[Federal Register Volume 87, Number 133 (Wednesday, July 13, 2022)]
[Notices]
[Pages 41846-41851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-14881]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95208; File No. SR-MSRB-2022-05]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of a Proposed Rule Change Consisting of 
Amendments to MSRB Rule G-34 To Better Align the CUSIP Requirements for 
Underwriters and Municipal Advisors With Current Market Practices

July 7, 2022.
    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 July 1, 2022 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 
consisting of amendments to MSRB Rule G-34, on CUSIP numbers, new 
issue, and market information requirements (the ``proposed rule 
change''). The proposed rule change would make minor amendments to 
better align Rule G-34's requirements for obtaining CUSIP numbers with 
the process followed by market participants and facilitate compliance 
with MSRB Rule G-34 by streamlining the rule text.
    If the Commission approves the proposed rule change, the MSRB will 
publish a Notice announcing the effective date of the proposed rule 
change no later than 10 days following Commission approval. The 
effective date will be no later than 30 days following Commission 
approval.
    The text of the proposed rule change is available on the MSRB's 
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2022-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
    Among other things, MSRB Rule G-34 on CUSIP numbers, new issue, and 
market information requirements establishes requirements relating to 
CUSIP numbers for brokers, dealers and municipal securities dealers 
(collectively and individually ``dealers'') acting as underwriters and 
for municipal advisors (dealers and municipal advisors together, 
``regulated entities''). In particular, Rule G-34(a)(i)(A) requires 
dealers acting as underwriters and municipal advisors advising the 
issuer with respect to a competitive sale of a new issue of municipal 
securities to apply for a CUSIP number or numbers based on eight 
specified items of information about the new issue.\3\ MSRB Rule G-
34(a)(i)(A)(5) addresses the obligations to update application 
information that has changed. The rule further stipulates details on 
how these regulated entities must apply for CUSIP numbers in detail 
that includes specific data points to be included in the application 
for obtaining CUSIP numbers.
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    \3\ These eight items are set forth in current MSRB Rule G-
34(a)(i)(A)(4)(a) through (h).
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    In 2019, the MSRB announced priority rules to be considered as part 
of its ongoing retrospective rule review. The goal of the review was to 
help ensure that: MSRB rules and interpretive guidance are effective in 
their principal goal of protecting investors, issuers and the public 
interest; not overly burdensome; clear; harmonized with the rules of 
other regulators, as appropriate; and reflective of current market 
practices.\4\ In this announcement, the MSRB listed MSRB Rule G-34 as a 
rule to be prioritized for

[[Page 41847]]

