[Federal Register Volume 85, Number 240 (Monday, December 14, 2020)]
[Notices]
[Page 80875]
[FR Doc No: 2020-27510]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meetings

TIME AND DATE: Notice is hereby given, pursuant to the provisions of
the Government in the Sunshine Act, Public Law 94-409, the Securities
and Exchange Commission will hold an Open Meeting on Wednesday,
December 16, 2020 at 10:00 a.m.

PLACE: The meeting will be held via remote means and/or at the
Commission's headquarters, 100 F Street NE, Washington, DC 20549.

STATUS: This meeting will begin at 10:00 a.m. (ET) and will be open to
the public via audio webcast only on the Commission's website at
www.sec.gov.

MATTERS TO BE CONSIDERED:
    1. The Commission will consider whether to adopt rules that will
require resource extraction issuers to disclose payments made to the
U.S. federal government or foreign governments for the commercial
development of oil, natural gas, or minerals. The rules will implement
Section 13(q) of the Securities Exchange Act of 1934, which was added
by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
    2. The Commission will consider whether to adopt amendments under
the Investment Advisers Act of 1940 (the ``Advisers Act'') to update
rules that govern investment adviser marketing to accommodate the
continual evolution and interplay of technology and advice, while
preserving investor protections. The Commission will also consider
whether to adopt amendments to Form ADV to provide the Commission with
additional information about advisers' marketing practices, and
corresponding amendments to the books and records rule under the
Advisers Act.
    3. The Commission will consider whether to approve a proposed rule
change by New York Stock Exchange LLC to amend Chapter One of the
Listed Company Manual to modify the provisions relating to direct
listings.

CONTACT PERSONS FOR MORE INFORMATION: For further information and to
ascertain what, if any, matters have been added, deleted or postponed,
please contact Vanessa A. Countryman, Office of the Secretary, at (202)
551-5400.

    Dated: December 9, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020-27510 Filed 12-10-20; 11:15 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 109 (Tuesday, June 7, 2011)]
[Notices]
[Page 32983]
[FR Doc No: 2011-14012]

-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-1974-DR; Docket ID FEMA-2001-0001]

Tennessee; Major Disaster and Related Determinations

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This is a notice of the Presidential declaration of a major
disaster for the State of Tennessee (FEMA-1974-DR), dated May 1, 2011,
and related determinations.

DATES: Effective Date: May 1, 2011.

FOR FURTHER INFORMATION CONTACT: Peggy Miller, Recovery Directorate,
Federal Emergency Management Agency, 500 C Street, SW., Washington, DC
20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Notice is hereby given that, in a letter
dated May 1, 2011, the President declared a major disaster under the
authority of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121-5207 (the Stafford Act), as follows:

    I have determined that the damage in certain areas of the State
of Tennessee resulting from severe storms, tornadoes, straight line
winds, and associated flooding during the period of April 25-28,
2011, is of sufficient severity and magnitude to warrant a major
disaster declaration under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, 42 U.S.C. 5121 et seq. (the ``Stafford
Act''). Therefore, I declare that such a major disaster exists in
the State of Tennessee.
    In order to provide Federal assistance, you are hereby
authorized to allocate from funds available for these purposes such
amounts as you find necessary for Federal disaster assistance and
administrative expenses.
    You are authorized to provide Individual Assistance and
assistance for debris removal and emergency protective measures
(Categories A and B) under the Public Assistance program in the
designated areas, Hazard Mitigation throughout the State, and any
other forms of assistance under the Stafford Act that you deem
appropriate subject to completion of Preliminary Damage Assessments
(PDAs), unless you determine that the incident is of such unusual
severity and magnitude that PDAs are not required to determine the
need for supplemental Federal assistance pursuant to 44 C.F.R.
206.33(d).
    Consistent with the requirement that Federal assistance is
supplemental, any Federal funds provided under the Stafford Act for
Public Assistance, Hazard Mitigation, and Other Needs Assistance
will be limited to 75 percent of the total eligible costs.
    Further, you are authorized to make changes to this declaration
to the extent allowable under the Stafford Act.

    The time period prescribed for the implementation of section
310(a), Priority to Certain Applications for Public Facility and Public
Housing Assistance, 42 U.S.C. 5153, shall be for a period not to exceed
six months after the date of this declaration.
    The Federal Emergency Management Agency (FEMA) hereby gives notice
that pursuant to the authority vested in the Administrator, under
Executive Order 12148, as amended, W. Montague Winfield, of FEMA is
appointed to act as the Federal Coordinating Officer for this declared
disaster.
    The following areas of the State of Tennessee have been designated
as adversely affected by this declared major disaster:

    Bradley, Greene, Hamilton, and Washington Counties for
Individual Assistance.
    Bradley, Greene, Hamilton, and Washington Counties for debris
removal and emergency protective measures (Categories A and B) under
the Public Assistance program.
    All counties within the State of Tennessee are eligible to apply
for assistance under the Hazard Mitigation Grant Program.

    (The following Catalog of Federal Domestic Assistance Numbers
(CFDA) are to be used for reporting and drawing funds: 97.030,
Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis
Counseling; 97.033, Disaster Legal Services; 97.034, Disaster
Unemployment Assistance (DUA); 97.046, Fire Management Assistance
Grant; 97.048, Disaster Housing Assistance to Individuals and
Households in Presidentially Declared Disaster Areas; 97.049,
Presidentially Declared Disaster Assistance--Disaster Housing
Operations for Individuals and Households; 97.050, Presidentially
Declared Disaster Assistance to Individuals and Households--Other
Needs; 97.036, Disaster Grants--Public Assistance (Presidentially
Declared Disasters); 97.039, Hazard Mitigation Grant).

    Dated: June 1, 2011.
W. Craig Fugate,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2011-14012 Filed 6-6-11; 8:45 am]
BILLING CODE 9111-23-P


[Federal Register Volume 82, Number 247 (Wednesday, December 27, 2017)]
[Notices]
[Pages 61283-61284]
[FR Doc No: 2017-27917]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 2788-017]

Goodyear Lake Hydro, LLC; Notice Soliciting Scoping Comments

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection.
    a. Type of Application: Subsequent Minor License.
    b. Project No.: 2788-017.
    c. Date filed: February 27, 2017.
    d. Applicant: Goodyear Lake Hydro, LLC (Goodyear Lake Hydro).
    e. Name of Project: Colliersville Hydroelectric Project.
    f. Location: On the North Branch of the Susquehanna River, in the
Town of Milford, Otsego County, New York. The project does not occupy
lands of the United States.
    g. Filed Pursuant to: Federal Power Act 16 U.S.C. 791(a)-825(r).
    h. Applicant Contact: Mr. Kevin Webb, Hydro Licensing Manager; Enel
Green Power North America, Inc., 100 Brickstone Square, Suite 300,
Andover, MA 01810;<PHONE_NUMBER>; [email protected].
    i. FERC Contact: Emily Carter,<PHONE_NUMBER> or
[email protected].
    j. Deadline for filing scoping comments: 30 days from the issuance
date of this notice.
    The Commission strongly encourages electronic filing. Please file
scoping comments using the Commission's eFiling system at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit brief
comments up to 6,000 characters, without prior registration, using the
eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You
must include your name and contact information at the end of your
comments. For assistance, please contact FERC Online Support at

[email protected],<PHONE_NUMBER> (toll free), or (202) 502-
8659 (TTY). In lieu of electronic filing, please send a paper copy to:
Secretary, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426. The first page of any filing should include
docket number P-2788-017.
    The Commission's Rules of Practice require all intervenors filing
documents with the Commission to serve a copy of that document on each
person on the official service list for the project. Further, if an
intervenor files comments or documents with the Commission relating to
the merits of an issue that may affect the responsibilities of a
particular resource agency, they must also serve a copy of the document
on that resource agency.
    k. This application is not ready for environmental analysis at this
time.
    l. Project Description.
    The existing Colliersville Hydroelectric Project consists of: (1) A
dam that includes: A 200-foot-long, 35-foot-high, reinforced-concrete,
Ambursen-type dam or spillway structure \1\ with a crest elevation of
1,150.22 feet National Geodetic Vertical Datum of 1929 (NGVD 29); a 50-
foot-wide concrete headgate structure located on the west side of the
river and adjacent to the spillway, forming the closure with the west
bank; and an L-shaped, 66-foot-long, concrete wall with one side along
the east side of the spillway and the other side parallel to the axis
of the dam, extending approximately 6 to 8 feet above the crest of the
dam; (2) a 364-acre reservoir (Goodyear Lake) with a gross storage
capacity of 7,800 acre-feet at a normal pool elevation of 1,150.22 feet
NGVD29; (3) a 550-foot-long reinforced concrete power canal,
approximately 50 feet wide and 6 feet deep at the head gates, extending
from a head gate structure adjacent to the dam (i.e., the intake) to
the powerhouse; (4) a 103-foot-long by 33-foot-wide reinforced concrete
powerhouse with trash racks with a clear spacing of 1.5 inches, and
containing two turbines rated at 850 horsepower (HP) and 1,150 HP, and
two generators having a rated capacity of 650 kilowatts (kW) and 850
kW, respectively; (5) a 300-foot-long and approximately 50- to 60-foot-
wide tailrace; (6) three, approximately 80-foot-long, 4.16-kilovolt
underground generator leads or transmission lines from the powerhouse
to an adjacent substation owned by the New York State Electric and Gas
Corporation; and (7) appurtenant facilities.
---------------------------------------------------------------------------

