[Federal Register Volume 83, Number 75 (Wednesday, April 18, 2018)]
[Notices]
[Pages 17200-17203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08052]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83038; File No. SR-MSRB-2018-02]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change to the MSRB's Facility for the Real-Time Transaction Reporting 
System

April 12, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on April 2, 2018 the Municipal Securities 
Rulemaking Board (the ``MSRB'' or ``Board'') filed with the Securities 
and Exchange Commission (``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 the 
MSRB's facility for the Real-Time Transaction Reporting System 
(``RTRS'') to reflect the re-engineered RTRS and modernize and 
consolidate the RTRS information facility (``RTRS IF'') (``proposed 
rule change''). The MSRB has filed the proposed rule change under 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) \4\ 
thereunder, as a noncontroversial rule change that renders the proposal 
effective upon filing. The proposed rule change would be made operative 
on May 29, 2018.
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    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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
    MSRB Rule G-14, on transaction reporting, requires brokers, dealers 
and municipal securities dealers (``dealers'') to report executed 
transactions in municipal securities to RTRS within 15 minutes of the 
time of trade, with limited exceptions. RTRS disseminates information 
about transactions occurring in the municipal securities market to RTRS 
subscription services, including to the MSRB's Electonic Municipal 
Market Access System (EMMA[supreg]). The RTRS IF sets forth the 
material aspects of the operation of RTRS by describing the basic 
functionality of, and the high-level parameters by which the MSRB 
operates, RTRS. The proposed rule change consists of amendments to the 
RTRS IF.\5\
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    \5\ The RTRS facility is currently available on the MSRB's 
website at http://www.msrb.org/Rules-and-Interpretations/MSRB-Rules/Facilities/RTRS-Facility.aspx.
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Background
    The MSRB is enhancing certain RTRS components, including improving 
business continuity and connectivity services to RTRS and migrating 
subscription products to encrypted solutions.\6\ The purpose of the 
proposed rule change is to revise the RTRS IF to reflect this re-
engineering of RTRS and to modernize and consolidate the RTRS IF.
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    \6\ The MSRB has reported the enhancements to RTRS components to 
the SEC consistent with Regulation Systems Compliance and Integrity. 
See Exchange Act Release No. 73639 (November 19, 2014), 79 FR 72251 
(December 5, 2014).
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    Since the re-engineering would result in revisions to the RTRS IF, 
the MSRB took the opportunity to perform a comprehensive review of the 
RTRS IF to evaluate whether it sufficiently and clearly describes the 
basic functionality and operation of RTRS. The MSRB believes that 
dealers, submitters \7\ and subscribers \8\ benefit from this 
information being provided in a concise and organized manner.
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    \7\ As defined in Rule G-14, a submitter means a dealer, or 
service bureau acting on behalf of a dealer, that has been 
authorized to interface with RTRS for the purposes of entering 
transaction data into the system.
    \8\ Subscriber refers to an individual or entity that receives 
RTRS data through an MSRB subscription service.
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Proposed Amendments to the RTRS Information Facility
(i) Subscriber Connectivity Changes
    The RTRS IF sets forth RTRS subscribers' options for connecting to 
the RTRS Real-Time Transaction Data Subscription Service (``Real-Time 
Service''). Currently, subscribers have the option to connect to the 
Real-Time Service either over the internet or by leased line. As part 
of the re-engineering, the MSRB will require that subscribers to the 
Real-Time Service utilize the internet to connect to RTRS. As a result, 
subscribers will no longer be able to use leased lines for the Real-
Time Service.
    With respect to messaging with RTRS, subscribers currently must use 
either the MQ Series messaging software or a Transmission Control 
Protocol (``TCP'') Socket connection. As part of the re-engineering, 
the MSRB will offer subscribers a new web service as an option for 
messaging with RTRS and retire the MQ Series messaging software. 
Moreover, the MSRB will require that any TCP socket connections 
utilized for messaging with RTRS are secure.
    The MSRB is implementing these subscriber connectivity changes to 
improve business continuity by allowing for more efficient failovers to

