83_FR_55427 83 FR 55214 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change Concerning Certain Data Elements on Form G-45 Under MSRB Rule G-45, on Reporting of Information on Municipal Fund Securities

83 FR 55214 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change Concerning Certain Data Elements on Form G-45 Under MSRB Rule G-45, on Reporting of Information on Municipal Fund Securities

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 213 (November 2, 2018)

Page Range55214-55219
FR Document2018-23966

Federal Register, Volume 83 Issue 213 (Friday, November 2, 2018)
[Federal Register Volume 83, Number 213 (Friday, November 2, 2018)]
[Notices]
[Pages 55214-55219]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-23966]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84496; File No. SR-MSRB-2018-08]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of a Proposed Rule Change Concerning Certain 
Data Elements on Form G-45 Under MSRB Rule G-45, on Reporting of 
Information on Municipal Fund Securities

October 29, 2018.
    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 15, 2018 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB 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 clarify a data element concerning the 
program management fee, to add a data element concerning the investment 
option closing date, and to delete data elements concerning annualized 
three-year performance information (the ``proposed rule change''). The 
MSRB requests that the proposed rule change become effective on June 
30, 2019.
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    \3\ Form G-45 is an electronic form on which submissions of the 
information required by Rule G-45 are made to the MSRB.
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    The text of the proposed rule change is available on the MSRB's 
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2018-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 MSRB proposes to refine and enhance certain of the investment 
option data that the MSRB collects under Rule G-45 from underwriters to 
529 savings plans \4\ and ABLE programs.\5\ Specifically, the MSRB 
proposes to amend Form G-45 to (i) clarify a data element concerning 
the program management fee, (ii) add a data element concerning the 
investment option closing date, and (iii) delete data elements 
concerning annualized three-year performance information. As discussed 
under ``Statutory Basis,'' the proposed rule change would provide 
information that would enhance the MSRB's and other regulators' ability 
to effectively and efficiently analyze 529 savings plans and ABLE 
programs to assess the impact of each 529 savings plan and ABLE program 
on the market, to evaluate trends and differences, and to gain an 
understanding of the aggregate risk taken by investors.
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    \4\ Section 529 of the Internal Revenue Code of 1986, as amended 
(the ``Code'') established savings plans (``529 savings plans'') to 
encourage saving for future education costs. 26 U.S.C. 
529(b)(1)(A)(ii). The SEC has determined that interests offered by 
such 529 savings plans are municipal securities under Section 
3(a)(29) of the Exchange Act. Exchange Act Release No. 70462 (Sept. 
20, 2013), 78 FR 67468, 67472-73 (Nov. 12, 2013).
    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. 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.
    Thus, the term ``529 plans'' includes 529 saving plans and 
prepaid tuition plans.
    \5\ ABLE programs are programs designed to implement Section 
529A to the Code. 26 U.S.C. 529A. Section 529A of the Code permits a 
state, or an agency or instrumentality thereof, to establish and 
maintain a tax-advantaged savings program to help support 
individuals with disabilities in maintaining health, independence, 
and quality of life.
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Background
    Rule G-45 requires brokers, dealers and municipal securities 
dealers (``dealers'') acting in the capacity as underwriters to 529 
savings plans or ABLE programs to submit on a semi-annual or annual 
basis (in the case of performance data) certain information about the 
plans or programs they underwrite. That information includes plan or 
program descriptive information, assets, asset allocation information 
(at the investment option level), contributions, withdrawals, fee and 
cost structure, performance, and other information. Beginning with the 
reporting period ending June 30, 2015 (in the case of 529 savings 
plans) and June 30, 2018 (in the case of ABLE programs), underwriters 
to 529 savings plans or ABLE programs have reported such information 
electronically to the MSRB.
    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.\6\ 
Specifically, collecting this information enhances the MSRB's 
understanding of 529 savings plans and ABLE programs. Such information 
informs the MSRB's regulatory activities and also the activities of 
those other financial regulators (i.e., the SEC, the Financial

[[Page 55215]]

Industry Regulatory Authority, Inc., and banking regulators) that are 
charged with examining and enforcing MSRB rules.
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    \6\ Exchange Act Release No. 71598 (Feb. 21, 2014), 79 FR 11161, 
11167 (Feb. 27, 2014) (SR-MSRB-2013-04) (stating ``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''). 
The MSRB believes that the collection of data about ABLE programs is 
equally important for the MSRB to fulfill its statutory 
responsibilities to investors and municipal entities.
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Enhancements to Rule G-45
A. Clarification of Program Management Fee Data Element
    Throughout the seven reporting periods during which the MSRB has 
analyzed data submitted on Form G-45, the MSRB has observed anomalies 
in the data submitted under Investment Option information. Those 
anomalies related to the program management fee and, as discussed below 
under ``New Investment Option Closing Date Data Element,'' to 
investment options that closed during the reporting period. Form G-45, 
under the Investment Option information subsection ``Program Management 
Fee,'' requires that an underwriter report the program management fee 
(expressed as an annual percentage of 529 savings plan or ABLE program 
assets) assessed by the 529 savings plan or ABLE program. The program 
management fee typically is a separately identifiable percentage that 
is shown in the fee table for the 529 savings plan or ABLE program, but 
for some 529 savings plans and ABLE programs, this is not the case. 
Instead for those 529 savings plans or ABLE programs, the program 
management fee is assessed by the underlying mutual fund in which the 
investment option invests (this is typically done through a 529 or ABLE 
share class of the mutual fund). Underwriters for those 529 savings 
plans or ABLE programs generally report the program management fee as 
zero on Form G-45, and then may add explanatory information in the 
notes section of the form about the fee. That explanatory information, 
however, may or may not actually disclose the program management fee in 
a format that is typically used for comparison--i.e., as an annual 
percentage of 529 savings plan or ABLE program assets. The proposed 
rule change would clarify that the underwriter must report the program 
management fee as an annual percentage of assets (e.g., x.xx%) no 
matter whether the program management fee is assessed by the underlying 
mutual fund or by the 529 savings plan or ABLE program itself. The 
underwriter would not be able to report the program management fee as 
zero and then explain in a note that it is assessed by the underlying 
mutual fund. Thus, the proposed rule change would allow the MSRB, as 
well as other regulators, to analyze data in a uniform format that 
would facilitate (i) comparison among 529 savings plans and ABLE 
programs, (ii) the evaluation of trends and differences, and (iii) the 
identification of potential risks to investors that may affect those 
529 savings plans and ABLE programs.
B. New Investment Option Closing Date Data Element
    From time to time, an investment option offered in a 529 savings 
plan may close to new investors, but allow current account owners who 
have allocated account value to an investment option to continue to 
invest in that ``closed'' investment option. Alternatively, the 529 
savings plan may close an investment option completely.\7\ In either 
case, the investment option data submitted for that investment option 
on Form G-45 can be contrary to what the MSRB would have expected for 
the investment option when compared to prior reporting periods, and the 
MSRB may not be able to easily determine why such variance occurred. To 
address this issue, the proposed rule change would add check-the-box 
items to Form G-45 that would alert the MSRB about whether an 
investment option has closed to new investors, but allows current 
account owners to contribute funds, or whether the investment option 
has closed to all investors.
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    \7\ As noted previously, with the reporting period ending June 
30, 2018, underwriters to ABLE programs began to submit information 
about the ABLE programs they underwrite on Form G-45. The MSRB 
believes that, similar to the investment options offered in 529 
savings plans, investment options in ABLE programs may close to 
investors.
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C. Deletion of Three-Year Annualized Performance Data Requirement
    The MSRB sought public comment about providing additional data 
concerning the investment options offered in 529 savings plans and ABLE 
programs.\8\ In response, the MSRB received the suggestion that the 
MSRB no longer require that an underwriter submit three-year annualized 
performance information for an investment option on Form G-45.
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    \8\ MSRB Notice 2017-17 (Aug. 22, 2017) (the ``Request for 
Comment''). Specifically, the MSRB sought comment on a possible 
clarification to the data it currently receives about the program 
management fee and about requiring underwriters to submit additional 
data relating to (i) performance data--i.e., to provide additional 
information about the benchmark return percent and to provide 
performance data by asset class and (ii) the investment option 
closing date. The Board determined not to proceed with the 
collection of additional performance data.
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    Form G-45 requires that underwriters annually report (i) total 
returns, including sales charges, (ii) total returns, excluding sales 
charges, and (iii) benchmark return percent for specified periods, 
including annualized or annual three-year percent. At the time the MSRB 
approved Form G-45, the College Savings Plans Network's (CSPN) 
voluntary disclosure principles that provide recommendations to the 
state entities that establish and maintain 529 savings plans (the 
``disclosure principles'') \9\ and which commenters stated were the 
industry norm in other rulemakings, recommended that such disclosure be 
made.\10\ However, since that time, CSPN has updated the disclosure 
principles, and CSPN no longer recommends that a 529 savings plan 
include three-year performance information.\11\ Further, three-year 
annualized performance information is not required by the SEC for 
mutual funds.
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    \9\ CSPN, a non-profit organization, was established as an 
affiliate to the National Association of State Treasurers, to make 
higher education more attainable and to serve as a clearinghouse for 
information among state-administered college savings programs.
    According to CSPN, CSPN, the states that administer 529 plans 
(i.e., 529 savings plans and prepaid tuition plans) and their 
private sector partners are committed to clarifying and enhancing 
disclosure and offering materials for 529 plans. CSPN stated that it 
adopted voluntary disclosure principles to enhance the comparability 
of information that investors should consider when investing in 529 
savings plans. See College Savings Plan Network Disclosure 
Principles Statement No. 6 (adopted July 1, 2017).
    \10\ See File No. SR-MSRB-2013-04 (proposed rule change 
consisting of new MSRB Rule G-45, on reporting of information on 
municipal fund securities, and Form G-45, and amendments to Rule G-
8, on books and records, and Rule G-9, on preservation of records); 
College Savings Plans Network Disclosure Principles Statement No. 5 
(adopted May 3, 2011).
    \11\ College Savings Plans Network Disclosure Principles 
Statement No. 6 (adopted July 1, 2017).
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    The MSRB has determined that Form G-45, even without the three-year 
performance data, would continue to provide the MSRB with sufficient 
performance information to assist the MSRB with its analysis of 529 
savings plans and ABLE programs. Therefore, because the MSRB believes 
that it will have sufficient performance information, it is no longer 
an appropriate regulatory burden and should be eliminated to avoid 
unnecessary costs.
2. Statutory Basis
    The MSRB Section 15B(b)(2) of the Exchange Act \12\ provides that:
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    \12\ 15 U.S.C. 78o-4(b)(2).

