
[Federal Register: August 18, 2010 (Volume 75, Number 159)]
[Notices]               
[Page 51128-51132]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au10-164]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62715, File No. SR-MSRB-2009-17]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of Amendment No. 1 and Order Granting 
Accelerated Approval of Proposed Rule Change, as Modified by Amendment 
No. 1 Thereto, Consisting of (i) Amendments to Rule G-8 (Books and 
Records To Be Made by Brokers, Dealers and Municipal Securities 
Dealers), Rule G-9 (Preservation of Records), and Rule G-11 (New Issue 
Syndicate Practices); (ii) a Proposed Interpretation of Rule G-17 
(Conduct of Municipal Securities Activities); and (iii) the Deletion of 
a Previous Rule G-17 Interpretive Notice

August 13, 2010.

I. Introduction

    On November 18, 2009, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board''), filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Exchange Act''),\1\ and Rule 
19b-4 thereunder,\2\ a proposed rule change consisting of (i) proposed 
amendments to Rule G-8 (books and records to be made by brokers, 
dealers and municipal securities dealers), Rule G-9 (preservation of 
records), and Rule G-11 (new issue syndicate practices); (ii) a 
proposed interpretation (the ``proposed interpretive notice'') of Rule 
G-17 (conduct of municipal securities activities); and (iii) the 
deletion of a previous Rule G-17 interpretive notice on priority of 
orders dated December 22, 1987 (the ``1987 interpretive notice''). The 
proposed rule change was published for comment in the Federal Register 
on December 10, 2009.\3\ The Commission received four comment letters 
about the proposed rule change.\4\ On August 4, 2010, the MSRB filed 
with the Commission, pursuant to Section 19(b)(1) of the Exchange Act 
\5\ and Rule 19b-4 thereunder,\6\ Amendment No. 1 to the proposed rule 
change, which made technical changes to the proposed rule change and 
responded to the comment letters received by the Commission in response 
to the Commission's Notice. The text of Amendment No. 1 is available on 
the MSRB's Web site (http://www.msrb.org), at the MSRB's principal 
office, and for Web site viewing and printing in the Commission's 
Public Reference Room. This order provides notice of Amendment No. 1 
and approves the proposed rule change as modified by Amendment No. 1 on 
an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61110 (December 3, 
2009), 74 FR 65573 (December 10, 2009) (``Commission's Notice'') 
(the ``original proposed rule change'').
    \4\ See letters from: John C. Melton, Sr., Houston, Texas, dated 
December 15, 2009; Karrie McMillan, General Counsel, Investment 
Company Institute (``ICI''), dated December 23, 2009 (``ICI 
Letter''); Mike Nicholas, CEO, Regional Bond Dealers Association 
(``RBDA''), dated December 30, 2009 (``RBDA Letter''); Leon J. 
Bijou, Managing Director and Associate General Counsel, Securities 
Industry and Financial Markets Association (``SIFMA''), dated 
December 31, 2009 (``SIFMA Letter'').
    \5\ 15 U.S.C. 78s(b)(1).
    \6\ 17 CFR 240.19b-4.
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II. Description of the Proposed Rule Change, As Modified by Amendment 
No. 1 to the Proposed Rule Change

    The proposed amendments to Rule G-11 would: (1) Apply the rule to 
all primary offerings, not just those for which a syndicate is formed; 
(2) require that all dealers (not just syndicate members) disclose 
whether their orders are for their own account or a related account; 
and (3) require that priority be given to orders from customers over 
orders from syndicate members for their own accounts or orders from 
their respective related accounts, to the extent feasible and 
consistent with the orderly distribution of securities in the offering, 
unless the issuer otherwise agrees or it is in the best interests of 
the syndicate not to follow that order of priority.
    The proposed amendments to Rules G-8 and G-9 would require that 
records be retained for all primary offerings of: (1) All orders, 
whether or not filled; (2) whether there was a retail order period and, 
if so, the issuer's definition of ``retail;'' and (3) those instances 
when the syndicate manager allocated bonds other than in accordance 
with the priority provisions of Rule G-11 and the specific reasons why 
it was in the best interests of the syndicate to do so.
    The proposed interpretive notice would provide that violation of 
these priority provisions would be a violation