    \1\ A type of buttress dam of which the upstream part is a
relatively thin flat slab usually made of reinforced concrete. A
buttress dam consists of watertight parts supported at intervals on
the downstream side by a series of buttresses.
---------------------------------------------------------------------------

    Goodyear Lake Hydro operates the project in a run-of-river mode.
The project experiences substantial seasonal and annual variations in
generation, and generates an annual average of 5,985 megawatt-hours.
Goodyear Lake Hydro proposes to continue to operate the project in run-
of-river mode.
    m. A copy of the application is available for review at the
Commission in the Public Reference Room or may be viewed on the
Commission's web site at http://www.ferc.gov using the eLibrary link.
Enter the docket number excluding the last three digits in the docket
number field to address the document. For assistance, contact FERC
Online Support. A copy is available for inspection and reproduction at
the address in item h above.
    n. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to this or other pending projects. For assistance, contact FERC
Online Support.
    o. Scoping Process
    The Commission staff intends to prepare an Environmental Assessment
(EA) for the Colliersville Hydroelectric Project in accordance with the
National Environmental Policy Act. The EA will consider both site-
specific and cumulative environmental impacts and reasonable
alternatives to the proposed action.
    Commission staff does not propose to conduct any on-site scoping
meetings at this time. Instead, we are soliciting comments,
recommendations, and information, on the Scoping Document 1 (SD1)
issued December 20, 2017.
    Copies of SD1 outlining the subject areas to be addressed in the EA
were distributed to the parties on the Commission's mailing list.
Copies of SD1 may be viewed on the web at http://www.ferc.gov using the
eLibrary link. Enter the docket number excluding the last three digits
in the docket number field to access the document. For assistance, call
1-866-208-3676 or for TTY,<PHONE_NUMBER>.

    Dated: December 20, 2017.
Kimberly D. Bose,
Secretary.
[FR Doc. 2017-27917 Filed 12-26-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 87, Number 124 (Wednesday, June 29, 2022)]
[Notices]
[Pages 38795-38802]
[FR Doc No: 2022-13814]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 95145; File No. SR-MSRB-2022-02]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Granting Approval of a Proposed Rule Change Consisting of
Amendments to MSRB Rule G-19 Regarding Regulation Best Interest for
Certain Municipal Securities Activities of Bank Dealers and MSRB Rule
G-48 Regarding Quantitative Suitability for Institutional Sophisticated
Municipal Market Professionals

June 23, 2022.

I. Introduction

    On April 29, 2022, the Municipal Securities Rulemaking Board (the
``MSRB'' or ``Board'') filed with the Securities and Exchange
Commission (the ``SEC'' or ``Commission''), pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule
19b-4 thereunder,\2\ a proposed rule change to consisting of amendments
to: (i) MSRB Rule G-19, on suitability of recommendations and
transactions, and (ii) MSRB Rule G-48, on transactions with
sophisticated municipal market professionals (``SMMPs'') \3\
(collectively, the ``proposed rule change'').
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Under MSRB Rule D-15, on the term sophisticated municipal
market professional, ``[t]he term `sophisticated municipal market
professional' or `SMMP' is generally defined by three essential
requirements: the nature of the customer; a determination of
sophistication by the broker, dealer or municipal securities dealer
[]; and an affirmation by the customer; as specified [therein].''
See MSRB Rule D-15.
---------------------------------------------------------------------------

    The proposed rule change would align MSRB Rule G-19 to the
Commission's Rule 15l-1 under the Exchange Act (``Regulation Best
Interest'') \4\ for certain municipal securities activities of bank
dealers \5\ (the ``Best Interest Amendments''). In addition, the
proposed rule change would amend MSRB Rule G-48 to modify the
quantitative suitability obligation of brokers, dealers, and municipal
securities dealers (collectively, ``dealers'' and, individually, each a
``dealer'') by eliminating the quantitative suitability obligation for
recommendations in circumstances where a dealer does not have actual
control or de facto control over the account of an Institutional SMMP
(the ``Institutional SMMP Amendment'').\6\
---------------------------------------------------------------------------

    \4\ 17 CFR 240.15l-1; see also Exchange Act Release No. 86031
(June 5, 2019), 84 FR 33318 (July 12, 2019) (File No. S7-07-18)
(``Regulation Best Interest Adopting Release'').
    \5\ Consistent with the definition set forth in MSRB Rule D-8,
the term ``bank dealer'' as used herein means ``a municipal
securities dealer which is a bank or a separately identifiable
department or division of a bank as defined in rule G-1 of the
Board.'' Such references in the proposed rule change shall be
collectively to ``Bank Dealers'' or individually to a ``Bank
Dealer.'' See also MSRB Rule D-11, which defines the term associated
persons (indicating that the term bank dealer as used in MSRB rules
shall generally refer to the associated persons of a bank dealer
unless the context otherwise requires or a rule of the Board
otherwise specifically provides).
    \6\ The term ``Institutional SMMP'' is used herein as defined
below under the discussion Background and Purpose of the
Institutional SMMP Amendment. The Institutional SMMP definition used
herein would not encompass any natural person customers who qualify
as ``retail customers'' under the definitions of Regulation Best
Interest, such as certain natural persons with significant total
assets, who might otherwise meet the status requirements of an SMMP.
---------------------------------------------------------------------------

    The proposed rule change was published for comment in the Federal
Register on May 10, 2022.\7\ The public comment period closed on May
31, 2022, and no comment letters were received on the proposed rule
change. As described further below, the Commission is approving the
proposed rule change.
---------------------------------------------------------------------------

    \7\ Exchange Act Release No. 88829 (May 4, 2022) (the
``Notice''), 87 FR 28084 (May 12, 2020) (MSRB-2022-02).
---------------------------------------------------------------------------

II. Description of Proposed Rule Change

    As described further below, the proposed rule change consists of
the Best Interest Amendments and the Institutional SMMP Amendment.

A. Background and Purpose of the Best Interest Amendments

    The MSRB stated that the proposed Best Interest Amendments would
amend MSRB Rule G-19 to extend the obligations of Regulation Best
Interest to Bank Dealers when making recommendations to retail
customers of municipal securities transactions or investment strategies
involving municipal securities (collectively, ``retail municipal
recommendations'' and, individually, each a ``retail municipal
recommendation'').\8\ The MSRB also stated that the Best Interest
Amendments are intended to improve investor protection in the municipal
securities market by ensuring that retail customers are afforded the
investor protections provided by Regulation Best Interest, regardless
of whether a retail municipal recommendation received by a retail
customer is made by a Broker-Dealer \9\ or a Bank Dealer.
---------------------------------------------------------------------------

    \8\ Notice, 87 FR at 28084.
    \9\ The term ``Broker-Dealer'' is used here as defined below
under the following discussion Background on the Commission's
Regulation Best Interest.
---------------------------------------------------------------------------

B. Background on the Commission's Regulation Best Interest

    On June 5, 2019, the SEC adopted Regulation Best Interest, which
established a new standard of conduct for broker-dealers, and the
natural persons who are associated persons of such broker-dealers
(collectively, ``Broker-Dealers'' and, individually, each a ``Broker-
Dealer''), when making a recommendation to a retail customer of any
securities transaction or investment strategy involving securities.\10\
As defined in Regulation Best Interest, the term ``retail customer''
generally refers to any natural person, or the legal representative of
such person, who receives and uses a recommendation from a Broker-
Dealer primarily for personal, family, or household purposes.\11\
Regulation Best Interest enhanced the Broker-Dealer standard of conduct
beyond previously existing suitability obligations, such as those then
required by MSRB Rule G-19, on suitability, for such retail customers
and aligned the applicable standard of conduct with the reasonable
expectations of retail customers.\12\
---------------------------------------------------------------------------

    \10\ See, generally, Regulation Best Interest Adopting Release.
    \11\ 17 CFR 240.15l-1(b)(1) (``Retail customer means a natural
person, or the legal representative of such natural person, who (i)
[r]eceives a recommendation of any securities transaction or
investment strategy involving securities from a broker, dealer, or a
natural person who is an associated person of a broker or dealer;
and (ii) [u]ses the recommendation primarily for personal, family,
or household purposes.'') For discussion of what it means for a
retail customer to ``use'' a recommendation, see the SEC staff's
Frequently Asked Questions on Regulation Best Interest, available at
https://www.sec.gov/tm/faq-regulation-best-interest.
    \12\ Regulation Best Interest Adopting Release, 84 FR at 33319.
---------------------------------------------------------------------------

    In this regard, Regulation Best Interest imposes the following
``general obligation'' on Broker-Dealers, stating a broker, dealer, or
a natural person who is an associated person of a broker or dealer,
when making a recommendation of any securities transaction or
investment strategy involving securities (including account
recommendations) to a retail customer, shall act in the best interest
of the retail customer at the time the recommendation is made, without
placing the financial or other interest of the broker, dealer, or
natural person who is an associated person of a broker or dealer making
the recommendation ahead of the interest of the retail customer.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 240.15l-1(a)(1). Regulation Best Interest provides
that this general obligation is satisfied only if a Broker-Dealer
complies with four component obligations: (i) an obligation to make
certain prescribed disclosures, before or at the time of the
recommendation, about the recommendation and the relationship
between the retail customer and the Broker-Dealer (the ``Disclosure
Obligation'') (see 17 CFR 240.15l-1(a)(2)(i)); (ii) an obligation to
exercise reasonable diligence, care, and skill in making a
recommendation (the ``Care Obligation'') (see 17 CFR 240.15l-
1(a)(2)(ii)); (iii) an obligation to establish, maintain, and
enforce written policies and procedures reasonably designed to
address conflicts of interest (the ``Conflict-of-Interest
Obligation'') (see 17 CFR 240.15l-1(a)(2)(iii)); and (iv) an
obligation to establish, maintain, and enforce written policies and
procedures reasonably designed to achieve compliance with Regulation
Best Interest (the ``Compliance Obligation'') (see 17 CFR 240.15l-
1(a)(2)(iv)).
---------------------------------------------------------------------------

