[Federal Register Volume 84, Number 219 (Wednesday, November 13, 2019)]
[Notices]
[Pages 61660-61670]
[FR Doc No: 2019-24601]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87478; File No. SR-MSRB-2019-10]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Amendment No. 2 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1 and Amendment No. 2, To Amend and Restate the MSRB's
August 2, 2012 Interpretive Notice Concerning the Application of Rule
G-17 to Underwriters of Municipal Securities

November 6, 2019.

I. Introduction

    On August 1, 2019, 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 (``Exchange Act'' or
``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change (the
``original proposed rule change'') to amend and restate the MSRB's
August 2, 2012 interpretive notice concerning the application of MSRB
Rule G-17 to underwriters of municipal securities (the ``2012
Interpretive Notice'').\3\ The original proposed rule change was
published for comment in the Federal Register on August 9, 2019.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The 2012 Interpretive Notice was approved by the SEC on May
4, 2012 and became effective on August 2, 2012. See Release No. 34-
66927 (May 4, 2012); 77 FR 27509 (May 10, 2012) (File No. SR-MSRB-
2011-09); and MSRB Notice 2012-25 (May 7, 2012). The 2012
Interpretive Notice is available here.
    \4\ Exchange Act Release No. 86572 (Aug. 5, 2019), 84 FR 39646
(Aug. 9, 2019) (``Notice of Filing''). The comment period closed on
August 30, 2019.
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    The Commission received three comment letters in response to the
original proposed rule change.\5\ On September 10, 2019, the MSRB
granted an extension of time for the Commission to act on the filing
until November 7, 2019. On October 7, 2019, the MSRB responded to the
comments \6\ and filed Amendment No. 1 to the original proposed rule
change (``Amendment No. 1'').\7\ The Commission published notice of
Amendment No. 1 in the Federal Register on October 15, 2019.\8\ In
response to Amendment No. 1, the Commission received three comment
letters.\9\ On October 31, 2019, the MSRB submitted a response to
comments received on Amendment No. 1 \10\ and

filed Amendment No. 2 to the original proposed rule change (``Amendment
No. 2'').\11\ This order approves the original proposed rule change, as
modified by Amendment No. 1 and Amendment No. 2 (as so modified, the
``proposed rule change''), on an accelerated basis.
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    \5\ See Letter to Secretary, Commission, from Tamara K. Salmon,
Associate General Counsel, Investment Company Institute dated Aug.
26, 2019 (the ``ICI Letter''), Letter to Secretary, Commission, from
Leslie M. Norwood, Managing Director and Associate General Counsel,
Securities Industry and Financial Markets Association, dated August
30, 2019 (the ``First SIFMA Letter''); Letter to Secretary,
Commission, from Susan Gaffney, Executive Director, National
Association of Municipal Advisors, dated August 30, 2019 (the
``First NAMA Letter'').
    \6\ See Letter to Secretary, Commission, from Gail Marshall,
Chief Compliance Officer, MSRB, dated October 7, 2019 (the ``First
Response Letter''), available at https://www.sec.gov/comments/sr-msrb-2019-10/srmsrb201910-6261133-193028.pdf.
    \7\ Amendment No. 1 is available at http://msrb.org/~/media/
Files/SEC-Filings/2019/MSRB-2019-10-A-1.ashx?.
    \8\ See Exchange Act Release No. 87255 (October 8, 2019), 84 FR
55192 (October 15, 2019) (the ``Notice of Amendment No. 1''). The
comment period closed on October 29, 2019.
    \9\ See Letter to Secretary, Commission, from Susan Gaffney,
Executive Director, National Association of Municipal Advisors,
dated October 29, 2019 (the ``Second NAMA Letter''); Letter to
Secretary, Commission, from Leslie M. Norwood, Managing Director and
Associate General Counsel, Securities Industry and Financial Markets
Association, dated October 29, 2019 (the ``Second SIFMA Letter'');
Letter to Secretary, Commission, from Michael Nicholas, Chief
Executive Officer, Bond Dealers of America, dated October 29, 2019
(the ``BDA Letter'').
    \10\ See Letter to Secretary, Commission, from Gail Marshall,
Chief Compliance Officer, MSRB, dated October 31, 2019 (the ``Second
Response Letter'' and, together with the First Response Letter, the
``MSRB Response Letters''), available at https://www.sec.gov/comments/sr-msrb-2019-10/srmsrb201910-6381148-197768.pdf.
    \11\ Amendment No. 2 is available at http://msrb.org/~/media/
Files/SEC-Filings/2019/MSRB-2019-10-A-2.ashx?.
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II. Description of Proposed Rule Change

    As described more fully in the Notice of Filing, Amendment No. 1,
and Amendment No. 2, the MSRB stated that the purpose of the proposed
rule change is to update and streamline certain obligations specified
in the 2012 Interpretive Notice (the 2012 Interpretive Notice, so
amended by the proposed rule change, is referred to herein as the
``Revised Interpretive Notice'') and, thereby, benefit issuers and
underwriters of municipal securities alike by reducing the burdens
associated with those obligations, including the obligation of
underwriters to make, and the burden on issuers to acknowledge and
review, written disclosures that itemize risks and conflicts that are
unlikely to materialize during the course of a transaction, not unique
to a given transaction or a particular underwriter where a syndicate is
formed, and/or otherwise duplicative.\12\
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    \12\ See Notice of Filing.
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A. Incorporation of Subsequent MSRB Guidance Into Revised Interpretive
Notice