[[Page 51129]]

of Rule G-17, subject to the same exceptions as provided in proposed 
amended Rule G-11. It also would provide that Rule G-17 does not 
require that customer orders be accorded greater priority than orders 
from dealers that are not syndicate members or their respective related 
accounts. The proposed interpretive notice also would provide that it 
would be a violation of Rule G-17 for a dealer to allocate securities 
in a manner that is inconsistent with an issuer's requirements for a 
retail order period without the issuer's consent. Issuance of the 
notice, in addition to the amendments to Rule G-11, is consistent with 
previous guidance issued by the Board that all activities of dealers 
must be viewed in light of the basic fair dealing principles of Rule G-
17, regardless of whether other MSRB rules establish additional 
requirements on dealers.\7\
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    \7\ MSRB Notice 2009-42 (July 14, 2009)--Guidance on Disclosure 
and Other Sales Practice Obligations to Individual and Other Retail 
Investors in Municipal Securities.
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    The original proposed rule change arose out of the Board's ongoing 
review of its General Rules as well as concerns expressed by 
institutional investors that their orders were sometimes not filled in 
whole or in part during a primary offering, yet the bonds became 
available shortly thereafter in the secondary market. They attributed 
that problem to two causes: First, some retail dealers were allowed to 
place orders in retail order periods without going away orders and 
second, syndicate members, their affiliates, and their respective 
related accounts were allowed to buy bonds in the primary offering for 
their own account even though other orders remained unfilled. There was 
also concern that these two factors could contribute to restrictions on 
access to new issues by retail investors, in a manner inconsistent with 
the issuer's intent. A full description of the original proposed rule 
change is contained in the Commission's Notice.
    Amendment No. 1 amends the text of the original proposed rule 
change to clarify that (i) amended MSRB Rule G-8(a)(viii) requires that 
records must be kept of whether there was a retail order period, 
regardless of whether the issuer required that there be one; (ii) the 
term ``priority provisions'' as used in amended Rule G-8(a)(viii)(A) 
includes both the customer priority provisions set forth in amended 
Rule G-11(e) and any other priority provisions of the syndicate (e.g., 
those included in an agreement among underwriters); (iii) the 
recordkeeping requirements of amended Rule G-8(a)(viii) concerning 
deviations from the customer priority provisions and the specific 
reasons for doing so are the same for both sole underwriters and 
syndicate managers; and (iv) the customer priority requirements of the 
interpretive notice are the same as those of amended Rule G-11(e).\8\ 
Amendment No. 1 also corrects a typographical error in amended G-
11(e)(ii).
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    \8\ Amendment No. 1 would make no changes to revised Rule G-9 as 
set forth in the original proposed rule change.
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    The MSRB is proposing the revision to the original proposed rule 
change set forth in clause (i) of the description of Amendment No. 1 
above, because in many cases a retail order period is conducted based 
on the recommendation of the underwriter, not because the issuer has 
required that there be a retail order period. The MSRB considers it 
important to know whether there was a retail order period, regardless 
of whether the issuer required that there be one. There is no revision 
to the requirement of amended Rule G-8(a)(viii) that requires a record 
of the issuer's definition of ``retail,'' if applicable.
    As more fully described below, the MSRB is proposing the revision 
to the original proposed rule change set forth in clause (ii) of the 
description of Amendment No. 1 above in response to a comment filed by 
the Regional Bond Dealers Association, which suggested that it was 
unclear what the term ``priority provisions'' meant in amended Rule G-
8(a)(viii)(A).
    The MSRB is proposing the revision to the original proposed rule 
change set forth in clause (iii) of the description of Amendment No. 1 
above to conform the recordkeeping rules for syndicates and sole 
managers, finding no reason for distinguishing between the two. 
Furthermore, the revision to amended Rule G-8(a)(viii)(A) is intended 
to remove what might have been perceived as a difference between 
amended Rule G-11(e) and the proposed interpretive notice.
    As more fully described below, the MSRB is proposing the revision 
to the original proposed rule change set forth in clause (iv) of the 
description of Amendment No. 1 above in response to a comment received 
from the Securities Industry and Financial Markets Association, which 
interpreted the use of the word ``generally'' to mean that there could 
be exceptions to the priority of orders provisions other than those set 
forth in the proposed interpretive notice. The revision makes it clear 
that the exceptions set forth in the proposed interpretive notice are 
the only exceptions. The Board considers those exceptions sufficient to 
cover the circumstances under which an underwriter might find it 
necessary to deviate from the priority provisions.

