SEC Approves Transaction Fee Increase and New Technology Fee

On December 29, 2010, the Securities and Exchange Commission (“SEC”) approved a rule change amending MSRB Rule A-13 to increase transaction assessments for certain municipal securities transactions reported to the Board and instituting a new technology fee on reported sales transactions.[1]  The rule change amends Rule A-13 to (a) increase the existing transaction assessments for inter-dealer and customer sales from .0005% to .001% of the total par value of inter-dealer sales and sales to customers that are reported by dealers to the MSRB (the “transaction fee”), and (b) impose a technology fee of $1.00 per transaction for inter-dealer and customer sales reported to the Board (the “technology fee”).  The technology fee will be transitional in nature and will be reviewed by the Board annually, in conjunction with the Board’s annual budgeting process, to determine whether it should continue to be assessed.  The effective date for the rule change is January 1, 2011.  Transaction fees are billed monthly, one month in arrears, by the MSRB and, therefore, the fee changes for the increased transaction fee and the inclusion of the new technology fee will first be reflected in dealer invoices issued for January 2011 activity, which will be mailed in early March 2011.

Questions about the amendments should be directed to Lawrence P. Sandor, Senior Associate General Counsel at (703) 797-6600. 

December 30, 2010

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TEXT OF AMENDMENTS [2]

Rule A-13:  Underwriting and Transaction Assessments for Brokers, Dealers and Municipal Securities Dealers

(a) – (b) No change

(c) Transaction and Technology Assessments. 

(i) Transaction Fee on Inter-Dealer Sales.  Each broker, dealer and municipal securities dealer shall pay to the Board a fee equal to .0005% ($.005 per $1,000) .001% ($.01 per $1,000) of the total par value of inter-dealer municipal securities sales that it reports to the Board under rule G-14(b), except as provided in subsection (iii) of this section paragraph (c).  For those inter-dealer transactions reported to the Board by a broker, dealer or municipal securities dealer on behalf of another broker, dealer or municipal securities dealer, the inter-dealer transaction fee shall be paid by the broker, dealer or municipal securities dealer that reported the transaction to the Board.  Such broker, dealer or municipal securities dealer may then collect the inter-dealer transaction fee from the broker, dealer or municipal securities dealer on whose behalf the transaction was reported. 

(ii) Transaction Fee on Customer Sales.  Each broker, dealer and municipal securities dealer shall pay to the Board a fee equal to .0005% ($.005 per $1,000) .001% ($.01 per $1,000) of the total par value of sales to customers that it reports to the Board under rule G-14(b), except as provided in subsection (iii) of this section paragraph (c).  The customer transaction fee shall be paid by the broker, dealer or municipal securities dealer that effected the sale to the customer.

(iii) Transactions Not Subject to Transaction Fee. Transaction fees assessed pursuant to subsection (i) or (ii) of this section (c) are not assessed on transactions in municipal securities that: 

(a) have a final stated maturity of nine months or less; or

(b) at the time of trade, may be tendered at the option of the holder to an issuer of such securities or its designated agent for redemption or purchase at par value or more at least as frequently as every nine months until maturity, earlier redemption, or purchase by an issuer or its designated agent.

(iv)  Technology Fee.

(a) Technology Fee on Inter-Dealer Sales.  Each broker, dealer and municipal securities dealer shall pay to the Board a fee equal to $1.00 per transaction for each inter-dealer municipal securities sale that it reports to the Board under rule G-14(b).  For those inter-dealer transactions reported to the Board by a broker, dealer or municipal securities dealer on behalf of another broker, dealer or municipal securities dealer, the technology fee shall be paid by the broker, dealer or municipal securities dealer that reported the transaction to the Board.  Such broker, dealer or municipal securities dealer may then collect the technology fee from the broker, dealer or municipal securities dealer on whose behalf the transaction was reported. 

(b) Technology Fee on Customer Sales.  Each broker, dealer and municipal securities dealer shall pay to the Board a fee equal to $1.00 per transaction for sales to customers that it reports to the Board under rule G-14(b).  The technology fee shall be paid by the broker, dealer or municipal securities dealer that effected the sale to the customer.

(d) – (f) No change.