Notice2024-06586
Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Clarify the Calculation of the Annual Fee on Municipal Advisors Under MSRB Rule A-11
Primary source
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Published
March 28, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 61 (Thursday, March 28, 2024)</title>
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[Federal Register Volume 89, Number 61 (Thursday, March 28, 2024)]
[Notices]
[Pages 21564-21566]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-06586]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99834; File No. SR-MSRB-2024-02]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Clarify the Calculation of the Annual Fee on Municipal
Advisors Under MSRB Rule A-11
March 22, 2024.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 21, 2024, the Municipal Securities
Rulemaking Board (``MSRB'' or ``Board'') filed with the Securities and
Exchange Commission (``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
Supplementary Material .01 to MSRB Rule A-11, on assessments for
municipal advisor professionals (``Rule A-11''), to clarify that the
calculation of the annual fee on municipal advisors for covered
professionals \3\ under Rule A-11(b) (the ``Municipal Advisor
[[Page 21565]]
Professional Fee'') is based on the number of covered professionals as
of January 31, 2024, rather than January 31, 2023, for the fees to be
assessed in 2024, and as of January 31 of each subsequent year
thereafter (the ``proposed rule change''). The MSRB has designated the
proposed rule change for immediate effectiveness.\4\
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\3\ As defined in Rule A-11(a), the term ``covered
professional'' shall mean a person associated with a municipal
advisor who is qualified as a municipal advisor representative in
accordance with MSRB Rule G-3 and for whom the municipal advisor has
on file with the Commission an active Form MA-I as of January 31 of
each year.
\4\ The MSRB has designated the proposed rule change as
establishing or changing a due, fee, or other charge under section
19(b)(3)(A)(ii) of the Exchange Act (15 U.S.C. 78s(b)(3)(A)(ii)) and
Rule 19b-4(f)(2) (17 CFR 240.19b-4(f)(2)) thereunder. While the
proposed rule change does not change the rate of the Municipal
Advisor Professional Fee, the number of covered professionals is a
necessary element of the calculation of the amount of Municipal
Advisor Professional Fees assessed.
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The text of the proposed rule change is available on the MSRB's
website at <a href="https://msrb.org/2024-SEC-Filings">https://msrb.org/2024-SEC-Filings</a>, 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 purpose of the proposed rule change is to amend Supplementary
Material .01, on Annual Rate Card Fee, to Rule A-11 to clarify that the
calculation of the Municipal Advisor Professional Fee for 2024 would be
based on the number of covered professionals as of January 31, 2024,
rather than January 31, 2023, and as of January 31 of each subsequent
year thereafter. This amendment makes the calculation of the Municipal
Advisor Professional Fee for municipal advisors based on the number of
covered professionals for whom the municipal advisor has on file with
the Commission an active Form MA-I as of January 31 of each applicable
year, consistent with the intent of Rule A-11(a), rather than as of
January 31, 2023 without regard to the year for which the fees are to
be assessed. Without this amendment, municipal advisors may pay an
inaccurately high or low fee for municipal professionals whose status
as covered professionals has changed since January 31, 2023.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
section 15B(b)(2)(J) of the Exchange Act,\5\ which states that the
MSRB's rules shall provide that each municipal advisor shall pay to the
MSRB such reasonable fees and charges as may be necessary or
appropriate to defray the costs and expenses of operating and
administering the MSRB. Such rules, among other things, must specify
the amount of such fees and charges.\6\ The proposed rule change
provides clarity regarding the specific amount of such fees and charges
to be paid by municipal advisors based on the number of covered
professionals in each applicable year. In addition, the MSRB believes
that it is more reasonable for each year's fee to be calculated based
on the number of covered professionals in that same year, rather than
based on the number from a prior year. As a result, the MSRB believes
that the proposed rule change satisfies the applicable requirements of
section 15B(b)(2)(J) of the Exchange Act.\7\
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\5\ 15 U.S.C. 78o-4(b)(2)(J).
\6\ Id.
\7\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
Section 15B(b)(2)(C) of the Exchange Act \8\ requires that MSRB
rules not be designed to impose any burden on competition not necessary
or appropriate in furtherance of the purposes of the Exchange Act. The
MSRB has considered the economic impact of the proposed rule change.\9\
The MSRB does not believe the proposed rule change imposes any burden
on competition, as it applies equitably and non-discriminatorily across
all municipal advisors and ensures that municipal advisors pay the
correct Municipal Advisor Professional Fee based on an accurate count
of covered professionals as of each respective year for which such fees
shall be paid, consistent with Rule A-11(a). Additionally, the proposed
rule change does not unduly burden any municipal advisor, and in fact
it would, in some cases, relieve the burden of overpaying for
individuals whose status as a covered professional may have changed
since January 31, 2023. Finally, the MSRB believes that the proposed
rule change would not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.