    The MSRB stated that the proposed rule change would integrate
certain concepts (with revisions as described in the Notice of Filing,
Amendment No. 1, and Amendment No. 2) from (i) the MSRB's
implementation guidance dated July 18, 2012 concerning the 2012
Interpretive Notice (the ``Implementation Guidance'') \13\ and (ii) the
regulatory guidance dated March 25, 2013 answering certain frequently
asked questions regarding the 2012 Interpretive Notice (the ``FAQs'')
\14\ into the Revised Interpretive Notice, thereby consolidating the
Implementation Guidance, FAQs, and the Revised Interpretive Notice into
a single publication.\15\
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    \13\ See MSRB Notice 2012-38 (July 18, 2012).
    \14\ See MSRB Notice 2013-08 (Mar. 25, 2013).
    \15\ See Notice of Filing.
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i. Applicability of the Revised Interpretive Notice to the Continuous
Offering of Municipal Fund Securities
    The MSRB noted that the Implementation Guidance makes clear that
the 2012 Interpretive Notice applies not only to primary offerings of
new issues of municipal bonds and notes by an underwriter, but also to
a dealer serving as primary distributor (but not to dealers serving
solely as selling dealers) in a continuous offering of municipal fund
securities, such as interests in 529 savings plans.\16\ In the original
proposed rule change, the MSRB incorporated this concept from the
Implementation Guidance, adding a reference to Achieving a Better Life
Experience (ABLE) programs.\17\ In response to concerns raised in the
comments to the original proposed rule change, the MSRB proposed in
Amendment No. 1 and Amendment No. 2 to modify the proposed rule change
to state, ``[t]his notice does not apply to a dealer acting as a
primary distributor in a continuous offering of municipal fund
securities.'' \18\ Thus, the MSRB stated, the original proposed rule
change, as revised by Amendment No. 1 and Amendment No. 2, makes clear
that the specific fair dealing duties outlined in the proposed rule
change--which articulate the delivery of certain disclosures at
particular times during the course of an underwriting transaction--
would not be applicable to the situations of a dealer serving as a
primary distributor in a continuous offering of municipal fund
securities.\19\ The MSRB noted that Amendment No. 1 did not revise the
portion of the text of the original proposed rule change indicating
that the fair dealing obligations outlined in the interpretive notice
may serve as one of many bases for dealers acting in a capacity not
specifically addressed therein--such as a dealer serving as a primary
distributor in a continuous offering of municipal fund securities--to
determine how to establish appropriate policies and procedures for
ensuring it meets its fair dealing obligations under Rule G-17.\20\
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    \16\ Id.
    \17\ Id.
    \18\ See Amendment No. 1, Amendment No. 2.
    \19\ See Amendment No. 1.
    \20\ Id.
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ii. Applicability of the Revised Interpretive Notice to a Primary
Offering That Is Placed With Investors by a Placement Agent
    The MSRB noted that the Implementation Guidance provides that no
type of underwriting is wholly excluded from the application of the
2012 Interpretive Notice, including certain private placement
activities.\21\ The MSRB stated that the proposed rule change would
incorporate this concept from the Implementation Guidance into the
Revised Interpretive Notice with certain revisions, as discussed in
further detail in the Notice of Filing and Amendment No. 1.\22\
Pursuant to Amendment No. 1, the MSRB added language to the Revised
Interpretive Notice clarifying that the disclosures delivered by an
underwriter to an issuer must not be inaccurate or misleading, and that
nothing in the Revised Interpretive Notice should be construed as
requiring an underwriter to make a disclosure to an issuer that is
false.\23\
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    \21\ See Notice of Filing.
    \22\ See Notice of Filing, Amendment No. 1.
    \23\ See Amendment No. 1.
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    In addition, the MSRB stated that the proposed rule change would
update the 2012 Interpretive Notice by incorporating supplemental
language into the Revised Interpretive Notice intended to harmonize it
with the Commission's adoption of its permanent rules regarding the
registration and record-keeping requirements applicable to municipal
advisors, and related exclusions and exceptions, which went into effect
after the effective date of the 2012 Interpretive Notice.\24\ The MSRB
stated that it believes that the guidance provided by this harmonizing
language is in keeping with the existing references included in the
2012 Interpretive Notice and its guidance regarding the existence of
other relevant or similar legal obligations that could have a bearing
on an underwriter's fair dealing obligations under Rule G-17.\25\
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    \24\ See Notice of Filing.
    \25\ Id.
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iii. Statements Regarding Negotiated Offerings and Defining Negotiated
and Competitive Offerings for Purposes of the Revised Interpretive
Notice
    The MSRB stated that by its terms, and as presently stated in the
Implementation Guidance, the 2012 Interpretive Notice applies primarily
to negotiated offerings of municipal securities, with many of its
provisions not applicable to competitive offerings.\26\ The MSRB noted
that the Implementation Guidance clarified what constitutes a
negotiated offering for purposes of the 2012 Interpretive Notice, and
the MSRB stated that the proposed rule change would incorporate this
language into the Revised Interpretive Notice.\27\
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    \26\ Id.
    \27\ Id.

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iv. Applicability of the Revised Interpretive Notice to Persons Other
Than Issuers of Municipal Securities
    The MSRB noted that the 2012 Interpretive Notice outlines the
duties that a dealer owes to an issuer of municipal securities when the
dealer underwrites a new issuance, and that the Implementation Guidance
provides that the 2012 Interpretive Notice ``does not set out the
underwriter's fair dealing obligations to other parties involved with a
municipal securities financing, including a conduit borrower.'' \28\
The MSRB stated that the proposed rule change would incorporate the
language from the Implementation Guidance into the Revised Interpretive
Notice with conforming revisions, stating ``[t]his notice does not set
out the underwriter's fair-practice duties to other parties to a
municipal securities financing (e.g., conduit borrowers).'' \29\
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    \28\ Id.
    \29\ Id.
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v. Statements Regarding Underwriters' Discouragement of the Engagement
of a Municipal Advisor
    The MSRB noted that the Implementation Guidance further clarifies
the scope of the prohibition included in the 2012 Interpretive Notice,
affirming that an underwriter must not recommend that the issuer not
retain a municipal advisor.\30\ The MSRB stated that the proposed rule
change would incorporate this concept into the Revised Interpretive
Notice certain revisions, as more fully discussed in the Notice of
Filing, providing that ``Underwriters also must not recommend issuers
not retain a municipal advisor. Accordingly, underwriters may not
discourage issuers from using a municipal advisor or otherwise imply
that the hiring of a municipal advisor would be redundant because the
sole underwriter or underwriting syndicate can provide the services
that a municipal advisor would.'' \31\
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    \30\ Id.
    \31\ Id.
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vi. Statements Regarding Third-Party Payments
    The MSRB noted that the Implementation Guidance clarifies the
obligation of underwriters to disclose certain third-party payments, as
well as other payments, values or credits received by an
underwriter.\32\ The MSRB stated that proposed rule change would
incorporate the language from the Implementation Guidance into the
Revised Interpretive Notice, with certain revisions, including the
removal of language regarding ``normal course of business'' payments
that the MSRB believed was redundant, as more fully described in the
Notice of Filing.\33\
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    \32\ Id.
    \33\ Id.
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vii. Need for Each Underwriter in a Syndicate To Deliver Dealer-
Specific Conflicts of Interest When Applicable
    The MSRB noted that the FAQs clarify what disclosures may be
effected by a syndicate manager on behalf of co-managing underwriters
in the syndicate. The MSRB stated that the proposed rule change would
incorporate the relevant language from the FAQs into the Revised
Interpretive Notice with certain revisions, including the technical
clarification that such disclosures apply to ``actual material
conflicts of interest'' and ``potential material conflicts of
interest'' in order to make the statements consistent with related
amendments in the proposed rule change, as more fully described in the
Notice of Filing.\34\
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    \34\ Id.
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viii. Statements Regarding the Timing for the Delivery of Certain
Disclosures
    The MSRB noted that the Implementation Guidance and FAQs clarify
the timing for the delivery of the disclosures under the 2012
Interpretive Notice.\35\ The MSRB stated that the proposed rule change
would incorporate these timing concepts from the Implementation
Guidance and FAQs into the Revised Interpretive Notice with certain
revisions (e.g., by utilizing the Revised Interpretive Notice's defined
terms of ``standard disclosure,'' ``dealer-specific disclosures,'' and
``transaction-specific disclosures'').\36\
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    \35\ Id.
    \36\ Id.
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    The MSRB stated that the proposed rule change also would
incorporate the concept that the timelines are defined to ensure that
underwriters act promptly to deliver disclosures in light of all the
relevant facts and circumstances, but are not ``intended to establish
strict, hair-trigger tripwires resulting in mere technical rule
violations.'' \37\
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    \37\ Id.
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ix. Statements Regarding Whether Underwriters May Rely on Certain
Representations of Issuer Officials
    The MSRB noted that the FAQs clarify the circumstances under which
an underwriter may rely on the representations of issuer officials.\38\
The MSRB stated that the proposed rule change would incorporate this
language from the FAQs into the Revised Interpretive Notice with
clarifying language regarding the relevance of facts discovered during
the course of an underwriter's due diligence, including diligence
related to the transaction generally or pursuant to an underwriter's
own determination of whether it has any actual material conflicts of
interest or potential material conflicts of interest.\39\ Specifically,
the Revised Interpretive Notice supplements the existing statement from
the FAQs with language intended to clarify that if an underwriter
becomes aware of a fact through the normal course of its diligence that
would lead it to doubt a representation of an issuer official, such
information may rise to the level of a red flag that would not allow
the underwriter to reasonably rely on the written representation.\40\
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    \38\ Id.
    \39\ Id.
    \40\ Id.
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x. Statements Regarding an Underwriter Having a Reasonable Basis for
Its Representations and Other Material Information Provided to Issuers
    The MSRB noted that the 2012 Interpretive Notice states that
underwriters must ``have a reasonable basis for representations and
other material information provided to issuers'' and clarifies that the
obligation ``extends to the reasonableness of assumptions underlying
the material information being provided,'' and that the Implementation
Guidance further contextualizes this reasonable basis standard.\41\ The
MSRB stated that the proposed rule change would incorporate this
language from the Implementation Guidance into the Revised Interpretive
Notice with certain revisions, including removing certain language
regarding an underwriter's use of assumptions, which the MSRB believed
was potentially confusing and redundant, as further described in the
Notice of Filing.\42\
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    \41\ Id.
    \42\ Id.
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xi. Statements Regarding Whether a Particular Recommended Financing
Structure or Product Is Complex
    The MSRB noted that the 2012 Implementation Guidance contains a
description of a ``complex municipal securities financing'' that is
further clarified in the Implementation Guidance.\43\ The MSRB further
noted the 2012 Interpretive Notice then provides a non-exclusive,
illustrative list of examples of new issue structures