    In response to the Commission's adoption of Regulation Best
Interest, on May 1, 2020, the MSRB filed a proposed rule change with
the Commission to harmonize Regulation Best Interest with certain MSRB
rules applicable to related municipal securities activities of Broker-
Dealers.\14\ The Commission approved these proposed amendments on June
25, 2020.\15\
---------------------------------------------------------------------------

    \14\ See Exchange Act Release No. 88828 (May 6, 2020), 85 FR
28082, File No. SR-MSRB-2020-02 (hereinafter, the ``Broker-Dealer
Harmonization Filing''), available at https://msrb.org/-/media/Files/SEC-Filings/2020/MSRB-2020-02-Notice.ashx?.
    \15\ See Exchange Act Release No. 89154 (June 25, 2020), 85 FR
39613 (July 1, 2020), File No. SR-MSRB-2020-02, available at https://msrb.org/-/media/Files/SEC-Filings/2020/MSRB-2020-02-Federal-Register.ashx?.
---------------------------------------------------------------------------

C. Discussion of Regulation Best Interest's Current Applicability to
Bank Dealers

    By its terms, Regulation Best Interest does not apply to retail
municipal recommendations made by Bank Dealers, because Bank Dealers in
exempted securities have an exception from Broker-Dealer status under
the Act and Regulation Best Interest applies only to Broker-
Dealers.\16\ As a result, Bank Dealers presently are not required to
comply with Regulation Best Interest and, therefore, retail investors
may not benefit from its enhanced standard of conduct when receiving
recommendations from Bank Dealers.\17\
---------------------------------------------------------------------------

    \16\ Notice, 87 FR at 28085.
    \17\ See Broker-Dealer Harmonization Filing, 85 FR at 28083, n.
5 (discussing how Bank Dealers are not subject to Regulation Best
Interest by the terms of the SEC's rules and indicating the Board's
intent to issue a request for comment regarding extending the
requirements of Regulation Best Interest to Bank Dealers). Notably,
all Bank Dealer recommendations, including retail municipal
recommendations, are presently subject to the longstanding
suitability obligations provided by MSRB rules, including MSRB Rule
G-19 and, when applicable, MSRB Rule G-48. Notice, 87 FR at 28085,
n. 13.
---------------------------------------------------------------------------

D. Application of Regulation Best Interest to Bank Dealers

    The MSRB stated that the proposed Best Interest Amendments would
amend MSRB Rule G-19 to require a Bank Dealer to comply with Regulation
Best Interest to the same extent as if it were a Broker-Dealer when
making a retail municipal recommendation.\18\ Consequently, a Bank
Dealer would have to act in the best interest of the retail customer at
the time a retail municipal recommendation is made, without placing the
financial or other interests of the Bank Dealer ahead of the interest
of the retail customer.\19\ Correspondingly, the Bank Dealer would have
to comply with the Commission's component obligations of Regulation
Best Interest to the same extent as if it were a Broker-Dealer,
including Regulation Best Interest's Disclosure Obligation,\20\ Care
Obligation,\21\ Conflict-of-Interest Obligation,\22\ and Compliance
Obligation.\23\
---------------------------------------------------------------------------

    \18\ Notice, 87 FR at 28085.
    \19\ Id.
    \20\ 17 CFR 240.15l-1(a)(2)(i).
    \21\ 17 CFR 240.15l-1(a)(2)(ii).
    \22\ 17 CFR 240.15l-1(a)(2)(iii).
    \23\ 17 CFR 240.15l-1(a)(2)(iv).
---------------------------------------------------------------------------

    Under the proposed Best Interest Amendments, the component
obligations of Regulation Best Interest would apply to those municipal
securities activities associated with a retail municipal recommendation
within the overall context of a Bank Dealer business model. The MSRB
stated that it believes that any SEC guidance with respect to the
understanding and application of Regulation Best Interest would be
equally applicable to Bank Dealers.\24\
---------------------------------------------------------------------------

    \24\ Notice, 87 FR at 28085.

---------------------------------------------------------------------------

E. Application of the Disclosure Obligation to Bank Dealers

    Consistent with Regulation Best Interest's Disclosure Obligation,
the proposed Best Interest Amendments would require a Bank Dealer,
prior to or at the time of the retail municipal recommendation, to
provide to its retail customer, in writing, full and fair disclosure
of: (a) all material facts relating to the scope and terms of the
relationship with the retail customer, including: (i) that the Bank
Dealer is acting as a municipal securities dealer with respect to the
retail municipal recommendation; (ii) the material fees and costs that
apply to the retail customer's transactions, holdings, and accounts;
and (iii) the type and scope of services provided to the retail
customer, including any material limitations on the securities or
investment strategies involving securities that may be recommended to
the retail customer; \25\ and (b) all material facts relating to
conflicts of interest that are associated with the retail municipal
recommendation.\26\
---------------------------------------------------------------------------

    \25\ The MSRB offered the example that, if the applicable legal
charter of a Bank Dealer only permits a Bank Dealer to conduct
municipal securities activities or, in fact, a Bank Dealer's
business model is limited to municipal securities activities, then
the Bank Dealer generally would be required to accurately disclose
the fact that it only engages in transactions involving municipal
securities and, therefore, will only make recommendations to a
retail customer regarding transactions involving municipal
securities. Notice, 87 FR at 28085, n. 18.
    \26\ Notice, 87 FR at 28085.
---------------------------------------------------------------------------

F. Application of the Care Obligation to Bank Dealers

    Consistent with Regulation Best Interest's Care Obligation, the
proposed Best Interest Amendments would require a Bank Dealer to
exercise reasonable diligence, care, and skill to: (a) understand the
potential risks, rewards, and costs associated with any retail
municipal recommendation, and have a reasonable basis to believe that a
retail municipal recommendation could be in the best interest of at
least some retail customers; (b) have a reasonable basis to believe
that the retail municipal recommendation is in the best interest of a
particular retail customer, based on that retail customer's investment
profile and the potential risks, rewards, and costs associated with the
recommendation, and does not place the financial or other interest of
the Bank Dealer ahead of the interest of the retail customer; (c) have
a reasonable basis to believe that a series of retail municipal
recommendations, even if in the retail customer's best interest when
viewed in isolation, is not excessive and is in the retail customer's
best interest when taken together in light of the retail customer's
investment profile and does not place the financial or other interest
of the Bank Dealer ahead of the interest of the retail customer.\27\
---------------------------------------------------------------------------

    \27\ Notice, 87 FR at 28086.
---------------------------------------------------------------------------

G. Application of the Conflict-of-Interest Obligation to Bank Dealers

    Consistent with Regulation Best Interest's Conflict-of-Interest
Obligation, the proposed Best Interest Amendments would require a Bank
Dealer to establish, maintain, and enforce written policies and
procedures reasonably designed to: (a) identify and at a minimum
disclose, in accordance with its Disclosure Obligation, or eliminate,
all conflicts of interest associated with such retail municipal
recommendations; (b) identify and mitigate any conflicts of interest
associated with such retail municipal recommendations that create an
incentive for a natural person who is an associated person of the Bank
Dealer to place the interests of the Bank Dealer or such associated
person ahead of the interest of the retail customer; (c)(i) identify
and disclose any material limitations placed on the securities or
investment strategies involving securities that may be recommended to a
retail customer and any conflicts of interest associated with such
limitations, in accordance with its Disclosure Obligation, and (ii)
prevent such limitations and associated conflicts of interest from
causing the Bank Dealer to make retail municipal recommendations that
place the interest of the Bank Dealer ahead of the interest of the
retail customer; and (d) identify and eliminate any sales contests,
sales quotas, bonuses, and non-cash compensation that are based on the
sales of specific municipal securities or specific types of municipal
securities within a limited period of time.\28\
---------------------------------------------------------------------------

    \28\ Id.
---------------------------------------------------------------------------

H. Application of the Compliance Obligation to Bank Dealers

    Consistent with Regulation Best Interest's Compliance Obligation,
the proposed Best Interest Amendments would require a Bank Dealer to
establish, maintain, and enforce written policies and procedures
reasonably designed to achieve compliance with Regulation Best
Interest.\29\
---------------------------------------------------------------------------

    \29\ Id.
---------------------------------------------------------------------------

I. Purpose and Intent of the Best Interest Amendments

    The MSRB stated that it proposed the Best Interest Amendments to
MSRB Rule G-19 for purposes of enhancing the standard of investor
protection in the municipal securities market and enhancing fairness
and efficiency in the municipal securities market by promoting
regulatory parity among Bank Dealers and Broker-Dealers.\30\ Specific
to enhancing the standard of investor protection, the MSRB noted that
it believes that all retail customers receiving a retail municipal
recommendation should benefit from the enhanced investor protections
afforded by Regulation Best Interest, regardless of whether such a
retail customer is a customer of a Broker-Dealer or a Bank Dealer. \31\
Currently, retail customers of Bank Dealers are not afforded the
protections of Regulation Best Interest when receiving a retail
municipal recommendation from a Bank Dealer.\32\ The MSRB also stated
that, as the proposed Best Interest Amendments would require a Bank
Dealer to comply with the enhanced standard of conduct required by
Regulation Best Interest, the MSRB believes that the Best Interest
Amendments would improve overall investor protection in the municipal
securities market.\33\
---------------------------------------------------------------------------

    \30\ Id.
    \31\ Id.
    \32\ Id.
    \33\ Id.
---------------------------------------------------------------------------

    Specific to promoting regulatory parity, the MSRB stated that it
believed that the proposed Best Interest Amendments would establish a
uniform regulatory standard in the municipal securities market by
requiring the same standard of conduct for Bank Dealers and Broker-
Dealers when making retail municipal recommendations.\34\ The MSRB
noted that this uniform standard would enhance the fairness and
efficiency of the municipal securities market by ensuring Bank Dealers
have regulatory obligations and burdens when engaging in retail
municipal recommendations that are equivalent to the regulatory
obligations and burdens of Broker-Dealers when engaging in the same
municipal securities activities.\35\ The MSRB stated that this
uniformity would better ensure that Bank Dealers do not have a
competitive advantage in the municipal securities market by operation
of a less burdensome regulatory standard of conduct and, thereby,
mitigate the potential for regulatory arbitrage.\36\
---------------------------------------------------------------------------

    \34\ Id.
    \35\ Id.
    \36\ Id.