[t]he Board shall propose and adopt rules to effect the purposes of 
this title with respect to transactions in municipal securities 
effected by brokers, dealers, and municipal securities dealers and 
advice provided to or on behalf of municipal entities or obligated 
persons by brokers, dealers, municipal securities dealers, and 
municipal advisors

[[Page 55216]]

with respect to municipal financial products, the issuance of 
municipal securities, and solicitations of municipal entities or 
obligated persons undertaken by brokers, dealers, municipal 
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securities dealers, and municipal advisors.

    Section 15B(b)(2)(C) of the Exchange Act \13\ provides that the 
MSRB's rules shall:
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    \13\ 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, 
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municipal entities, obligated persons, and the public interest.

The MSRB believes that the proposed rule change is consistent with 
Sections 15B(b)(2) \14\ and 15B(b)(2)(C) \15\ of the Exchange Act. The 
proposed rule change would help prevent fraudulent and manipulative 
acts and practices, promote just and equitable principles of trade, and 
foster cooperation and coordination with persons engaged in regulating 
transactions in municipal securities.
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    \14\ 15 U.S.C. 78o-4(b)(2).
    \15\ 15 U.S.C. 78o-4(b)(2)(C).
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    The proposed rule change would help prevent fraudulent and 
manipulative acts and practices. The proposed rule change would allow 
the MSRB to analyze data in a uniform format that would facilitate the 
(i) efficient and effective comparison among 529 savings plans and ABLE 
programs, (ii) evaluation of trends and differences, and (iii) 
identification of potential risks to investors that may affect those 
529 savings plans and ABLE programs. The ability to identify trends and 
differences, also would enable the regulators that are charged with 
inspecting for compliance with and enforcing the MSRB's rules, as noted 
above, to better determine whether the 529 savings plan or ABLE program 
disclosure documents and marketing materials, which underwriters 
generally draft or participate in drafting, are consistent with the 
data submitted to the MSRB. Further, the ability to identify potential 
risks to investors from the Form G-45 data analysis would inform the 
MSRB with its development of rulemaking and interpretive guidance 
priorities with respect to MSRB regulated entities. Further, the 
ability to identify potential risks to investors from the Form G-45 
data would inform other regulators with their development of their 
priorities for risk-based compliance examinations for such regulated 
entities. These enhanced oversight abilities, in turn, would help 
prevent fraudulent and manipulative acts and practices.
    The proposed rule change also would promote just and equitable 
principles of trade. For the same reasons that the proposed rule change 
would help prevent fraudulent and manipulative acts and practices, the 
proposed rule change also would promote just and equitable principles 
of trade.
    In addition, the proposed rule change would foster cooperation and 
coordination with persons engaged in regulating municipal securities 
transactions. For the same reasons that the proposed rule change would 
help prevent fraudulent and manipulative acts and practices, the 
proposed rule change also would foster cooperation and coordination 
with persons engaged in regulating municipal securities transactions. 
In addition, as discussed under ``Deletion of Three-Year Annual 
Performance Data Requirement,'' the proposed rule change would make the 
collection of performance data under Form G-45 more consistent with 
what is required by other financial regulators and with current 
industry norms, and thereby also would foster regulatory coordination 
with persons engaged in regulating municipal securities transactions.
    Moreover, the MSRB believes that the proposed rule change is 
consistent with the MSRB's statutory obligation to protect investors 
and municipal entities. To fulfill this responsibility, it is necessary 
for the MSRB to have a complete and reliable data set about 529 savings 
plans and ABLE programs, including the investment options offered in 
those 529 savings plans and ABLE programs. The proposed rule change 
would provide the MSRB with additional meaningful data about the 
investment options offered in those plans or programs--specifically, 
the proposed rule change would clarify an existing data element 
relating to the program management fee and would add a data element in 
the form of a check the box to alert the MSRB about the closing of an 
investment option during the reporting period. This clarification and 
additional data element would facilitate the MSRB's ability to 
efficiently and effectively analyze the market for 529 savings plans 
and ABLE programs as well as to evaluate trends and differences among 
529 savings plans and the ABLE programs. The MSRB believes that 
understanding the investment options and the costs associated with 529 
savings plans and ABLE programs 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 savings plans is sufficient, or whether additional rulemaking is 
necessary to protect investors. Further, as previously noted, 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 savings plans. Those other regulators 
may use this information to determine the nature or timing of risk-
based dealer examinations. In addition, under the proposed rule change, 
the MSRB would no longer collect three-year performance data about the 
investment options and their related benchmarks, if any. As discussed 
under ``Deletion of Three-Year Annual Performance Data Requirement,'' 
the proposed rule change thereby would make the collection of 
performance data under Form G-45 more consistent with what is required 
by other financial regulators and with current industry norms. Thus, 
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 municipal entities that offer 529 savings 
plans and ABLE programs.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 15B(b)(2)(C) of the Exchange Act \16\ requires that MSRB 
rules be designed to not impose any burden on competition not necessary 
or appropriate in furtherance of the purposes of the Act. In accordance 
with the Board's policy on the use of economic analysis, the Board has 
reviewed the proposed rule change.\17\ To fulfill its responsibility to 
protect investors, the MSRB must have current and reliable information 
about the fees and expenses assessed under such programs or plans and 
the market for 529 savings plans and ABLE programs as a whole. The 
proposed rule change is

[[Page 55217]]