that constitute a complex municipal securities financing.\44\
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    \43\ Id.
    \44\ Id.
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    The MSRB stated that the proposed rule change would incorporate
this language from the Implementation Guidance into the Revised
Interpretive Notice with conforming revisions and an update to the
illustrative, non-exclusive list of interest rate benchmarks to include
the Secured Overnight Financing Rate (SOFR).\45\ The MSRB stated that
it believes this edit is a necessary update to ensure that the Revised
Interpretive Notice would reflect current market practices.\46\
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    \45\ Id.
    \46\ Id.
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xii. Statements Regarding the Specificity of Disclosures
    The MSRB noted that the 2012 Interpretive Notice provides that an
underwriter of a negotiated issue that recommends a complex municipal
securities transaction or product to an issuer has an obligation to
disclose all financial material risks known to the underwriter and
reasonably foreseeable at the time of the disclosure, financial
characteristics, incentives, and conflicts of interest regarding the
transaction or product.\47\ The MSRB further noted that the
Implementation Guidance provided clarification and additional guidance
with respect to this obligation, as further described in the Notice of
Filing.\48\ The MSRB stated that the proposed rule change would
incorporate the language from the Implementation Guidance into the
Revised Interpretive Notice with certain revisions as further described
in the Notice of Filing and Amendment No. 1, including the removal of
the statement regarding how such disclosures might assist issuers.\49\
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    \47\ Id.
    \48\ Id.
    \49\ See Notice of Filing, Amendment No. 1. See also ``Amending
the Nature, timing and Manner of Disclosures--Assignment of
responsibility for the Standard Disclosures and Transaction-Specific
Disclosures,'' infra.
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xiii. Statements Regarding Profit Sharing Arrangements
    The MSRB noted that the 2012 Interpretive Notice states that,
``[a]rrangements between the underwriter and an investor purchasing new
issue securities from the underwriter according to which profits
realized from the resale by such investor of the securities are
directly or indirectly split or otherwise shared with the underwriter
also would, depending on the facts and circumstances (including in
particular if such resale occurs reasonably close in time to the
original sale by the underwriter to the investor), constitute a
violation of the underwriter's fair dealing obligation under Rule G-
17.'' \50\ The MSRB stated that the proposed rule change would
incorporate into the Revised Interpretive Notice additional language
from the Implementation Guidance, which reads, in relevant part,
``[u]nderwriters should be mindful that, depending on the facts and
circumstances, such an arrangement may be inferred from a purposeful
but not otherwise justified pattern of transactions or other course of
action, even without the existence of a formal written agreement.''
\51\
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    \50\ See Notice of Filing.
    \51\ Id.
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B. Amending the Nature, Timing, and Manner of Disclosures

    The MSRB stated that the proposed rule change would define certain
categories of underwriter disclosures and assign the responsibility for
the delivery of certain disclosures to the syndicate manager in
circumstances where a syndicate is formed, as described below and as
further described in the Notice of Filing and Amendment No. 1.\52\
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    \52\ See Notice of Filing, Amendment No. 1.
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i. Definitions of Certain Categories of Underwriter Disclosures
    The MSRB stated that the proposed rule change would define the
following terms in order to delineate a dealer's various fair dealing
obligations under the Revised Interpretive Notice: ``standard
disclosures'' as collectively referring to the disclosures concerning
the role of an underwriter and an underwriter's compensation; ``dealer-
specific disclosures'' as collectively referring to the disclosures
concerning an underwriter's actual material conflicts of interest and
potential material conflicts of interest; and ``transaction-specific
disclosures'' as collectively referring to the disclosures concerning
the material aspects of financing structures that the underwriter
recommends.\53\
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    \53\ See Notice of Filing.
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ii. Assignment of Responsibility for the Standard Disclosures and
Transaction-Specific Disclosures
    The MSRB noted that the 2012 Interpretive Notice states that a
syndicate manager is permitted, but not required, to make the standard
disclosures and the transaction-specific disclosures on behalf of the
other underwriters in the syndicate.\54\ The MSRB stated that the
amendments in the original proposed rule change would obligate only the
syndicate manager \55\ of a syndicate--or sole underwriter, as the case
may be--to make the standard disclosures and transaction-specific
disclosures and would eliminate any obligation of other co-managing
underwriters in the syndicate to make the standard disclosures and
transaction-specific disclosures.\56\ In response to concerns raised in
the comments to the original proposed rule change, the MSRB proposed in
Amendment No. 1 to modify the original proposed rule change to state
that the underwriter making a recommendation to an issuer regarding a
financing structure or product, including, when applicable, a Complex
Municipal Securities Financing Recommendation,\57\ has the fair dealing
obligation to deliver the applicable transaction-specific
disclosures.\58\ Consequently, the MSRB stated, pursuant to Amendment
No. 1, when the syndicate manager (or any other underwriter in the
syndicate) is not the underwriter making the recommendation of a
financing structure or product to the issuer, such underwriter does not
have a fair dealing obligation under the proposed rule change to
deliver the transaction-specific disclosures with respect to such
financing structure or product.\59\
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    \54\ Id.
    \55\ As defined in Exhibit 5 to Amendment No. 2.
    \56\ See Notice of Filing.
    \57\ As defined in Exhibit 5 to Amendment No. 2.
    \58\ See Amendment No. 1.
    \59\ Id.
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    In addition, the MSRB stated that the proposed rule change provides
that any disclosures delivered by a syndicate manager prior to or
concurrent with the formation of a syndicate would not need to be
identified as delivered in the capacity of the syndicate manager or
otherwise redelivered ``on behalf'' of the syndicate.\60\
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    \60\ See Notice of Filing.
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    The MSRB further noted that, pursuant to the proposed rule change,
each member of the syndicate would remain responsible for ensuring the
delivery of any dealer-specific disclosures if, but only if, such
syndicate member had actual material conflicts of interest or potential
material conflicts of interest that must be disclosed.\61\
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    \61\ Id.
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iii. Separate Identification of the Standard Disclosures
    The MSRB noted that the 2012 Interpretive Notice currently permits
the delivery of omnibus disclosure documents, in which the standard

