[Federal Register Volume 82, Number 113 (Wednesday, June 14, 2017)]
[Notices]
[Pages 27307-27315]
[FR Doc No: 2017-12266]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80890; File No. SR-MSRB-2017-03]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed Rule Change To Amend MSRB Rule G-
26, on Customer Account Transfers, To Modernize the Rule and Promote a
Uniform Customer Account Transfer Standard

June 7, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\
notice is hereby given that on May 26, 2017 the Municipal Securities
Rulemaking Board (the ``MSRB'' or ``Board'') filed with the Securities
and Exchange Commission (the ``SEC'' or ``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by the MSRB. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The MSRB filed with the Commission a proposed rule change to amend
MSRB Rule G-26, on customer account transfers, to modernize the rule
and promote a uniform customer account transfer standard for all
brokers, dealers, municipal securities brokers and municipal securities
dealers (collectively, ``dealers'') (``proposed rule change'').\3\ The
MSRB requests that the proposed rule change be effective three months
from the date of Commission approval.
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    \3\ For clarity and ease of reference, current provisions of
Rule G-26 will be cited herein as ``Rule G-26,'' and proposed
amendments to Rule G-26 will be cited herein as ``proposed Rule G-
26''.
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    The text of the proposed rule change is available on the MSRB's Web
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2017-Filings.aspx, at the MSRB's principal office, 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 MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The MSRB has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.

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

1. Purpose
    The purpose of the proposed rule change is to modernize Rule G-26
and promote a uniform customer account transfer standard for all
dealers. The MSRB believes that, by including certain provisions
parallel to the customer account transfer rules of other SROs,
particularly FINRA Rule 11870, in current Rule G-26, as outlined below,
the transfer of customer securities account assets will be more
flexible, less burdensome, and more efficient, while reducing confusion
and risk to investors and allowing them to better move their municipal
securities to their dealer of choice.
Current Rule G-26
    Rule G-26 requires dealers to cooperate in the transfer of customer
accounts and specifies procedures for carrying out the transfer
process. Such transfers occur when a customer decides to transfer an
account from one dealer, the carrying party (i.e., the dealer from
which the customer is requesting the account be transferred) to
another, the receiving party (i.e., the dealer to which the customer is
requesting the account be transferred). The rule establishes specific
time frames within which the carrying party is required to transfer a
customer account; limits the reasons for which a receiving party may
take exception to an account transfer instruction; provides for the
establishment of fail-to-receive and fail-to-deliver contracts; \4\ and
requires that fail contracts be resolved in accordance with MSRB close-
out procedures, established by MSRB Rule G-12(h). In addition, the
current rule requires the use of the automated customer account
transfer service in place at a registered clearing agency registered
with the Commission when both dealers are direct participants in the
same clearing agency.\5\ Finally, the rule contains a provision for
enhancing compliance by requiring submission of transfer instructions
to the enforcement authority with jurisdiction over the dealer carrying
the account, if the enforcement authority requests such submission.\6\
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    \4\ Fail-to-receive and fail-to-deliver contracts are records
maintained by the receiving party and the carrying party,
respectively, when a customer account transfer fails.
    \5\ See Rule G-26(h).
    \6\ See Rule G-26(i).
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    The MSRB adopted Rule G-26 in 1986 as part of an industry-wide
initiative to create a uniform customer account transfer standard by
applying a customer account transfer procedure to all dealers that are
engaged in municipal securities activities.\7\ The uniform standard for
all customer account transfers (i.e., automated and manual processes)
is largely driven by the National Securities Clearing Corporation's
(``NSCC'') Automated Customer Account Transfer Service (``ACATS''). The
MSRB adopted Rule G-26 in conjunction with the adoption of similar
rules by other self-regulatory organizations (``SROs'')--New York Stock
Exchange (``NYSE'') Rule 412 and Financial Industry Regulatory
Authority (``FINRA'') Rule 11870.\8\ Those rules are not applicable to
certain accounts at dealers, particularly municipal security-only
accounts and accounts at bank dealers.\9\ Current Rule G-26 governs the
municipal security-only customer account transfers performed by those