review.\5\ The MSRB sought comment in 2019 on MSRB Rule G-34, but the 
following year determined to maintain the obligations under the rule 
with respect to the responsible party for obtaining a CUSIP number in 
new issues.\6\
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    \4\ See MSRB Notice 2019-04, MSRB Identifies Priority Rules for 
Retrospective Rule Review (February 5, 2019).
    \5\ Id. at 3.
    \6\ See MSRB Notice 2019-08, Request for Comment on MSRB Rule G-
34 Obligation of Municipal Advisors to Apply for CUSIP Numbers When 
Advising on Competitive Sales (February 27, 2019). Comments 
submitted in response to Regulatory Notice 2019-08 are available 
here: https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2019/2019-08?c=1.
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    In recent years, the MSRB has heard from industry members through 
stakeholder engagement that MSRB Rule G-34's requirements on obtaining 
CUSIP numbers, in its current form, do not accurately reflect the 
actual process that an underwriter or municipal advisor must go through 
when obtaining a CUSIP number. This discrepancy further complicates 
efforts when a municipal advisor or underwriter creates written 
supervisory procedures that are mapped to the rule text but do not 
accurately reflect the actual or logistical process that they must 
undertake for appropriately obtaining a CUSIP number. After reviewing 
rule requirements relating to obtaining a CUSIP number, the MSRB is 
submitting this proposed rule change to: modernize the rule to better 
align with the realities of obtaining a CUSIP number; provide 
flexibility in the rule; and clear up areas of confusion for 
underwriters and municipal advisors attempting to comply with the rule.
    In summary, the proposed rule change:
     specifies that CUSIP applications must be made to the 
Board's designee (and not the Board itself);
     removes the obligation for municipal advisors providing 
advice with respect to a competitive offering to apply for the CUSIP 
number by no later than one business day after dissemination of a 
notice of sale in favor of a more flexible standard that still 
obligates the application to be made within sufficient time to ensure 
timely CUSIP number assignment;
     removes language dictating the precise content of a CUSIP 
number application that the Board feels would more appropriately be 
left to the Board's designee for receiving and reviewing such 
applications; and
     explicitly provides that certain obligations set forth in 
the rule do not apply when CUSIP numbers have been preassigned.
Designee of the Board
    MSRB Rule G-34(a)(i)(A) currently requires an underwriter or 
municipal advisor to obtain CUSIP numbers through an application in 
writing to the Board or its designee. The proposed rule change amends 
this language by providing that underwriters and municipal advisors 
must apply to the Board's designee and removing the language in the 
rule text that makes reference to the Board in that requirement.\7\ 
This revised language is designed to avoid the potential for confusion 
associated with the current rule text and to more clearly convey the 
MSRB's expectations with respect to the process of obtaining a CUSIP 
number. The Board does not currently assign CUSIP numbers to municipal 
securities; underwriters and municipal advisors may only obtain one by 
application to the only entity that provides these identifiers, CUSIP 
Global Services. The Board's current designee is CUSIP Global 
Services.\8\ This designation would remain unchanged by the proposed 
rule change and would be reflected in new Supplementary Material .01. 
If CUSIP numbers become available from another source or another 
identifier for municipal securities becomes market practice at some 
point in the future, the MSRB would notify the market of a decision to 
modify the designee via publication of an MSRB regulatory notice.
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    \7\ The proposed rule change also makes similar amendments to 
Rule G-34(a)(i)(A)(5) and G-34(a)(i)(D) to remove references to the 