disclosures need not be separately identified from the transaction-
specific disclosures and dealer-specific disclosures.\62\ The proposed
rule change would require the separate identification and formatting of
the standard disclosures (i.e., disclosures concerning the role of the
underwriter and the underwriter's compensation) from the transaction-
specific disclosure and the dealer-specific disclosures.\63\
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    \62\ Id.
    \63\ Id.
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iv. Meaning of ``Recommendation'' for Purposes of Disclosures Related
to Complex Municipal Securities Financings
    The MSRB noted that the 2012 Interpretive Notice provides that an
underwriter in a negotiated offering that recommends a complex
municipal securities financing to an issuer must disclose the material
financial characteristics of the complex municipal securities
financing, as well as the material financial risks of the financing
that are known to the underwriter and reasonably foreseeable at the
time of the disclosure (a ``complex municipal securities financing
disclosure'').\64\ As the MSRB further noted, the Implementation
Guidance provides that the requirement to provide a complex municipal
securities financing disclosure is triggered if: the new issue is sold
in a negotiated offering; the new issue is a complex municipal
securities financing; and such financing was recommended by the
underwriter.\65\ The MSRB stated that these aspects of the 2012
Interpretive Notice would remain applicable under the Revised
Interpretive Notice.\66\
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    \64\ Id.
    \65\ Id.
    \66\ Id.
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    However, the MSRB noted that the 2012 Interpretive Notice does not
define the term ``recommendation'' for purposes of this
requirement.\67\ The MSRB stated that it believes it is important to
provide this clarification to facilitate dealer compliance with the
proposed rule change. Therefore, as further described in the Notice of
Filing, the MSRB stated that the proposed rule change would clarify
that a communication by an underwriter is a ``recommendation'' that
triggers the obligation to deliver a complex municipal securities
financing disclosure if--given its content, context, and manner of
presentation -- the communication reasonably would be viewed as a call
to action to engage in a complex municipal securities financing or
reasonably would influence an issuer to engage in a particular complex
municipal securities financing.\68\
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    \67\ Id.
    \68\ Id.
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v. ``Reasonably Likely'' Standard for Disclosure of Potential Material
Conflicts of Interest
    The MSRB noted that the 2012 Interpretive Notice currently requires
the underwriter to disclose to the issuer any actual material conflicts
of interest and any potential material conflicts of interest, and that
the Implementation Guidance provides guidance as to when such
obligation is triggered.\69\ The MSRB stated that these aspects of the
2012 Interpretive Notice would remain applicable under the Revised
Interpretive Notice. However, the MSRB noted, the proposed rule change
provides that an underwriter's potential material conflict of interest
must be disclosed as part of the dealer-specific disclosures if, but
only if, the potential material conflict of interest is ``reasonably
likely'' to mature into an actual material conflict of interest during
the course of that specific transaction.\70\ The MSRB noted that the
proposed rule change will not diminish an underwriter's fair dealing
obligation to update, or otherwise supplement, its dealer-specific
disclosures in circumstances when a previously undisclosed potential
conflict of interest later ripens into an actual material conflict of
interest.\71\
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    \69\ Id.
    \70\ Id.
    \71\ Id.
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vi. Underwriters Are Not Obligated To Provide Written Disclosure of
Conflicts of Other Parties
    As the MSRB noted, the 2012 Interpretive Notice requires
underwriters to provide issuers with certain standard disclosures,
dealer-specific disclosures, and transaction-specific disclosures, when
and if applicable. By their respective definitions, the standard
disclosures cover generic conflicts of interest that could apply to any
underwriter in any underwriting; the dealer-specific disclosures are
the actual material conflicts of interest and potential material
conflicts of interest generally unique to a specific underwriter; and
the transaction-specific disclosures relate to the specific financing
structure recommended by an underwriter.\72\ The MSRB stated that the
proposed rule change would expressly state that underwriters are not
required to make any written disclosures on the part of issuer
personnel or any other parties to the transaction as part of the
standard disclosures, dealer-specific disclosures, or the transaction-
specific disclosures.\73\
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    \72\ Id.
    \73\ Id.
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vii. Disclosures Must Be ``Clear and Concise''
    The MSRB noted that the 2012 Interpretive Notice currently requires
disclosures to be ``designed to make clear to such official the subject
matter of such disclosures and their implications for the issuer.''
\74\ The MSRB stated that the proposed rule change would provide that
an underwriter's disclosures must be delivered in a ``clear and
concise'' manner.\75\
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    \74\ Id.
    \75\ Id.
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viii. Definition of Municipal Entity
    The MSRB noted that the 2012 Interpretive Notice currently provides
a definition of ``municipal entity'' that references Section 15B(e)(8)
under the Exchange Act.\76\ In light of the Commission's definition
contained in Exchange Act Rule 15Ba1-1 \77\ and the MSRB's definition
of ``municipal entity'' as used under Rule G-42, both of which were
adopted after the publication of the 2012 Interpretive Notice, the MSRB
stated that the proposed rule change would incorporate a specific
reference to this rule definition, in addition to the general statutory
definition, to avoid any confusion about the scope of the Revised
Interpretive Notice and to promote harmonization with Exchange Act Rule
15Ba1-1 and Rule G-42.\78\
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    \76\ Id.
    \77\ See Registration of Municipal Advisors, Release No. 34-
70462 (September 20, 2013), 78 FR 67467 (hereinafter, the ``MA Rule
Adopting Release'') (November 12, 2013) (available at http://www.sec.gov/rules/final/2013/34-70462.pdf).
    \78\ See Notice of Filing.
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C. Additional Standard Disclosure Regarding the Engagement of Municipal
Advisors

    The MSRB noted that the 2012 Interpretive Notice currently requires
an underwriter to make five discrete statements regarding the
underwriter's role as part of the standard disclosures, including a
disclosure that, ``unlike a municipal advisor, the underwriter does not
have a fiduciary duty to the issuer under the federal securities laws
and is, therefore, not required by federal law to act in the best
interest of the issuer without regard to its own or other interests.''
\79\ The MSRB stated that the proposed rule change would incorporate

a new standard disclosure that ``the issuer may choose to engage the
services of a municipal advisor with a fiduciary obligation to
represent the issuer's interests in the transaction.'' \80\
---------------------------------------------------------------------------

    \79\ Id.
    \80\ Id.
---------------------------------------------------------------------------

D. Permit Email Read Receipt To Serve as Issuer Acknowledgement

    The MSRB noted that the 2012 Interpretive Notice currently requires
underwriters to attempt to receive written acknowledgement of receipt
by the official of the issuer other than by evidence of automatic email
receipt.\81\ The MSRB stated that the proposed rule change would permit
an email read receipt to serve as the issuer's acknowledgement under
the Revised Interpretive Notice.\82\ The proposed rule change would
define the term ``email read receipt'' to mean ``an automatic response
generated by a recipient issuer official confirming that an email has
been opened.'' The MSRB stated that it believes that this proposed
change will not compromise issuer protection, because the proposed rule
change would require the email read receipt to come from an issuer
official that is not party to a conflict, based on the underwriter's
knowledge, and either has been specifically identified by the issuer to
receive such disclosure communications or, in the absence of such
specific identification, is an issuer official who the underwriter
reasonably believes has the authority to bind the issuer by contract
with the underwriter. The MSRB further stated that the proposed rule
change would also clarify that, ``[w]hile an email read receipt may
generally be an acceptable form of an issuer's written acknowledgement
under this notice, an underwriter, may not rely on such an email read
receipt as an issuer's written acknowledgement where such reliance is
unreasonable under all of the facts and circumstances, such as where
the underwriter is on notice that the issuer official to whom the email
is addressed has not in fact received or opened the email.'' \83\
---------------------------------------------------------------------------

    \81\ Id.
    \82\ Id.
    \83\ Id.
---------------------------------------------------------------------------

E. Other Technical and Conforming Amendments

    The MSRB stated that the proposed rule change would make certain
other technical and conforming changes to the proposed rule change, as
described in detail in the Notice of Filing, Amendment No. 1, and
Amendment No. 2.\84\
---------------------------------------------------------------------------

    \84\ See Notice of Filing, Amendment No. 1, Amendment No. 2.
---------------------------------------------------------------------------

    In the Notice of Filing, the MSRB stated that it will publish a
regulatory notice within 90 days of the publication of approval of the
proposed rule change in the Federal Register, and such notice will
specify the compliance date for the amendments described in the
proposed rule change, which in any case shall be not less than 90 days,
nor more than one year, following the date of the notice establishing
such compliance date.\85\ The MSRB is requesting accelerated approval
of Amendment No. 1 and Amendment No. 2.\86\
---------------------------------------------------------------------------

    \85\ See Notice of Filing.
    \86\ See Amendment No. 1, Amendment No. 2.
---------------------------------------------------------------------------