[[Page 17201]]

backup sites, migrate the Real-Time Service to encrypted messaging and 
improve the security of subscriber connections.
    The MSRB has previously notified subscribers of these connectivity 
changes, which will be operative on May 29, 2018, and provided a test 
environment for subscribers to test applicable systems changes. 
Specifically, the MSRB first notified all subscribers to the Real-Time 
Service of the subscriber connectivity changes on January 5, 2017 and 
made a test environment available to subscribers on February 1, 2017. 
The MSRB has been engaging in outreach efforts to subscribers to 
support the transition to the re-engineered RTRS and will continue to 
do so.
    The proposed rule change would remove references to leased lines 
and the MQ Series and add references to the new web service and secure 
TCP socket connections to reflect the subscriber connectivity changes 
associated with the re-engineering.
(ii) Removal of Outdated References
    The RTRS IF was approved by the Commission on August 31, 2004 \9\ 
and RTRS became operational on January 10, 2005. RTRS replaced the 
MSRB's former Transaction Reporting System (the ``TRS system'') and 
brought real-time collection and dissemination of transactions to the 
municipal securities market.
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    \9\ Exchange Act Release No. 50294 (August 31, 2004), 69 FR 
54170 (September 7, 2004) (SR-MSRB-2004-02).
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    Given the significance of the progression to real-time collection 
and dissemination at the time of RTRS' inception, the facility 
referenced improvements associated with the creation of real-time 
collection and dissemination and included transitional language which 
referenced the TRS system in describing RTRS functionality, including 
describing enhanced functionality of RTRS as compared with the TRS 
system, and common features between the systems.
    As it has been over thirteen years since TRS ceased operation and 
the progression to real-time collection and dissemination took place, 
the proposed rule change would remove dated references to the original 
improvements associated with real-time collection and dissemination and 
the TRS system, including the section titled ``Improved Functionality'' 
and much of a section titled ``Enhancement of Information Available to 
Regulators.'' To modernize the RTRS IF, the information that remains 
current with respect to information that RTRS provides to regulators 
would be consolidated under the proposed rule change in a renamed 
section titled ``Information Available to Regulators.''
    The inclusion of references to TRS and the enhancements implemented 
in 2005 no longer serve a purpose in describing the basic functionality 
of, or the high-level parameters by which the MSRB operates, RTRS. In 
addition, information concerning outdated ``enhancements'' could 
mislead users to believe certain RTRS functionality is recent, when in 
fact such functionality may have been in place since 2005.
    In place of these references, the proposed rule change would add a 
new introductory paragraph which explains the purpose of the RTRS IF, 
summarizes key RTRS functionality and refers dealers to Rule G-14 for 
transaction reporting requirements.
(iii) Consolidating Format
    The RTRS IF is currently structured such that there are separate 
segmented topics within the information facility: the ``RTRS 
Facility,'' the ``MSRB Real-Time Transaction Data Subscription 
Service,'' the ``Comprehensive Transaction Data Subscription Service,'' 
the ``MSRB Historical Transaction Data Product,'' and the ``MSRB 
Academic Historical Transaction Data Product.'' Each segmented topic 
was initially designed to stand alone, with each having a separate 
footnote section.
    The proposed rule change would reorganize the RTRS IF into two 
sections, ``RTRS Functionality'' and ``Transaction Dissemination by 
RTRS.'' The first section, ``RTRS Functionality'' would set forth basic 
information regarding the operation and functionality of RTRS, 
including the submission of transaction reports, messaging input 
options, the information that RTRS provides to regulators, and key 
steps in RTRS processing. The ``Transaction Dissemination by RTRS'' 
section would describe the RTRS subscription products, including the 
Real-Time Service, the Comprehensive Transaction Data Subscription 
Service, the Historical Transaction Data Product and the Academic 
Historical Transaction Data Product. Reorganizing and consolidating the 
RTRS IF in the manner set forth in the proposed rule change would 
reduce redundancies and improve readability.
    The proposed rule change would also consolidate repetitive 
references in the RTRS IF to ensure consistency within the document. 
For example, the proposed rule change would consolidate a list of 
information designed to identify and describe the types of data 
disseminated by RTRS currently provided in both the ``RTRS Facility'' 
segment and the ``Real-Time Transaction Data Subscription Service'' 
segment. A consolidated list of data fields would reduce the risk of 
inconsistencies and potential confusion.
    The proposed rule change would also consolidate two sections in the 
RTRS IF that describe the process by which RTRS determines whether a 
trade is reported within the applicable reporting deadline set forth in 
Rule G-14. The RTRS IF contains a section titled ``Measurement of 
Timely Reporting'' and a section titled ``Lateness checking,'' both of 
which contain similar information. The proposed rule change 
consolidates the information in these two sections to improve clarity 
regarding the description of RTRS processing with respect to measuring 
trades against the applicable reporting deadline.
    In addition, the ``Message-Based and Web-Based Input Methods'' 
section of the RTRS IF includes repetitive references regarding the 
ability of dealers and submitters to use the message-based and web-
based portals. The proposed rule change removes these repetitive 
references as the ``RTRS Portals'' section of the RTRS IF is the 
appropriate section to uniformly describe the policies governing each 
RTRS portal.
    The proposed rule change also consolidates several other repetitive 
references in the RTRS IF.
(iv) Uniformity of Rule References
    As RTRS is the facility for the collection of information about 
transactions occurring in the municipal securities market, the RTRS IF 
includes references to dealers' obligations under Rule G-14. The 
proposed rule change would ensure that, if Rule G-14 is referenced, the 
language of Rule G-14 would be used in the RTRS IF.
    To that end, the proposed rule change would replace the section 
titled ``Submission of Transaction Reports by Intermediaries'' with a 
new section titled ``Submission of Transaction Reports'' which 
references relevant provisions of Rule G-14. By including direct 
references to Rule G-14, the proposed rule change would provide 
increased certainty regarding transaction reporting obligations.
    To ensure consistency within the RTRS IF, the proposed rule change 
would also replace certain uses of the term ``dealer'' with the term 
``submitter.'' The term ``dealer'' would be used when referencing 
obligations under Rule G-14 and the term ``submitter'' would be used 
when

