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Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

the proposed amendments would expressly clarify that the dealer would not be subject to the notifications requirement, under Rule G10a, in cases where dealers conduct a limited business and are not considered to have customers.
III. Supplementary Material to Rule G
10
The proposed rule change would include supplementary material under Rule G10 that would provide clarity on the timeframe for delivery of the required notifications. Supplementary Material .01 of Rule G10 would make clear that the obligation to provide the required notifications once each calendar year to applicable customers would be deemed satisfied if dealers deliver the required notifications at a given point in each calendar year so long as any customers that effected a transaction in municipal securities or held municipal securities after that given date in each calendar year receive the notifications within the following rolling 12-month period. More explicitly, after a dealer provides the required notifications to the applicable customers, the ensuing notifications must be provided within 12 months from the date of the preceding notifications, but may be provided within a shorter time period.10 The MSRB believes that the proposed amendments would foster greater flexibility with respect to the timing of the required notifications, and would also ensure that each applicable customer receives the required notification within a rolling 12-month period; and thereby, ease operational concerns.
For example, assume a dealer opts to remit the required notifications on June 30, 2022, and in September 2002 a nonSMMP customer who has never held municipal securities effects a transaction in municipal securities for the first time. The dealer would not be required to remit the notifications to that customer in calendar year 2022, but the dealer would be obligated to remit the notification to that customer, and all other applicable customers, on or before June 30, 2023. In no event may a dealer exceed 12 months without remitting the notifications to a non-SMMP customer who has effected a transaction in municipal securities or who holds municipal securities.
provides that any member that does not have customers or is a party to a carrying agreement where the carrying firm member complies with the rule is exempt from the requirements of the rule.
10 A dealer may, of course, elect to provide the required notification more frequently than a rolling 12-month basis.

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The proposed rule change makes technical amendments to streamline the required notifications by deleting the current provision aii of Rule G10
and placing the reference to the website address for the Municipal Securities Rulemaking Board within the proposed amended provision that re-numbers provision aiii of Rule G10 to provision aii. The proposed amendments also re-numbers the remainder of Rule G10, accordingly.
2. Statutory Basis Section 15Bb2C of the Exchange Act 30 provides that the MSRBs 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.

The MSRB believes that the proposed rule change is consistent with Sections 15Bb2 11 and 15Bb2C 12 of the Exchange Act. Rule G10 would continue to be designed to prevent fraudulent and manipulative acts and the proposed rule change does not diminish such protections. The proposed rule change would help promote just and equitable principles of trade, and protect investors, municipal entities, obligated persons and the public interest by ensuring that customers who have effected a transaction in municipal securities or hold a municipal securities position, during the requisite period, receive information that would be useful to them in understanding the regulatory framework. The proposed rule change may also avoid confusion because dealers would not have to provide notifications to customers who have not effected any municipal securities transactions. More specifically, the proposed rule change is designed to ensure that applicable customers receive beneficial information, through the MSRBs investor brochure, on how to file a complaint about dealers with the appropriate regulatory authority and an overview of the investor protections provided by MSRB rules. The required notifications, which would be provided once each calendar year, are in support of curbing potential fraudulent and 11 15
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U.S.C. 78o4b2.
U.S.C. 78o4b2C.

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manipulative practices, by creating an awareness amongst customers of the SEC and MSRB.
Additionally, for all other customers, including SMMPs, while dealers will not have to provide the required notifications pursuant to Rule G10a, such dealers would have to make the required notifications available on their websites in accordance with the rule, and other applicable MSRB rules and federal securities laws, which is in furtherance of the public interest. The MSRB believes that the proposed amendments to Rule G48 to effectuate the exemption for remitting notifications to SMMPs, so long as the SMMPs have access to such notifications on a dealers website, will facilitate transactions in municipal securities and help perfect the mechanism of a free and open market in municipal securities by avoiding the imposition of regulatory burdens upon dealers where they appear to be unnecessary. The MSRB currently understands that SMMPs are generally knowledgeable about the registration status of a dealer and how to file a complaint if warranted and can access the information on a dealers website as needed.
B. Self-Regulatory Organizations Statement on Burden on Competition Section 15Bb2C of the Exchange Act requires that MSRB rules not be designed to impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act.13 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.14
The MSRB does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act.
The purpose of amending Rule G10
is to better refine the requirement for dealers to provide the required notifications to specified customers.
Rule G10 was originally designed to protect investors by providing them with the information necessary through the investor brochure to file a complaint about their dealers with the appropriate 13 15

U.S.C. 78o4b2C.
Policy on the Use of Economic Analysis in MSRB Rulemaking, available at http msrb.org/
Rules-and-Interpretations/Economic-AnalysisPolicy.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 approaches.
14 See
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