dealers to ensure that all customer account transfers are subject to
regulation that is consistent with the uniform industry standard. Thus,
in order to maintain consistency and the uniform standard, the MSRB
has, from time to time, modified the requirements of Rule G-26 to
conform to certain provisions of the parallel FINRA and NYSE customer
account transfer rules, as well as to enhancements made to the ACATS
process by NSCC, that had relevance to municipal securities.
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    \7\ See Exchange Act Release No. 22810 (Jan. 17, 1986), 51 FR
3287 (Jan. 24, 1986) (SR-MSRB-86-2) (proposing Rule G-26). See also
Exchange Act Release Nos. 22663 (Nov. 27 1985) (SR-NYSE-85-17)
(approving NYSE Rule 412); 22941 (Feb. 24, 1986) (SR-NASD-29)
(approving NASD/FINRA Rule 11870).
    \8\ In 2007, FINRA was created through the consolidation of the
National Association of Securities Dealers (``NASD'') and the member
regulation, enforcement and arbitration operations of the NYSE.
Current NYSE Rule 412 cross-references NASD/FINRA Rule 11870 for the
purpose of incorporating it into the NYSE rulebook.
    \9\ See Exchange Act Release No. 22810 (Jan. 17, 1986), 51 FR
3287 (Jan. 24, 1986) (SR-MSRB-86-2) (``Currently certain municipal
securities brokers or municipal securities dealers, particularly
those with municipal security-only accounts and bank dealers, will
not be covered by the standards governing the rest of the securities
industry.'').
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    On January 6, 2017, the MSRB published a request for comment,
proposing a number of draft amendments to Rule G-26 to maintain
consistency with the rules of the NSCC, the NYSE and FINRA by
conforming to significant updates to those other SRO rules that have
relevance to municipal securities and municipal security-only customer
account transfers.\10\ In response to the Request for Comment, the MSRB
received three comment letters, supporting the general purpose of the
amendments to Rule G-26, but suggesting alternative approaches and
raising a few other issues.\11\ After carefully considering all of the
comments received, the MSRB determined to file this proposed rule
change.
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    \10\ MSRB Notice 2017-01 (Jan. 6, 2017) (``Request for
Comment'').
    \11\ See infra note 81.
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Residual Credit Positions
    In 1989, the NSCC expanded ACATS to include the transfer of
customer account residual credit positions. These are assets in the
form of cash or securities that can result from dividends, interest
payments or other types of assets received by the carrying party after
the transfer process is completed, or which were restricted from being
included in the original transfer.\12\ The NYSE and FINRA made
corresponding changes to their rules that require dealers that
participate in a registered clearing agency with automated residual
credit processing capabilities to utilize those facilities to transfer
residual credit positions that accrue to an account after a
transfer.\13\ Prior to allowing for these transfers, a check frequently
would have to be produced, or a delivery bill or report, which then
required a check to be issued or securities to be transferred.\14\ This
process could result in lost or improperly routed checks and
securities, as well as the expenses of postage and processing.\15\
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    \12\ See Exchange Act Release No. 26659 (Mar. 22, 1989), 54 FR
12984 (Mar. 29, 1989) (SR-NSCC-89-3).
    \13\ See Exchange Act Release Nos. 34633 (Sept. 2, 1994), 59 FR
46872 (Sept. 12, 1994) (SR-NYSE-94-21); 35031 (Nov. 30, 1994), 59 FR
62761 (Dec. 6, 1994) (SR-NASD-94-56). See also former NYSE Rule
412(e)(3); FINRA Rule 11870(m)(3).
    \14\ See Exchange Act Release No. 26659 (Mar. 29, 1989) (SR-
NSCC-89-3).
    \15\ Id.
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    The MSRB is proposing to update Rule G-26 to include the transfer
of customer account residual credit positions, which would benefit both
customers and dealers by substantially decreasing the paperwork, risks,
inefficiencies and costs associated with the practice of check issuance
and initiation of securities deliveries to resolve residual credit
positions.\16\
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    \16\ See proposed Rule G-26(k)(ii).
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Partial Account Transfers
    In 1994, the NYSE and FINRA amended their rules to permit partial