Effective Date of Proposed Rule Change

    The MSRB requested that the proposed rule change become effective 
for new issues of municipal securities for which the Time of Formal 
Award (as defined in Rule G-34(a)(ii)(C)(1)(a)) occurs more than 60 
days after approval of the proposed rule change by the SEC.

III. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change, 
the comment letters received, and the MSRB's responses to the comment 
letters and finds that the proposed rule change is consistent with the 
requirements of the Exchange Act and the rules and regulations 
thereunder applicable to the MSRB \9\ and, in particular, the 
requirements of Section 15B(b)(2)(C) of the Exchange Act \10\ and the 
rules and regulations thereunder. Section 15B(b)(2)(C) of the Exchange 
Act requires, among other things, that the MSRB's rules be designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in municipal securities, to remove impediments to and perfect the 
mechanism of a free and open market in municipal securities, and, in 
general, to protect investors and the public interest.\11\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the Exchange Act because it will prevent fraudulent and 
manipulative acts and practices and protect investors and the public 
interest. The Commission believes the proposal will help achieve a 
broader distribution of municipal securities while still providing 
sufficient flexibility to syndicate managers and sole underwriters, and 
further believes that investors would benefit from a broader 
distribution of securities that is fair and reasonable and consistent 
with principles of fair dealing.
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    \9\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition and capital formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78o-4(b)(2)(C).
    \11\ Id.

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[[Page 51130]]