---------------------------------------------------------------------------

J. Background and Purpose of the Institutional SMMP Amendment

    The MSRB stated that the proposed Institutional SMMP Amendment
would amend MSRB Rule G-48 to modify the current obligation to perform
a quantitative suitability analysis for recommendations where the
dealer does not have actual control or de facto control over the
account of an SMMP who is not a retail customer \37\ under Regulation
Best Interest (collectively, ``Institutional SMMPs'' and, individually,
each an ``Institutional SMMP'').\38\
---------------------------------------------------------------------------

    \37\ See supra note 11 for the applicable definition of ``retail
customer'' and related citation. Any customer meeting such
definition of retail customer pursuant to Regulation Best Interest
would not be considered an Institutional SMMP for the purposes of
the proposed Institutional SMMP Amendment and its modification to
MSRB Rule G-48. For purposes of MSRB rules, such a customer meeting
the definition of a ``retail customer'' would receive the
protections afforded by Regulation Best Interest.
    \38\ Notice, 87 FR at 28086.
---------------------------------------------------------------------------

    As is the case with the reduced customer-specific suitability
obligations currently afforded to Institutional SMMPs under MSRB Rule
G-48(c), the MSRB stated that it believes that dealers transacting with
Institutional SMMPs should have similarly reduced quantitative-
suitability obligations in instances where the dealer does not have
actual control or de facto control over the account of an Institutional
SMMP.\39\ The MSRB noted that this modification would effectively
revert the quantitative suitability standard for Institutional SMMPs
back to the previously existing standard that was in place under MSRB
rules prior to June 30, 2020.\40\ The MSRB stated that the proposed
Institutional SMMP Amendment is intended to improve the efficiency of
the municipal securities market without eroding investor protection by
aligning the compliance burden associated with certain recommendations
made by dealers to the reasonable expectations and capabilities of
Institutional SMMPs--who by their nature are more sophisticated, non-
natural-person customers and must affirmatively indicate their capacity
to (i) exercise independent judgment and (ii) access material
information.\41\
---------------------------------------------------------------------------

    \39\ Id.
    \40\ Id.; see also Broker-Dealer Harmonization Filing, 85 FR at
28082, n. 4. The MSRB notes that it has had a long held prohibition
against ``churning,'' and the MSRB formally ``recast'' this
prohibition as quantitative suitability through an amendment to MSRB
Rule G-19 approved by the SEC in 2014. See also Exchange Act Release
No. 71665 (Mar. 7, 2014), 79 FR 2432 (Mar. 13, 2014), File No. SR-
MSRB-2013-07 (discussing the then-existing MSRB prohibition on
churning and a proposed rule change to recast this prohibition using
the phrase ``quantitative suitability''), available at http://
www.msrb.org/~/media/Files/SEC-Filings/2013/MSRB-2013-07-Fed-Reg-
Approval.ashx?la=en&hash=AEDA0B5509630E25473E9F6F3A3F9C34.
    \41\ Notice, 87 FR at 28086-87. See also MSRB Rule G-48(c).
---------------------------------------------------------------------------

K. Background on MSRB Rule G-19's Quantitative Suitability Requirements

    MSRB Rule G-19 sets the MSRB's baseline investor protection
standards regarding the suitability of recommendations made by dealers
to their customers of purchases, sales, or exchanges of municipal
securities that are not subject to Regulation Best Interest.\42\ Among
other requirements, Supplementary Material .05 of MSRB Rule G-19
enumerates three components of a dealer's suitability analysis when
recommending a transaction or investment strategy involving a municipal
security or municipal securities to a non-retail customer (i.e., a
recommendation that is not subject to Regulation Best Interest).\43\ As
further defined in the text of the rule, MSRB Rule G-19 provides that a
dealer's suitability obligation is composed of (i) reasonable-basis
suitability, (ii) customer-specific suitability, and (iii) quantitative
suitability.\44\ Most relevant to the proposed Institutional SMMP
Amendment of this proposed rule change, quantitative suitability
requires a dealer to have a reasonable basis for believing that a
series of recommended transactions, even if suitable when viewed in
isolation, are not excessive and unsuitable for the customer when taken
together in light of the customer's investment profile, as delineated
in MSRB Rule G-19.\45\ No single test defines excessive activity, but
factors such as the turnover rate, the cost-equity ratio, and the use
of in-and-out trading in a customer's account may provide a basis for a
finding that a dealer has violated the quantitative suitability
obligation.\46\
---------------------------------------------------------------------------

    \42\ MSRB Rule G-19.
    \43\ See the Broker-Dealer Harmonization Filing, 85 FR at 28084.
The Broker-Dealer Harmonization Filing amended MSRB Rule G-19 to
provide that the rule does not apply to recommendations subject to
Regulation Best Interest. Notice, 87 FR at 28087, n. 23.
    \44\ Notice, 87 FR at 28087.
    \45\ MSRB Rule G-19, Supplementary Material .05(c).
    \46\ Id.
---------------------------------------------------------------------------

    Pursuant to the amendments effectuated by the Broker-Dealer
Harmonization Filing, discussed above and effective as of June 30,
2020, the quantitative suitability obligation of MSRB Rule G-19 no
longer incorporates an element of control in relation to a customer's
account.\47\ As a result, dealers are currently obligated to conduct a
quantitative suitability analysis under MSRB Rule G-19 when making
recommendations to Institutional SMMPs, even in instances where the
dealer does not have actual control or de facto control over the
account.\48\ The obligation applies notwithstanding the fact that
Institutional SMMPs self-identify under MSRB Rule G-48 and MSRB Rule D-
15 as having the willingness and requisite investment sophistication
to, for example, independently evaluate the recommendations of a dealer
and the quality of a dealer's execution, as further discussed
below.\49\
---------------------------------------------------------------------------

    \47\ Stated differently, as of June 30, 2020, if the obligations
of MSRB Rule G-19 attach to a dealer's recommendation, then the
investor protections regarding quantitative suitability apply
regardless of whether the dealer making the recommendation exercises
any actual control or de facto control over the customer's account.
Notice, 87 FR at 28087, n. 26. The Broker-Dealer Harmonization
Filing amended this language of Supplementary Material .05(c) to
eliminate such control requirements, effectively extending the
requirements of quantitative suitability to any customer account.
See Broker-Dealer Harmonization Filing, 85 FR at 28084. June 30,
2020 was the compliance date for the amendments enacted by the
Broker-Dealer Harmonization Filing. See Broker-Dealer Harmonization
Filing, 85 FR at 28082, n. 4. Pursuant to the Broker-Dealer
Harmonization Filing, the MSRB also notes that this quantitative
suitability obligation applies uniformly to any dealer (i.e., the
same regulatory obligations apply to both Broker-Dealers and Bank
Dealers). Notice, 87 FR at 28087, n. 26.
    \48\ Notice, 87 FR at 28087.
    \49\ Id. See MSRB Rule D-15(c) (requiring an Institutional SMMP
to ``affirmatively indicate,'' among other things, that it is
exercising independent judgment in evaluating (A) the
recommendations of the dealer and (B) the quality of execution of
the customer's transactions by the dealer).
---------------------------------------------------------------------------

L. Background on MSRB Rule G-48 and Modified Regulatory Obligations

    MSRB Rule G-48 provides for modified dealer regulatory obligations
under MSRB rules when dealing with certain customers that meet the
definition of a Sophisticated Municipal Market Participant (i.e., an
SMMP).\50\ More specifically, when transacting with an SMMP customer,
Rule G-48 modifies aspects of a dealer's baseline regulatory
obligations in terms of: (i) time of trade disclosures,\51\ (ii)
transaction pricing,\52\ (iii) bona fide

quotations,\53\ (iv) best execution,\54\ and (vi) suitability.\55\ The
modified regulatory obligations afforded to SMMPs under MSRB rules are
intended to account for the distinct capabilities of certain
sophisticated, non-retail customers and the varied types of dealer-
customer relationships occurring in the municipal securities
market.\56\
---------------------------------------------------------------------------