III. Summary of Comments Received and MSRB's Responses to Comments

    As noted previously, the Commission received three comment letters
in response to the Notice of Filing and three comment letters in
response to Amendment No. 1. The MSRB responded to the comment letters
on the Notice of Filing in its First Response Letter,\87\ and the MSRB
responded to the comment letters on Amendment No. 1 in its Second
Response Letter.\88\ One commenter expressed its support for the
original proposed rule change \89\ and for Amendment No. 1.\90\
---------------------------------------------------------------------------

    \87\ See First Response Letter.
    \88\ See Second Response Letter.
    \89\ See First NAMA Letter.
    \90\ See Second NAMA Letter.
---------------------------------------------------------------------------

A. Application to Underwriters of Municipal Fund Securities

    In the original proposed rule change, the MSRB proposed to revise
the 2012 Interpretive Notice to incorporate existing language from the
Implementation Guidance clarifying the application of the notice ``to a
dealer serving as a primary distributor (but not to dealers serving
solely as selling group members) in a continuous offering of municipal
fund securities, such as interests in 529 savings plans and Achieving a
Better Life Experience (ABLE) programs.'' \91\ In response to the
Notice of Filing, one commenter requested that the MSRB revise the
original proposed rule change to further ``distinguish the disclosure
required of 529 underwriters from those required of bond offering
underwriters'' and recommended specific revisions in this regard.\92\
For example, the commenter requested that the standard disclosures
concerning the underwriter's role under the original proposed rule
change allow such disclosures to be amended ``to the extent applicable
to the nature of the relationship with the issuer.'' \93\
---------------------------------------------------------------------------

    \91\ See Notice of Filing.
    \92\ See ICI Letter.
    \93\ Id.
---------------------------------------------------------------------------

    The MSRB responded that it believes there is merit to the
commenter's view that the proposed rule change ``should provide
additional guidance regarding its application to underwriters of 529
plans,'' but that the MSRB did not believe incorporating the specific
revisions proposed by the commenter would be prudent because such
revisions may reduce the clarity of the disclosure obligations
applicable to other underwriters and, thereby, reduce the overall
clarity of the Revised Interpretive Notice.\94\ The MSRB further stated
that it believes that the commenter's comments regarding the need to
provide more clarity in this regard would be better addressed in an
interpretation or other guidance separately issued under Rule G-17 that
more narrowly considers the fair dealing obligations of dealers serving
as primary distributors in a continuous offering of municipal fund
securities.\95\
---------------------------------------------------------------------------

    \94\ See First Response Letter.
    \95\ Id.
---------------------------------------------------------------------------

    Consequently, rather than incorporating the specific text proposed
by the commenter, the MSRB, in Amendment No. 1 and Amendment No. 2,
incorporated a revision to the original proposed rule change that, the
MSRB stated, would strike the relevant text incorporated from the
Implementation Guidance, which, as filed, would clarify the application
of the original proposed rule change to the circumstances of a
continuous offering of municipal fund securities.\96\ The proposed rule
change, as amended by Amendment No.1 and Amendment No. 2, would replace
this language with a statement that ``[t]his notice does not apply to a
dealer acting as a primary distributor in a continuous offering of
municipal fund securities.'' \97\ The MSRB further states that it
intends to make clear that the specific fair practice duties outlined
in the Revised Interpretive Notice articulating the delivery of certain
disclosures at particular times during the course of an underwriting
transaction would not be applicable to the situations of a dealer
serving as a primary distributor in a continuous offering of municipal
fund securities.\98\
---------------------------------------------------------------------------

    \96\ Id.
    \97\ Id.
    \98\ Id.
---------------------------------------------------------------------------

B. Delivery of Complex Municipal Securities Financing Disclosures

    In response to the Notice of Filing, one commenter expressed
concern that the text of the original proposed rule change did not
identify ``who needs to provide transaction specific disclosures for a
swap recommendation if not made

by the syndicate manager or sole manager.'' \99\ This commenter
encouraged the MSRB to amend the original proposed rule change to make
clear that ``the duty to provide such disclosures should remain with
the underwriter or dealer providing or recommending the derivatives,
even after a syndicate is formed.'' \100\ The commenter stated that
``recommendations on derivatives require specialized knowledge and . .
. in this case, the underwriter or dealer making the recommendation and
otherwise providing the derivative product be responsible for making
the appropriate transaction-specific disclosures on the material
aspects of this financing structure to the issuer.'' \101\
---------------------------------------------------------------------------

    \99\ See First SIFMA Letter.
    \100\ Id.
    \101\ Id.
---------------------------------------------------------------------------

    The MSRB stated that it believes that there is merit to this point
and agreed with the commenter's suggestion that the original proposed
rule change should be amended to clarify in the amended revised
interpretive notice that, except in limited circumstances, the
underwriter making a financing recommendation to an issuer has a fair
dealing obligation to deliver the requisite transaction-specific
disclosures.\102\ More specifically, the MSRB agreed with the
commenter's view that the duty to provide a complex municipal
securities financing disclosure generally should remain with the dealer
``recommending'' a financing structure and/or ``providing'' a specific
product within that structure (such as a derivative product), ``even
after the syndicate is formed.'' \103\
---------------------------------------------------------------------------

    \102\ See First Response Letter.
    \103\ Id.
---------------------------------------------------------------------------

    Accordingly, pursuant to Amendment No. 1, the MSRB revised the
original proposed rule change to make clear that: (1) The underwriter
making a recommendation to the issuer regarding a financing structure
has the fair dealing obligation to deliver the applicable transaction-
specific disclosures, and (2), conversely, when the syndicate manager
(or any other underwriter in the syndicate) is not the underwriter
making such a recommendation to the issuer, then such underwriter does
not have a fair dealing obligation under the amended revised
interpretive notice to deliver the transaction-specific
disclosures.\104\ The MSRB stated that it believes that these revisions
in Amendment No. 1 are responsive to this comment and are consistent
with the goal of the Board's retrospective review of the 2012
Interpretive Notice.\105\ The MSRB also believes that these revisions
in Amendment No. 1 will continue to reduce the number of duplicative
disclosures that an issuer receives during the course of a transaction
involving an underwriting syndicate.\106\
---------------------------------------------------------------------------

    \104\ Id.
    \105\ Id.
    \106\ Id.
---------------------------------------------------------------------------

C. Application to Underwriters Serving as Placement Agents

    In the original proposed rule change, the MSRB proposed to revise
the 2012 Interpretive Notice to incorporate existing language from the
Implementation Guidance that clarifies the application of the 2012
Interpretive Notice to circumstances in which a dealer serves as an
agent of an issuer in the placement of the issuer's municipal
securities.\107\ In response to the Notice of Filing, one commenter
expressed concerns regarding this portion of the original proposed rule
change.\108\ The commenter encouraged the MSRB to strike the language
in footnote 12 of Exhibit 5 of the original proposed rule change and
replace it with language that grants dealers the flexibility to omit
and disclaim certain fair dealing disclosures when an engagement with
an issuer to place municipal securities makes such disclosures not
true.\109\ Specifically, the commenter requested that the proposed
language in footnote 12 of Exhibit 5 be replaced with the following
statement, ``[i]f the nature of the engagement makes one or more of the
required disclosures not true, then it should be permissible to omit
such disclosures and disclaim such in the relevant engagement letter.''
\110\
---------------------------------------------------------------------------

    \107\ See Notice of Filing.
    \108\ See First SIFMA Letter.
    \109\ Id.
    \110\ Id.
---------------------------------------------------------------------------