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.
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    \16\ Id.
    \17\ Policy on the Use of Economic Analysis in MSRB Rulemaking, 
available at http://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx. For those rule changes which the MSRB seeks 
immediate effectiveness, the MSRB usually focuses exclusively its 
examination on the burden of competition on regulated entities.
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    The need for the proposed rule change to Form G-45 arises from the 
MSRB's oversight of dealers acting as underwriters to 529 savings plans 
and ABLE programs. The MSRB believes that this information is required 
to ensure effective regulation of dealers that sell interests in and 
underwriters to 529 savings plans and ABLE programs. Since certain data 
elements are not disclosed or readily available in some instances, 
rulemaking is required to bring the information to light. Specifically,
    1. In certain instances, the program management fee is included in 
the total fund operating expenses assessed by the underlying mutual 
fund and thus is not separately disclosed. This makes comparing and 
analyzing program management fees across plans difficult; and
    2. From time to time, an investment option may either close to new 
investors but allow current account owners to continue to invest or may 
close to new investors or all investors completely. Therefore, 
investment data submitted for that investment option may not accurately 
portray the real annualized return.
    The proposed rule change to Form G-45 would clarify the requirement 
of an existing data element, the program management fee, and the 
collection of an additional data element (check-the-boxes) about the 
investment option closing date information to remedy the above 
concerns. The MSRB can therefore remove the burden on submitters of 
unnecessary follow-ups for what is, in reality, accurate albeit 
incomplete data. In addition, the proposed rule change would delete the 
requirements to report three-year annualized performance data for each 
investment option and any related benchmark.
    The MSRB has evaluated alternatives to the proposed rule change 
with regard to obtaining some of the above information without the 
proposed rule change to Form G-45. However, none of these alternatives 
is preferable to the proposed requirements. For example, the program 
management fee, as an annual percentage of assets, is already submitted 
by the underlying mutual funds in disclosure documents to the SEC. 
However, to obtain the total program management fee for an entire 
municipal security fund through a review of disclosure documents, the 
MSRB would have to manually sift through the disclosures for all 
underlying funds and calculate the total program management fee based 
on a weighted-average of assets under management for each fund. For 
regulatory purposes, the MSRB needs to efficiently obtain a consistent 
set of uniform, reliable and relevant information about 529 savings 
plans and ABLE programs in order to compare across plans. Another 
alternative to the proposed rule change to Form G-45 is a manual review 
of information in plan disclosure documents submitted to the MSRB's 
Electronic Municipal Market Access (EMMA[supreg]) \18\ website or on 
529 savings plan or ABLE program websites. A manual review of 
information would be insufficient and inefficient.
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    \18\ EMMA is a registered trademark of the MSRB.
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    The benefits from collecting program management fee and investment 
option closing date data should exceed the costs. These benefits 
include enhanced regulatory oversight of underwriters to 529 savings 
plans and ABLE programs and improved understanding of the 529 savings 
plan and ABLE program marketplace. More importantly, since the 
remaining data elements are readily available to submitters, the costs 
associated with the current recommendation would be relatively 
minor.\19\
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    \19\ Commenters confirmed that there is limited burden 
associated with providing investment option closing date information 
to the MSRB. As to the program management fee, commenters generally 
agree that it is not burdensome to report.
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    Specifically, the program management fee expressed as an annual 
percentage of assets for each share class is already disclosed to the 
SEC, as the SEC-registered underlying mutual fund in which an 
investment option invests is required to disclose the percentage of the 
program management fee in the disclosure documents that it submits to 
the SEC. The costs of the submission process would be minor. Likewise, 
the costs of submitting the investment option closing date would be 
negligible as the issuer supplements the disclosure documents for the 
529 savings plan with that information.\20\ Consequently, the benefits 
should exceed the costs after the proposed rule change would be 
implemented by the industry.
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    \20\ As noted previously, the MSRB believes that issuers of ABLE 
programs also would supplement their disclosure documents with an 
investment option's closing date.
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    In addition to voicing their opinions on the MSRB's proposed 
clarification of and new data element requirements, commenters also 
requested that the MSRB consider eliminating the current requirement to 
report three-year annualized performance information under Rule G-45, 
as the industry standard no longer includes the three-year returns 
information as a part of the performance disclosure.\21\ The MSRB 
concurs that omitting the three-year annualized performance data would 
not materially change the MSRB's regulatory capability in this area, 
and submitters should benefit from a reduced burden when they no longer 
need to report this information. The MSRB believes the cost savings 
from no longer requiring the three-year annualized performance data 
should outweigh the benefit provided by the data.
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    \21\ In addition to the three-year performance data, the MSRB 
currently requires the performance data for year-to-date, one-year, 
five-years, ten-years and since inception.
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    In the aggregate, the MSRB believes that the proposed rule change 
would provide a range of benefits, including reducing regulatory 
inefficiencies to facilitate an efficient and effective regulatory 
oversight of relevant underwriters and dealers. Although the proposed 
rule change may impose some costs on underwriters and/or require them 
to revise certain business practices and spend additional resources. 
The MSRB believes that the total costs would be less than the aggregate 
benefits that would accrue over time to the market.
Effect on Competition, Efficiency and Capital Formation
    The MSRB believes that the proposed rule change would facilitate 
regulatory oversight of the municipal fund security market and promote 
capital formation by informing rulemaking, preventing fraud, and 
protecting investors. At present, the MSRB is unable to quantitatively 
evaluate the magnitude of efficiency gains or losses, or the impact on 
capital formation, but believes that the benefits outweigh the costs 
over the long term, as the costs of compliance are expected to be 
minor. Additionally, in the MSRB's view, the proposed rule change does 
not result in an undue burden on competition since it would apply to 
all underwriters of 529 savings plans and ABLE programs equally.\22\
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    \22\ The proposed rule change would not impose any burden on 
non-underwriting dealers that only sell interests in either 529 
savings plans or ABLE programs.
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    Competition, however, may be adversely affected if, to compensate 
for costs and regulatory burden, underwriters would raise the fees 
charged to issuers, resulting in issuers refraining from using dealers 
to engage directly with potential investors, or

[[Page 55218]]

passing on some portion of the higher fee amount to investors.
    The MSRB believes that the proposed rule change would not impose an 
unnecessary or inappropriate regulatory burden on small regulated 
entities, as the burden on underwriters should be proportional to their 
business activities in relation to 529 savings plans and ABLE programs.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The MSRB sought public comment about providing additional data 
concerning the investment options offered in 529 savings plans and ABLE 
programs.\23\ In response to the Request for Comment, the MSRB received 
six comment letters.\24\ Commenters generally opposed providing 
additional data to the MSRB. However, commenters suggested that they 
could more easily provide data relating to two of the items about which 
the MSRB sought comment (a clarification concerning the program 
management fee and data concerning the investment option closing date) 
than the other two items with which the MSRB sought comment but with 
which the Board determined not to proceed. Further, one commenter 
suggested that the MSRB amend Form G-45 to delete the requirement that 
an underwriter submit investment option annualized three-year 
performance information \25\ and another commenter specifically 
supported that suggestion.\26\
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    \23\ See note 8, supra.
    \24\ The MSRB received letters from the State of West Virginia: 
Letter from John D. Perdue, West Virginia State Treasurer, dated 
September 18, 2017 (``West Virginia''); American Funds Distributors, 
Inc.: Letter from Maria Manotok, Senior Counsel, dated September 21, 
2017 (``American Funds''); Ascensus College Savings: Letter from 
Sandra Madden, General Counsel, dated September 21, 2017 
(``Ascensus''); College Savings Plans Network and College Savings 
Foundation: Letter from Richard J. Polimeni, Chairman, College 
Savings Foundation, and Young Boozer, Chairman, College Savings 
Plans Network, dated September 21, 2017 (``CSPN and CSF''); 
Investment Company Institute: Letter from Tamara K. Salmon, Senior 
Associate Counsel, dated September 21, 2017 (``ICI''); Securities 
Industry and Financial Markets Association: Letter from Leslie M. 
Norwood, Managing Director and Associate General Counsel, and 
Bernard Canepa, Vice President and Assistant General Counsel, dated 
September 21, 2017 (``SIFMA'').
    \25\ See ICI letter.
    \26\ See SIFMA letter.
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Additional Investment Option Data
i. Program Management Fee
    Although commenters generally opposed any amendment to Form G-45, 
one commenter, SIFMA, stated that it generally supports the proposed 
rule change relating to the program management fee, however, SIFMA gave 
this support while also sharing the concerns about this item expressed 
by the ICI. Other commenters stated that the program management fee 
could be proprietary,\27\ costly to report separately due to 
programming costs,\28\ and that reporting the percentage of the fee 
separately could lead to the MSRB ``double counting'' the amount of the 
program management fee.\29\
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    \27\ See Ascensus letter.
    \28\ See ICI letter.
    \29\ Id.
---------------------------------------------------------------------------

    The MSRB continues to believe that it is important to receive 
information about the program management fee in a uniform manner. With 
its adoption of Rule G-45 and Form G-45, the MSRB recognized the 
importance of receiving consistent and reliable information about 529 
savings plans for the MSRB to fulfill its mission to protect investors. 
This information allows the MSRB, as well as other regulators, to 
analyze the data in a format that can be sorted to foster a better 
understanding of the 529 savings plan industry. Without that 
information, the analytical process is not as efficient as it otherwise 
could be.
    Moreover, the SEC-registered underlying mutual fund in which an 
investment option invests is required to disclose the percentage of the 
program management fee in the disclosure documents that it submits to 
the SEC. The MSRB has obtained this information through such a review. 
The MSRB submits that the percentage of the program management fee is 
not proprietary, as it is disclosed to the SEC in public documents. For 
that same reason, the MSRB believes that underwriters would incur 
minimal costs, if any, if they were to report the percentage of the 
program management fee separately.
    As far as the double counting of the program management fee, the 
MSRB currently has the analytical tools necessary to ensure that the 
percentage of the program management fee is not double counted. 
Underwriters could simply continue to alert the MSRB in the notes 
section of Form G-45, that the program management fee is assessed by 
the underlying mutual fund in which the investment option invests. The 
MSRB then would take the note into consideration when it analyzes the 
underlying fund expenses for an investment option.
ii. Investment Option Closing Date
    Four commenters submitted comments about providing information 
about an investment option closing date. In general, commenters stated 
that they did not oppose the proposal, and that the information would 
be easily reportable, but that reporting such information may increase 
costs to the 529 savings plan, and they were not certain why the 
information would be meaningful to the MSRB.\30\ Commenters explained 
that the increased costs could result because the 529 savings plan 
would not be able to use the data it submits to other regulators on 
Form G-45.\31\
---------------------------------------------------------------------------

    \30\ See American Funds letter (``[a]though we do not oppose the 
requirement that 529 plan underwriters report whether an investment 
option has closed to new investors, we are concerned that the 
Proposal would require 529 plan underwriters to collect and provide 
to the MSRB new information''); Ascensus letter (``w]e have the 
investment option closing dates and can provide this information if 
applicable''); ICI letter (``[t]o the extent the MSRB revises Form 
G-45 to elicit this information in an easy-to-disclose format (e.g., 
as a ``check-the-box'' question), it is information that our members 
could easily report''); and SIFMA letter (``[w]e generally support 
the draft amendments pertaining to the program management fee and 
investment option closing data elements; however, we concur with the 
ICI on these points'').
    \31\ See, e.g., American Funds letter and ICI letter.
---------------------------------------------------------------------------