or non-standard customer account transfers (i.e., the transfer of
specifically designated assets from an account held at one dealer to an
account held at another dealer).\17\ Subsequently, in 2004, the NYSE
and FINRA further amended their rules generally to apply the same
procedural standards and time frames that are applicable to the
transfer of entire accounts to partial transfers as well.\18\ Because
customer and dealer obligations resulting from the transfer of an
entire account differ from the obligations arising from the transfer of
specified assets within an account that will remain active at the
carrying party, the NYSE and FINRA rules distinguish between the
transfer of security account assets in whole or in specifically
designated part. For example, it would not be necessary for a customer
to instruct the carrying party as to the disposition of his or her
assets that are nontransferable if the customer is not transferring the
entire account.
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    \17\ See Exchange Act Release Nos. 34633 (Sept. 2, 1994), 59 FR
46872 (Sept. 12, 1994) (SR-NYSE-94-21); 35031 (Nov. 30, 1994), 59 FR
62761 (Dec. 6, 1994) (SR-NASD-94-56). See also former NYSE Rule 412,
Interpretation (a)/01; FINRA Rule 11870(a)(2).
    \18\ See Exchange Act Release Nos. 49415 (Mar. 12, 2004), 69 FR
13608 (Mar. 23, 2004) (SR-NYSE-2003-29); 50018 (July 14, 2004), 69
FR 43873 (July 22, 2004) (SR-NASD-2004-058).
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    The MSRB is proposing to update Rule G-26 to permit partial account
transfers under the same time frames applicable to transfers of entire
accounts, which the MSRB believes would provide dealers with the
ability to facilitate more efficient and expeditious transfers, as well
as increase accountability for dealers and reduce difficulties
encountered by customers related to transfers.\19\ The MSRB also
believes this change will further competition among dealers by more
easily allowing investors to transfer their municipal securities to the
dealer of their choice.
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    \19\ See proposed Rule G-26(b), (c)(ii), (d)(i), (e)(ii),
(k)(i). The proposed rule change would require that dealers expedite
all authorized municipal securities account asset transfers, whether
through ACATS or via other means permissible, and coordinate their
activities with respect thereto.
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Transfer of Third-Party and/or Proprietary Products
    In 1998, the NSCC modified ACATS to better facilitate and expedite
the transfer of a customer account containing third-party and/or
proprietary products that the receiving party is unable to receive or
carry.\20\ The NYSE and FINRA made conforming changes in 2001.\21\
Prior to the NSCC's modernization of ACATS in 1998, a receiving party
was not permitted to reject an individual account asset and only could
reject an account in its entirety. Today, however, under these other
SROs' rules, the receiving party has the capability to either accept
all assets in the account being transferred or, to the extent permitted
by the receiving party's designated examining authority, accept only
some of the assets in the account.\22\
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    \20\ See Exchange Act Release No. 40657 (Nov. 10, 1998), 63 FR
63952 (Nov. 17, 1998) (SR-NSCC-98-06).
    \21\ See Exchange Act Release Nos. 44596 (July 26, 2001), 66 FR
40306 (Aug. 2, 2001) (SR-NYSE-00-61); 44787 (Sept. 12, 2001), 66 FR
48301 (Sept. 19, 2001) (SR-NASD-2001-53). See also former NYSE Rule
412, Interpretation (b)(1),/01,/04,/06; FINRA Rule 11870(c)(2).
    \22\ See FINRA Rule 11870(c)(3)-(4).
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    Although most securities can be transferred, dealers vary in their
ability to accept and support certain third-party investment products.
Under the NSCC's prior customer account transfer procedures, and the
current procedures outlined in Rule G-26, a customer that wishes to
transfer its entire account to another dealer would submit a signed
transfer instruction to the receiving party.\23\ The receiving party
would immediately submit the transfer instruction to the carrying
party, and the carrying party would have three days to either validate
and return the transfer instruction or take exception to the
instruction.\24\ Prior to or at the time of validation of the transfer
instruction, the carrying party would be required to notify the
customer with respect to the disposition of any assets it identified as
nontransferable \25\ and request