    The MSRB stated that it believes there is merit to the commenter's
concern that the Revised Interpretive Notice should not be interpreted
to require a dealer serving as an agent to an issuer in the placement
of the issuer's municipal securities to deliver inaccurate
disclosures.\111\ Therefore, the MSRB proposed in Amendment No. 1, to
revise the original proposed rule change to supplement the existing
language with the following text, ``[a]s a threshold matter, the
disclosures delivered by an underwriter to an issuer must not be
inaccurate or misleading, and nothing in this notice should be
construed as requiring an underwriter to make a disclosure to an issuer
that is false.'' \112\ The MSRB stated that it believes this revision
to be a clarifying change, because an underwriter's overarching fair
dealing obligation under Rule G-17 prohibits it from engaging in any
deceptive or dishonest practice.\113\
---------------------------------------------------------------------------

    \111\ See First Response Letter.
    \112\ Id.
    \113\ Id.
---------------------------------------------------------------------------

D. Certain Standardized Disclosures for Complex Municipal Securities
Financing

    In response to Amendment No. 1, two commenters raised concerns
about the standardized disclosures with respect to complex municipal
securities financings.\114\ One commenter expressed concerns that the
proposed rule change would create a vague and imprecise standard for
determining what is a complex municipal securities financing and what
kinds of information related to the transaction would need to be
disclosed and under what conditions.\115\ The commenter stated that
underwriters need more precision and guidance around this standard in
order to implement sound compliance and consistent disclosures, and
urged the MSRB to revise this element of the proposed rule change.\116\
Another commenter stated that its members read the term
``individualized'' in the proposed rule changed to mean that standard
or model disclosures are designed to be clear, concise and tailored to
the specific type or class of financing, and not a book of disclosures
relating to all potential types of financings, and requested
confirmation from the MSRB that this interpretation is accurate.\117\
---------------------------------------------------------------------------

    \114\ See BDA Letter, Second SIFMA Letter.
    \115\ See BDA Letter.
    \116\ Id.
    \117\ See Second SIFMA Letter.
---------------------------------------------------------------------------

    The MSRB stated that it generally agrees with the statement that it
would be consistent with the current text of the proposed rule change,
as well as the intent of the original proposed rule change, for an
underwriter to develop policies and procedures that provide for the
development and delivery of certain standardized transaction-specific
disclosures for complex municipal securities financings for which an
underwriter anticipates commonly recommending to its issuer clients
(``Standardized Complex Municipal Securities Transaction
Disclosures'').\118\ The MSRB further provided that, assuming that the
content of such Standardized Complex Municipal Securities Transaction
Disclosure is (a) drafted in a clear and concise manner for issuer
personnel of both greater and lesser degrees of sophistication and (b)
otherwise consistent with the requirements of the Revised Interpretive

Notice, the proposed rule change would only require the underwriter to
tailor the content of such Standardized Complex Municipal Securities
Transaction Disclosure to the extent that such disclosure did not fully
describe the material financial features and risks unique to that
particular recommended financing in such a clear and concise manner for
the issuer personnel receiving the disclosure.\119\ The MSRB stated
that it does not need to amend the proposed rule change to address this
comment because, as outlined in the Second Response Letter and as noted
by the commenter, the concept can be reasonably understood from the
existing language of the amended proposed rule change.\120\
---------------------------------------------------------------------------

    \118\ See Second Response Letter.
    \119\ Id.
    \120\ Id.
---------------------------------------------------------------------------

    In response to the commenter's concern that the standard for
determining what is a complex municipal securities financing is vague,
the MSRB stated that it previously has addressed these concerns in its
previous statements.\121\
---------------------------------------------------------------------------

    \121\ Id.
---------------------------------------------------------------------------

E. Tiered Disclosure Requirements Based on Issuer Characteristics

    In response to the Notice of Filing, and again in response to
Amendment No. 1, one commenter stated that it believes that tiered
disclosure requirements may be beneficial to issuers and
underwriters.\122\ The commenter requested that the MSRB ``provide
examples of concrete hypotheticals in order to provide clarity to
regulated dealers regarding how the content of [the] transaction-based
disclosures may potentially vary by issuer sophistication and still
survive regulatory scrutiny.'' \123\
---------------------------------------------------------------------------

    \122\ See First SIFMA Letter, Second SIFMA Letter.
    \123\ See First SIFMA Letter.
---------------------------------------------------------------------------

    The MSRB noted that the proposed rule change sets out a principles-
based approach to an underwriter's fair dealing obligation to deliver
certain disclosures and incorporates existing hypothetical examples
from the Implementation Guidance and FAQs.\124\ The MSRB stated that it
evaluated formal disclosure tiers and declined to adopt such tiers or
other disclosure requirements based on rigid issuer classifications in
response to prior stakeholder comments because the MSRB believes there
is not an obvious, appropriate methodology for classifying issuers in a
manner that would advance the policies underlying the 2012 Interpretive
Notice or that would materially relieve burdens for underwriters or
issuers, and requiring different disclosure standards for different
issuers may have unintended consequences that compromise issuer
protections.\125\ The MSRB stated that the comments do not alter the
MSRB's conclusions in this regard.\126\
---------------------------------------------------------------------------

    \124\ See First Response Letter.
    \125\ See First Response Letter, Second Response Letter.
    \126\ Id.
---------------------------------------------------------------------------

F. Standard for the Disclosure of Potential Material Conflicts of
Interest

    In response to the Notice of Filing, and again in response to
Amendment No. 1, two commenters requested that the MSRB amend the
original proposed rule change to require only disclosures of actual
conflicts of interest.\127\ The MSRB noted that the 2012 Interpretive
Notice currently requires the underwriter to disclose to the issuer any
actual material conflicts of interest and any potential material
conflicts of interest, which requirement is triggered if: The new issue
is sold in a negotiated underwriting; the matter to be disclosed
represents a conflict of interest, either in reality or potentially;
and any such actual or potential conflict of interest is material.\128\
The MSRB stated that these aspects of the 2012 Interpretive Notice
would remain applicable under the proposed rule change. However, the
proposed rule change would provide that an underwriter's potential
material conflict of interest must be disclosed as part of the dealer-
specific disclosures if, but only if, the potential material conflict
of interest is ``reasonably likely'' to mature into an actual material
conflict of interest during the course of that specific
transaction.\129\ This MSRB further noted that this revision would
reduce a dealer's burden by narrowing the dealer-specific disclosures
currently required under the 2012 Interpretive Notice from all
potential material conflicts to those potential material conflicts that
meet this more focused standard.\130\
---------------------------------------------------------------------------

    \127\ See First SIFMA Letter, Second SIFMA Letter, BDA Letter.
    \128\ See First Response Letter.
    \129\ Id.
    \130\ Id.
---------------------------------------------------------------------------

    The MSRB reiterated that, as indicated in the Notice of Filing, it
believes that the disclosure of material conflicts of interest remains
significant to an issuer's evaluation of the dealer providing
underwriting services, which justifies the obligation for underwriters
to continue to provide these disclosures.\131\ To the degree that an
underwriter has knowledge that a material conflict of interest does not
currently exist, but is reasonably likely to ripen into an actual
material conflict of interest during the course of the underwriting
transaction, the MSRB stated that it continues to believe that the
municipal securities market is best served by the underwriter providing
advanced notification to the issuer of the likelihood of such material
conflict of interest, rather than waiting to disclose the conflict
until it has ripened into an actual conflict.\132\
---------------------------------------------------------------------------

    \131\ See First Response Letter, Second Response Letter.
    \132\ Id.
---------------------------------------------------------------------------