Board and make clear that the CUSIP number application discussed in 
those paragraphs must be made to the Board's designee.
    \8\ In 1983, the Board designated the CUSIP Service Bureau as 
its designee to assign CUSIP numbers to new issues of municipal 
securities. See MSRB Reports, Vol. 3, No. 3 at 11 (May 1983), 
available at https://msrb.org/-/media/Files/MSRB-Reports/1983/
May1983-Volume3--Number3.ashx. The CUSIP Service Bureau has since 
changed its name to CUSIP Global Services. Pursuant to a contract 
between the CUSIP Service Bureau and the MSRB, all references to the 
CUSIP Service Bureau were amended to read CUSIP Global Services. 
Accordingly, CUSIP Global Services (formerly known as the CUSIP 
Service Bureau) remains the MSRB's designee.
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    In addition, as it is the Board's designee, and not the Board, that 
controls the CUSIP number application process, the Board proposes to 
remove the in-writing requirement for the application made for 
obtaining CUSIP numbers. Because the Board does not receive or review 
CUSIP applications, it believes that the manner in which an applicant 
applies for CUSIP numbers is best left to the entity that reviews 
applications and assigns the CUSIP number (i.e., the Board's designee).
One Business Day Obligation
    MSRB Rule G-34(a)(i)(A)(3) states that a municipal advisor advising 
the issuer with respect to a competitive sale of a new issue of 
municipal securities shall make an application by no later than one 
business day after dissemination of a notice of sale or other such 
request for bids. The proposed rule change removes the obligation to 
make such application by no later than one business day since it is not 
always practical for municipal advisors to comply given the realities 
of the marketplace and therefore may place an undue burden on municipal 
advisors. The rule already obligates the application to be made at a 
time sufficient to ensure final CUSIP number assignment occurs prior to 
the award of the issue. The MSRB believes that this language is 
sufficient to ensure that any such application is timely without 
dictating a more burdensome approach of requiring a specific numeric 
time obligation. Additionally, the MSRB understands that, from an 
operational perspective, it may be impracticable for municipal advisors 
to apply for a CUSIP number within one business day after dissemination 
of a notice of sale, as currently required by Rule G-34(a)(i)(A)(3).\9\ 
Accordingly, removal of this language would better align the rule text 
with the operational process followed by municipal advisors in 
connection with their CUSIP applications.
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    \9\ See Letter from Susan Gaffney, Executive Director, NAMA, 
dated May 28, 2019 available at: https://www.msrb.org/rfc/2019-08/gaffney.pdf (stating that there is an inherent timing inconsistency 
with respect to Rule G-34(a)(i)(A)(3) as it requires application for 
CUSIP numbers no later than one business day after the Notice of 
Sale, which will almost always be before the identity of the 
investors are known, and therefore the [municipal advisor] could not 
reasonably obtain the investors' written representations) (``NAMA 
Letter'').
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Information To Be Provided When Applying for CUSIP Numbers
    MSRB Rule G-34(a)(i)(A)(4) lists specific data points that must be 
provided when applying for CUSIP numbers. These data points include the 
complete name of issue and series designation, if any; interest rate(s) 
and maturity date(s) (provided, however, that, if the interest rate is 
not established at the time of application, it may be provided at such 
time as it becomes available); dated date; type of issue (e.g., general 
obligation, limited tax or revenue); type of revenue, if the issue is a 
revenue issue; details of all redemption provisions; the name of any 
company or other person in addition to the issuer obligated, directly 
or indirectly, with respect to the debt