    The MSRB believes that having information about the investment 
option closing date would enhance the ability of the MSRB to analyze 
investment option data in a timely and efficient manner. As commenters 
acknowledged, underwriters have this information (a 529 savings plan 
must supplement its program disclosure booklet with this information in 
a timely manner to comply with its obligations under the federal 
securities laws). As noted under ``Self-Regulatory Organization's 
Statement on Burden on Competition,'' the MSRB believes that providing 
an investment option closing date should not materially increase costs 
for underwriters.
iii. Three-Year Annualized Performance Information
    As noted under ``Self-Regulatory Organization's Statement of the 
Purpose of, and Statutory Basis for, the Proposed Rule Change,'' Form 
G-45 requires that underwriters annually report (i) total returns, 
including sales charges, (ii) total returns, excluding sales charges, 
and (iii) benchmark return percent for specified periods, including 
annualized or annual three-year percent. At the time the MSRB approved 
Form G-45, the disclosure principles which commenters stated were the 
industry norm in other rulemakings, recommended that such disclosure be 
made.\32\ However, since that time, CSPN has updated the disclosure 
principles,

[[Page 55219]]

and CSPN no longer recommends that a 529 savings plan include three-
year performance information.\33\ Commenters suggested that the MSRB 
harmonize Form G-45 with the disclosure principles,\34\ and that 
continuing to provide this information to the MSRB would not be helpful 
to investors and would be burdensome to produce.\35\ In addition, 
three-year performance information is not required by the SEC for 
mutual funds.
---------------------------------------------------------------------------

    \32\ See note 10.
    \33\ See note 11.
    \34\ See ICI letter and SIFMA letter.
    \35\ See SIFMA letter.
---------------------------------------------------------------------------

    The MBRB agrees with commenters' suggestion, and the proposed rule 
change would delete this requirement. Form G-45, even without the 
three-year performance data, would continue to provide the MSRB with 
sufficient performance information to assist the MSRB with its analysis 
of the 529 savings plan and ABLE program industries. Further, the 
suggestion would result in cost savings for those industries.
iv. Economic Analysis
    Commenters confirmed that there is limited burden associated with 
providing investment option closing date information to the MSRB. As to 
the program management fee, commenters generally agree that it would be 
less burdensome to report than the benchmark performance and investment 
return data elements. While the MSRB agrees with ICI and other 
commenters \36\ that expenses may be incurred by underwriters to 
redesign the current reporting system to report the program management 
fee separately, the MSRB believes the incurred expenses would likely be 
one-time only and should not be too burdensome for the industry. In 
addition, the percentage of the program management fee itself is 
already disclosed to the SEC, as the underlying mutual fund in which an 
investment option invests is required to disclose the percentage of the 
program management fee in the disclosure documents that it submits to 
the SEC.
---------------------------------------------------------------------------

    \36\ See the Letters from Ascensus College Savings and American 
Funds.
---------------------------------------------------------------------------

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-2018-08 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-2018-08. 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 website (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 website 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 to make available publicly. All submissions 
should refer to File Number SR-MSRB-2018-08 and should be submitted on 
or before November 23, 2018.

    For the Commission, pursuant to delegated authority.\37\
---------------------------------------------------------------------------

    \37\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23966 Filed 11-1-18; 8:45 am]
 BILLING CODE 8011-01-P



     55214                          Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices

     business days between the hours of                      fund securities,3 to clarify a data                     proposes to amend Form G–45 to (i)
     10:00 a.m. and 3:00 p.m. Copies of the                  element concerning the program                          clarify a data element concerning the
     filing also will be available for                       management fee, to add a data element                   program management fee, (ii) add a data
     inspection and copying at the principal                 concerning the investment option                        element concerning the investment
     office of the Exchange. All comments                    closing date, and to delete data elements               option closing date, and (iii) delete data
     received will be posted without change.                 concerning annualized three-year                        elements concerning annualized three-
     Persons submitting comments are                         performance information (the ‘‘proposed                 year performance information. As
     cautioned that we do not redact or edit                 rule change’’). The MSRB requests that                  discussed under ‘‘Statutory Basis,’’ the
     personal identifying information from                   the proposed rule change become                         proposed rule change would provide
     comment submissions. You should                         effective on June 30, 2019.                             information that would enhance the
     submit only information that you wish                      The text of the proposed rule change                 MSRB’s and other regulators’ ability to
     to make available publicly. All                         is available on the MSRB’s website at                   effectively and efficiently analyze 529
     submissions should refer to File                        www.msrb.org/Rules-and-                                 savings plans and ABLE programs to
     Number SR–Phlx–2018–66, and should                      Interpretations/SEC-Filings/2018-                       assess the impact of each 529 savings
     be submitted on or before November 23,                  Filings.aspx, at the MSRB’s principal                   plan and ABLE program on the market,
     2018.                                                   office, and at the Commission’s Public                  to evaluate trends and differences, and
                                                             Reference Room.                                         to gain an understanding of the
       For the Commission, by the Division of
                                                                                                                     aggregate risk taken by investors.
     Trading and Markets, pursuant to delegated              II. Self-Regulatory Organization’s
     authority.17                                            Statement of the Purpose of, and                        Background
     Eduardo A. Aleman,                                      Statutory Basis for, the Proposed Rule                     Rule G–45 requires brokers, dealers
     Assistant Secretary.                                    Change                                                  and municipal securities dealers
     [FR Doc. 2018–23963 Filed 11–1–18; 8:45 am]                In its filing with the Commission, the               (‘‘dealers’’) acting in the capacity as
     BILLING CODE 8011–01–P                                  MSRB included statements concerning                     underwriters to 529 savings plans or
                                                             the purpose of and basis for the                        ABLE programs to submit on a semi-
                                                             proposed rule change and discussed any                  annual or annual basis (in the case of
     SECURITIES AND EXCHANGE                                 comments it received on the proposed                    performance data) certain information
     COMMISSION                                              rule change. The text of these statements               about the plans or programs they
                                                             may be examined at the places specified                 underwrite. That information includes
                                                             in Item IV below. The MSRB has                          plan or program descriptive
     [Release No. 34–84496; File No. SR–MSRB–
                                                             prepared summaries, set forth in                        information, assets, asset allocation
     2018–08]
                                                             Sections A, B, and C below, of the most                 information (at the investment option
     Self-Regulatory Organizations;                          significant aspects of such statements.                 level), contributions, withdrawals, fee
     Municipal Securities Rulemaking                                                                                 and cost structure, performance, and
                                                             A. Self-Regulatory Organization’s                       other information. Beginning with the
     Board; Notice of Filing of a Proposed                   Statement of the Purpose of, and
     Rule Change Concerning Certain Data                                                                             reporting period ending June 30, 2015
                                                             Statutory Basis for, the Proposed Rule                  (in the case of 529 savings plans) and
     Elements on Form G–45 Under MSRB                        Change                                                  June 30, 2018 (in the case of ABLE
     Rule G–45, on Reporting of Information
                                                             1. Purpose                                              programs), underwriters to 529 savings
     on Municipal Fund Securities
                                                                                                                     plans or ABLE programs have reported
                                                                The MSRB proposes to refine and                      such information electronically to the
     October 29, 2018.
                                                             enhance certain of the investment                       MSRB.
        Pursuant to Section 19(b)(1) of the                  option data that the MSRB collects                         The collection of information under
     Securities Exchange Act of 1934 (the                    under Rule G–45 from underwriters to                    Rule G–45 is intended to protect
     ‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule                 529 savings plans 4 and ABLE                            investors, municipal entities and the
     19b–4 thereunder,2 notice is hereby                     programs.5 Specifically, the MSRB                       public interest and prevent fraudulent
     given that on October 15, 2018 the                                                                              and manipulative acts and practices.6
     Municipal Securities Rulemaking Board                     3 Form G–45 is an electronic form on which
                                                                                                                     Specifically, collecting this information
     (the ‘‘MSRB’’ or ‘‘Board’’) filed with the              submissions of the information required by Rule
                                                             G–45 are made to the MSRB.                              enhances the MSRB’s understanding of
     Securities and Exchange Commission                        4 Section 529 of the Internal Revenue Code of         529 savings plans and ABLE programs.
     (the ‘‘SEC’’ or ‘‘Commission’’) the                     1986, as amended (the ‘‘Code’’) established savings     Such information informs the MSRB’s
     proposed rule change as described in                    plans (‘‘529 savings plans’’) to encourage saving for   regulatory activities and also the
     Items I, II, and III below, which Items                 future education costs. 26 U.S.C. 529(b)(1)(A)(ii).
                                                                                                                     activities of those other financial
     have been prepared by the MSRB. The                     The SEC has determined that interests offered by
                                                             such 529 savings plans are municipal securities         regulators (i.e., the SEC, the Financial
     Commission is publishing this notice to                 under Section 3(a)(29) of the Exchange Act.
     solicit comments on the proposed rule                   Exchange Act Release No. 70462 (Sept. 20, 2013),        an agency or instrumentality thereof, to establish
     change from interested persons.                         78 FR 67468, 67472–73 (Nov. 12, 2013).                  and maintain a tax-advantaged savings program to
                                                               Section 529 also established prepaid tuition          help support individuals with disabilities in
     I. Self-Regulatory Organization’s                       plans. 26 U.S.C. 529(b)(1)(A)(i). Under a prepaid       maintaining health, independence, and quality of
     Statement of the Terms of Substance of                  tuition plan, an investor may purchase tuition          life.
                                                             credits or certificates on behalf of a designated          6 Exchange Act Release No. 71598 (Feb. 21, 2014),
     the Proposed Rule Change                                beneficiary, which entitle the beneficiary to the       79 FR 11161, 11167 (Feb. 27, 2014) (SR–MSRB–
                                                             waiver or payment of qualified higher education         2013–04) (stating ‘‘to fulfill its statutory
       The MSRB filed with the Commission                    expenses. Such credits or certificates generally are    responsibilities to investors and municipal entities
     a proposed rule change to amend Form                    not viewed as being municipal securities, and           in the context of 529 plans, the Commission
     G–45 under MSRB Rule G–45, on                           dealers generally do not participate in the             believes that it is appropriate for the MSRB to
     reporting of information on municipal                   marketing of prepaid tuition plans.                     possess basic, reliable information regarding 529
                                                               Thus, the term ‘‘529 plans’’ includes 529 saving      plans, including the underlying investment
                                                             plans and prepaid tuition plans.                        options’’). The MSRB believes that the collection of
       17 17 CFR 200.30–3(a)(12).                              5 ABLE programs are programs designed to              data about ABLE programs is equally important for
       1 15 U.S.C. 78s(b)(1).                                implement Section 529A to the Code. 26 U.S.C.           the MSRB to fulfill its statutory responsibilities to
       2 17 CFR 240.19b–4.                                   529A. Section 529A of the Code permits a state, or      investors and municipal entities.