    \50\ MSRB Rule G-48.
    \51\ MSRB Rule G-48(a) (``The broker, dealer, or municipal
securities dealer shall not have any obligation under Rule G-47 to
ensure disclosure of material information that is reasonably
accessible to the market.'')
    \52\ MSRB Rule G-48(b).
    \53\ MSRB Rule G-48(d) (``The broker, dealer, or municipal
securities dealer disseminating an SMMP's `quotation' as defined in
Rule G-13, which is labeled as such, shall apply the same standards
regarding quotations described in Rule G-13(b) as if such quotations
were made by another broker, dealer, or municipal securities
dealer.'')
    \54\ MSRB Rule G-48(e) (``The broker, dealer, or municipal
securities dealer shall not have any obligation under Rule G-18 to
use reasonable diligence to ascertain the best market for the
subject security and buy or sell in that market so that the
resultant price to the SMMP is as favorable as possible under
prevailing market conditions.'')
    \55\ MSRB Rule G-48(c).
    \56\ See, e.g., Exchange Act Release No. 67064 (May 25, 2012),
77 FR 32704 (June 1, 2012), File No. SR-MSRB-2012-05 (May 25, 2012)
(approving an MSRB proposed rule change to relax certain
qualifications for a dealer to afford a customer SMMP status in
light of market developments regarding the increased availability of
municipal securities market information and the desire of certain
institutional customers to access alternative trading systems).
---------------------------------------------------------------------------

    Most relevant to the proposed Institutional SMMP Amendment, Rule G-
48(c) currently modifies the suitability requirements of MSRB Rule G-19
by eliminating the requirement for dealers to conduct a customer-
specific suitability analysis for recommendations made to an
Institutional SMMP.\57\ The operative provision of MSRB Rule G-48
provides that, ``[w]hen making a recommendation subject to Rule G-19
and not Regulation Best Interest, Rule 15l-1 under the Act, a broker,
dealer, or municipal securities dealer shall not have any obligation
under Rule G-19 to perform a customer-specific suitability analysis.''
\58\ This relaxed customer-specific suitability obligation is generally
aligned with the ``independent judgment'' affirmations a customer
seeking SMMP status makes under MSRB Rule D-15. The proposed
Institutional SMMP Amendment would likewise relax the quantitative
suitability obligation for similar reasons, as further described in the
following sections.\59\
---------------------------------------------------------------------------

    \57\ Id. The amendments to MSRB Rule G-48 enacted by the Broker-
Dealer Harmonization Filing carved out recommendations to customers
that are subject to Regulation Best Interest from the rule's
modified standards. See Broker-Dealer Harmonization Filing, 85 FR at
28084-85.
    \58\ MSRB Rule G-48(c).
    \59\ See Exchange Act Release No. 71665 (Mar. 7, 2014), 79 FR
14321 (Mar. 13, 2014), File No. SR-MSRB-2013-07 (Sept. 17, 2013)
(codifying the relaxed customer-specific suitability obligation for
recommendations made to SMMPs in MSRB Rule G-48 and the actual
control or de facto control requirement, thereafter eliminated in
2020 as described herein, for the applicability of quantitative
suitability to recommendations made to customers in MSRB Rule G-19).
---------------------------------------------------------------------------

M. Background on MSRB Rule D-15 and SMMP Affirmation Requirements

    MSRB Rule G-48 incorporates the definition of SMMP under MSRB Rule
D-15 for purposes of defining which customers do (or do not) qualify as
an SMMP for purposes of Rule G-48 and, therefore, MSRB Rule D-15
establishes the scope of potential customers who might qualify for MSRB
Rule G-48's modified obligations.\60\ The SMMP definition in MSRB Rule
D-15 enumerates three components, which separately address: (i) the
minimum qualifying traits and characteristics of an SMMP customer; \61\
(ii) that a dealer must develop a reasonable basis for determining
whether a customer has the requisite level of expertise and
sophistication to be deemed an SMMP customer (the ``SMMP Reasonable
Basis Determination''); \62\ and (iii) the affirmations that a customer
must communicate to the dealer regarding its own investment judgment
and access to information in order to be appropriately deemed an SMMP
customer (the ``SMMP Customer Affirmations'').\63\
---------------------------------------------------------------------------

    \60\ MSRB Rule G-48.
    \61\ MSRB Rule D-15(a) (a customer is only eligible to be
treated as an SMMP if the customer is: (i) a bank, savings and loan
association, insurance company, or registered investment company,
(ii) a registered investment advisor, or (iii) a person or entity
with total assets of at least $50 million).
    \62\ MSRB Rule D-15(b) (a customer is only eligible to be
treated as an SMMP if the dealer has developed a reasonable basis to
believe that the customer is capable of evaluating investment risks
and market value independently, both in general and with regard to
particular transactions and investment strategies in municipal
securities. In addition, Supplementary Material .01 of MSRB Rule D-
15 states that, as part of the reasonable-basis analysis, the dealer
should consider the amount and type of municipal securities owned or
under management by the customer).
    \63\ MSRB Rule D-15(c).
---------------------------------------------------------------------------

    With respect to the SMMP Customer Affirmations, MSRB Rule D-15(c)
provides that the customer must affirmatively indicate to the dealer
that (i) it is exercising independent judgment in evaluating the
recommendations of the dealer; the quality of execution of the
customer's transactions by the dealer; and the transaction price for
non-recommended secondary market agency transactions as to which the
dealer's services have been explicitly limited to providing anonymity,
communication, order matching and/or clearance functions and the dealer
does not exercise discretion as to how or when the transactions are
executed; \64\ and (ii) it has timely access to material information
that is available publicly through established industry sources as
defined in MSRB Rule G-47(b)(i) and MSRB Rule G-47(b)(ii) (i.e.,
``material information'' from ``established industry sources,'' such as
EMMA website information and rating agency reports).\65\
---------------------------------------------------------------------------

    \64\ See MSRB Rule D-15(c)(1) (``The customer must affirmatively
indicate that it: (1) is exercising independent judgment in
evaluating: (A) the recommendations of the dealer; (B) the quality
of execution of the customer's transactions by the dealer; and (C)
the transaction price for non-recommended secondary market agency
transactions as to which (i) the dealer's services have been
explicitly limited to providing anonymity, communication, order
matching and/or clearance functions and (ii) the dealer does not
exercise discretion as to how or when the transactions are executed
. . .'').
    \65\ See MSRB Rule D-15(c)(2) (``The customer must affirmatively
indicate that it . . . (2) has timely access to material information
that is available publicly through established industry sources as
defined in Rule G-47(b)(i) and (ii).'')
---------------------------------------------------------------------------

    The MSRB noted that an institutional customer who self-identifies
as an SMMP has freely affirmed to a dealer its willingness to be
treated as a sophisticated customer with the capacity and resources to
exercise its own independent judgment.\66\ The MSRB stated that, in
this way, the SMMP Customer Affirmations are designed to ensure that
any customer treated as an SMMP has affirmatively and knowingly
provided the grounds on which a dealer may afford such SMMP customer
lesser protections under certain MSRB rules.\67\ As an additional
investor protection safeguard beyond the requirement for SMMP Customer
Affirmations, the SMMP Reasonable Basis Determination also requires a
dealer to have a reasonable basis to believe that an SMMP customer is
capable of evaluating investment risks and market value independently,
both in general and with regard to particular transactions and
investment strategies in municipal securities.\68\ The MSRB noted that,
in this way, the SMMP Reasonable Basis Determination further ensures
that an Institutional SMMP does in fact possess a more sophisticated
understanding of the municipal securities market.\69\ The MSRB noted
that the proposed Institutional SMMP Amendment would not alter the SMMP
Customer Affirmations, the SMMP Reasonable Basis Determination, nor any
of the other definitional elements of MSRB Rule D-15 that must be
satisfied for a customer to qualify as an SMMP.\70\
---------------------------------------------------------------------------

    \66\ Notice, 87 FR at 28088.
    \67\ Id.
    \68\ See MSRB Rule D-15(b) and Rule D-15 Supplementary Material
.01.
    \69\ Notice, 87 FR at 28088
    \70\ Id.

---------------------------------------------------------------------------

N. Purpose and Intent of the Institutional SMMP Amendment to MSRB Rule
G-48

    The MSRB stated that the proposed Institutional SMMP Amendment
would amend MSRB Rule G-48 to modify the quantitative suitability
obligations of dealers when effecting transactions for their
Institutional SMMPs.\71\ The proposed Institutional SMMP Amendment
would require a dealer to conduct a quantitative suitability analysis
only in situations where the dealer has actual control or de facto
control over an Institutional SMMP's account.\72\ As stated above, the
proposed amendments to MSRB Rule G-48 would narrowly reinstate the
scope of suitability protections afforded to Institutional SMMPs in
effect prior to the amendments effectuated by the Broker-Dealer
Harmonization Filing, and so should be a familiar regulatory concept to
dealers and Institutional SMMPs alike.\73\
---------------------------------------------------------------------------

    \71\ Id.
    \72\ Where a dealer exercises actual control or de facto control
over an Institutional SMMP's account, the dealer would still be
required to perform a quantitative suitability analysis in
accordance with Supplementary Material .05 of MSRB Rule G-19.
Relatedly, if an Institutional SMMP limitedly provides its customer
affirmation on a trade-by-trade basis, then the dealer would be
required to comply with all aspects of MSRB Rule G-19, including
both the quantitative suitability requirement and the customer-
specific suitability requirement, for those recommendations for
which the Institutional SMMP did not provide the applicable customer
affirmation. See Supplementary Material .02 of MSRB Rule D-15
(discussing trade-by-trade affirmations).
    \73\ Notice, 87 FR at 28088.
---------------------------------------------------------------------------