instructions from the customer with respect to their disposition.\26\
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    \23\ See Rule G-26(d)(i).
    \24\ Id.
    \25\ Currently, the term ``nontransferable asset'' means an
asset that is incapable of being transferred from the carrying party
to the receiving party because (A) it is an issue in default for
which the carrying party does not possess the proper denominations
to effect delivery and no transfer agent is available to re-register
the securities, or (B) it is a municipal fund security which the
issuer requires to be held in an account carried by one or more
specified dealers that does not include the receiving party. See
Rule G-26(a)(iii).
    \26\ See Rule G-26(c)(ii).
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    A customer account could also contain assets that are
nontransferable but have not yet been identified as nontransferable
(e.g., a municipal fund security that the receiving party is unable to
carry--unbeknownst to the carrying party). Under current Rule G-26, the
carrying party would have to include such nontransferable assets in the
transfer of the account, and, if the receiving party were unable to
receive/carry the nontransferable asset, the receiving party would have
to send the asset back to the carrying party.\27\ While the instances
in which dealers would need to rely upon Rule G-26 and the special
procedures for transfer of nontransferable assets may be rare, these
fails require substantial processing time for both the carrying and
receiving parties, and require carrying parties to credit the receiving
party's funds equivalent to the value of the assets they are unable to
deliver. These fails can also cause customers confusion in that
customers receive multiple account statements from the carrying and
receiving parties as the dealers initiate and then reverse transfers.
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    \27\ See Rule G-26(d)(i)-(ii).
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    The NSCC's modifications regarding third-party and proprietary
products allow the receiving party to review the asset validation
report, designate those nontransferable assets it is unable to receive/
carry, provide the customer with a list of those assets, and require
instructions from the customer regarding their disposition.\28\ The
proposed rule change would make Rule G-26 consistent with this change
by requiring the receiving party to designate any third-party products
it is unable to receive.\29\ Accordingly, the MSRB believes the
proposed rule change will eliminate the present need for reversing the
transfer of nontransferable assets, reduce the overall time frame for
transferring third-party products, and generally reduce delay in and
the cost of customer account transfers.
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    \28\ See NSCC Rule 50 Section 8.
    \29\ See proposed Rule G-26(e)(vii).
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Electronic Signature for Customer Authorization of Account Transfer
    Under current Rule G-26, a customer can initiate a transfer of a
municipal securities account from one dealer to another by giving
written notice to the receiving party.\30\ NYSE Rule 412 and FINRA Rule
11870 previously had the same requirement; however, in 2004, the NYSE
and FINRA established that a customer also can initiate an account
transfer, in whole or in part, using either the customer's actual
signature or an electronic signature in a format recognized as valid
under federal law to conduct interstate commerce.\31\ The MSRB believes
that updating the written notice requirement in Rule G-26 to include
electronic signatures will expedite the transfer of customer assets
between dealers and more easily allow investors to transfer their
assets to the dealer of their choice. Accordingly, the MSRB is
proposing to replace the written notice requirement with an authorized
instruction requirement, which can be a customer's actual written or
electronic signature.\32\
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    \30\ Under Rule G-26(c)(i), customers and dealers may use Form
G-26 (the transfer instruction prescribed by the MSRB), the transfer
instructions required by a clearing agency registered with the SEC
in connection with its automated customer account transfer system or
transfer instructions that are substantially similar to those
required by such clearing agency to accomplish a customer account
transfer.
    \31\ See Exchange Act Release Nos. 49415 (Mar. 12, 2004), 69 FR
13608 (Mar. 23, 2004) (SR-NYSE-2003-29); 50018 (July 14, 2004), 69
FR 43873 (July 22, 2004) (SR-NASD-2004-058).
    \32\ See Supplementary Material .01 to proposed Rule G-26.
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Shortened ACATS Cycle
    ACATS has been modified over time to provide a more seamless and
timely customer account transfer process. Specifically, in 1994, the
NSCC accelerated the time (from two days to one day) in which accounts
are transferred by reducing the time a receiving party has after
receipt of the transfer instruction to determine whether to accept,
reject or request adjustments to the account.\33\ In 1998 and 2000, the
NYSE and FINRA, respectively, shortened the time frame for the asset
review portion of the transfer period from two days to one day, and the
time frame the carrying party has to complete the transfer of customer
securities account assets to the receiving party from four days to
three days following the validation of a transfer instruction.\34\
Further, in 2007, FINRA more generally provided that the time frame(s)
in FINRA Rule 11870 will change, as determined from time to time in any
publication, relating to the ACATS facility, by the NSCC.\35\ Rule G-26
currently specifies three days as the time to validate or take
exception to the transfer instructions and four days as the time frame
for completion of a customer account transfer.\36\ The MSRB believes
that reducing those time frames to one and three day(s), respectively,
will ensure consistency with the industry standard set by the NSCC and
harmonization with other SROs, while providing greater efficiency and
improving the customer experience in the customer account transfer
process.\37\ Therefore, the proposed rule change would shorten the time
for validation from three days to one, and shorten the time for
completing the customer account transfer from four days to three.
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    \33\ See Exchange Act Release No. 34879 (Oct. 21, 1994), 59 FR
54229 (Oct. 28, 1994) (SR-NSCC-94-13).
    \34\ See Exchange Act Release Nos. 40712 (Nov. 25, 1998), 63 FR
67163 (Dec. 4, 1998) (SR-NYSE-98-30); 43635 (Nov. 29, 2000), 65 FR
75990 (Dec. 5, 2000) (SR-NASD-00-68). See also former NYSE Rule
412(b)(3); FINRA Rule 11870(e).
    \35\ See Exchange Act Release No. 56677 (Oct. 19, 2007), 72 FR
60699 (Oct. 25, 2007) (SR-FINRA-2007-005).
    \36\ See Rule G-26(d)(i), (v).
    \37\ See proposed Rule G-26(d)(i), (f)(i).
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    Because Rule G-26 applies to manual customer account transfers, in
addition to automated processes, the MSRB is, at this time, not
incorporating by reference changes in the time frame of the transfer
cycle as determined by future changes in the ACATS time frames made by
the NSCC. The MSRB believes that the current time frames are
sufficiently long to accommodate manual processes, but it would be
important for the MSRB to evaluate the ability of bank dealers and
other dealers with municipal securities-only accounts, which are
subject to Rule G-26, to perform such processes under shorter time
frames before adopting any such proposal in the future.
Definition of ``Nontransferable Asset''
    In response to a specific question in the Request for Comment,\38\
the Securities Industry and Financial Markets Association (``SIFMA'')
indicated that dealers may sell proprietary products that are municipal
securities to customers, the transferability of which FINRA Rule 11870
addresses.\39\ Given this affirmative response, and because a receiving
party cannot hold a proprietary product of a carrying party, the MSRB
believes it is important to include proprietary products of the
carrying party in the definition of ``nontransferable asset'' to better
harmonize with FINRA's corresponding definition and to ensure that bank
dealers, and other dealers subject to Rule G-26, have clarity when
handling