Discussion of Comment Letters

    The Commission received four comment letters in response to the 
Commission's Notice. ICI supported the proposal. RBDA, SIFMA and Mr. 
Melton expressed concerns about various aspects of the proposal.
    ICI stated that they believe the proposal would improve access to 
new issues by investors and would help address uncertainty surrounding 
Rule G-17. They also stated that the experience of their members has 
demonstrated that industry practice over the previous year has allowed 
for the regular disregard of previous MSRB guidance on priority of 
orders. In addition, they stated that there is no reason to 
disadvantage, or allow for the appearance of disadvantaging, retail 
customers in primary offerings because the offering does not use a 
syndicate.
    ICI urged the MSRB to consider defining ``retail'' for purposes of 
``retail order periods'' in a way that recognizes that retail investors 
access the municipal market through a variety of ways, including mutual 
funds. ICI noted that retail investors are excluded from the retail 
order periods if they choose to make their municipal bond investments 
through mutual funds, and that these retail investors often are the 
smaller or less sophisticated investors who do not have the necessary 
assets to purchase bonds on their own.
    The MSRB stated that it appreciated the concerns expressed by ICI 
regarding the pricing of bonds purchased by retail investors. The MSRB 
indicated that it is aware of the substantial retail participation in 
the municipal securities market that is accomplished through mutual 
fund investments. Nevertheless, the MSRB stated that MSRB rules do not 
require that primary offerings of municipal securities include retail 
order periods, and that the MSRB considers it appropriate to leave that 
decision and the decision of how ``retail'' is defined to issuers of 
municipal securities. The Commission believes that leaving decisions 
about retail order periods to the discretion of municipal issuers is 
not inconsistent with the Exchange Act.
    RBDA supports the intent of the proposed amendments to the priority 
provisions which generally would give express priority to customer 
orders over orders by members of a syndicate or a sole underwriter for 
their own or related accounts. Nonetheless, RBDA urges the MSRB to 
permit syndicate managers and sole underwriters to refuse to prioritize 
as a customer order any order that the syndicate manager or sole 
underwriter reasonably believes to have been placed by an opportunistic 
investor purchasing bonds with the expectation of reselling them at 
higher prices shortly after the initial offering.
    The MSRB stated in response that the proposed rule change would 
permit deviation from the priority provisions of amended Rule G-11 if 
following the priority provisions was not consistent with the orderly 
distribution of securities in the offering or, in the case of 
syndicates, the syndicate manager determined that it was in the best 
interests of the syndicate to deviate from the priority provisions. The 
MSRB believes that, depending on the specific facts and circumstances, 
a sole underwriter or syndicate manager could reasonably determine that 
according priority to an order from a customer whom the sole 
underwriter or syndicate manager reasonably believes would purchase 
municipal securities with the expectation of selling them at higher 
prices shortly thereafter might be an appropriate basis for departing 
from the priority provisions consistent with the proposed rule change.
    RBDA was also concerned that the proposed amendment would require 
records to be made of each instance in which the syndicate manager 
accorded equal or greater priority over other orders to orders by 
syndicate members for their own or related accounts, even if such 
prioritization were in compliance with the priority provisions of Rule 
G-11. The MSRB responded that in order for the proposed recordkeeping 
rule to track the proposed amendment to Rule G-11 more closely, 
Amendment No. 1 would amend the syndicate recordkeeping rule (Rule G-
8(a)(viii)(A)) to require records of: ``those instances in which the 
syndicate manager allocated securities in a manner other than in 
accordance with the priority provisions, including those instances in 
which the syndicate manager accorded equal or greater priority over 
other orders to orders by syndicate members for their own accounts or 
their respective related accounts. * * *''
    In addition, RBDA was concerned that the proposal's requirement to 
record the specific reasons why it was in the best interests of the 
syndicate to make any such alternate allocations would be unnecessarily 
perilous for syndicate managers. RBDA believes the amendment is unclear 
about the amount of detail regarding these reasons that would be 
necessary to record in order to satisfy the new requirements. RBDA also 
states that the requirement for such qualitative analysis will create 
an opportunity to second guess in hindsight the recorded judgment of 
the syndicate manager.
    The MSRB responded that existing Rule G-11 already provides that, 
in the event the syndicate manager allocates bonds other than in 
accordance with the priority provisions of the syndicate, ``the 
syndicate manager or managers shall have the burden of justifying that 
such allocation was in the best interests of the syndicate.'' The MSRB 
also stated that the proposed rule change does not change this 
requirement; it merely requires the syndicate manager to keep a 
contemporaneous record of such justification.
    The Commission believes the MSRB has adequately addressed RBDA's 
concerns. The proposed rule change would permit deviation from the 
priority provisions of amended Rule G-11 if following the priority 
provisions was not consistent with the orderly distribution of 
securities in the offering or, in the case of syndicates, the syndicate 
manager determined that it was in the best interests of the syndicate 
to deviate from the priority provisions. Amendment No. 1 should address 
RBDA's duplicative recordkeeping concerns. And the Commission agrees 
that the proposed rule change does not change the syndicate manager's 
existing burden of justifying that such allocation was in the best 
interests of the syndicate; rather, it merely requires the syndicate 
manager to keep a contemporaneous record of such justification.
    SIFMA expressed concern that the intent of the proposed rule is 
ambiguous. SIFMA infers that the MSRB's intent is, at least in part, to 
prevent flipping. SIFMA stated that there are many reasons why orders 
are not filled and that there are many ways securities can be sold at 
higher prices in the secondary market that do not require regulatory 
response. The MSRB stated in its response that its goal behind the 
proposed rule change was to achieve a broader distribution of municipal 
securities, and the proposed rule change was not directed at flipping.
    SIFMA suggested that helping to ensure that institutional 
investors' orders are filled would be the antithesis of ``a broader 
distribution of municipal securities.'' In addition, SIFMA stated that 
the exceptions to the priority provisions contradict the claim that the 
purpose of the proposal is to encourage a broader distribution of 
municipal securities.
    The MSRB noted in its response that many institutional investors 
serve as vehicles for individual investors to invest in municipal 
securities, as explained in ICI's comment letter. The MSRB stated that, 
as of September 2009, 20 percent of municipal securities were

[[Page 51131]]

