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Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Notices
implementation date for the proposed rule changes temporary fee reduction is April 1, 2021.
The text of the proposed rule change is available on the MSRBs website at www.msrb.org/Rules-andInterpretations/SEC-Filings/2021Filings.aspx, at the MSRBs principal office, and at the Commissions Public Reference Room.
II. Self-Regulatory Organizations 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 Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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1. Purpose The purpose of the proposed rule change is to temporarily reduce the rate of assessment for the Boards underwriting, transaction, and technology fees under MSRB Rule A13
with respect to assessable activity that occurs on April 1, 2021 through September 30, 2022.5 The proposed rule change is designed to promote the collection of reasonable fees and charges as are necessary or appropriate to defray the costs and expenses of operating and administering the Board. The Board believes that the proposed rule change achieves such reasonable fees and charges because it will rightsize the Boards reserves position, in conformance with a prudently established and reasonable target, by forgoing a portion of market activity fees over an eighteenth month period. In effect, the Board intends to utilize its excess reserves to offset the forgone revenue resulting from the temporary fee reduction and, thereby, reasonably reduce the fees of the class of MSRB
regulated entities 6 whose prior fee payments directly contributed to the 5 For the reasons discussed herein, underwriting assessments charged pursuant to Rule A13cii to certain dealers acting as underwriters of municipal fund securities are not included in the temporary fee reduction.
6 The term regulated entities is used here as defined below in the first full sentence of the following paragraph i.e., dealers and municipal advisors.

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MSRB being in excess of its reserves target.
Background on MSRB Fee Structure The Board discharges its statutory mandate under the Exchange Act by establishing rules for dealers and municipal advisors together with dealers, regulated entities, collecting and disseminating market information, coordinating with other regulatory authorities, and conducting outreach to external stakeholders.7 The Board assesses fees on regulated entities to generate funds for these activities. The current fees assessed on regulated entities are the:
1. Municipal Advisor Professional Fee MSRB Rule A11: A fee of $1,000 for each person associated with the municipal advisor who is qualified as a municipal advisor representative in accordance with MSRB Rule G3 and for whom the municipal advisor has on file with the SEC a Form MAI as of January 31 of each year;
2. Initial Registration Fee MSRB Rule A12: A $1,000 one-time registration fee to be paid by each dealer to register with the MSRB before engaging in municipal securities activities and by each municipal advisor to register with the MSRB before engaging in municipal advisory activities;
3. Annual Registration Fee MSRB
Rule A12: A $1,000 annual fee to be paid by each dealer and municipal advisor registered with the MSRB;
4. Late Fee MSRB Rule A11 and MSRB Rule A12: A $25 monthly late fee and a late fee on the overdue balance computed according to the prime rate until paid on balances not paid within 30 days of the invoice date by the dealer or municipal advisor;
5. Underwriting Fee MSRB Rule A
13: A fee amount of $.0275 per $1,000
of the par value paid by a dealer, on all municipal securities purchased from an issuer by or through such dealer, whether acting as principal or agent as part of a primary offering;
6. Municipal Funds Underwriting Fee MSRB Rule A13: A fee amount of $.005 per $1,000 of the total aggregate assets for the reporting period i.e., the 529 savings plan fee on underwriters, in the case of an underwriter as defined in MSRB Rule G45 of a primary offering of certain municipal fund securities; 8
7. Transaction Fee MSRB Rule A13:
A fee amount of .001% $.01 per $1,000
of the total par value to be paid by a 7 See Section 15Bb of the Exchange Act 15
U.S.C. 78o4b.
8 See note 5 supra clarifying that such fees are not included in the temporary fee reduction.

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dealer, except in limited circumstances, for inter-dealer sales and customer sales reported to the MSRB pursuant to MSRB
Rule G14b, on transaction reporting requirements;
8. Technology Fee MSRB Rule A13:
A fee of $1.00 paid per transaction by a dealer for each inter-dealer sale and for each sale to customers reported to the MSRB pursuant to MSRB Rule G
14b; and 9. Examination Fee MSRB Rule A
16: A $150 test development fee assessed per candidate for each MSRB
examination.
The Board also receives revenues from certain other sources, such as regulatory fine-sharing 9 and MSRB data subscription fees.10 These revenue sources contribute a smaller portion to the overall MSRB funding.11
Historically, the vast majority of the MSRBs revenue has been derived from fees on regulated entities, in particular dealers who pay market activity fees pursuant to MSRB Rule A13ci and d, as discussed in more detail below.12
Overview of MSRB Budget and Reserves As a self-funded regulatory organization, MSRB revenue comes primarily from its regulated entities, and the MSRB does not receive any taxpayer dollars. The Board is responsible for independently managing and monitoring the MSRBs financial position on an ongoing basis and ensuring that the MSRB has sufficient reserves to maintain the MSRBs operations without interruption, even in 9 Fine revenue became a new revenue source as first provided in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act the Dodd-Frank Act. See 15 U.S.C. 78o4c9.
10 The MSRB charges data subscription service fees for subscribers, including dealers, municipal advisors, and non-regulated entities, seeking direct electronic delivery of municipal trade data and disclosure documents associated with municipal bond issues. Notably, however, this information is available without direct electronic delivery on the EMMA website without charge.
11 For example, fine-sharing revenue amounted to approximately 3.3 percent of the MSRBs overall revenue in Fiscal Year 2020 $1.5 million and 0.4
percent in Fiscal Year 2019 $150,000. See MSRB
2020 Annual Report, available at http msrb.org//
media/Files/Resources/MSRB-2020-AnnualReport.ashx?la=en.
12 With the extension of the MSRBs jurisdiction to regulate municipal advisors in the Dodd-Frank Act, this class of regulated entity began contributing to the cost of MSRB regulation in 2014. See Release No. 3472019 Apr. 25, 2014, 79 FR 24798 May 1, 2014 File No. SRMSRB201403. See also Release No. 3481841 Oct. 10, 2017, 82 FR 48135, 48138 Oct. 16, 2017 File No. SRMSRB201707
increasing the municipal advisor professional fee from $300 to $500 and Release No. 3487075 Sept.
24, 2019, 82 FR 51698 Sept. 30, 2019 File No.
SRMSRB201911 increasing the municipal advisor professional fee from $500 to $1,000 over the course of two years.

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