such proprietary products in customer account transfers.\40\
Accordingly, the proposed rule change would also provide the following
options for the disposition of such proprietary products that would be
nontransferable assets: Liquidation; retention by the carrying party
for the customer's benefit; or transfer, physically and directly, in
the customer's name to the customer.\41\
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    \38\ See Request for Comment, Question 8 (``Do municipal
securities brokers or municipal securities dealers sell proprietary
products that are municipal securities to customers?'').
    \39\ See letter from SIFMA at note 81 infra.
    \40\ See proposed Rule G-26(a)(iii)(C); FINRA Rule
11870(c)(1)(D)(i).
    \41\ See proposed Rule G-26(c)(ii)(A)-(C).
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Transfer Instructions
Disposition of Nontransferable Assets
    Under current Rule G-26, if there are nontransferable assets
included in a transfer instruction, there are multiple options
available to the customer for their disposition, and the carrying party
must request further instructions from the customer with respect to
which option the customer would like to exercise.\42\ Depending on the
type of nontransferable asset at issue, FINRA Rule 11870(c) requires
either the carrying party or the receiving party to provide the
customer with a list of the specific nontransferable assets and request
the customer's desired disposition of such assets. For example, FINRA
Rule 11870(c)(4) places the burden on the receiving party for third-
party products that are nontransferable. In response to the Request for
Comment, SIFMA noted that current industry practice and standard
requires that, depending on the type of nontransferable asset, either
the carrying party or the receiving party provide the customer with a
list of the nontransferable assets and request the customer's desired
disposition of such assets, as opposed to limiting that requirement to
the carrying party, which was proposed in the Request for Comment.\43\
Because there are third-party products that are municipal securities
that a receiving party may not be able to carry, and such a receiving
party may be the only party to a customer account transfer with that
knowledge, the MSRB believes allowing the receiving party to notify the
customer of any nontransferable assets in a transfer and request their
disposition in such circumstances will help ensure that nontransferable
assets are properly identified and that both parties to a transfer are
coordinating closely to complete the transfer efficiently and
expeditiously. To allow for this, to improve harmonization with FINRA
Rule 11870 and to promote a uniform standard for all dealers, the
proposed rule change would explicitly require that the carrying party
and/or the receiving party provide the list of nontransferable
assets.\44\
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    \42\ See Rule G-26(c)(ii).
    \43\ See letter from SIFMA at note 81 infra.
    \44\ See proposed Rule G-26(c)(ii).
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Liquidation of Nontransferable Assets
    Under current Rule G-26, one of the disposition options for
nontransferable assets available to customers is liquidation.\45\ When
providing customers with this option, dealers are required to
specifically indicate any redemption or other liquidation-related fees
that may result from such liquidation and that those fees may be
deducted from the money balance due the customer.\46\ FINRA Rule 11870
provides the same requirements, but also requires dealers to refer
customers to the disclosure information for third-party products or to
the registered representative at the carrying party for specific
details regarding any such fees, as well as to distribute any remaining
balance to the customer and an indication of the method of how it will
do so.\47\ The MSRB believes the inclusion of these additional
requirements in Rule G-26 will help ensure that customers receive as
much relevant information as possible regarding potential redemption
fees, including for municipal fund securities.\48\ Specifically, the
proposed rule change would require a referral to the program disclosure
for a municipal fund security or to the registered representative for
specific details regarding any such fees for the same.\49\ Further, for
clarity, the MSRB believes it is important to require explicitly the
distribution of the remaining balance to the customer and an indication
of how it will be accomplished.\50\ Therefore, the proposed rule change
would require dealers to specifically indicate any redemption or other
liquidation-related fees that may result from liquidation and that
those fees may be deducted from the money balance due the customer.
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    \45\ See Rule G-26(c)(ii).
    \46\ See Rule G-26(c)(ii)(A).
    \47\ See FINRA Rule 11870(c)(3)(A), (c)(4)(A).
    \48\ See proposed Rule G-26(c)(ii)(A).
    \49\ Id.
    \50\ Id.
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Transfer of Nontransferable Assets to Customers
    FINRA Rule 11870(c)(3)(C) provides an option for nontransferable
assets that are proprietary products to be transferred, physically and
directly, in the customer's name to the customer. The MSRB believes
that some municipal securities that are nontransferable assets could
similarly be transferred, physically and directly, to the customer, so
the proposed rule change would add this option to the alternative
dispositions available to customers.\51\ The MSRB notes that not all
municipal securities may be appropriate for this option and that the
carrying party would not be required to physically deliver any
nontransferable assets of which it does not have physical possession.
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    \51\ See proposed Rule G-26(c)(ii)(C).
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Timing of Disposition of Nontransferable Assets
    Rule G-26 currently does not provide a time frame for the carrying
party to effect the disposition of nontransferable assets as instructed
by the customer. FINRA Rule 11870(c)(5) requires that the money balance
resulting from liquidation must be distributed, and any transfer
instructed by the customer must be initiated, within five business days
following receipt of the customer's disposition instruction. The MSRB
believes it is important to provide clarity as to the timing of these
dispositions to ensure that customer transfers are handled
expeditiously.
Accordingly, the proposed rule change would harmonize with FINRA Rule
11870(c)(5) and establish the same five-day requirement.\52\
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    \52\ See proposed Rule G-26(c)(iii).
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Transfer Procedures
    Current Rule G-26(d) establishes, as part of the transfer
procedures, the requirements for validation of the transfer
instructions and completion of the transfer. To detail the specific
validation/exception and completion processes more clearly and to
better harmonize with FINRA Rule 11870, the proposed rule change would
provide the provisions describing those processes in new, separate
sections of the rule.\53\
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    \53\ See proposed Rule G-26(e), (f). As a result of this
restructuring, the subsequent, existing sections of the rule would
be renumbered in proposed Rule G-26.
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Validation of Transfer Instructions
    Under current Rule G-26(d)(iv)(A), upon validation of a transfer
instruction, the carrying party must ``freeze'' the account to be
transferred and return the transfer instruction to the receiving party
with an attachment indicating all securities positions and money
balance in the account as shown on the books of the carrying party.
Because the proposed rule change would allow for partial account
transfers of specifically designated municipal securities assets, the
proposed rule change would require the account freeze only for
validation of the transfer of an entire account, as the

