘‘SEC’’ or ‘‘Commission’’) the 2014 as part of The Tax Increase Prevention Act of
submission, all subsequent proposed rule change as described in 2014 (Pub. L. 113–295).
5 As noted under ‘‘Self-Regulatory Organization’s
20 For purposes only of waiving the 30-day
Items I, II, and III below, which Items
Statement of the Purpose of, and Statutory Basis for,
operative delay, the Commission has also the Proposed Rule Change’’ below, the proposed
21 17 CFR 200.30–3(a)(12).
considered the proposed rule’s impact on rule change does not alter the date that
1 15 U.S.C. 78s(b)(1).
efficiency, competition, and capital formation. See underwriters to ABLE programs must submit data
15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. under Rule G–45 to the MSRB.
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maintaining health, independence, and guidance was followed by the August process that the MSRB used in
quality of life.6 Section 529A was 2016 guidance published by the Board determining the data elements relating
modeled, in part, on Section 529 of the to address particular issues, including to the fees and expenses associated with
Code.7 Section 529 established college Rule G–45, applicable to the sale of an investment in a 529 college savings
savings plans (‘‘529 college savings interests in ABLE programs by brokers, plan when the MSRB first developed
plans’’) to encourage saving for future dealers and municipal securities dealers Form G–45.
higher education costs.8 The SEC has (collectively, ‘‘dealers’’).14
determined that interests offered by While the MSRB believes that current
Specifically, in August 2016, the
such 529 college savings plans are MSRB filed for immediate effectiveness Form G–45 would capture most of the
municipal securities under Section an amendment to Rule G–45 to delay, by data that would be informative to the
3(a)(29) of the Act.9 two years from August 29, 2016 until MSRB, the MSRB noted that there are
Given the similarities between the August 29, 2018, the date that differences between the pricing
structure of ABLE accounts and 529 submissions are due under Rule G–45 structure of certain ABLE programs and
college savings plan accounts and the from underwriters to ABLE programs the typical 529 college savings plan.
manner in which interests in ABLE (the ‘‘August filing’’).15 The MSRB Specifically, based on the MSRB’s
accounts would be distributed, the believed that the delay would help review, there are transactional fees
MSRB requested and received ensure that the MSRB would receive assessed by ABLE programs that
interpretive guidance from the SEC staff reliable, complete and accurate filings generally are not assessed by 529 college
about the status of interests in ABLE on Form G–45 from such underwriters. savings plans, and there is variance
accounts under the federal securities The MSRB also believed that the delay based on state residency in the level of
laws.10 SEC staff stated that ‘‘at least would help ensure that the MSRB the account maintenance fee assessed by
some interests in ABLE accounts . . . would receive more meaningful data ABLE programs that generally does not
may be ‘municipal securities’ as defined about a larger set of ABLE programs on occur with 529 college savings plans.17
in Section 3(a)(29) of the Exchange Act, Form G–45.16 Similarly, to receive more
depending on the facts and Rule G–45 requires dealers acting in
meaningful data about ABLE programs,
circumstances’’ 11 and that ‘‘[i]f a dealer the capacity as underwriters to ABLE
the MSRB submits the proposed rule
is acting as an ‘underwriter’ (as defined programs or 529 college savings plans to
change. However, this proposed rule
in Rule 15c2–12(f)(8)) in connection change does not alter the date that submit on a semi-annual or annual basis
with that primary offering, the dealer underwriters to ABLE programs must (in the case of performance data) certain
may be subject to the requirements of begin to submit data to the MSRB under information about the programs or plans
Rule 15c2–12.’’ 12 Rule G–45. they underwrite. That information
After the MSRB received the SEC staff includes program or plan descriptive
guidance, the MSRB provided (ii) The Collection of Additional information, assets, asset allocation
interpretative guidance relating to Relevant Fee and Expense Data information (at the investment option
interests in ABLE programs under At the time the MSRB submitted the level), contributions, withdrawals, fee
MSRB Rule D–12, on the definition of August filing, there were two ABLE and cost structure, performance, and
‘‘municipal fund security.’’ 13 That programs that were operational. Since other information. The MSRB and other
that time, the MSRB understands that 27 regulatory authorities use this data to
6 26 U.S.C. 529A. more ABLE programs have become analyze 529 college savings plans (and
7 Report to accompany H.R. 647, Committee on operational. As each additional ABLE will be able to use this data to analyze
Ways and Means, H.R. Rept. No. 113–614, part 1
at 7 (2014). program has become operational, the ABLE programs), monitor their growth
8 26 U.S.C. 529(b)(1)(A)(ii). Section 529 also MSRB has reviewed the disclosure rate, size and investment options, and
established prepaid tuition plans. 26 U.S.C. booklet for the program to determine compare 529 college savings plans
529(b)(1)(A)(i). Under a prepaid tuition plan, an whether there is data about the
investor may purchase tuition credits or certificates based on fees, costs, and performance.