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                                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices                                                     55215

     Industry Regulatory Authority, Inc., and                comparison among 529 savings plans                      specified periods, including annualized
     banking regulators) that are charged                    and ABLE programs, (ii) the evaluation                  or annual three-year percent. At the
     with examining and enforcing MSRB                       of trends and differences, and (iii) the                time the MSRB approved Form G–45,
     rules.                                                  identification of potential risks to                    the College Savings Plans Network’s
                                                             investors that may affect those 529                     (CSPN) voluntary disclosure principles
     Enhancements to Rule G–45
                                                             savings plans and ABLE programs.                        that provide recommendations to the
     A. Clarification of Program Management                                                                          state entities that establish and maintain
     Fee Data Element                                        B. New Investment Option Closing Date
                                                                                                                     529 savings plans (the ‘‘disclosure
                                                             Data Element
        Throughout the seven reporting                                                                               principles’’) 9 and which commenters
     periods during which the MSRB has                          From time to time, an investment                     stated were the industry norm in other
     analyzed data submitted on Form G–45,                   option offered in a 529 savings plan may                rulemakings, recommended that such
     the MSRB has observed anomalies in                      close to new investors, but allow current               disclosure be made.10 However, since
     the data submitted under Investment                     account owners who have allocated                       that time, CSPN has updated the
     Option information. Those anomalies                     account value to an investment option                   disclosure principles, and CSPN no
     related to the program management fee                   to continue to invest in that ‘‘closed’’                longer recommends that a 529 savings
     and, as discussed below under ‘‘New                     investment option. Alternatively, the                   plan include three-year performance
     Investment Option Closing Date Data                     529 savings plan may close an                           information.11 Further, three-year
     Element,’’ to investment options that                   investment option completely.7 In either                annualized performance information is
     closed during the reporting period.                     case, the investment option data                        not required by the SEC for mutual
     Form G–45, under the Investment                         submitted for that investment option on                 funds.
     Option information subsection                           Form G–45 can be contrary to what the                     The MSRB has determined that Form
     ‘‘Program Management Fee,’’ requires                    MSRB would have expected for the                        G–45, even without the three-year
     that an underwriter report the program                  investment option when compared to                      performance data, would continue to
     management fee (expressed as an annual                  prior reporting periods, and the MSRB                   provide the MSRB with sufficient
     percentage of 529 savings plan or ABLE                  may not be able to easily determine why                 performance information to assist the
     program assets) assessed by the 529                     such variance occurred. To address this                 MSRB with its analysis of 529 savings
     savings plan or ABLE program. The                       issue, the proposed rule change would                   plans and ABLE programs. Therefore,
     program management fee typically is a                   add check-the-box items to Form G–45                    because the MSRB believes that it will
     separately identifiable percentage that is              that would alert the MSRB about                         have sufficient performance
     shown in the fee table for the 529                      whether an investment option has                        information, it is no longer an
     savings plan or ABLE program, but for                   closed to new investors, but allows                     appropriate regulatory burden and
     some 529 savings plans and ABLE                         current account owners to contribute                    should be eliminated to avoid
     programs, this is not the case. Instead                 funds, or whether the investment option                 unnecessary costs.
     for those 529 savings plans or ABLE                     has closed to all investors.
                                                                                                                     2. Statutory Basis
     programs, the program management fee                    C. Deletion of Three-Year Annualized                       The MSRB Section 15B(b)(2) of the
     is assessed by the underlying mutual                    Performance Data Requirement                            Exchange Act 12 provides that:
     fund in which the investment option
     invests (this is typically done through a                  The MSRB sought public comment                       [t]he Board shall propose and adopt rules to
     529 or ABLE share class of the mutual                   about providing additional data                         effect the purposes of this title with respect
     fund). Underwriters for those 529                       concerning the investment options                       to transactions in municipal securities
                                                             offered in 529 savings plans and ABLE                   effected by brokers, dealers, and municipal
     savings plans or ABLE programs                                                                                  securities dealers and advice provided to or
     generally report the program                            programs.8 In response, the MSRB
                                                             received the suggestion that the MSRB                   on behalf of municipal entities or obligated
     management fee as zero on Form G–45,                                                                            persons by brokers, dealers, municipal
     and then may add explanatory                            no longer require that an underwriter                   securities dealers, and municipal advisors
     information in the notes section of the                 submit three-year annualized
     form about the fee. That explanatory                    performance information for an                             9 CSPN, a non-profit organization, was

     information, however, may or may not                    investment option on Form G–45.                         established as an affiliate to the National
     actually disclose the program                              Form G–45 requires that underwriters                 Association of State Treasurers, to make higher
                                                             annually report (i) total returns,                      education more attainable and to serve as a
     management fee in a format that is                                                                              clearinghouse for information among state-
     typically used for comparison—i.e., as                  including sales charges, (ii) total                     administered college savings programs.
     an annual percentage of 529 savings                     returns, excluding sales charges, and                      According to CSPN, CSPN, the states that
     plan or ABLE program assets. The                        (iii) benchmark return percent for                      administer 529 plans (i.e., 529 savings plans and
                                                                                                                     prepaid tuition plans) and their private sector
     proposed rule change would clarify that                    7 As noted previously, with the reporting period     partners are committed to clarifying and enhancing
     the underwriter must report the program                 ending June 30, 2018, underwriters to ABLE              disclosure and offering materials for 529 plans.
     management fee as an annual                             programs began to submit information about the          CSPN stated that it adopted voluntary disclosure
     percentage of assets (e.g., x.xx%) no                   ABLE programs they underwrite on Form G–45.             principles to enhance the comparability of
                                                             The MSRB believes that, similar to the investment       information that investors should consider when
     matter whether the program                                                                                      investing in 529 savings plans. See College Savings
                                                             options offered in 529 savings plans, investment
     management fee is assessed by the                       options in ABLE programs may close to investors.        Plan Network Disclosure Principles Statement No.
     underlying mutual fund or by the 529                       8 MSRB Notice 2017–17 (Aug. 22, 2017) (the           6 (adopted July 1, 2017).
                                                                                                                        10 See File No. SR–MSRB–2013–04 (proposed
     savings plan or ABLE program itself.                    ‘‘Request for Comment’’). Specifically, the MSRB
                                                             sought comment on a possible clarification to the       rule change consisting of new MSRB Rule G–45, on
     The underwriter would not be able to                                                                            reporting of information on municipal fund
                                                             data it currently receives about the program
     report the program management fee as                    management fee and about requiring underwriters         securities, and Form G–45, and amendments to
     zero and then explain in a note that it                 to submit additional data relating to (i) performance   Rule G–8, on books and records, and Rule G–9, on
     is assessed by the underlying mutual                    data—i.e., to provide additional information about      preservation of records); College Savings Plans
                                                             the benchmark return percent and to provide             Network Disclosure Principles Statement No. 5
     fund. Thus, the proposed rule change                                                                            (adopted May 3, 2011).
                                                             performance data by asset class and (ii) the
     would allow the MSRB, as well as other                  investment option closing date. The Board                  11 College Savings Plans Network Disclosure
     regulators, to analyze data in a uniform                determined not to proceed with the collection of        Principles Statement No. 6 (adopted July 1, 2017).
     format that would facilitate (i)                        additional performance data.                               12 15 U.S.C. 78o–4(b)(2).