customer's account at the carrying party should not be frozen if
certain municipal securities would remain in the account and the
customer may want to continue transacting in that account.\54\ For
whole and partial account transfers, the carrying party would continue
to have the responsibility to return the instructions and indicate the
securities positions and money balance to be transferred.\55\ However,
to identify the assets held in the customer account at the carrying
party more comprehensively and to harmonize with FINRA Rule
11870(d)(5)(A), the proposed rule change would also require the
carrying party to indicate safekeeping positions,\56\ which are defined
to be any security held by a carrying party in the name of the
customer, including securities that are unendorsed or have a stock/bond
power attached thereto.\57\
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    \54\ See proposed Rule G-26(e)(i).
    \55\ See proposed Rule G-26(e)(ii).
    \56\ See proposed Rule G-26(e)(ii).
    \57\ See proposed Rule G-26(a)(vi).
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    Additionally, current Rule G-26(d)(iv)(B) requires the carrying
party to include a then-current market value for all assets to be
transferred. FINRA Rule 11870(d)(5) provides that the original cost
should be used as the value if a then-current value cannot be
determined for an asset. The proposed rule change would include a
provision substantially similar to the FINRA provision to provide
clarity on how any such municipal securities should be valued and to
improve harmonization between the MSRB and FINRA rules.\58\
---------------------------------------------------------------------------