on behalf of a designated beneficiary, which entitle
programs that would be beneficial for By collecting this information, the
the beneficiary to the waiver or payment of the MSRB to analyze under Rule G–45 MSRB enhances its understanding of
qualified higher education expenses. Prepaid that an underwriter to an ABLE program 529 college savings plans (and will be
tuition plans generally have residency would not be required to submit under
requirements. Such credits or certificates generally able to enhance its understanding of
current Form G–45. But for the program
are not viewed as being municipal securities, and ABLE programs). The Commission has
dealers generally do not participate in the type, the review process of ABLE
marketing of prepaid tuition plans. program fees was identical to the review agreed with the MSRB that the
9 Exchange Act Release No. 70462 (Sept. 20, collection of information under Rule G–
2013), 78 FR 67468, 67472–73 (Nov. 12, 2013). See 14 Id. 45 is intended to protect investors,
Letter from Catherine McGuire, Chief Counsel, 15 See SR–MSRB–2016–11 (Aug. 12, 2016). municipal entities and the public
Division of Market Regulation, U.S. Securities and
Exchange Commission, to Diane G. Klinke, General
16 Further, as part of that August filing, the MSRB interest and prevent fraudulent and
provided guidance in supplementary material manipulative acts and practices by
Counsel, Municipal Securities Rulemaking Board
under (i) Rule G–42, that such rule applies to
(Feb. 26, 1999) (determining that at least some
municipal advisors that engage in municipal allowing the MSRB to collect
interests in higher education trusts are municipal comprehensive, reliable, and consistent
advisory activities for sponsors or trustees of ABLE
securities under the Act).
10 Letter dated March 31, 2016 from Jessica S.
programs and (ii) Rule G–44, that such rule equally electronic data about such programs or
applies to municipal advisors that engage in
Kane, Director, Office of Municipal Securities, U.S.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
municipal advisory activities for sponsors or
Securities and Exchange Commission to Robert A. trustees of 529 college savings plans, ABLE 17 The MSRB believes that the transactional fees
Fippinger, Esq., Chief Legal Officer, Municipal programs, and other municipal fund securities. That assessed by an ABLE program reflect the nature of
Securities Rulemaking Board, in response to letter guidance provided clarity about the applicability of an ABLE program as more of a short-term, rather
dated December 31, 2015 from Robert A. Fippinger such rules to municipal advisors that engage in than as a longer-term, savings vehicle when
to Jessica S. Kane, both letters are available at municipal advisory activities for sponsors or compared to a 529 college savings plan. Further, the
https://www.sec.gov/info/municipal/msrb-letter- trustees of municipal fund securities. The MSRB MSRB believes that the variance in the level or
033116-interests-in-able-accounts.pdf. provided that guidance in response to requests from amount of the account maintenance fee assessed by
11 Id.
industry groups in other Board rulemaking an ABLE program between an in-state and an out-
12 Id.
proposals. Id.; see also MSRB Notice 2016–20 (Aug. of-state resident account owner reflects state
13 MSRB Notice 2016–14 (Apr. 12, 2016). 12, 2016). disability policies.
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![49912 Federal Register / Vol. 82, No. 207 / Friday, October 27, 2017 / Notices
to make available publicly. All Exchange, Incorporated (‘‘C2’’), onto the practicable will reduce potential
submissions should refer to File same technology as the Exchange. confusion for Users.