held by mutual funds on behalf of retail investors. The MSRB stated 
that these investors frequently are able to negotiate lower prices for 
their customers and provide a means for individual investors to achieve 
diversification without making large investments. The MSRB further 
stated that the proposed rule change does not require that underwriters 
accord non-underwriter dealers the same priority as customers; it 
simply permits them to do so.
    The MSRB believes the allowance of some exceptions to the priority 
provisions provides needed flexibility. The MSRB noted that the 
proposed interpretation provides that it ``understands that syndicate 
managers must balance a number of competing interests in allocating 
securities in a primary offering and must be able quickly to determine 
when it is appropriate to allocate away from the priority provisions, 
to the extent consistent with the issuer's requirements.'' The 
interpretation applies equally to sole underwriters. The need for such 
flexibility does not contradict the purpose of achieving broader 
distribution of municipal securities. The Commission agrees that the 
proposal would help achieve a broader distribution of municipal 
securities, while still allowing flexibility depending on various 
market conditions.
    SIFMA also questioned whether the MSRB is authorized to determine 
the preferred order of distributing securities. The MSRB stated in its 
response that the MSRB is directed by Congress in section 15B of the 
Exchange Act to write rules designed, among other things, ``to remove 
impediments to and perfect the mechanism of a free and open market in 
municipal securities, and, in general, to protect investors and the 
public interest.'' The MSRB believes that broadening the distribution 
of municipal securities to investors in the primary market, at what are 
generally attendant lower prices than those available in the secondary 
market, is clearly within that statutory purpose. The MSRB further 
noted that Congressional concerns led to the provision of section 15B 
of the Exchange Act, and support its view that broadening the 
distribution of municipal securities falls within its statutory 
purpose. The Commission agrees that the proposed rule falls within the 
MSRB's statutory authority.
    SIFMA expressed concern that the proposed amendments contain 
several different and possibly conflicting standards, and that newly 
revised Rule G-11(e)(i) is confusing and contradictory. SIFMA suggested 
that the proposed interpretive notice does not define what would 
constitute ``the orderly distribution of securities,'' and that dealers 
could have difficulty determining what ``is in the best interests of 
the syndicate.'' The MSRB responded that the phrase ``orderly 
distribution of new issue securities'' was used in the 1987 
Interpretive Notice, which the proposed rule change would replace. The 
MSRB recognizes that, while broad distribution of securities was a 
concern of Congress when it enacted section 15B of the Exchange Act, 
the underwriter must be free to exert some control over that process if 
necessary to achieve a favorable result for the issuer. The MSRB 
further stated that it was the MSRB's intent that the priority 
provisions may be deviated from if it is in the best interests of the 
syndicate to do so, and noted that the proposed interpretation contains 
the same exception as is found in the proposed amendment to Rule G-11.
    SIFMA believes the proposed rule change would have a detrimental 
effect on competition and borrowing costs and would not apply equally 
to all dealers. SIFMA believes that the proposal would result in higher 
borrowing costs for issuers and subordinate a very large group of 
active municipal market investors to other investors because they are 
affiliated with or related to the syndicate manager.
    The MSRB responded that the proposal would apply equally to all 
dealers when they serve as underwriters. All underwriters would 
continue to be able to place going-away orders (i.e., orders for which 
customers are already conditionally committed) during the primary 
offering that would be accorded priority under the proposal.\12\ The 
MSRB stated that the proposed rule change incorporates the same 
exceptions to the priority provisions that exist under current law. The 
MSRB further stated that what the proposed rule change would do is to 
require accountability of underwriters who deviated from the priority 
provisions, because they would be required to keep records of their 
reasons for doing so.\13\
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    \12\ The MSRB stated that the fact that Rule G-14 requires that 
such orders be reported to the MSRB's Real-Time Trade Reporting 
System as interdealer orders will not cause such orders to be 
treated as interdealer orders for purposes of the priority of orders 
provisions of Rule G-11(e) and Rule G-17, as long as an equivalent 
amount of customer orders for the same securities is reported under 
Rule G-14 on the same day as the interdealer order is executed.
    \13\ The MSRB also notes that a ``municipal securities 
investment trust'' is only a related account if sponsored by a 
syndicate member, sole underwriter, or an affiliate of either. To be 
a sponsor of such a trust a dealer or its affiliate must share in 
the benefits and burdens of ownership of the municipal securities in 
the trust. The provision of structuring, remarketing, or liquidity 
services with respect to such a trust will not alone cause the trust 
to be a related account of the dealer or affiliate providing such 
services.
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    SIFMA stated that the proposed interpretive notice is less 
restrictive than the proposed rule amendments. SIFMA said that the 
greater flexibility of the proposed interpretive notice is the result 
of the word ``generally,'' which was included to indicate that the 
principles of fair dealing contained in Rule G-17 provide guidance that 
must take into account all of the circumstances surrounding an 
allocation of securities in a primary offering and do not compel giving 
priority to customers' orders. SIFMA stated that the interpretive 
notice is also more flexible than the proposed rule for sole 
underwriters who are not part of a syndicate. The MSRB responded that 
there was no intent to make the proposed interpretation less rigorous 
than the proposed amendment to Rule G-11. For the avoidance of doubt, 
Amendment No. 1 would slightly revise the proposed interpretation.
    The Commission believes the MSRB has adequately addressed SIFMA's 
concerns about the purpose of the proposal, the application of the 
proposal's requirements, its impact on competition and borrowing costs 
and the MSRB's statutory authority. Amendment No. 1 should clarify that 
the interpretive notice is not inconsistent with the rule.
    Mr. Melton states that the intent of the MSRB is to restrict 
activity that many see as free riding in new issue municipal offerings. 
He suggests that the proposal should be re-drafted to allow 
underwriters the flexibility to identify flippers and treat those 
orders as dealer orders rather than affording flippers customer status. 
He is also of the view that the ``best interests of the syndicate'' 
exception would require unnecessary effort and not provide assurance 
that an underwriter could protect itself against allegations of rule 
violations in new issue allocations. Mr. Melton suggested that clear 
language should be drafted that allows an underwriter to identify 
flippers and prioritize flipper orders accordingly.
    The MSRB responded that the MSRB considers it consistent with the 
permitted exceptions from the priority provisions for a sole 
underwriter or syndicate manager to refuse to accord priority to an 
order from a customer whom the sole underwriter or syndicate manager 
reasonably believes would purchase municipal securities with the