    \58\ See proposed Rule G-26(e)(ii).
---------------------------------------------------------------------------

Exceptions To Transfer Instructions
    As part of the validation process, current Rule G-26 provides that
the carrying party may take certain exceptions to the transfer
instructions authorized by the customer and provided by the receiving
party. Specifically, Rule G-26(d)(ii) allows a carrying party to take
exception to a transfer instruction only if it has no record of the
account on its books or the transfer instruction is incomplete.\59\
FINRA Rule 11870(d)(3) provides numerous other bases to take exception
to a transfer instruction that the MSRB believes would more
comprehensively address potential issues with a transfer instruction
with which a carrying party could reasonably take issue and better
harmonize with FINRA Rule 11870. Accordingly, in addition to the
existing bases for exceptions, the proposed rule change would allow a
carrying party to take exception to a transfer instruction if: (1) The
transfer instruction contains an improper signature; (2) additional
documentation is required (e.g., legal documents such as death or
marriage certificate); (3) the account is ``flat'' and reflects no
transferable assets; \60\ (4) the account number is invalid (i.e., the
account number is not on the carrying party's books); \61\ (5) it is a
duplicate request; (6) it violates the receiving party's credit policy;
(7) it contains unrecognized residual credit assets (i.e., the
receiving party cannot identify the customer); (8) the customer
rescinds the instruction (e.g., the customer has submitted a written
request to cancel the transfer); (9) there is a mismatch of the Social
Security Number/Tax ID (e.g., the number on the transfer instruction
does not correspond to that on the carrying party's records); (10) the
account title on the transfer instruction does not match that on the
carrying party's records; (11) the account type on the transfer
instruction does not correspond to that on the carrying party's
records; (12) the transfer instruction is missing or contains an
improper authorization (e.g., the transfer instruction requires an
additional customer authorization or successor custodian's acceptance
authorization or custodial approval; or (13) the customer has taken
possession of the assets in the account (e.g., the municipal securities
account assets in question have been transferred directly to the
customer).\62\
---------------------------------------------------------------------------

    \59\ See Rule G-26(d)(ii).
    \60\ For such an exception, the receiving party would have to
resubmit the transfer instruction only if the most recent customer
statement is attached. See proposed Rule G-26(e)(v).
    \61\ If the carrying party has changed the account number for
purposes of internally reassigning the account, it would be the
responsibility of the carrying party to track the changed account
number, and such reassigned account number would not be considered
invalid for purposes of fulfilling a transfer instruction. See
proposed Rule G-26(e)(iv)(F).
    \62\ In order to include the exceptions to transfer instructions
with the provisions related to validation, the proposed rule change
would move the existing exceptions to, and add the new exceptions
in, the new, separate section on validation of transfer
instructions. See proposed Rule G-26(e)(iv).
---------------------------------------------------------------------------