Number SR–MSRB–2017–08 and should The text of the proposed rule change The Exchange adopt Stop Orders and
be submitted on or before November 17, is available at the Exchange’s Web site Stop Limit Orders, to be defined in
2017. at www.bats.com, at the principal office Rules 21.1(d)(11) and (d)(12),
For the Commission, pursuant to delegated of the Exchange, and at the respectively. In order to adopt such
authority.27 Commission’s Public Reference Room. rules, the Exchange also proposes to re-
Eduardo A. Aleman,
number current Rule 21.1(d)(10) (related
II. Self-Regulatory Organization’s to ‘‘Intermarket Sweep Orders’’) as Rule
Assistant Secretary. Statement of the Purpose of, and 21.1(d)(9) (currently reserved), and
[FR Doc. 2017–23374 Filed 10–26–17; 8:45 am] Statutory Basis for, the Proposed Rule current Rule 21.1(d)(11) (related to
BILLING CODE 8011–01–P Change ‘‘Qualified Continent Cross Orders’’) as
In its filing with the Commission, the Rule 21.1(d)(10).
Exchange included statements A Stop Order would be defined in
SECURITIES AND EXCHANGE concerning the purpose of and basis for Rule 21.1(d)(11) as an order that
COMMISSION the proposed rule change and discussed becomes a Market Order 6 when the stop
any comments it received on the price is elected. A Stop Order to buy
[Release No. 34–81920; File No. SR–
BatsEDGX–2017–39] proposed rule change. The text of these would be elected when the consolidated
statements may be examined at the last sale in the option occurs at or
Self-Regulatory Organizations; Bats places specified in Item IV below. The above, or the NBB is equal to or higher
EDGX Exchange, Inc.; Notice of Filing Exchange has prepared summaries, set than, the specified stop price. A Stop
and Immediate Effectiveness of a forth in Sections A, B, and C below, of Order to sell would be elected when the
Proposed Rule Change to Rule 21.1, the most significant parts of such consolidated last sale in the option
Definitions, To Modify Stop Orders and statements. occurs at or below, or the NBO is equal
Stop Limit Orders Applicable to the to or lower than, the specified stop
(A) Self-Regulatory Organization’s price.
Exchange’s Equity Options Platform in Statement of the Purpose of, and
Preparation for the C2 Options In addition, the Exchange proposes to
Statutory Basis for, the Proposed Rule restrict Stop Orders, which, as described
Exchange, Incorporated Technology Change
Migration above, are converted to Market Orders
1. Purpose when elected, from being elected when
October 23, 2017. the underlying security is in a Limit
In 2016, the Exchange and its State, as defined in the Limit Up-Limit
Pursuant to Section 19(b)(1) of the affiliates Bats BZX Exchange, Inc.
Securities Exchange Act of 1934 (the Down Plan. Such an order would be
(‘‘BZX’’), Bats BYX Exchange, Inc. held until the end of the Limit State, at
‘‘Act’’),1 and Rule 19b–4 thereunder,2 (‘‘BYX’’), and Bats EDGA Exchange, Inc.