[[Page 51132]]

expectation of selling them at higher prices shortly thereafter. 
Furthermore, the MSRB stated that the proposed rule change incorporates 
the same exceptions to the priority provisions that exist under current 
law, and that what the proposed rule change would do is to require 
accountability of underwriters who deviated from the priority 
provisions, because they would be required to keep records of why they 
did so. The Commission believes the MSRB's explanation of the 
application of the proposal adequately addresses Mr. Melton's concerns. 
With regard to all other issues raised by the commenters, the 
Commission believes that the MSRB has adequately addressed the 
commenters' concerns.

IV. Order Granting Accelerated Approval of Proposed Rule Change

    Pursuant to Section 19(b)(2) of the Exchange Act,\14\ the 
Commission may not approve any proposed rule change, or amendment 
thereto, prior to the 30th day after the date of publication of notice 
of the filing thereof, unless the Commission finds good cause for so 
doing and publishes its reasons for so finding. The MSRB requests that 
the Commission find good cause, pursuant to Section 19(b)(2) of the 
Exchange Act, for approving Amendment No. 1 prior to the thirtieth day 
after publication of notice of filing of Amendment No. 1 in the Federal 
Register. The MSRB believes that the Commission has good cause for 
granting accelerated approval of the proposed rule change because the 
revisions made by Amendment No. 1 are technical amendments that do not 
significantly alter the substance of the original proposed rule change, 
are consistent with the purpose of the original proposed rule change, 
and do not raise significant new issues. The Commission hereby finds 
good cause for approving the proposed rule change, as modified by 
Amendment No. 1, before the 30th day after the date of publication of 
notice of filing thereof in the Federal Register. The Commission notes 
that the original proposed rule change was published in the Federal 
Register on December 10, 2009. The Commission does not believe that 
Amendment No. 1 significantly alters the proposal. In Amendment No. 1, 
the MSRB made technical revisions in response to comments. The 
Commission believes that Amendment No. 1 is consistent with the 
proposal's purpose and raises no new significant issues. Accordingly, 
pursuant to Section 19(b)(2) of the Exchange Act,\15\ the Commission 
finds good cause to approve the proposed rule change, as amended, on an 
accelerated basis.
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    \14\ 15 U.S.C. 78s(b)(2).
    \15\ 15 U.S.C. 78s(b)(2).
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V. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Exchange 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2009-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2009-17. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the MSRB. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MSRB-2009-17 and should be 
submitted on or before September 8, 2010.

VI. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change, as amended, is consistent with the Exchange Act and the 
rules and regulations thereunder applicable to the MSRB\16\ and, in 
particular, the requirements of Section 15B(b)(2)(C) of the Exchange 
Act\17\ and the rules and regulations thereunder. The proposal will 
become effective for new issues of municipal securities for which the 
Time of Formal Award (as defined in Rule G-34(a)(ii)(C)(1)(a)) occurs 
more than 60 days after approval of the proposed rule change by the 
SEC, as requested by the MSRB.
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    \16\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78o-4(b)(2)(C).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\18\ that the proposed rule change (SR-MSRB-2010-17), as 
amended, be, and it hereby is, approved on an accelerated basis.
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    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20467 Filed 8-17-10; 8:45 am]
BILLING CODE 8010-01-P