[[Page 41848]]

service on all or part of the issue (and, if part of the issue, an 
indication of which part); and any distinction(s) in the security or 
source of payment of the debt service on the issue, and an indication 
of the part(s) of the issue to which such distinction(s) relate.
    The proposed rule change removes these data points from the rule 
and instead provides that underwriters and municipal advisors shall 
provide the information required by the Board's designee in connection 
with their CUSIP application. The proposed rule change also makes a 
similar amendment to Rule G-34(a)(i)(D), removing from the rule text 
the three specified pieces of information that must be included in an 
application to obtain a CUSIP number in connection with certain new 
issuances that refund part of an outstanding issuance. The MSRB 
believes that Rule G-34 should not contain specific data points to be 
provided to its designee, as the MSRB does not control the specifics of 
the application process, nor does it make a determination on the 
sufficiency of an application to receive CUSIP numbers. The MSRB 
believes that the entity providing CUSIP numbers, the Board's designee, 
is the appropriate entity to dictate what individual data points must 
be provided with an application for CUSIP numbers in order to 
sufficiently evaluate an application. The MSRB believes that this 
flexibility will help create a rule that is less likely to become stale 
over time.
CUSIP Pre-Assignment
    The proposed rule change specifies that the Rule G-34(a)(i)(A)(3) 
obligation to apply for a CUSIP number only applies where no CUSIP 
numbers have been pre-assigned. The Board believes that this aligns 
with the common understanding among market participants that there is 
no obligation to seek a CUSIP number where one has already been pre-
assigned. A similar amendment to Rule G-34(a)(i)(C) provides that the 
provisions of Rule G-34(a)(i) regarding the assignment and affixture of 
CUSIP numbers do not apply with respect to any new issue of municipal 
securities on which CUSIP numbers have been preassigned.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2) of the Exchange Act,\10\ which provides that the 
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 with 
respect to municipal financial products, the issuance of municipal 
securities, and solicitations of municipal entities or obligated 
persons undertaken by brokers, dealers, municipal securities dealers, 
and municipal advisors.
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    \10\ 15.U.S.C. 78o-4(b)(2).
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    Section 15B(b)(2)(C) of the Exchange Act \11\ provides that the 
MSRB's rules shall 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, municipal 
entities, obligated persons, and the public interest.
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    \11\ 15 U.S.C. 78o-4(b)(2)(C).
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    The MSRB believes the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Exchange Act \12\ because the proposed rule 
change would foster cooperation and coordination with persons engaged 
in regulating, processing information with respect to and facilitating 
transactions in municipal securities. It does so by modernizing the 
rule to align with the realities of the process followed by 
underwriters and municipal advisors in obtaining a CUSIP number, 
allowing the Board's designee to dictate the details of the CUSIP 
application process without the distraction of the rule text describing 
the application process that may not necessarily reflect the designee's 
process, and creating a more efficient CUSIP application process more 
generally. Specifically, the MSRB believes that by removing potential 
ambiguities as to the identity of the entity to whom CUSIP applications 
should be sent, specifying directly in the rule that such application 
should be sent to CUSIP Global Services, and allowing CUSIP Global 
Services to dictate the details of the CUSIP application process, the 
MSRB is fostering coordination with those processing information with 
respect to municipal securities and fostering cooperation with 
underwriters and municipal advisors by facilitating compliance with a 
clearer rule.
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    \12\ Id.
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    The MSRB believes that the proposed rule change also will remove 
impediments to a free and open municipal securities market because it 
will align MSRB Rule G-34's obligations associated with obtaining CUSIP 
numbers with the actual process an underwriter or municipal advisor 
must undertake when obtaining CUSIP numbers for new issues of municipal 
securities. It would do so by removing burdens on underwriters and 
municipal advisors that result in no appreciable benefit for the market 
and promoting clarity of the rule and compliance expectations. The MSRB 
believes that removal of these burdens may facilitate better and more 
timely compliance with the rule. For example, in some cases, the 
proposed rule change may facilitate more timely applications for CUSIP 
numbers. By removing potential ambiguities as to the identity of the 
entity to whom CUSIP number applications should be made, underwriters 
and municipal advisors are less likely to spend time trying to learn to 
whom such applications should be made and potentially are more likely 
to make their applications in a timely manner.
    Additionally, the Board sees no benefit to requiring municipal 
advisors to apply for a CUSIP number within a specific numerical time 
frame--particularly in circumstances where it may be impractical or 
impossible to do so--where the rule already requires that the 
application must be made within sufficient time to obtain a CUSIP 
number. By removing this burden and by specifying that CUSIP 
applications are not necessary for any new issue on which CUSIP numbers 
have been preassigned, the proposed rule change would reduce compliance 
burdens and permit municipal advisors to spend the time that would have 
been spent trying to comply with those burdens in service of their 
municipal entity and obligated person clients instead. The MSRB again 
believes that removal of these obligations does not negatively impact 
investors, issuers or the public interest, but does facilitate 
compliance and the establishment of more practical written supervisory 
procedures for underwriters and municipal advisors that reflect the 
actual process followed in connection with the process to obtain CUSIP 
numbers.
    The MSRB also believes that the proposed rule change will remove 
impediments to a free and open municipal securities market because it 
would create a rule that is less likely to become stale over time. As 
market practices evolve, rule text that specifies detailed information 
that must be