notice is hereby given that on October which point the order would again
(‘‘EDGA’’) received approval to affect a become eligible to be elected. This
10, 2017, Bats EDGX Exchange, Inc. (the merger (the ‘‘Merger’’) of the Exchange’s
‘‘Exchange’’ or ‘‘EDGX’’) filed with the aspect of the proposal is also based on
indirect parent company, Bats Global the rules of CBOE 7 and C2 8 and is
Securities and Exchange Commission Markets, Inc. (‘‘BGM’’), with CBOE
(‘‘Commission’’) the proposed rule consistent with the Exchange’s current
Holdings, Inc. (‘‘CBOE Holdings’’), the handling of Market Orders, which are
change as described in Items I and II direct parent of Chicago Board Options
below, which Items have been prepared not accepted when the underlying
Exchange, Incorporated (‘‘CBOE’’) and security is in a Limit State.9 As Stop
by the Exchange. The Exchange has C2 Options Exchange, Incorporated
designated this proposal as a ‘‘non- Orders become Market Orders when
(‘‘C2’’, and together with the Exchange, elected, the Exchange believes that this
controversial’’ proposed rule change BZX, BYX, EDGA, and CBOE the ‘‘CBOE
pursuant to Section 19(b)(3)(A) of the change is merely an extension of its
Affiliated Exchanges’’).5 The CBOE existing functionality.
Act 3 and Rule 19b–4(f)(6)(iii)
Affiliated Exchanges are working to A Stop Limit Order would be defined
thereunder,4 which renders it effective align certain system functionality,
upon filing with the Commission. The in Rule 21.1(d)(12) as an order that
retaining only intended differences becomes a limit order when the stop
Commission is publishing this notice to between the CBOE Affiliated Exchanges,
solicit comments on the proposed rule price is elected. A Stop Limit Order to
in the context of a technology migration. buy would be elected and would
change from interested persons. Thus, the proposals set forth below are become a buy limit order when the
I. Self-Regulatory Organization’s intended to add certain system consolidated last sale in the option
Statement of the Terms of Substance of functionality that is more similar to
the Proposed Rule Change functionality offered by CBOE and C2 in 6 ‘‘Market Orders’’ are orders to buy or sell at the
order to ultimately provide a consistent best price available at the time of execution. Market
The Exchange filed a proposal to Orders to buy or sell an option traded on are
technology offering for market
update Rule 21.1 to make modifications rejected if they are received when the underlying
participants who interact with the CBOE
to the Exchange’s rules and security is subject to a ‘‘Limit State’’ or ‘‘Straddle
Affiliated Exchanges. Although the State’’ as defined in the Plan to Address
functionality applicable to the
Exchange intentionally offers certain Extraordinary Market Volatility Pursuant to Rule
Exchange’s options platform (‘‘EDGX 608 of Regulation NMS under the Act (the ‘‘Limit
features that differ from those offered by
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Options’’) in preparation for the Up-Limit Down Plan’’). Any portion of a Market
its affiliates and will continue to do so,
technology migration of the Exchange’s Order that would execute at a price more than $0.50
the Exchange believes that offering or 5 percent worse than the NBBO at the time the
affiliated options exchange, C2 Options
similar functionality to the extent order initially reaches BZX Options, whichever is
greater, will be cancelled. See Exchange Rule
27 17 CFR 200.30–3(a)(12). 5 See Securities Exchange Act Release No. 79585 21.1(d)(5).
1 15 U.S.C. 78s(b)(1). 7 See CBOE Rule 6.53, Interpretation and Policy
(December 16, 2016), 81 FR 93988 (December 22,
2 17 CFR 240.19b–4. .01C.
2016) (SR–BatsBZX–2016–68; SR–BatsBYX–2016–
3 15 U.S.C. 78s(b)(3)(A). 8 See C2 Rule 6.10, Interpretation and Policy .01C.
29; SR–BatsEDGA–2016–24; SR–BatsEDGX–2016–
4 17 CFR 240.19b–4(f)(6)(iii). 60). 9 See Exchange Rule 21.1(d)(5).
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Document Created: 2017-10-27 02:06:30
Document Modified: 2017-10-27 02:06:30
| 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 | 82 FR 49908 |
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