    More importantly, because each Institutional SMMP must self-
identify as an SMMP by making the SMMP Customer Affirmations, as well
as fulfill the requirements associated with a dealer's SMMP Reasonable
Basis Determination, the MSRB stated that the proposed Institutional
SMMP Amendment would ease a regulatory burden on dealers that
effectively replicates the sort of analysis an Institutional SMMP is
willing and capable of performing itself.\74\ As a result, the MSRB
noted that the proposed Institutional SMMP Amendment would align the
compliance burden associated with certain recommendations made by
dealers to the reasonable expectations and capabilities of
Institutional SMMPs.\75\
---------------------------------------------------------------------------

    \74\ Id.
    \75\ Id.
---------------------------------------------------------------------------

    Although the MSRB noted that investor protection benefits
associated with requiring dealers to perform a potentially duplicative
suitability analysis can be appropriate in other circumstances,\76\ the
MSRB stated that the compliance burden associated with performing a
quantitative suitability analysis on recommendations made to
Institutional SMMPs outweighs the potential marginal investor
protection benefits.\77\ The MSRB noted that the proposed Institutional
SMMP Amendment would promote efficiency in the municipal securities
market by eliminating a regulatory burden on dealers that potentially
provides a duplicative or unneeded analyses in supplement of an
Institutional SMMPs' own independent and informed judgment.\78\ The
MSRB stated that the proposed Institutional SMMP Amendment would allow
dealers to redirect the resources associated with this regulatory
burden to other more productive market activities.\79\
---------------------------------------------------------------------------

    \76\ Notice, 87 FR at 28088-89. For example, the MSRB believes
that the obligation to perform quantitative suitability analyses
under MSRB rules remains appropriate, regardless of the potential
for such duplication, in circumstances of recommendations made to
retail customers; non-retail, institutional customers who fail to
meet the characteristics of an SMMP; and/or non-retail customers who
have declined to make the affirmations necessary to be appropriately
deemed an SMMP. Notice, 87 FR at 28089, n. 46.
    \77\ Notice, 87 FR at 28089.
    \78\ Id.
    \79\ Id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change.
The Commission finds that the proposed rule change is consistent with
the requirements of the Exchange Act and the rules and regulations
thereunder applicable to the MSRB.
    In particular, the Commission believes that the proposed rule
change is consistent with the provisions of Exchange Act Section
15B(b)(2)(C), which provides, in part, 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,
and 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.\80\
---------------------------------------------------------------------------

    \80\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

A. Commission Findings for the Best Interest Amendments

    The Commission finds that the proposed Best Interest Amendments are
consistent with Section 15B(b)(2)(C) of the Act \81\ because the
amendments would: (i) prevent fraudulent and manipulative acts and
practices; (ii) promote just and equitable principles of trade; (iii)
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; (iv) remove impediments to and perfect the
mechanism of a free and open market in municipal securities and
municipal financial products; and (v) protect investors, municipal
entities, obligated persons, and the public interest.
---------------------------------------------------------------------------

    \81\ Id.
---------------------------------------------------------------------------

i. Prevent Fraudulent and Manipulative Acts and Practices
    The Commission finds that the proposed Best Interest Amendments
would prevent fraudulent and manipulative acts and practices by
extending the enhanced standards of conduct required by Regulation Best
Interest to the retail municipal recommendations of Bank Dealers. As
noted by the Commission in the adopting release for Regulation Best
Interest, Regulation Best Interest enhances the broker-dealer standard
of conduct beyond existing suitability obligations.\82\ Specifically,
the proposed Best Interest Amendments would mandate Bank Dealers act in
the best interest of the retail customer at the time the recommendation
is made (without placing the financial or other interest of the Broker-
Dealer ahead of the interest of the retail customer).\83\ As such, the
Commission finds that the proposed Best Interest Amendments would
enhance the quality of Bank Dealer retail municipal recommendations.
---------------------------------------------------------------------------

    \82\ Regulation Best Interest Adopting Release, 84 FR at 33318.
    \83\ Notice, 87 FR at 28085.
---------------------------------------------------------------------------

    The Commission further finds that the proposed Best Interest
Amendments would address conflicts of interest in connection with Bank
Dealer retail municipal recommendations, by establishing, maintaining,
and enforcing policies and procedures reasonably designed to identify
and fully and fairly disclose material facts about conflicts of
interest (and in instances where it is determined that disclosure is
insufficient to reasonably address the conflict, to mitigate, or in
certain

instances, eliminate the conflict).\84\ Therefore, the Commission finds
that reducing the potential harm to retail customers that may be caused
by conflict of interest in connection with Bank Dealer retail municipal
recommendations.
---------------------------------------------------------------------------

    \84\ Notice, 87 FR at 28086.
---------------------------------------------------------------------------

    By enhancing the quality of Bank Dealer recommendations to retail
customers and mitigating harm to retail customers from potential
conflict of interest, the Commission believes that the proposed Best
Interest Amendments would prevent potential fraudulent and manipulative
acts and practices and promote the protection of the retail customers
of Bank Dealers.\85\
---------------------------------------------------------------------------

    \85\ Regulation Best Interest Adopting Release, 84 FR at 33318.
---------------------------------------------------------------------------

ii. Promote Just and Equitable Principles of Trade
    The Commission finds that the proposed Best Interest Amendments'
mandate of a uniform standard among Broker-Dealers and Bank Dealers
when making recommendations to retail customers in municipal securities
would promote just and equitable principles of trade within the
municipal securities market. Specifically, the proposed Best Interest
Amendments would ensure Bank Dealers have regulatory obligations and
burdens when engaging in retail municipal recommendations that are
generally equivalent to the regulatory obligations and burdens of
Broker-Dealers (when engaging in the same municipal securities
activities).\86\ The Commission notes that this uniformity would better
ensure that Bank Dealers do not have a competitive advantage in the
municipal securities market by operation of a less burdensome
regulatory standard of conduct. Therefore, the Commission finds that
the proposed Best Interest Amendments will mitigate the potential for
regulatory arbitrage and thereby promote just and equitable principles
of trade.
---------------------------------------------------------------------------

    \86\ Notice, 87 FR at 28086.
---------------------------------------------------------------------------

iii. 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
    The Commission finds that the proposed Best Interest Amendments
would foster cooperation and coordination between the MSRB, SEC, and
other regulators by aligning the suitability obligations of MSRB Rule
G-19 with the suitability obligations of Regulation Best Interest. \87\
The Commission notes that such alignment would establish a uniform
standard of suitability obligations among Broker-Dealers and Bank
Dealers when making retail municipal recommendations, creating
regulatory clarity regarding retail municipal recommendations. As such,
the Commission finds that the proposed Best Interest Amendments will
foster greater cooperation and coordination among the authorities that
examine Broker-Dealers and Bank Dealers for compliance with MSRB rules,
as well as authorities that enforce those rules.
---------------------------------------------------------------------------

    \87\ Notice, 87 FR at 28085.
---------------------------------------------------------------------------

iv. Remove Impediments to and Perfect the Mechanism of a Free and Open
Market in Municipal Securities and Municipal Financial Products
    The Commission finds that the proposed Best Interest Amendments
would remove impediments to, and perfect the mechanism of, a free and
open market in municipal securities by creating a uniform regulatory
standard for retail municipal recommendations. By establishing one
standard for retail municipal recommendations, the Commission finds
that the proposed Best Interest Amendments would eliminate confusion
about duties Bank Dealers (with retail customers and non-retail
customers) owe to retail customers regarding municipal securities
recommendations.\88\ The Commission further notes that having one
standard of retail municipal recommendations would also eliminate
confusion about the duties retail customers (who have accounts with
both Bank Dealers and Broker-Dealers) can expect from Bank Dealers and
Broker-Dealers regarding municipal securities recommendations. The
Commission finds that the Best Interest Amendments would reduce Bank
Dealers' and retail customers' confusion regarding the duties
associated with providing retail municipal recommendation. As such, the
Commission holds that the proposed Best Interest Amendments remove
impediments to the municipal security market, removing uncertainty
surrounding retail municipal recommendations.
---------------------------------------------------------------------------

    \88\ Id.
---------------------------------------------------------------------------

v. Protect Investors, Municipal Entities, Obligated Persons, and the
Public Interest
    The Commission believes that the proposed Best Interest Amendments'
revision to MSRB Rule G-19 will protect investors by ensuring Bank
Dealers comply with the heightened regulatory requirements of the
Commission's Regulation Best Interest rather than current MSRB G-
19.\89\ By uniformly applying the investor protections provided by
Regulation Best Interest, the proposed Best Interest Amendments would
ensure that a retail customer will receive the enhanced investor
protections of Regulation Best Interest, regardless of whether a
Broker-Dealer or a Bank Dealer makes retail municipal recommendation.
In doing so, the Commission finds that the proposed Best Interest
Amendments thereby protect investors, municipal entities, obligated
persons, and the public interest.
---------------------------------------------------------------------------

    \89\ Id.
---------------------------------------------------------------------------

B. Commission Findings for the Institutional SMMP Amendment

    The Commission finds that the proposed Institutional SMMP Amendment
is consistent with Section 15B(b)(2)(C) \90\ of the Act in that such
amendment would remove impediments to and perfect the mechanism of a
free and open market in municipal securities and municipal financial
products, without materially diminishing the prevention of fraudulent
and manipulative acts and practices; or the protect investors,
municipal entities, obligated persons, and the public interest.
---------------------------------------------------------------------------