[[Page 41849]]

included in a CUSIP application or that otherwise governs the details 
of the CUSIP application process may become impediments to an efficient 
CUSIP application process, instead of facilitating that very process. 
The MSRB believes that the proposed rule change provides the 
appropriate degree of flexibility in the rule text.
    Section 15B(b)(2)(L)(iv) of the Exchange Act \13\ requires that 
rules adopted by the Board 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 is consistent with Section 15B(b)(2)(L)(iv) of the Exchange Act 
\14\ because the proposed rule change would relieve all municipal 
advisors, including small municipal advisors of the same compliance 
burdens and would not impose any new compliance burdens on municipal 
advisors.
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    \13\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
    \14\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB believes that the proposed rule change does not impose a 
burden on competition. Section 15B(b)(2)(C) of the Act \15\ 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 
MSRB has considered the economic impact associated with the proposed 
rule change, including a comparison to reasonable alternative 
regulatory approaches, relative to the baseline.\16\ The MSRB believes 
that the proposed rule change would lessen the compliance burden for 
underwriters and municipal advisors, and encourage fair competition by 
reducing confusion and ensuring compliance with existing CUSIP number 
requirements. Furthermore, the proposed rule change would apply equally 
to all MSRB regulated entities. The MSRB believes the proposed rule 
change would relieve a burden on competition without any erosion of 
protection for issuers and investors. Therefore, the MSRB believes 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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    \15\ 15 U.S.C. 78o-4(b)(2)(C).
    \16\ See Policy on the Use of Economic Analysis in MSRB 
Rulemaking, available at http://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx. In evaluating whether there was a 
burden on competition, the Board was guided by its principles that 
required the Board to consider costs and benefits of a rule change, 
its impact on capital formation and the main reasonable alternative 
regulatory approach.
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    The purpose of amending Rule G-34 is to better align the CUSIP 
requirements for underwriters and municipal advisors with current 
market practices, clarify the identity of the Board's designee for 
CUSIP number applications, and modernize Rule G-34 by reducing 
prescriptive requirements on how applicants obtain CUSIP numbers. The 
proposed rule change would accurately reflect that the MSRB does not 
assign CUSIP numbers. The proposed rule change would also reflect the 
Board's designee as CUSIP Global Services. Additionally, the proposed 
amendments would remove eight currently identified data fields for 
CUSIP number application and instead require regulated entities to 
provide the information required by the Board's designee, CUSIP Global 
Services, to determine the appropriate information that an applicant 
shall provide when applying to receive CUSIP numbers.\17\ Finally, the 
proposed rule change would eliminate the no later than one business day 
after the dissemination of a notice of sale or other such request for 
bids time limit requirement for obtaining CUSIP numbers by municipal 
advisors, though it would continue to require municipal advisors to 
obtain CUISP numbers at a time sufficient to ensure final CUSIP number 
assignment occurs prior to the award of the issue. As the MSRB is not, 
and never was, involved in assigning CUSIP numbers to applicants, 
amending the rule text to specify that the Board's designee assigns 
CUSIP numbers should not affect the practical implementation of Rule G-
34. The remainder of the MSRB's statement on burden on competition 
mostly focuses on the removal of eight data points and the time limit 
required for CUSIP registration.
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    \17\ The current obligations require CUSIP number applicants to 
provide (a) complete name of issue and series designation, if any; 
(b) interest rate(s) and maturity date(s); (c) dated date; (d) type 
of issue (e.g., general obligation, limited tax or revenue); (e) 
type of revenue, if the issue is a revenue issue; (f) details of all 
redemption provisions; (g) the name of any company or other person 
in addition to the issuer obligated, directly or indirectly, with 
respect to the debt service on all or part of the issue; and (h) any 
distinction(s) in the security or source of payment of the debt 
service on the issue.
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    For this filing, the current iteration of Rule G-34, where MSRB-
registered underwriters and municipal advisors are required to obtain 
CUSIP numbers for competitive sales, is used as the baseline to 
evaluate the costs and benefits for the proposed amendments, as well as 
other reasonable regulatory alternatives.
    The MSRB considered and assessed a couple of reasonable regulatory 
alternatives but determined the proposed rule change is superior to 
these alternatives. One alternative would be to modify the data fields 
requirements for CUSIP number applicants to be consistent with what the 
Board's designee, CUSIP Global Services requires. There are currently 
eight data elements proscribed in the rule.\18\ However, CUSIP Global 
Services, as an independent entity from the MSRB, may amend the 
requirements periodically in the future. In this alternative, the MSRB 
would have to amend Rule G-34 whenever there is a change initiated by 
CUSIP Global Services. This would be an unpredictable alternative which 
may require the MSRB to revise Rule G-34 on a regular basis; in 
addition, it would create inconsistency for a period of time before the 
MSRB is able to revise Rule G-34.
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    \18\ The eight data elements are listed in footnote 17.
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    Another alternative the MSRB considered was to keep a numeric time 
limit requirement for municipal advisors applying for CUSIP numbers in 
place but expand the time limit from no later than one business day to 
more than one business day to provide applicants more flexibility. 
However, since the MSRB is not involved in any aspect of the CUSIP 
number application process, the MSRB would not be able to determine 
what the ideal application time limit would be other than being prior 
to the award of an issue. As a result, the MSRB determined that 
eliminating the no later than one business day time limit requirement 
would be an even better option than simply extending the time limit.
Benefits and Costs
    The MSRB believes the proposed amendments to Rule G-34, on 
aggregate, would reduce the burden for underwriters and municipal 
advisors by providing more clarity and aligning CUSIP number 
applicants' responsibility with the real-world practice, without any 
erosion of protection for issuers and investors.
Benefits
    The proposed rule change to Rule G-34 would reduce the uncertainty 
and challenge in collecting multiple data points by CUSIP number 
applicants which may not be necessary for, or helpful to, the Board's 
designee at the time of CUSIP obtainment. As it is