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     55216                        Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices

     with respect to municipal financial products,           regulators with their development of                  and the costs associated with 529
     the issuance of municipal securities, and               their priorities for risk-based                       savings plans and ABLE programs as
     solicitations of municipal entities or                  compliance examinations for such                      well as the other data collected under
     obligated persons undertaken by brokers,
                                                             regulated entities. These enhanced                    Rule G–45 are basic requirements for
     dealers, municipal securities dealers, and
     municipal advisors.                                     oversight abilities, in turn, would help              regulation and necessary to assist the
                                                             prevent fraudulent and manipulative                   MSRB with its evaluation as to whether
       Section 15B(b)(2)(C) of the Exchange                  acts and practices.                                   its regulatory scheme for dealers that
     Act 13 provides that the MSRB’s rules                      The proposed rule change also would                sell interests in or underwrite ABLE
     shall:                                                  promote just and equitable principles of              programs and/or 529 savings plans is
     be designed to prevent fraudulent and                   trade. For the same reasons that the                  sufficient, or whether additional
     manipulative acts and practices, to promote             proposed rule change would help                       rulemaking is necessary to protect
     just and equitable principles of trade, to              prevent fraudulent and manipulative                   investors. Further, as previously noted,
     foster cooperation and coordination with                acts and practices, the proposed rule                 the information that would be collected
     persons engaged in regulating, clearing,                change also would promote just and
     settling, processing information with respect
                                                                                                                   by the proposed rule change would help
     to, and facilitating transactions in municipal          equitable principles of trade.                        the MSRB and other regulators that
     securities and municipal financial products,               In addition, the proposed rule change              examine dealers prioritize their efforts
     to remove impediments to and perfect the                would foster cooperation and                          with respect to those dealers that sell
     mechanism of a free and open market in                  coordination with persons engaged in                  interests in or underwrite ABLE
     municipal securities and municipal financial            regulating municipal securities                       programs and 529 savings plans. Those
     products, and, in general, to protect                   transactions. For the same reasons that               other regulators may use this
     investors, municipal entities, obligated                the proposed rule change would help                   information to determine the nature or
     persons, and the public interest.                       prevent fraudulent and manipulative                   timing of risk-based dealer
     The MSRB believes that the proposed                     acts and practices, the proposed rule                 examinations. In addition, under the
     rule change is consistent with Sections                 change also would foster cooperation                  proposed rule change, the MSRB would
     15B(b)(2) 14 and 15B(b)(2)(C) 15 of the                 and coordination with persons engaged                 no longer collect three-year performance
     Exchange Act. The proposed rule                         in regulating municipal securities                    data about the investment options and
     change would help prevent fraudulent                    transactions. In addition, as discussed               their related benchmarks, if any. As
     and manipulative acts and practices,                    under ‘‘Deletion of Three-Year Annual                 discussed under ‘‘Deletion of Three-
     promote just and equitable principles of                Performance Data Requirement,’’ the                   Year Annual Performance Data
     trade, and foster cooperation and                       proposed rule change would make the                   Requirement,’’ the proposed rule change
     coordination with persons engaged in                    collection of performance data under                  thereby would make the collection of
     regulating transactions in municipal                    Form G–45 more consistent with what                   performance data under Form G–45
     securities.                                             is required by other financial regulators             more consistent with what is required
        The proposed rule change would help                  and with current industry norms, and                  by other financial regulators and with
     prevent fraudulent and manipulative                     thereby also would foster regulatory                  current industry norms. Thus, the
     acts and practices. The proposed rule                   coordination with persons engaged in                  MSRB believes that the information to
     change would allow the MSRB to                          regulating municipal securities                       be collected by the proposed rule
     analyze data in a uniform format that                   transactions.                                         change would better enable the MSRB to
     would facilitate the (i) efficient and                     Moreover, the MSRB believes that the               protect investors in these programs and
     effective comparison among 529 savings                  proposed rule change is consistent with               plans and the municipal entities that
     plans and ABLE programs, (ii)                           the MSRB’s statutory obligation to                    offer 529 savings plans and ABLE
     evaluation of trends and differences,                   protect investors and municipal entities.             programs.
     and (iii) identification of potential risks             To fulfill this responsibility, it is
     to investors that may affect those 529                  necessary for the MSRB to have a                      B. Self-Regulatory Organization’s
     savings plans and ABLE programs. The                    complete and reliable data set about 529              Statement on Burden on Competition
     ability to identify trends and                          savings plans and ABLE programs,                        Section 15B(b)(2)(C) of the Exchange
     differences, also would enable the                      including the investment options                      Act 16 requires that MSRB rules be
     regulators that are charged with                        offered in those 529 savings plans and                designed to not impose any burden on
     inspecting for compliance with and                      ABLE programs. The proposed rule                      competition not necessary or
     enforcing the MSRB’s rules, as noted                    change would provide the MSRB with                    appropriate in furtherance of the
     above, to better determine whether the                  additional meaningful data about the                  purposes of the Act. In accordance with
     529 savings plan or ABLE program                        investment options offered in those                   the Board’s policy on the use of
     disclosure documents and marketing                      plans or programs—specifically, the                   economic analysis, the Board has
     materials, which underwriters generally                 proposed rule change would clarify an                 reviewed the proposed rule change.17
     draft or participate in drafting, are                   existing data element relating to the                 To fulfill its responsibility to protect
     consistent with the data submitted to                   program management fee and would                      investors, the MSRB must have current
     the MSRB. Further, the ability to                       add a data element in the form of a                   and reliable information about the fees
     identify potential risks to investors from              check the box to alert the MSRB about                 and expenses assessed under such
     the Form G–45 data analysis would                       the closing of an investment option                   programs or plans and the market for
     inform the MSRB with its development                    during the reporting period. This                     529 savings plans and ABLE programs
     of rulemaking and interpretive guidance                 clarification and additional data                     as a whole. The proposed rule change is
     priorities with respect to MSRB                         element would facilitate the MSRB’s
     regulated entities. Further, the ability to             ability to efficiently and effectively                  16 Id.

     identify potential risks to investors from              analyze the market for 529 savings plans                17 Policy on the Use of Economic Analysis in

     the Form G–45 data would inform other                   and ABLE programs as well as to                       MSRB Rulemaking, available at http://msrb.org/
                                                             evaluate trends and differences among                 Rules-and-Interpretations/Economic-Analysis-
                                                                                                                   Policy.aspx. For those rule changes which the
       13 15 U.S.C. 78o–4(b)(2)(C).                          529 savings plans and the ABLE                        MSRB seeks immediate effectiveness, the MSRB
       14 15 U.S.C. 78o–4(b)(2).                             programs. The MSRB believes that                      usually focuses exclusively its examination on the
       15 15 U.S.C. 78o–4(b)(2)(C).                          understanding the investment options                  burden of competition on regulated entities.



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                                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices                                                      55217