    \90\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    Specifically, the Commissions finds that the proposed Institutional
SMMP Amendment would remove impediments to and perfect the mechanism of
a free and open market in municipal securities and municipal financial
product by eliminating the current requirement to perform a
quantitative suitability analysis for recommendations in circumstances
where the dealer does not have actual control or de facto control over
an Institutional SMMP's account.\91\ The Commission notes that ending
this requirement could eliminate potentially duplicative analyses
undertaken by dealers on behalf of Institutional SMMPs. In particular,
the Commission notes that Institutional SMMPs have already affirmed
their capacity and expertise to conduct such analyses for themselves,
and presumably, the Institutional SMMPs presumably have taken upon
themselves to perform such analyses.
---------------------------------------------------------------------------

    \91\ Notice, 87 FR at 28088.
---------------------------------------------------------------------------

    Therefore, the Commission believes that the proposed Institutional
SMMP Amendment would facilitate transactions in municipal securities
and remove impediments to and perfect the mechanism of a free and open
market in

municipal securities by reducing a compliance burden.
    The Commission further believes that proposed Institutional SMMP
Amendment would not materially diminish the prevention of fraudulent
and manipulative acts and practices under MSRB Rule G-19, as amended by
the proposed Best Interest Amendments, by incorporating the concepts of
actual control or de facto control.\92\ Specifically, the Commission
believes that reinstating control elements would help address potential
scenarios in which the ability of an Institutional SMMP to exercise
independent judgment is undermined or circumvented. Such a situation
may occur when a dealer may not have formal discretionary authority
over an Institutional SMMP's account, but nevertheless exercises de
facto control over the account (to, for example, engage in churning
activity in clear contravention of an Institutional SMMP's investment
interests). The Commission further finds that the proposed
Institutional SMMP Amendment's incorporating the actual control or de
facto control elements maintains baseline investor protections for
Institutional SMMPs in such scenarios of greater dealer impropriety or
intentional wrongdoing.
---------------------------------------------------------------------------

    \92\ Notice, 87 FR at 28088.
---------------------------------------------------------------------------

    Similarly, the Commission believes that the proposed Institutional
SMMP Amendment will not materially diminish the protection of
investors, municipal entities, and obligated person, and the public
interest provided by MSRB Rule G-19, as amended by the proposed Best
Interest Amendments. Specifically, under the proposed Institutional
SMMP Amendment, new institutional customers, who otherwise would
qualify as SMMPs but desire the additional investor protections
afforded by quantitative suitability under MSRB Rule G-19, may decline
to provide the required affirmations under MSRB Rule D-15.\93\ The
Commission notes that, under the proposed rule change, existing
Institutional SMMPs could withdraw their SMMP status and obtain the
suitability protections afforded by MSRB Rule G-19. The Commission
believes this ability to self-identify as an Institutional SMMP will
help ensure that those institutional customers who desire additional
investor protection can secure them under MSRB rules, which would then
require a dealer to undertake a quantitative suitability analysis.
Accordingly, the Commission finds that the proposed Institutional SMMP
Amendment would not materially diminish essential safeguards for
investor protection.
---------------------------------------------------------------------------

    \93\ Notice, 87 FR at 28090.
---------------------------------------------------------------------------

    In approving the proposed rule change, the Commission has
considered the proposed rule change's impact on efficiency,
competition, and capital formation.\94\ Exchange Act Section
15B(b)(2)(C) \95\ 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.
---------------------------------------------------------------------------

    \94\ 15 U.S.C. 78c(f).
    \95\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    The Commission does not believe that the proposed Best Interest
Amendments would impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act because
the proposed rule change would align MSRB rules with the requirements
of Regulation Best Interest. As such, the proposed Best Interest
Amendments will reduce the potential for regulatory arbitrage and any
attendant disruption it could have caused in the competitive landscape
between Broker-Dealers and Bank Dealers regarding retail municipal
recommendations. Consequently, the proposed Best Interest Amendments
will not impose any burden on competition not necessary or appropriate
in furtherance of the purposes of the Exchange Act, because it
establishes a uniform regulatory environment for all retail municipal
recommendations.
    The Commission further believes that the proposed Institutional
SMMP Amendment would not impose any burden on competition not necessary
or appropriate in furtherance of the purposes of the Exchange Act
because the proposed rule change would be equally applicable to all
dealers. As such, the Commission finds that any benefits or burdens to
competition would be evenly applied to all such firms transacting with
institutional customers. Therefore, neither the proposed Best Interest
Amendments nor the proposed Institutional SMMP Amendment do not impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Exchange Act.
    The Commission has also reviewed the record for the proposed rule
change and notes that the record does not contain any information to
indicate that the proposed rule change would have a negative effect on
capital formation. Further, the Commission finds that the possible
increased investor protection offered by the proposed Best Interest
Amendments and the possible operational efficiency proposed
Institutional SMMP Amendments could foster greater faith in the
integrity of the municipal security market, increasing participation in
this market, thereby increase capital formation.
    The Commission also finds that the proposed rule change includes
provisions that help promote efficiency. In particular, the Commission
believes the proposed Best Interest Amendments may improve Broker
Dealers and Bank Dealers' effectiveness in providing retail municipal
recommendations by promoting a uniform standard of suitability
requirements (for example, increasing compliance efficiency for firms
who have both Broker-Dealer and Bank Dealer subsidiaries). The
Commission also notes that the proposed Institutional SMMP Amendment
may improve the operational efficiency of the municipal securities
market. By reintroducing the element of actual control or de facto
control with respect to Institutional SMMP accounts that would trigger
a dealer's quantitative suitability obligation, the Commission finds
that the proposed Institutional SMMP Amendment could eliminate
potentially duplicative analyses undertaken by dealers on behalf of
Institutional SMMPs.
    The Commission received no comment letters on the proposed rule
change.
    For the reasons noted above, the Commission believes that the
proposed rule change is consistent with the Exchange Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\96\ that the proposed rule change (SR-MSRB-2022-02) be,
and hereby is, approved.
---------------------------------------------------------------------------

    \96\ 15 U.S.C. 78s(b)(2).
    \97\ 17 CFR 200.30-3(a)(12).

    For the Commission, pursuant to delegated authority.\97\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-13814 Filed 6-28-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 87, Number 161 (Monday, August 22, 2022)]
[Notices]
[Page 51466]
[FR Doc No: 2022-18134]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meetings

TIME AND DATE: 1:00 p.m. on Thursday, August 25, 2022.

PLACE: The meeting will be held via remote means and/or at the
Commission's headquarters, 100 F Street NE, Washington, DC 20549.

STATUS: This meeting will be closed to the public.

MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners,
the Secretary to the Commission, and recording secretaries will attend
the closed meeting. Certain staff members who have an interest in the
matters also may be present.
    In the event that the time, date, or location of this meeting
changes, an announcement of the change, along with the new time, date,
and/or place of the meeting will be posted on the Commission's website
at https://www.sec.gov.
    The General Counsel of the Commission, or his designee, has
certified that, in his opinion, one or more of the exemptions set forth
in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR
200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10),
permit consideration of the scheduled matters at the closed meeting.
    The subject matter of the closed meeting will consist of the
following topics:
    Institution and settlement of injunctive actions;
    Institution and settlement of administrative proceedings;
    Resolution of litigation claims; and
    Other matters relating to examinations and enforcement proceedings.
    At times, changes in Commission priorities require alterations in
the scheduling of meeting agenda items that may consist of
adjudicatory, examination, litigation, or regulatory matters.

CONTACT PERSON FOR MORE INFORMATION: For further information; please
contact Vanessa A. Countryman from the Office of the Secretary at (202)
551-5400.
    Authority: 5 U.S.C. 552b.

    Dated: August 18, 2022.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-18134 Filed 8-18-22; 11:15 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 69 (Tuesday, April 10, 2018)]
[Notices]
[Pages 15442-15444]
[FR Doc No: 2018-07243]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82992; File No. SR-NYSEAMER-2018-11]

Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend the NYSE
Amex Options Fee Schedule With Respect to the Options Regulatory Fee

April 4, 2018.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on March 23, 2018, NYSE American LLC (the ``Exchange'' or
``NYSE American'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Amex Options Fee Schedule
(``Fee Schedule'') by modifying the description of the Options
Regulatory Fee (``ORF''). The proposed rule change is available on the
Exchange's website at www.nyse.com, at the principal office of the
Exchange, 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 self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to clarify the
description of the ORF. The Exchange charges an ORF in the amount of
$0.0055 per contract side. The proposed rule change does not change the
amount of the ORF, but instead modifies the rule text to clarify how
the ORF is assessed and collected. Currently, the Exchange describes
the ORF as follows:

    The ORF will be assessed on each ATP Holder for all options
transactions, including Mini Options, executed or cleared by the ATP
Holder that are cleared by the OCC in the customer range regardless
of the exchange on which the transaction occurs. The fee is
collected indirectly from ATP Holders through their clearing firms
by the OCC on behalf of NYSE American. Effective December 1, 2012,
an ATP Holder shall not be assessed the fee until it has satisfied
applicable technological requirements necessary to commence
operations on NYSE American. The Exchange may only increase or
decrease the ORF semi-annually, and any such fee change will be
effective on the first business day of February or August. The
Exchange will notify participants via a Trader Update of any change
in the amount of the fee at least 30 calendar days prior to the
effective date of the change.\4\
---------------------------------------------------------------------------

    \4\ See Fee Schedule, Section VII, Regulatory Fees, ORF,
available here, https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf.