[[Page 17202]]

referring to an RTRS user who accesses the system to make a submission, 
whether the user is a dealer or a service bureau acting on behalf of a 
dealer.
(v) Improved Descriptions of RTRS Functionality
    As part of its comprehensive review, the MSRB analyzed whether 
aspects of the RTRS IF could be enhanced to more accurately or 
concisely describe RTRS functionality and operation to better serve the 
RTRS IF's intention of describing the basic functionality of, and the 
high-level parameters by which the MSRB operates, RTRS.
    One area where the MSRB determined that an enhanced description of 
RTRS functionality would be beneficial is in reference to real-time 
dissemination. The RTRS IF frequently references that RTRS disseminates 
transaction data in ``real-time'' but does not uniformly describe 
``real-time'' processing. Instead, the RTRS IF suggests that real-time 
is ``as soon as it is received'' or ``as soon as possible.'' In 
addition, in one section, the RTRS IF provides that ``[t]he MSRB 
anticipates that, during peak traffic periods, these automated 
functions will be accomplished within two minutes, and during lighter 
periods will be accomplished within a few seconds.''
    The proposed rule change would clarify that real-time dissemination 
for RTRS functionality occurs ``promptly following processing in 
RTRS.'' This description of real-time dissemination reflects the fact 
that, prior to dissemination, RTRS, among other things, conducts format 
checks, validates the submitter, timestamps and assesses the trade 
against the reporting deadline and conducts content checks.
    The proposed rule change would also clarify the impact of failing 
certain checks in RTRS processing. The proposed rule change would 
revise the RTRS IF to highlight that messages that fail certain format 
or content checks are not processed further and an error message 
describing the deficiency is returned to the submitter. The RTRS Users 
Manual sets forth additional information regarding format and content 
checks.\10\
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    \10\ The RTRS Users Manual is currently available on the MSRB's 
website at http://www.msrb.org/Market-Transparency/Trade-Data/RTRS-Users-Manual.aspx.
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(vi) Removal of Certain Technical and Ancillary Information
    Given that the purpose of the RTRS IF is to set forth the material 
aspects of RTRS' operation, highly technical and ancillary information 
regarding RTRS is more appropriately left to the RTRS Users Manual and 
similar documents that the MSRB maintains that describe RTRS 
functionality.
    Specifically, the MSRB maintains two specifications documents for 
RTRS, the ``Specifications for Real-Time Reporting of Municipal 
Securities Transactions'' (``RTRS Reporting Specifications'') and the 
``Specifications Document for the RTRS Subscription Service'' (``RTRS 
Subscription Specifications''). Both of these specifications documents 
are available on the MSRB's publicly available website, msrb.org.\11\ 
The RTRS Reporting Specifications provide detailed information 
regarding, among other things, input and output specifications, message 
formatting, structure and flow and error messages and feedback. The 
RTRS Subscription Specifications provide specifications and 
requirements to access, retrieve and understand RTRS subscription 
services. The MSRB also maintains an ``MSRB Subscription Services Price 
List'' on msrb.org to inform interested individuals about the pricing 
for RTRS subscription services.
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    \11\ The RTRS Reporting Specifications are currently available 
on the MSRB's website at http://www.msrb.org/msrb1/RTRS/RTRS-Specifications.pdf. The RTRS Subscription Specifications are 
currently available on the MSRB's website at http://www.msrb.org/msrb1/RTRS/Specifications-Document-for-RTRS-Subscription-Service.pdf.
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    The proposed rule change would remove certain technical and 
ancillary information from the RTRS IF that is presented in the RTRS 
Reporting Specifications, RTRS Subscription Specifications and MSRB 
Subscription Services Price List. The removal of such information will 
streamline the RTRS IF by presenting the information that is necessary 
to describe the material aspects of the operation of RTRS.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
the provisions of Section 15B(b)(2)(C) of the Act.\12\ which provides 
that the MSRB's rules shall:
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    \12\ 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.