     necessary for the MSRB to gather                        MSRB would have to manually sift                       annualized performance information
     relevant data required to ensure the                    through the disclosures for all                        under Rule G–45, as the industry
     MSRB’s regulatory scheme is sufficient                  underlying funds and calculate the total               standard no longer includes the three-
     and/or to determine whether additional                  program management fee based on a                      year returns information as a part of the
     rulemaking is necessary to protect                      weighted-average of assets under                       performance disclosure.21 The MSRB
     investors.                                              management for each fund. For                          concurs that omitting the three-year
       The need for the proposed rule                        regulatory purposes, the MSRB needs to                 annualized performance data would not
     change to Form G–45 arises from the                     efficiently obtain a consistent set of                 materially change the MSRB’s
     MSRB’s oversight of dealers acting as                   uniform, reliable and relevant                         regulatory capability in this area, and
     underwriters to 529 savings plans and                   information about 529 savings plans and                submitters should benefit from a
     ABLE programs. The MSRB believes                        ABLE programs in order to compare                      reduced burden when they no longer
     that this information is required to                    across plans. Another alternative to the               need to report this information. The
     ensure effective regulation of dealers                  proposed rule change to Form G–45 is                   MSRB believes the cost savings from no
     that sell interests in and underwriters to              a manual review of information in plan                 longer requiring the three-year
     529 savings plans and ABLE programs.                    disclosure documents submitted to the                  annualized performance data should
     Since certain data elements are not                     MSRB’s Electronic Municipal Market                     outweigh the benefit provided by the
     disclosed or readily available in some                  Access (EMMA®) 18 website or on 529                    data.
     instances, rulemaking is required to                    savings plan or ABLE program websites.                   In the aggregate, the MSRB believes
     bring the information to light.                         A manual review of information would                   that the proposed rule change would
     Specifically,                                           be insufficient and inefficient.                       provide a range of benefits, including
       1. In certain instances, the program                     The benefits from collecting program                reducing regulatory inefficiencies to
     management fee is included in the total                 management fee and investment option                   facilitate an efficient and effective
     fund operating expenses assessed by the                 closing date data should exceed the                    regulatory oversight of relevant
     underlying mutual fund and thus is not                  costs. These benefits include enhanced                 underwriters and dealers. Although the
     separately disclosed. This makes                        regulatory oversight of underwriters to
     comparing and analyzing program                                                                                proposed rule change may impose some
                                                             529 savings plans and ABLE programs                    costs on underwriters and/or require
     management fees across plans difficult;                 and improved understanding of the 529
     and                                                                                                            them to revise certain business practices
                                                             savings plan and ABLE program                          and spend additional resources. The
       2. From time to time, an investment                   marketplace. More importantly, since
     option may either close to new investors                                                                       MSRB believes that the total costs
                                                             the remaining data elements are readily                would be less than the aggregate
     but allow current account owners to
                                                             available to submitters, the costs                     benefits that would accrue over time to
     continue to invest or may close to new
                                                             associated with the current                            the market.
     investors or all investors completely.
                                                             recommendation would be relatively
     Therefore, investment data submitted                                                                           Effect on Competition, Efficiency and
                                                             minor.19
     for that investment option may not                                                                             Capital Formation
                                                                Specifically, the program management
     accurately portray the real annualized
                                                             fee expressed as an annual percentage of                  The MSRB believes that the proposed
     return.
       The proposed rule change to Form                      assets for each share class is already                 rule change would facilitate regulatory
     G–45 would clarify the requirement of                   disclosed to the SEC, as the SEC-                      oversight of the municipal fund security
     an existing data element, the program                   registered underlying mutual fund in                   market and promote capital formation
     management fee, and the collection of                   which an investment option invests is                  by informing rulemaking, preventing
     an additional data element (check-the-                  required to disclose the percentage of                 fraud, and protecting investors. At
     boxes) about the investment option                      the program management fee in the                      present, the MSRB is unable to
     closing date information to remedy the                  disclosure documents that it submits to                quantitatively evaluate the magnitude of
     above concerns. The MSRB can                            the SEC. The costs of the submission                   efficiency gains or losses, or the impact
     therefore remove the burden on                          process would be minor. Likewise, the                  on capital formation, but believes that
     submitters of unnecessary follow-ups                    costs of submitting the investment                     the benefits outweigh the costs over the
     for what is, in reality, accurate albeit                option closing date would be negligible                long term, as the costs of compliance are
     incomplete data. In addition, the                       as the issuer supplements the disclosure               expected to be minor. Additionally, in
     proposed rule change would delete the                   documents for the 529 savings plan with                the MSRB’s view, the proposed rule
     requirements to report three-year                       that information.20 Consequently, the                  change does not result in an undue
     annualized performance data for each                    benefits should exceed the costs after                 burden on competition since it would
     investment option and any related                       the proposed rule change would be                      apply to all underwriters of 529 savings
     benchmark.                                              implemented by the industry.                           plans and ABLE programs equally.22
       The MSRB has evaluated alternatives                      In addition to voicing their opinions
                                                             on the MSRB’s proposed clarification of                   Competition, however, may be
     to the proposed rule change with regard                                                                        adversely affected if, to compensate for
     to obtaining some of the above                          and new data element requirements,
                                                             commenters also requested that the                     costs and regulatory burden,
     information without the proposed rule                                                                          underwriters would raise the fees
     change to Form G–45. However, none of                   MSRB consider eliminating the current
                                                             requirement to report three-year                       charged to issuers, resulting in issuers
     these alternatives is preferable to the                                                                        refraining from using dealers to engage
     proposed requirements. For example,                       18 EMMA                                              directly with potential investors, or
                                                                           is a registered trademark of the MSRB.
     the program management fee, as an                         19 Commenters      confirmed that there is limited
     annual percentage of assets, is already                 burden associated with providing investment              21 In addition to the three-year performance data,
     submitted by the underlying mutual                      option closing date information to the MSRB. As to     the MSRB currently requires the performance data
     funds in disclosure documents to the                    the program management fee, commenters generally       for year-to-date, one-year, five-years, ten-years and
     SEC. However, to obtain the total                       agree that it is not burdensome to report.             since inception.
                                                                20 As noted previously, the MSRB believes that        22 The proposed rule change would not impose
     program management fee for an entire                    issuers of ABLE programs also would supplement         any burden on non-underwriting dealers that only
     municipal security fund through a                       their disclosure documents with an investment          sell interests in either 529 savings plans or ABLE
     review of disclosure documents, the                     option’s closing date.                                 programs.



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     55218                        Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices

     passing on some portion of the higher                   generally supports the proposed rule                   about an investment option closing date.
     fee amount to investors.                                change relating to the program                         In general, commenters stated that they
       The MSRB believes that the proposed                   management fee, however, SIFMA gave                    did not oppose the proposal, and that
     rule change would not impose an                         this support while also sharing the                    the information would be easily
     unnecessary or inappropriate regulatory                 concerns about this item expressed by                  reportable, but that reporting such
     burden on small regulated entities, as                  the ICI. Other commenters stated that                  information may increase costs to the
     the burden on underwriters should be                    the program management fee could be                    529 savings plan, and they were not
     proportional to their business activities               proprietary,27 costly to report separately             certain why the information would be
     in relation to 529 savings plans and                    due to programming costs,28 and that                   meaningful to the MSRB.30 Commenters
     ABLE programs.                                          reporting the percentage of the fee                    explained that the increased costs could
     C. Self-Regulatory Organization’s                       separately could lead to the MSRB                      result because the 529 savings plan
     Statement on Comments on the                            ‘‘double counting’’ the amount of the                  would not be able to use the data it
     Proposed Rule Change Received From                      program management fee.29                              submits to other regulators on Form G–
                                                                The MSRB continues to believe that it               45.31
     Members, Participants, or Others
                                                             is important to receive information                       The MSRB believes that having
        The MSRB sought public comment                       about the program management fee in a                  information about the investment option
     about providing additional data                         uniform manner. With its adoption of                   closing date would enhance the ability
     concerning the investment options                       Rule G–45 and Form G–45, the MSRB                      of the MSRB to analyze investment
     offered in 529 savings plans and ABLE                   recognized the importance of receiving                 option data in a timely and efficient
     programs.23 In response to the Request                  consistent and reliable information                    manner. As commenters acknowledged,
     for Comment, the MSRB received six                      about 529 savings plans for the MSRB                   underwriters have this information (a
     comment letters.24 Commenters                           to fulfill its mission to protect investors.           529 savings plan must supplement its
     generally opposed providing additional                  This information allows the MSRB, as                   program disclosure booklet with this
     data to the MSRB. However,                              well as other regulators, to analyze the               information in a timely manner to
     commenters suggested that they could                    data in a format that can be sorted to                 comply with its obligations under the
     more easily provide data relating to two                foster a better understanding of the 529               federal securities laws). As noted under
     of the items about which the MSRB                       savings plan industry. Without that                    ‘‘Self-Regulatory Organization’s
     sought comment (a clarification                         information, the analytical process is                 Statement on Burden on Competition,’’
     concerning the program management fee                   not as efficient as it otherwise could be.             the MSRB believes that providing an
     and data concerning the investment                         Moreover, the SEC-registered                        investment option closing date should
     option closing date) than the other two                 underlying mutual fund in which an                     not materially increase costs for
     items with which the MSRB sought                        investment option invests is required to               underwriters.
     comment but with which the Board                        disclose the percentage of the program
     determined not to proceed. Further, one                 management fee in the disclosure                       iii. Three-Year Annualized Performance
     commenter suggested that the MSRB                       documents that it submits to the SEC.                  Information
     amend Form G–45 to delete the                           The MSRB has obtained this                                As noted under ‘‘Self-Regulatory
     requirement that an underwriter submit                  information through such a review. The                 Organization’s Statement of the Purpose
     investment option annualized three-year                 MSRB submits that the percentage of the                of, and Statutory Basis for, the Proposed
     performance information 25 and another                  program management fee is not                          Rule Change,’’ Form G–45 requires that
     commenter specifically supported that                   proprietary, as it is disclosed to the SEC             underwriters annually report (i) total
     suggestion.26                                           in public documents. For that same                     returns, including sales charges, (ii)
     Additional Investment Option Data                       reason, the MSRB believes that                         total returns, excluding sales charges,
                                                             underwriters would incur minimal                       and (iii) benchmark return percent for
     i. Program Management Fee                               costs, if any, if they were to report the              specified periods, including annualized
        Although commenters generally                        percentage of the program management                   or annual three-year percent. At the
     opposed any amendment to Form G–45,                     fee separately.                                        time the MSRB approved Form G–45,
     one commenter, SIFMA, stated that it                       As far as the double counting of the                the disclosure principles which
                                                             program management fee, the MSRB                       commenters stated were the industry
       23 See  note 8, supra.                                currently has the analytical tools                     norm in other rulemakings,
       24 The   MSRB received letters from the State of      necessary to ensure that the percentage                recommended that such disclosure be
     West Virginia: Letter from John D. Perdue, West         of the program management fee is not                   made.32 However, since that time, CSPN
     Virginia State Treasurer, dated September 18, 2017
     (‘‘West Virginia’’); American Funds Distributors,       double counted. Underwriters could                     has updated the disclosure principles,
     Inc.: Letter from Maria Manotok, Senior Counsel,        simply continue to alert the MSRB in
     dated September 21, 2017 (‘‘American Funds’’);          the notes section of Form G–45, that the                  30 See American Funds letter (‘‘[a]though we do