[[Page 41850]]

currently written, all underwriters and municipal advisors, as part of 
a competitive sale, are required to provide security level information 
such as revenue source, redemption provisions and any obligor related 
information. This information may not be in line with the information 
required by the entity providing CUSIP numbers. The proposed rule 
change would reduce the need to source each data point by removing the 
list of information that must be given to the Board's designee and 
simply replacing it with the obligation to provide the Board's designee 
with the information which the Board's designee requires to obtain a 
CUSIP number. Additionally, if the Board's designee pre[hyphen]assigns 
CUSIP numbers to an issuance, the regulated entity would not need to 
specify the eight data fields simply to evidence its compliance with 
Rule G-34 requirements.
    The proposed rule change also would remove uncertainty by 
explicitly identifying CUSIP Global Services as the Board's designee 
and reduce the burden on municipal advisors by eliminating the time 
limit for CUSIP number application, which may not be practical in the 
real world.
Costs
    The MSRB believes the changes to Rule G-34 would have minimal costs 
associated with the amendments. One potential upfront cost would be for 
underwriters and municipal advisors to update their policies and 
procedures. The MSRB believes the revisions would be straightforward 
and should not take much time and effort to implement. The ongoing 
compliance costs also would be reduced, as the proposed rule change is 
intended to reduce the compliance burden on underwriters and municipal 
advisors.
    In addition, there is a possibility that the proposed rule change 
may lead to more usage of express requests for CUSIP numbers with CUSIP 
Global Services than the current state, if municipal advisors delay 
their CUSIP number applications until shortly before the competitive 
bidding process. For example, it currently takes CUSIP Global Services 
approximately one to two business days to process a standard CUSIP 
request,\19\ which costs $192 for the first maturity, plus $27 for each 
additional maturity or class per series in the same application/
offering document in 2022.\20\ The express request is more expensive, 
with a 50% surcharge, but will result in a CUSIP number produced within 
one hour of the request. While the MSRB does not have the information 
to estimate the future usage of express requests,\21\ there is a chance 
that eliminating the no later than one business day time limit required 
to obtain a CUSIP number may result in more CUSIP numbers being 
obtained using the express request process, which would be 50% more 
expensive than the standard process. The MSRB believes, however, with 
the current CUSIP number application process in place since June 2018, 
most municipal advisors are unlikely to change the timing of obtaining 
CUSIP numbers.
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    \19\ Internal analysis conducted by the MSRB using data on CUSIP 
issuance obtained from CUSIP Global Services for select months in 
2018, 2019, 2020 and 2021.
    \20\ See https://www.cusip.com/pdf/FeesforCUSIPAssignment.pdf.
    \21\ As of January 2021, less than 9% of all CUSIP numbers were 
obtained via the express request process, based on internal analysis 
conducted by the MSRB using data on CUSIP issuance obtained from 
CUSIP Global Services.
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Effect on Competition, Efficiency and Capital Formation
    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. The MSRB 
believes that the proposed rule change may improve the operational 
efficiency of the municipal securities market by aligning the 
requirements with the real-world practice, promoting consistency, and 
reducing potentially misaligned requirements. Additionally, the MSRB 
believes the proposed rule change would encourage fair competition by 
reducing confusion and ensuring compliance with existing CUSIP number 
requirements. Furthermore, a smooth and efficient process for CUSIP 
number applications also helps ensure a successful onset of secondary 
market trading, which would benefit investors seeking to change their 
positions in newly issued municipal securities. This would in turn 
benefit issuers by potentially lowering an issuance's liquidity risk 
premium, which would also benefit the capital formation process. 
Finally, the proposed rule change would apply equally to all MSRB 
regulated entities. Accordingly, the MSRB believes the proposed rule 
change would relieve a burden on competition without any erosion of 
protection for issuers and investors.

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

    The Board did not specifically solicit comments on the proposed 
rule change to MSRB Rule G-34. However, as previously referenced, the 
Board did seek comment on MSRB Rule G-34 more generally as part of its 
retrospective rule review initiative in 2017 \22\ and 2019.\23\
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    \22\ See MSRB Notice 2017-05, Request for Comment on Draft 
Amendments to Clarifications of MSRB Rule G-34, on Obtaining CUSIP 
Numbers (March 1, 2017). Comments submitted in response to 
Regulatory Notice 2017-05 are available here: https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2017/2017-05?c=1. See 
MSRB Notice 2017-11, Second Request for Comment on Draft Amendments 
to and Clarifications of MSRB Rule G-34, on Obtaining CUSIP Numbers 
(June 1, 2017). Comments submitted in response to Regulatory Notice 
2017-11 are available here: https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2017/2017-11?c=1.
    \23\ See MSRB Notice 2019-08, Request for Comment on MSRB Rule 
G-34 Obligation of Municipal Advisors to Apply for CUSIP Numbers 
When Advising on Competitive Sales (February 27, 2019). Comments 
submitted in response to MSRB Notice 2019-08 are available here: 
https://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2019/2019-08?c=1.
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    In response to the 2019 request for comment, NAMA was of the view 
that Rule G-34(a)(i)(A)(3) presents a timing inconsistency insofar as 
that section of the rule requires application for CUSIP numbers no 
later than one business day after the Notice of Sale. NAMA noted that 
this will almost always be before the identity of the investors are 
known, and therefore before a municipal advisor could reasonably obtain 
written representations from investors.\24\ The MSRB believes that the 
proposed rule change's removal of the one business day requirement 
would remove the timing inconsistency raised by NAMA. The MSRB does not 
believe that the remaining comments received in response to the 2017 or 
2019 requests for comment are applicable to the proposed rule change.
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    \24\ NAMA Letter at 3.
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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

[[Page 41851]]

    (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-2022-05 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-2022-05. 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-2022-05 and should be submitted on 
or before August 3, 2022.
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    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, pursuant to delegated authority.\25\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-14881 Filed 7-12-22; 8:45 am]
BILLING CODE 8011-01-P