    Specifically, the proposed rule change would contribute to the 
MSRB's continuing efforts to improve market transparency by improving 
business continuity and the security of RTRS subscriber connections. As 
RTRS disseminates information about transactions occurring in the 
municipal securities market, any improvement with respect to the 
resiliency and security of RTRS will further perfect the mechanism of a 
free and open market in municipal securities by making it more likely 
that the market is continuously provided with transaction information.
    The RTRS enhancements will improve the speed of dissemination of 
trade information and enhance the resiliency of RTRS by allowing RTRS 
to failover to backup sites more efficiently. This re-engineering of 
RTRS will also migrate the Real-Time Service to encrypted messaging and 
further enhance the security of subscriber connections. The MSRB is 
continuously seeking to enhance system security and the RTRS re-
engineering is consistent with this objective.
    The proposed rule change would also increase clarity and accuracy 
with respect to the description of basic RTRS functionality and the 
high-level parameters by which the MSRB operates RTRS. The MSRB 
believes that dealers, submitters and subscribers will benefit from a 
clearer understanding of this information. While additional technical 
information regarding RTRS is set forth in the RTRS Users Manual and 
similar documents that the MSRB maintains, the MSRB believes that it is 
important that fundamental information regarding RTRS be clearly 
described in the RTRS IF and the proposed rule change serves this 
purpose.

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

    Section 15B(b)(2)(C) of the Act \13\ requires that MSRB rules not 
be designed to impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change consists of revisions to the RTRS IF to better align the 
language of the information facility to the MSRB's administration of 
RTRS. The proposed rule change seeks to clarify existing services and 
make minor changes of a technical nature to the information facility 
resulting from the re-engineering. The proposed rule change will not 
modify the manner in which the MSRB administers RTRS in collecting and 
disseminating information on transactions in the municipal securities 
market. Accordingly, the MSRB does not believe

[[Page 17203]]

that the proposed rule change will result in any burden on competition 
that is not necessary or appropriate in furtherance of the Act.
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    \13\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Board did not solicit comment on the proposed change. 
Therefore, there are no comments on the proposed rule change received 
from members, participants or others.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    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.

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-2018-02 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-2018-02. 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 (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-2018-02 and should be submitted on 
or before May 9, 2018.

    For the Commission, pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-08052 Filed 4-17-18; 8:45 am]
 BILLING CODE 8011-01-P