     Ascensus College Savings: Letter from Sandra            program management fee is assessed by                  not oppose the requirement that 529 plan
     Madden, General Counsel, dated September 21,                                                                   underwriters report whether an investment option
     2017 (‘‘Ascensus’’); College Savings Plans Network      the underlying mutual fund in which                    has closed to new investors, we are concerned that
     and College Savings Foundation: Letter from             the investment option invests. The                     the Proposal would require 529 plan underwriters
     Richard J. Polimeni, Chairman, College Savings          MSRB then would take the note into                     to collect and provide to the MSRB new
     Foundation, and Young Boozer, Chairman, College         consideration when it analyzes the                     information’’); Ascensus letter (‘‘w]e have the
     Savings Plans Network, dated September 21, 2017                                                                investment option closing dates and can provide
     (‘‘CSPN and CSF’’); Investment Company Institute:       underlying fund expenses for an                        this information if applicable’’); ICI letter (‘‘[t]o the
     Letter from Tamara K. Salmon, Senior Associate          investment option.                                     extent the MSRB revises Form G–45 to elicit this
     Counsel, dated September 21, 2017 (‘‘ICI’’);                                                                   information in an easy-to-disclose format (e.g., as a
     Securities Industry and Financial Markets               ii. Investment Option Closing Date                     ‘‘check-the-box’’ question), it is information that our
     Association: Letter from Leslie M. Norwood,                Four commenters submitted                           members could easily report’’); and SIFMA letter
     Managing Director and Associate General Counsel,                                                               (‘‘[w]e generally support the draft amendments
     and Bernard Canepa, Vice President and Assistant        comments about providing information                   pertaining to the program management fee and
     General Counsel, dated September 21, 2017                                                                      investment option closing data elements; however,
     (‘‘SIFMA’’).                                              27 See   Ascensus letter.                            we concur with the ICI on these points’’).
        25 See ICI letter.                                     28 See   ICI letter.                                    31 See, e.g., American Funds letter and ICI letter.
        26 See SIFMA letter.                                   29 Id.                                                  32 See note 10.




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                                  Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices                                                   55219

     and CSPN no longer recommends that a                    the self-regulatory organization                      be submitted on or before November 23,
     529 savings plan include three-year                     consents, the Commission will:                        2018.
     performance information.33                                (A) By order approve or disapprove                    For the Commission, pursuant to delegated
     Commenters suggested that the MSRB                      such proposed rule change, or                         authority.37
     harmonize Form G–45 with the                              (B) institute proceedings to determine
                                                                                                                   Eduardo A. Aleman,
     disclosure principles,34 and that                       whether the proposed rule change
                                                             should be disapproved.                                Assistant Secretary.
     continuing to provide this information
                                                                                                                   [FR Doc. 2018–23966 Filed 11–1–18; 8:45 am]
     to the MSRB would not be helpful to                     IV. Solicitation of Comments                          BILLING CODE 8011–01–P
     investors and would be burdensome to
     produce.35 In addition, three-year                        Interested persons are invited to
     performance information is not required                 submit written data, views, and
                                                             arguments concerning the foregoing,                   SECURITIES AND EXCHANGE
     by the SEC for mutual funds.                                                                                  COMMISSION
                                                             including whether the proposed rule
       The MBRB agrees with commenters’                      change is consistent with the Act.
     suggestion, and the proposed rule                                                                             [Release No. 34–84498; File No. SR–ICEEU–
                                                             Comments may be submitted by any of                   2018–014]
     change would delete this requirement.                   the following methods:
     Form G–45, even without the three-year                                                                        Self-Regulatory Organizations; ICE
     performance data, would continue to                     Electronic Comments
                                                                                                                   Clear Europe Limited; Notice of Filing
     provide the MSRB with sufficient                          • Use the Commission’s internet                     and Immediate Effectiveness of a
     performance information to assist the                   comment form (http://www.sec.gov/                     Proposed Rule Change Relating to
     MSRB with its analysis of the 529                       rules/sro.shtml); or                                  Amendments to the Recovery Plan and
     savings plan and ABLE program                             • Send an email to rule-comments@                   Wind-Down Plan
     industries. Further, the suggestion                     sec.gov. Please include File Number SR–
     would result in cost savings for those                  MSRB–2018–08 on the subject line.                     October 29, 2018.
     industries.                                                                                                      Pursuant to Section 19(b)(1) of the
                                                             Paper Comments
     iv. Economic Analysis                                                                                         Securities Exchange Act of 1934, as
                                                                • Send paper comments in triplicate                amended (‘‘Act’’),1 and Rule 19b–4
        Commenters confirmed that there is                   to Secretary, Securities and Exchange                 thereunder,2 notice is hereby given that
     limited burden associated with                          Commission, 100 F Street NE,                          on October 16, 2018, ICE Clear Europe
     providing investment option closing                     Washington, DC 20549.                                 Limited (‘‘ICE Clear Europe’’ or the
     date information to the MSRB. As to the                 All submissions should refer to File                  ‘‘Clearing House’’) filed with the
     program management fee, commenters                      Number SR–MSRB–2018–08. This file                     Securities and Exchange Commission
     generally agree that it would be less                   number should be included on the                      (‘‘Commission’’) the proposed rule
     burdensome to report than the                           subject line if email is used. To help the            changes described in Items I and II
     benchmark performance and investment                    Commission process and review your                    below, which Items have been prepared
     return data elements. While the MSRB                    comments more efficiently, please use                 primarily by ICE Clear Europe. ICE Clear
     agrees with ICI and other commenters 36                 only one method. The Commission will                  Europe filed the proposed rule change
     that expenses may be incurred by                        post all comments on the Commission’s                 pursuant to Section 19(b)(3)(A) 3 of the
     underwriters to redesign the current                    internet website (http://www.sec.gov/                 Act and Rule 19b–4(f)(6) thereunder,4 so
     reporting system to report the program                  rules/sro.shtml). Copies of the                       that the proposal was immediately
     management fee separately, the MSRB                     submission, all subsequent                            effective upon filing with the
     believes the incurred expenses would                    amendments, all written statements                    Commission. The Commission is
     likely be one-time only and should not                  with respect to the proposed rule                     publishing this notice to solicit
     be too burdensome for the industry. In                  change that are filed with the                        comments on the proposed rule change
     addition, the percentage of the program                 Commission, and all written                           from interested persons.
     management fee itself is already                        communications relating to the
                                                             proposed rule change between the                      I. Clearing Agency’s Statement of the
     disclosed to the SEC, as the underlying                                                                       Terms of Substance of the Proposed
     mutual fund in which an investment                      Commission and any person, other than
                                                             those that may be withheld from the                   Rule Change
     option invests is required to disclose the
     percentage of the program management                    public in accordance with the                           ICE Clear Europe proposes to make
     fee in the disclosure documents that it                 provisions of 5 U.S.C. 552, will be                   certain updates to its Recovery Plan and
     submits to the SEC.                                     available for website viewing and                     Wind-Down Plan. The revisions do not
                                                             printing in the Commission’s Public                   involve any changes to the ICE Clear
     III. Date of Effectiveness of the                       Reference Room, 100 F Street NE,                      Europe Clearing Rules or Procedures.5
     Proposed Rule Change and Timing for                     Washington, DC 20549 on official
     Commission Action                                       business days between the hours of                    II. Clearing Agency’s Statement of the
                                                             10:00 a.m. and 3:00 p.m. Copies of the                Purpose of, and Statutory Basis for, the
       Within 45 days of the date of                                                                               Proposed Rule Change
     publication of this notice in the Federal               filing also will be available for
     Register or within such longer period of                inspection and copying at the principal                 In its filing with the Commission, ICE
     up to 90 days (i) as the Commission may                 office of the MSRB. All comments                      Clear Europe included statements
     designate if it finds such longer period                received will be posted without change.               concerning the purpose of and basis for
     to be appropriate and publishes its                     Persons submitting comments are
     reasons for so finding or (ii) as to which              cautioned that we do not redact or edit                 37 17 CFR 200.30–3(a)(12).
                                                                                                                     1 15 U.S.C. 78s(b)(1).
                                                             personal identifying information from
                                                                                                                     2 17 CFR 240.19b–4.
       33 See
                                                             comment submissions. You should
              note 11.                                                                                               3 15 U.S.C. 78s(b)(3)(A).
       34 See ICI letter and SIFMA letter.
                                                             submit only information that you wish                   4 17 CFR 240.19b–4(f)(6).
       35 See SIFMA letter.                                  to make available publicly. All                         5 Capitalized terms used but not defined herein
       36 See the Letters from Ascensus College Savings      submissions should refer to File                      have the meanings specified in the ICE Clear
     and American Funds.                                     Number SR–MSRB–2018–08 and should                     Europe Clearing Rules (the ‘‘Rules’’).



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Document Created: 2018-11-02 01:10:10
Document Modified: 2018-11-02 01:10:10
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 55214 

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