G. Standard Disclosure Regarding the Engagement of a Municipal Advisor

    In response to the Notice of Filing, and again in response to
Amendment No. 1, two commenters requested that the MSRB amend the
original proposed rule change to eliminate the new standard disclosure
that ``the issuer may choose to engage the services of a municipal
advisor with a fiduciary obligation to represent the issuer's interests
in the transaction.'' \133\ One commenter also stated that the Revised
Interpretive Notice should make clear that neither municipal advisors
nor underwriters may misrepresent the services and duties that the
other is permitted to provide.\134\ The MSRB reiterated that it
believes that this additional disclosure will further clarify the
distinctions between an underwriter--who is subject to a duty of fair
dealing when providing advice regarding the issuance of municipal
securities to municipal entities--and a municipal advisor--who is
subject to a federal statutory fiduciary duty when providing advice
regarding the issuance of municipal securities to municipal entities--
and, thereby, would promote the protection of municipal entity issuers
in accordance with the MSRB's statutory mandate at a relatively minimal
burden to underwriters.\135\ The MSRB acknowledged that the additional
disclosure would cause underwriters to incur costs associated with
revising their policies and procedures and delivering the new
disclosure in their standard disclosures during transactions; however,
the MSRB concluded that any costs associated with the proposed rule
change would be outweighed by its benefits.\136\ The MSRB further
stated that, because the Revised Interpretive Notice is limitedly
focused on underwriters' fair dealing obligations to issuers, not the
duties of loyalty and care that municipal advisors

owe their municipal entity clients, the Revised Interpretive Notice is
not the appropriate vehicle to address the duties of municipal
advisors, recognizing that MSRB Rule G-42, on the duties of non-
solicitor municipal advisors, effectively prohibits a municipal advisor
from knowingly misrepresenting its services or the services of an
underwriter.\137\
---------------------------------------------------------------------------

    \133\ See First SIFMA Letter, Second SIFMA Letter, BDA Letter.
    \134\ See Second SIFMA Letter.
    \135\ See First Response Letter, Second Response Letter.
    \136\ See Second Response Letter.
    \137\ Id.
---------------------------------------------------------------------------

H. Interaction of Proposed Rule Change With Pending Matters

    In response to the Notice of Filing, and again in response to
Amendment No. 1, two commenters expressed concerns about the
interaction of the proposed rule change with other pending
matters.\138\ One commenter \139\ expressed concerns that the text of
the proposed rule change may ``front-run'' a related issue that is now
under consideration by the Commission regarding the duties of municipal
placement agents under the federal securities laws.\140\ Another
commenter expressed the belief that the MSRB missed an important and
timely opportunity to provide substantial compliance efficiencies by
combining and integrating underwriter disclosures required under MSRB
Rules G-17 and G-23, and urged the MSRB to do so.\141\ The MSRB
declined to address these concerns, stating that the matters that
commenters requested the MSRB address are outside the scope of the
proposed rule change, which does not pertain to the duties of municipal
advisors.\142\
---------------------------------------------------------------------------

    \138\ See First SIFMA Letter, Second SIFMA Letter, BDA Letter.
    \139\ See First SIFMA Letter, Second SIFMA Letter.
    \140\ See ``Notice of Proposed Exemptive Order Granting a
Conditional Exemption from the Broker Registration Requirements of
Section l5(a) of the Securities Exchange Act of 1934 for Certain
Activities of Registered Municipal Advisors,'' Exchange Act Release
No. 87204 (Oct. 2, 2019), 84 FR 54062 (Oct. 9, 2019).
    \141\ See BDA Letter.
    \142\ See First Response Letter, Second Response Letter.
---------------------------------------------------------------------------

I. Compliance Date for the Proposed Rule Change

    In response to Amendment No. 1, one commenter requested that the
MSRB set a compliance date of one year from the date the proposed rule
change's amendments to the 2012 Interpretive Notice are final.\143\ The
commenter requested this timeframe to allow ``sufficient time'' for
dealers to implement the proposed rule change's amendments and revise
their policies and procedures.\144\ The MSRB noted that it had
indicated in the original proposed rule change that, if the proposed
rule change is approved by the Commission, it will publish a regulatory
notice within 90 days of the publication of such approval in the
Federal Register and such notice would specify the compliance date for
the amendments described in the proposed rule change, which in any case
would be not less than 90 days, nor more than one year, following the
date of the regulatory notice.\145\ The MSRB stated that this is
consistent with the commenter's request.\146\ The MSRB will work with
stakeholders, as needed, to determine reasonable compliance dates for
the changes, recognizing the commenter's request for at least a one-
year compliance timeline given that policy and procedures would need to
be updated to conform to the proposed rule change.\147\
---------------------------------------------------------------------------

    \143\ See Second SIFMA Letter.
    \144\ Id.
    \145\ See Second Response Letter.
    \146\ Id.
    \147\ Id.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    The Commission has carefully considered the original proposed rule
change, the comment letters received, the MSRB Response Letters,
Amendment No. 1, and Amendment No. 2. The Commission finds that the
proposed rule change is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to the MSRB.
    In particular, the proposed rule change, as modified by Amendment
No. 1 and Amendment No. 2, is consistent with Section 15B(b)(2)(C) of
the Act.\148\ Section 15B(b)(2)(C) of the Act requires that the MSRB's
rules be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in municipal securities and municipal
financial products, to remove impediments to and perfect the mechanism
of a free and open market in municipal securities and municipal
financial products, and in general, to protect investors, municipal
entities, obligated persons, and the public interest.\149\
---------------------------------------------------------------------------

    \148\ 15 U.S.C. 78o-4(b)(2)(C).
    \149\ Id.
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change is consistent
with the provisions of Section 15B(b)(2)(C) of the Act because it will
protect municipal entities from fraudulent and manipulative acts and
practices, remove impediments to and perfect the mechanism of a free
and open market, and promote just and equitable principles of trade.
    The Commission believes that the proposed rule change would promote
the protection of municipal entities by protecting them from fraudulent
and manipulative acts and practices. By (i) Specifying which
underwriters are obligated to deliver the ``standard disclosures,''
``transaction-specific disclosures'' and ``dealer-specific
disclosures'';, (ii) requiring the separate identification and
formatting of the standard disclosures by underwriters; and (iii)
requiring that disclosures be clear and concise, the proposed rule
change will enable issuers to more efficiently and carefully evaluate
the information contained in the disclosures they do receive, which may
result in better-informed issuers. Further, the Commission believes the
addition by the proposed rule change of a new standard disclosure that
the issuer may choose to engage the services of a municipal advisor
with a fiduciary obligation to represent the issuer's interests in the
transaction will promote the protection of municipal entities by
expressly informing them that they may obtain the advice of a municipal
advisor, who would serve as a fiduciary to the issuer.
    The Commission believes that the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market, and
promote just and equitable principles of trade by clarifying and
streamlining underwriters' disclosure obligations to municipal entity
issuers, thereby facilitating more efficient compliance with those
obligations. By incorporating certain provisions of the Implementation
Guidance and FAQs, with certain revisions, into the Revised
Interpretive Notice, the proposed rule change provides for a single
consolidated document to which underwriters may look, facilitating the
efficient identification of any applicable fair dealing obligations. By
(i) specifying that the standard disclosures and many transaction-
specific disclosures should be sent to issuers only from the syndicate
manager or sole underwriter; (ii) clarifying that underwriters are not
obligated to provide written disclosures regarding the conflicts of
issuer personnel or other parties to the transaction; and (iii)
providing that disclosures must be made in a clear and concise manner,
the proposed rule change would remove impediments to and perfect the
mechanism of a free and open market, and promote just and

