
[Federal Register Volume 76, Number 20 (Monday, January 31, 2011)]
[Notices]
[Pages 5417-5418]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1985]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63764; File No. SR-MSRB-2010-17]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Order Granting Approval of Proposed Rule Change Consisting of 
Amendments to Rule A-3, on Membership on the Board

January 25, 2011.

I. Introduction

    On November 30, 2010, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board''), filed with the Securities and Exchange 
Commission (``Commission''), 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 consisting of amendments to Rule A-3, on 
membership on the Board, in order to establish a Nominating Committee 
in compliance with MSRB transitional Rule A-3(i). The proposed rule 
change was published for comment in the Federal Register on December 
17, 2010.\3\ The Commission received no comment letters about the 
proposed rule change.\4\ This order approves the proposed rule change.
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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. 63533 (December 13, 
2010), 75 FR 79061 (December 17, 2010) (the ``Commission's 
Notice'').
    \4\ On January 13, 2011, Commissioner Aguilar, along with 
Michael E. Coe, Counsel to the Commissioner, met with 
representatives of the National Association of Independent Public 
Finance Advisors to discuss the proposed rule change among other 
matters. See Memorandum from Michael E. Coe, dated January 13, 2011.
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II. Description of the Proposed Rule Change

    The purpose of the proposed rule change is to make changes to MSRB 
Rule A-3(c) as are necessary and appropriate prior to the creation of 
the Nominating Committee of the MSRB.
    On September 30, 2010, the SEC approved MSRB Rule A-3(i), a 
transitional rule for MSRB fiscal year 2011 intended to implement the 
requirements of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203, 124 Stat. 1376 (2010) (the ``Dodd-
Frank Act'').\5\ The transitional rule provides that on or after 
October 1, 2010, and prior to the formation of the Nominating Committee 
for purposes of nominating Board members for fiscal year 2012, the 
Board will amend the provisions of Rule A-3(c) to (a) reflect the 
composition of the Board as provided under the Dodd-Frank Act, (b) 
assure that the Nominating Committee will be composed of a majority of 
public members and will have fair representation of broker-dealers, 
bank dealers, and municipal advisors, and (c) reflect such other 
considerations consistent with the provisions of Section 15B of the 
Exchange Act and the Dodd-Frank Act as the Board deems appropriate. The 
proposed rule change is intended to amend Rule A-3(c) to comply with 
the requirements of transitional Rule A-3(i), as approved by the SEC.
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    \5\ See Exchange Act Release No. 63025 (September 30, 2010), 75 
FR 61806 (October 6, 2010).
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    Consistent with Rule A-3(i), the Nominating Committee (hereinafter, 
``Nominating and Governance Committee'') would consist of eleven 
members, six of whom would be public members and five of whom would be 
industry members. The Chair of the Committee would be a public member. 
Establishing an eleven member committee would allow for fair 
representation of regulated entities by reserving five positions for 
brokers, dealers, municipal securities dealers and municipal advisors.
    Each constituency identified in the Dodd-Frank Act would be 
guaranteed a minimum of one seat on the Nominating and Governance 
Committee but the level of each constituency would be capped to avoid 
overweighting of any one over the others. These ranges of membership 
are as follows:
     Six public members consisting of (a) at least one, but no 
more than three, representative of institutional or retail investors; 
(b) at least one, but no more than three, representative of municipal 
entities; (c) at least one, but no more than three, members of the 
public with knowledge of or experience in the municipal industry and 
not representative of investors or municipal entities;\6\ and
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    \6\ In order to ensure balance on the committee and reflect the 
breadth of public representatives on the Board, the proposal would 
require one to three committee members be selected from Board 
members who are not representative of municipal entities or 
investors.
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     Five regulated members, consisting of (a) at least one, 
but no more than two, representative of broker-dealers; (b) at

[[Page 5418]]

least one, but no more than two, representative of bank dealers; and 
(c) at least one, but no more than two, representative of non-dealer 
municipal advisors.
    The Board believes this formulation is consistent with the Dodd-
Frank Act and Rule A-3(i) in that it provides for a majority of public 
members on the Committee and fair representation of regulated entities. 
The MSRB also believes it is important that the Chair of the Nominating 
and Governance Committee be a public member, both as a governance best 
practice and in recognition of the majority of public members on the 
Board, as mandated by the Dodd-Frank Act.
    A more complete description of the proposal is contained in the 
Commission's Notice.\7\
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    \7\ See supra note 3.
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III. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change 
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 \8\ and, in particular, the 
requirements of Section 15B(b)(2)(B) of the Exchange Act \9\ and the 
rules and regulations thereunder. Section 15B(b)(2)(B) of the Exchange 
Act provides that the MSRB's rules shall:
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    \8\ 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).
    \9\ 15 U.S.C. 78o-4(b)(2)(B).

    Establish fair procedures for the nomination and election of 
members of the Board and assure fair representation in such 
nominations and elections of public representatives, broker dealer 
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representatives, bank representatives, and advisor representatives.

    The Commission believes that the proposed rule change is consistent 
with the Exchange Act as amended by the Dodd-Frank Act, in that it 
would provide for the creation of an MSRB Nominating and Governance 
Committee that reflects the composition of the Board as provided under 
the Dodd-Frank Act and would help assure that the Nominating and 
Governance Committee would be composed of a majority of public members 
and have fair representation of broker-dealers, bank dealers, and 
municipal advisors, consistent with MSRB Rule A-3(i) as approved by the 
SEC.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\10\ that the proposed rule change (SR-MSRB-2010-17), be, 
and it hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1985 Filed 1-28-11; 8:45 am]
BILLING CODE 8011-01-P