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\8\ 15 U.S.C. 78o-4(b)(2)(C).
\9\ See Policy on the Use of Economic Analysis in MSRB
Rulemaking, available at <a href="https://www.msrb.org/Policy-Use-Economic-Analysis-MSRB-Rulemaking">https://www.msrb.org/Policy-Use-Economic-Analysis-MSRB-Rulemaking</a>. In evaluating whether there was any burden
on competition that is not necessary or appropriate in furtherance
of the purposes of the Exchange Act, the MSRB was guided by its
principles that required the MSRB to consider costs and benefits of
a rule change, its impact on efficiency, capital formation and
competition, and the main reasonable alternative regulatory
approaches. For those rule changes which the MSRB files for
immediate effectiveness under section 19(b)(3)(A) of the Exchange
Act (15 U.S.C. 78s(b)(3)(A)), while not subject to the policy, the
MSRB usually focuses its examination exclusively on the burden of
competition on regulated entities.
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Section 15B(b)(2)(L)(iv) of the Exchange Act \10\ requires that
MSRB rules not impose a regulatory burden on small municipal advisors
that is not necessary or appropriate in the public interest and for the
protection of investors, municipal entities, and obligated persons,
provided that there is robust protection of investors against fraud.
The MSRB believes that the proposed rule change would not impose an
unnecessary or inappropriate regulatory burden on small municipal
advisors, as the fees assessed would be proportionate to the actual
number of municipal advisors within each firm. The proposed rule change
clarifies that the Municipal Advisor Professional Fee, payable by each
municipal advisory firm under Rule A-11(b), is based on the number of
covered professionals with Forms MA-I filed by a firm on January 31 of
each applicable year, rather than January 31, 2023, as currently stated
in Supplementary Material .01 to Rule A-11. By providing that the
Municipal Advisor Professional Fee each year be based on an accurate
covered professional count for the applicable year, the proposed rule
change removes regulatory burdens stemming from payment of an
inaccurate fee.
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\10\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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For the reasons noted above, the MSRB believes that the proposed
rule change would not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Exchange
Act.\11\
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\11\ 15 U.S.C. 78o-4(b)(2)(C).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received on the
proposed rule change. The MSRB previously included the amendment
reflected in this proposed rule change in its withdrawn proposal to
amend MSRB Rules A-11 and A-13 to establish the
[[Page 21566]]
2024 rate card fees for dealers and municipal advisors. See Exchange
Act Release No. 99096 (Dec. 6, 2023), 88 FR 86188 (Dec. 12, 2023), File
No. SR-MSRB-2023-06 (the ``2024 Rate Card Filing'').\12\ Although the
Commission received comment letters from four commenters on other
aspects of the 2024 Rate Card Filing, none addressed the amendment
reflected in this proposed rule change.\13\
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\12\ On January 29, 2024, the Commission suspended the 2024 Rate
Card Filing, which had gone into effect on January 1, 2024. See
Exchange Act Release No. 99444 (Jan. 29, 2024), 89 FR 7424 (Feb. 2,
2024) (File No. SR-MSRB-2023-06). On February 16, 2024, the MSRB
withdrew the 2024 Rate Card Filing. See Exchange Act Release No.
99577 (Feb. 21, 2024), 89 FR 14552 (Feb. 27, 2024) (File No. SR-
MSRB-2023-06).
\13\ The comment letters are available at <a href="https://www.sec.gov/comments/sr-msrb-2023-06/srmsrb202306.htm">https://www.sec.gov/comments/sr-msrb-2023-06/srmsrb202306.htm</a>.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective pursuant to
section 19(b)(3)(A) of the Act \14\ and paragraph (f) of Rule 19b-4
thereunder.\15\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f).
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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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet<ls-thn-eq> Send an email to <a href="/cdn-cgi/l/email-protection#f684839a93db95999b9b93988285b6859395d8919980"><span class="__cf_email__" data-cfemail="1a686f767f37797577777f746e695a697f79347d756c">[email protected]</span></a>. Please
include File Number SR-MSRB-2024-02 on the subject line.
Paper Comments
<bullet> 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-2024-02. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-MSRB-2024-02 and should be submitted on
or before April 18, 2024.
For the Commission, pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-06586 Filed 3-27-24; 8:45 am]
BILLING CODE 8011-01-P
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