equitable principles of trade, by eliminating certain redundant and
generic disclosures currently delivered by underwriters to issuers that
provide little, if any, informational benefits to issuers, but do
create non-trivial compliance and recordkeeping burdens on
underwriters. By clarifying the definition of Complex Municipal
Securities Financing Recommendation, and specifying the particular
underwriter that must provide these particularized transaction-specific
disclosures to issuers, the proposed rule change would promote just and
equitable principles of trade by eliminating legal ambiguity under the
Revised Interpretive Notice, thereby reducing the compliance burden for
underwriters without diminishing the protection of municipal entities.
By specifying that the underwriter making a Complex Municipal
Securities Financing Recommendation must provide the transaction-
specific disclosure for that recommendation, the proposed rule change
may improve the accuracy and usefulness of such disclosures to
municipal entities.
    The Commission further believes that proposed rule change would
remove impediments to and perfect the mechanism of a free and open
market by clarifying which potential material conflicts of interest
must be disclosed by underwriters and at what time. This portion of the
proposed rule change may reduce the volume of initial conflicts
disclosures that must be provided, limiting such disclosures to those
conflicts that are most concrete and probable, and therefore most
useful to issuers at that time.
    The Commission further believes that the proposed rule change would
remove impediments to and perfect the mechanism of a free and open
market, and facilitate transactions in municipal securities, by
permitting an email read receipt to serve as the issuer's
acknowledgement of receipt of the applicable disclosures under the
Revised Interpretive Notice. This provision of the proposed rule change
would improve the efficiency of the disclosure process by allowing
underwriters to seek, and issuers to provide, acknowledgement
electronically through the built-in, automatic process of an email
system. The Commission believes that municipal entities would continue
to be protected under the Revised Interpretive Notice because the
underwriter would have a fair dealing obligation to receive the email
read receipt from a specific official identified as the issuer's
primary contact for the receipt of such disclosures or from an issuer
official that the underwriter reasonably believes has authority to bind
the issuer by contract with the underwriter. In addition, the proposed
rule change would not permit an underwriter to rely on an email read
receipt as an issuer's acknowledgement where such reliance is
unreasonable under all of the facts and circumstances, such as where
the underwriter is on notice that the issuer official to whom the email
is addressed has not in fact received or opened the email. Further, the
recipient of such an automatic email read receipt request would still
have the option to not provide this form of acknowledgement.
    In approving the proposed rule change, the Commission also has
considered the impact of the proposed rule change, on efficiency,
competition, and capital formation.\150\ The Commission believes that
the proposed rule change clarifies underwriter disclosure obligations
and will streamline certain obligations specified in the 2012
Interpretive Notice and, thereby, reduce the burdens associated with
those obligations, including the obligation of underwriters to make,
and the burden on issuers to acknowledge and review, written
disclosures that are duplicative, itemize risks and conflicts that are
not reasonably likely to materialize during the course of a
transaction, and/or are not unique to a particular transaction or
underwriting engagement. The Commission further believes that the
proposed rule change may increase the efficiency of certain market
practices, such as enhancing the ability of issuers to efficiently and
properly evaluate the risks associated with a given transaction
(thereby improving the protection of issuers), including by separately
identifying the different categories of disclosures, providing
additional clarity to underwriters regarding the scope of their
regulatory obligations to municipal entity issuers, and permitting an
email read receipt to serve the issuer's acknowledgment of receipt of
disclosures in certain circumstances, thereby reducing the burdens of
obtaining acknowledgment in those cases.
---------------------------------------------------------------------------

    \150\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    As noted above, the Commission received three comment letters on
the Notice of Filing and three comment letters on Amendment No. 1. The
Commission believes that the MSRB, through its responses and through
Amendment No. 1 and Amendment No. 2, has addressed commenters'
concerns.
    For the reasons noted above, the Commission believes that the
proposed rule change is consistent with the Act.

V. Solicitation of Comments on Amendment No. 2

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 2
to the proposed rule change is consistent with the Act. Comments may be
submitted by any of the following methods:

Electronic Comments

     Use of the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-MSRB-2019-10 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MSRB-2019-10. 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 MSRB. All comments received
will be posted without change; we do not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-MSRB-2019-10 and should be submitted on or before
December 4, 2019.

VI. Accelerated Approval of Proposed Rule Change

    The Commission finds good cause for approving the original proposed
rule

change, as modified by Amendment No. 1 and Amendment No. 2, prior to
the 30th day after the date of publication of the Notices of Amendment
No. 1 and Amendment No. 2 in the Federal Register. As discussed above,
Amendment No. 1 proposes to revise the original proposed rule change to
state that (1) the underwriter making a recommendation to the issuer
regarding a financing structure, including, when applicable, a Complex
Municipal Securities Financing Recommendation, has the fair dealing
obligation to deliver the applicable transaction-specific disclosures
and (2) the notice does not apply to a dealer acting as a primary
distributor in a continuous offering of municipal fund securities.
Amendment No. 1 and Amendment No. 2 otherwise propose to revise the
original proposed rule change with technical modifications intended to
more precisely define the scope of its application and/or to promote
clarity in its interpretation. The MSRB has stated that it believes
that the modifications to the original proposed rule change are
responsive to commenters, and are consistent with the original proposed
rule change.\151\
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    \151\ See Amendment No. 1, Amendment No. 2.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission finds good cause for
approving the original proposed rule change, as modified by Amendment
No. 1 and Amendment No. 2, on an accelerated basis, pursuant to Section
19(b)(2) of the Act.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\152\ that the proposed rule change (SR-MSRB-2019-10) be, and
hereby is, approved on an accelerated basis.
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    \152\ 15 U.S.C. 78s(b)(2).

    For the Commission, pursuant to delegated authority.\153\
---------------------------------------------------------------------------

    \153\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24601 Filed 11-12-19; 8:45 am]
BILLING CODE 8011-01-P


Colorado School of Mines- Recycling Metals from Industrial Waste

Short Course and Workshop

June 28, 2007

On Thursday, June 28, 2007, a representative from the Office of Solid
Waste (OSW) gave a brief presentation on the supplemental proposed rule
as part of a short course and workshop sponsored by the Colorado School
of Mines. During the discussion that followed, EPA confirmed that states
have the choice of adopting the rule, to which many audience members
responded by voicing concerns over the potential ‘patchwork’ of
regulations that may complicate transportation and exports. One attendee
mentioned that a state who adopts may have a potential economic
advantage over one who doesn’t. Regarding the notification
requirement, EPA clarified that this was simply a notice and not an
approval process. EPA also explained the proposed exclusions would
include liquid hazardous secondary material. One last question asked if
the exclusions covered instances of recycling where only the physical
form was changed. EPA acknowledged the need to verify this.

Groups in Attendance:

Advanced Recycling Technology	Metallurg Vanadium Corp.

Agmet	Metech International

Alpha Omega Recycling	Morris Equipment Sales

AusZinc Metals & Alloys	Natural Resources Canada

Boliden Mineral	Network Environmental Services

Brush Wellman	Nickel Institute

CVRD Inco	Nickelhuette Aue Gmbh

Ceremark Technologies	Noranda Recycling

Chemionex	Ocean Partners

Colt Refining	Omegasolder Co.

Contech International	OmniSource Corporation

Cookson Electronics	P.B. Queneau & Associates

Department of Defense	PVS Technologies

Doe Run Corporation	Perma-Fix Environmental Services

Drinkard Research & Development Corp.	Phelps Dodge Miami Mining

ECS Refining	Pillar Induction

ELG Metals	QML

Electrum	Recapture Metals

EnviroCon International	Recycling Coordinators

Fairfield Metals	S.P. Metals

Flowserve Canada Corp.	SGS Minerals Service

GF Industries	Shell Global Solutions

Gannon & Scott	Shell Nederland Raffinadery B.V.

Gulf Chemical & Metallurgical Corp.	Sidmet S.A.

Haynes International	Sitec Servicios De Ingenieria

Hazen Research	Spiller Consultants

Heraeus Metal Processing	Stillwater Mining Co.

INMETCO	Stratcor

Itronics 	Teck Cominco Metals

Jean Goldschmidt International	Titan Metal Powders

Kalumetals	Toxco, Inc.

Kohsei Co., Ltd.	U.S. Department of Agriculture

Kuntz Electroplating	Umicore USA

Langeloth Metallurgical Company	U.S. Air Force

MK Metals Trading Mexico	United States Steel Corporation

MPT Group	Veolia ES Technical Corporation

Meretec Corporation	Wisdom Environmental

Merix Corporation	Xstrata

Metal Solutions Corporation	Zinc Nacional, S.A.

Metal-Tech, Ltd.	.