MSRB Amends Registration Rules for Dealers and Municipal Advisors
On November 12, 2010, the Securities and Exchange Commission (SEC) designated November 15, 2010 as the operative date for the Municipal Securities Rulemaking Board’s rule change[1] consisting of amendments to Rule G-40 and Form G-40 (on electronic mail contacts) and certain definitions necessary to the MSRB rules governing rulemaking concerning municipal advisors and the process of registering municipal advisors with the MSRB.[2]
Specifically, the rule change consists of: (i) an amendment to Rule D-11 to provide that the term “municipal advisor” in MSRB rules shall include the associated persons of such municipal advisor unless otherwise specified; (ii) a new Rule D-13 that defines “municipal advisory activities” with respect to the activities of municipal advisors described in Section 15B(e)(4)(A)(i) and (ii) of the Securities Exchange Act of 1934 (the “Act”); (iii) a new Rule D-14 that defines “appropriate regulatory agency” to have the meaning set forth in Section 3(a)(34) of the Act with respect to a broker, dealer, or municipal securities dealer and to mean the Commission with respect to a municipal advisor; (iv) amendments to Rule G-40 concerning the provision of electronic mail contacts by municipal advisors; and (v) amended Form G-40 concerning the provision of electronic mail contacts by municipal advisors.
The rule change is operative on November 15, 2010, which is the date on which municipal advisors may begin to register with the MSRB. Registration must be completed by December 31, 2010.
Questions about the rule change may be directed to Peg Henry, Deputy General Counsel, at 703-797-6625.
November 15, 2010
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TEXT OF RULE CHANGE [3]
D-11: “Associated Persons”
Unless the context otherwise requires or a rule of the Board otherwise specifically provides, the terms "broker," "dealer," "municipal securities broker," "municipal securities dealer," [and] "bank dealer,"and municipal advisor shall refer to and include their respective associated persons. Unless otherwise specified, persons whose functions are solely clerical or ministerial shall not be considered associated persons for purposes of the Board's rules.
D-13: “Municipal Advisory Activities”
“Municipal advisory activities” means the activities described in Section 15B(e)(4)(A)(i) and (ii) of the Act.
D-14: "Appropriate Regulatory Agency"
With respect to a broker, dealer, or municipal securities dealer, “appropriate regulatory agency” has the meaning set forth in Section 3(a)(34) of the Act. With respect to municipal advisors, “appropriate regulatory agency” means the Commission.
Rule G-40: Electronic Mail Contacts
(a)(i) Each broker, dealer, [or] municipal securities dealer, or municipal advisor shall maintain an Internet electronic mail account to permit communication with the MSRB, and shall appoint a Primary Electronic Mail Contact to serve as the official contact person for purposes of electronic mail communication between the broker, dealer, [or] municipal securities dealer, or municipal advisor and the MSRB. Each Primary Electronic Mail Contact of a broker, dealer, or municipal securities dealer shall be a registered municipal securities principal (Series 53 or Series 51) of the broker, dealer or municipal securities dealer.
(ii) Each broker, dealer, [or] municipal securities dealer, or municipal advisor may appoint an Optional Electronic Mail Contact for purposes of electronic mail communication between the broker, dealer, [or] municipal securities dealer, or municipal advisor and the MSRB.
(b)(i) Upon completion of its Rule A-12 submissions and assignment of an MSRB Registration Number, each broker, dealer, [or] municipal securities dealer, or municipal advisor shall electronically submit to the MSRB a completed Form G-40 setting forth, in the prescribed format, the following information:
(A) The name of the broker, dealer, [or] municipal securities dealer, or municipal advisor and the date.
(B) The MSRB Registration Number of the broker, dealer, [or] municipal securities dealer, or municipal advisor, including any separate MSRB Registration Number assigned if registered both as a municipal advisor and a broker, dealer, or municipal securities dealer.
(C) The name of the Primary Electronic Mail Contact, and his/her electronic mail address and telephone number.
(D) The name of the Optional Electronic Mail Contact, if any, and his/her electronic mail address and telephone number.
(E) The name, title and telephone number of the person who prepared the form.
(F) In the case of a municipal advisor, the categories of municipal advisor that describe the municipal advisor as provided on Form G-40.
(iii) A broker, dealer, [or] municipal securities dealer, or municipal advisor may change the [name of its Electronic Mail Contacts or other] information previously provided by electronically submitting to the MSRB an amended Form G-40. In addition, each broker, dealer, [or] municipal securities dealer, or municipal advisor shall update its [required Primary Electronic Mail Contact] information promptly, but in any event not later than 30 days following any change in such information.
(c)(i) Each broker, dealer, [or] municipal securities dealer, or municipal advisor shall review and, if necessary, update its information [on its Primary Electronic Mail Contacts] and submit such information electronically to the MSRB within 17 business days after the end of each calendar year.
(ii) Any broker, dealer, [or] municipal securities dealer, or municipal advisor that, during the 17 business-day update period, submits its initial Form G-40 or modifies or affirms its information [relating to its Primary Electronic Mail Contact] shall be deemed to be in compliance with the annual update requirement applicable to the year immediately preceding that 17 business-day update period.
(d) Each broker, dealer, [or] municipal securities dealer, or municipal advisor shall promptly comply with any request by the appropriate regulatory agency [(as defined in Section 3(a)(34) of the Act)] for required [Primary Electronic Mail Contact] information, but in any event not later than 15 days following any such request, or such longer period that may be agreed to by the appropriate regulatory agency.
(e) No municipal advisor shall be in violation of this rule for failure to complete Form G-40 in advance of January 1, 2011.
FORM G-40[1]
(Items to be provided pursuant to Rule G-40(b)(i))
(1) The MSRB Registration Number or Numbers of the broker, dealer, municipal securities dealer, or municipal advisor organization.
(2) The name of the organization and the date.
(3) The name of the person designated by the organization as its Primary Electronic Mail Contact.
(4) The e-mail address and telephone number of the Primary Electronic Mail Contact.
(5) The name of the Optional Electronic Mail Contact, if any, designated by the organization.
(6) The e-mail address and telephone number of the Optional Electronic Mail Contact, if any.
(7) The name, title, and telephone number of the person who prepared the form.
(8) For municipal advisors only, the category or categories of municipal advisor.
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[1] Paper Form G-40 is replaced in its entirety by amended electronic Form G-40.
[1] See SR-MSRB-2010-15 (November 10, 2010) (originally filed on November 1, 2010).
[2] Exchange Act Release No. 34-63308 (November 12, 2010).
[3] Underlining indicates additions; brackets denote deletions.