    The Exchange proposes to modify this description to more accurately
reflect how the ORF is imposed. Specifically, the ORF is assessed to
each ATP Holder for all options transactions cleared (but not
necessarily executed) by an ATP Holder through the OCC in the customer
range regardless of the exchange on which the transaction occurs. The
ORF is only assessed to ATP Holders that act as the clearing firm for
the transaction, regardless of whether the executing firm (if different
from the clearing firm) is an ATP Holder.\5\ Thus, the Exchange
proposes to delete the words ``executed or'' from the current
description of the ORF and to make clear that the ORF is assessed ``to
each ATP Holder'' on transactions ``that are cleared by the ATP Holder
through the OCC'' and that the ORF is ``collected from ATP Holder
clearing firms by OCC on behalf of NYSE American.'' \6\ The Exchange
also proposes to clarify that it ``uses reports from OCC when assessing
and collecting the ORF.'' \7\ The Exchange believes these changes would
clarify how the ORF is assessed and collected. To illustrate how the
ORF is assessed and collected, the Exchange provides the following set
of scenarios.
---------------------------------------------------------------------------

    \5\ The Exchange uses reports from OCC to determine the identity
of the clearing firm and compares that to the list of ATP Holders
for billing purposes.
    \6\ See proposed Fee Schedule, Section VII, Regulatory Fees,
ORF. In connection with the proposed revisions, the Exchange
proposes to remove as redundant the word ``indirectly'' from the
sentence explaining that the OCC collects the ORF from the ATP
Holder clearing firm. See id.
    \7\ See id. See supra note 5.
---------------------------------------------------------------------------

    Scenario 1:
    Executing (or Give-Up) Firm is not an ATP Holder. The Executing
Firm does not ``give-up'' or ``CMTA'' the transaction to another
clearing firm.\8\
---------------------------------------------------------------------------

    \8\ A CMTA or Clearing Member Trade Assignment is an agreement
by which an investor may enter derivative trades with a limited
number of different brokers and later consolidate these trades with
one brokerage house for clearing.
---------------------------------------------------------------------------

    No ORF Fee is assessed.
    Scenario 2:
    Executing Firm is an ATP Holder. The Executing Firm ``give-ups'' or
``CMTAs'' the transaction to another clearing firm that is not an ATP
Holder.
    No ORF Fee is assessed.
    Scenario 3:
    The Executing (or Give-Up) Firm is an ATP Holder. The Executing
Firm does not ``give-up'' or ``CMTA'' the transaction to another
clearing firm.
    ORF Fee is assessed on the self-clearing Executing Firm.
    Scenario 4:
    The Executing (or Give-Up) Firm is an ATP Holder. The Executing
Firm ``give-ups'' or ``CMTAs'' the transaction to

another clearing firm that is also an ATP Holder.
    ORF Fee is assessed on the CMTA (clearing) firm.
    Scenario 5:
    The Executing (or Give-Up) Firm is not an ATP Holder. The Executing
Firm ``give-ups'' or ``CMTAs'' the transaction to another clearing firm
that is an ATP Holder.
    ORF Fee is assessed on the CMTA (clearing) firm.
* * * * *
    As illustrated above, the Exchange does not assess the ORF on non-
ATP Holders that self-clear transactions, even if the executing firm is
an ATP Holder; the Exchange likewise does not impose the ORF if both
the executing firm and the firm that clears the transaction on its
behalf are non-ATP Holders.\9\
---------------------------------------------------------------------------

    \9\ Although the Exchange believes that its broad regulatory
responsibilities would support applying the ORF to transactions that
are executed (even if not ultimately cleared) by an ATP Holder, the
Exchange only imposes the ORF on transactions ultimately cleared by
ATP Holders at this time. The Exchange's regulatory responsibilities
are the same regardless of whether an ATP Holder enters a
transaction or clears a transaction. The Exchange regularly reviews
all such activities, including monitoring surveillance for position
limit violations, manipulation, front-running, contrary exercise
advice violations and insider trading. These activities span across
multiple exchanges.
---------------------------------------------------------------------------

    The Exchange proposes to modify the Fee Schedule to make clear that
it does not assess the ORF on outbound linkage trades.\10\ ``Linkage
trades'' are tagged in the Exchange's system, so the Exchange can
distinguish them from other trades. A customer order routed to another
exchange results in two customer trades, one from the originating
exchange and one from the recipient exchange. Charging ORF on both
trades could result in double-billing of ORF for a single customer
order, thus the Exchange will not assess ORF on outbound linkage trades
in a linkage scenario.
---------------------------------------------------------------------------

    \10\ See proposed Fee Schedule, Section VII, Regulatory Fees,
ORF.
---------------------------------------------------------------------------

    To further streamline the Fee Schedule, the Exchange also proposes
to delete superfluous and obsolete references to long-past effective
dates. Specifically, the Exchange proposes to delete references to the
effective dates of December 1, 2012 and February 3, 2014, which would
add clarity and transparency to the Fee Schedule.\11\
---------------------------------------------------------------------------

    \11\ See id.
---------------------------------------------------------------------------

    The Exchange notes that the ORF is designed to recover a material
portion of the costs to the Exchange of the supervision and regulation
of ATP Holder Customer transactions, including performing routine
surveillances and investigations, as well as policy, rulemaking,
interpretive, and enforcement activities. The Exchange monitors the
amount of revenue collected from the ORF to ensure that this revenue,
in combination with other regulatory fees and fines, does not exceed
regulatory costs. The Exchange may only increase or decrease the ORF
semi-annually, and any such fee change will be effective on the first
business day of February or August. If the Exchange determines that
regulatory revenues exceed regulatory costs, the Exchange will adjust
the ORF by submitting a fee filing and notifying ATP Holders via Trader
Update at least 30 days prior to the effective date. The Exchange
believes that revenue generated from the ORF, when combined with all of
the Exchange's other regulatory fees and fines, will cover a material
portion of the Exchange's regulatory costs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \12\ of the Act, in general, and
Section 6(b)(4) and (5) \13\ of the Act, in particular, in that it is
designed to provide for the equitable allocation of reasonable dues,
fees, and other charges among its members and other persons using its
facilities and does not unfairly discriminate between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes the proposed changes to the description of
ORF are reasonable, equitable and not unfairly discriminatory because
the changes add clarity and transparency to the Fee Schedule by more
accurately describing how the ORF is assessed and collected. The
proposed change does not alter the operation of the ORF, nor does it
alter the per contract rate of the ORF. The Exchange believes that
specifying that OCC files are used to determine the assessment and
collection of the ORF would add clarity and transparency to the Fee
Schedule.
    The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to opt to not to assess and collect the ORF when neither
the executing firm nor the CMTA (clearing) firm is an ATP Holder
because such entities are not members of the Exchange. Although the
Exchange believes that its broad regulatory responsibilities would
support applying the ORF to transactions that are executed (even if not
ultimately cleared) by an ATP Holder, because its regulatory
responsibilities are the same regardless of whether an ATP Holder
executes a transaction or clears a transaction, at this time the
Exchange imposes the ORF solely on transactions ultimately cleared by
ATP Holders.
    The Exchange believes the ORF is equitable and not unfairly
discriminatory because it is assessed to all ATP Holders on all their
transactions that clear as customer at the OCC. The Exchange believes
it is appropriate to assess the ORF only to transactions that clear as
customer at the OCC because regulating ATP Holder' customer trading
activity is more labor intensive and requires greater expenditure of
human and technical resources than regulating ATP Holders' non-customer
trading activity. The Exchange believes the ORF is designed to be fair
by assessing fees to those ATP Holders that require more Exchange
regulatory services based on the amount of customer options business
they conduct.
    The Exchange believes it is reasonable, equitable and
nondiscriminatory to not impose the ORF on outbound linkage trades.
Linkage trades'' are tagged in the Exchange's system, so the Exchange
can distinguish them from other trades. A customer order routed to
another exchange results in two customer trades, one from the
originating exchange and one from the recipient exchange. Charging ORF
on both trades could result in double-billing of ORF for a single
customer order, thus the Exchange will not assess ORF on outbound
linkage trades in a linkage scenario.
    The Exchange believes that the proposal deleting outdated reference
to long-past effective dates and removing the word ``indirectly'' is
reasonable as it would streamline the Fee Schedule by removing
superfluous language thereby making the Fee Schedule easier for market
participants to navigate.
    The ORF is designed to recover a material portion of the costs to
the Exchange of the supervision and regulation of ATP Holder customer
options business, including performing routine surveillances and
investigations, as well as policy, rulemaking, interpretive, and
enforcement activities. The Exchange monitors the amount of revenue
collected from the ORF to ensure that this revenue, in combination with
other regulatory fees and fines, does not exceed regulatory costs. The
Exchange has designed the ORF to generate revenues that, when combined
with all of the Exchange's other regulatory fees, would be less than or
equal to the Exchange's regulatory costs, which is consistent with the
view of the Securities and Exchange Commission (``Commission'') that
regulatory fees be

used for regulatory purposes and not to support the Exchange's business
side. In this regard, the Exchange believes that the ORF is reasonable.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended to address any competitive issues but rather to provide
more clarity and transparency regarding how the Exchange assesses and
collects the ORF. The Exchange believes any burden on competition
imposed by the proposed rule change is outweighed by the need to help
the Exchange adequately fund its regulatory activities to ensure
compliance with the Exchange Act.

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

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule
19b-4 \15\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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 No. SR-NYSEAMER-2018-11 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File No. SR-NYSEAMER-2018-11. 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 Exchange. 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 No. SR-NYSEAMER-2018-11, and should be submitted
on or before May 1, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-07243 Filed 4-9-18; 8:45 am]
 BILLING CODE 8011-01-P