    Additionally, FINRA Rule 11870(d)(2) precludes a carrying party
from taking an exception and denying validation of the transfer
instruction because of a dispute over security positions or the money
balance in the account to be transferred, and it requires the carrying
party to transfer the positions and/or money balance reflected on its
books for the account. The MSRB believes this provision will be equally
valuable to transfers covered under Rule G-26 to ensure that customers
are able to hold their municipal securities at their dealers of
choice.\63\
---------------------------------------------------------------------------

    \63\ See proposed Rule G-26(e)(iii).
---------------------------------------------------------------------------

Recordkeeping and Customer Notification
    During the validation process for a customer account transfer,
there is a risk that the parties to the transfer fail to identify
certain nontransferable assets, resulting in the improper transfer of
those assets. FINRA Rule 11870(c)(1)(E) explicitly requires that the
parties promptly resolve and reverse any such misidentified
nontransferable assets, update their records and bookkeeping systems
and notify the customer of the action taken. The MSRB believes it is
important to add this explicit requirement to Rule G-26 to ensure that
dealers address any errors in the transfer process promptly.\64\
Therefore, the proposed rule change would require that the parties
promptly resolve and reverse any such misidentified nontransferable
assets, update their records and bookkeeping systems and notify the
customer of the action taken.
---------------------------------------------------------------------------

    \64\ See proposed Rule G-26(e)(vi).
---------------------------------------------------------------------------

Transfer Rejection
    FINRA Rule 11870(d)(8) allows the receiving party to reject a full
account transfer if the account would not be in compliance with its
credit policies or minimum asset requirements. A receiving party may
not reject only a portion of the account assets (i.e., the particular
assets not in compliance with the dealer's credit policies or minimum
asset requirement). Rule G-26 currently does not include any comparable
provisions, but the MSRB believes it is reasonable for a receiving
party to deny a customer's transfer request due to noncompliance with
its credit policies or minimum asset requirements. Accordingly, the
proposed rule change would provide this ability to the receiving party
in Rule G-26.\65\
---------------------------------------------------------------------------

    \65\ See proposed Rule G-26(e)(viii).
---------------------------------------------------------------------------

Resolution of Discrepancies
    Rule G-26(f) currently provides that any discrepancies relating to
positions or money balances that exist or occur after transfer of a
customer account must be resolved promptly.\66\ FINRA Rule 11870(g)
includes the same standard but also requires that the carrying party
must promptly distribute to the receiving party any transferable assets
that accrue to the customer's transferred account after the transfer
has been effected. Further, FINRA Rule 11870(g) provides clarity to the
promptness requirement by requiring

that any claims of discrepancies after a transfer must be resolved
within five business days from notice of such claim or the non-claiming
party must take exception to the claim and set forth specific reasons
for doing so. To provide the same level of clarity and to improve
harmonization with FINRA Rule 11870(g), the proposed rule change would
include these same additional provisions.\67\
---------------------------------------------------------------------------

    \66\ See Rule G-26(f).
    \67\ See proposed Rule G-26(i)(ii)-(iii).
---------------------------------------------------------------------------

Participant in a Registered Clearing Agency
    When both the carrying party and the receiving party are direct
participants in a clearing agency that is registered with the SEC and
offers automated customer securities account transfer capabilities,
Rule G-26(h) currently requires the account transfer procedure to be
accomplished pursuant to the rules of and through such registered
clearing agency.\68\ FINRA Rule 11870(m) has a similar requirement that
provides an exception for specifically designated securities assets
transferred pursuant to the submittal of a customer's authorized
alternate instructions to the carrying party. As discussed above, FINRA
Rule 11870(m)(3) also requires the transfer of residual credit
positions through the registered clearing agency. Further, FINRA Rule
11870(m)(4) prescribes several conditions for such transfers for
participants in a registered clearing agency.\69\ The MSRB believes
customers and the parties to a customer account transfer should have
the option of performing the transfer outside of the facilities of a
registered clearing agency when an appropriate authorized alternate
instruction is given. Additionally, the MSRB believes the additional
prescription related to the process provided by FINRA will give greater
clarity to customers and dealers. Accordingly, the proposed rule change
would include these provisions.\70\
---------------------------------------------------------------------------

    \68\ See Rule G-26(h).
    \69\ FINRA also defines a ``participant in a registered clearing
agency'' as ``a member of a registered clearing agency that is
eligible to make use of the agency's automated customer securities
account transfer capabilities,'' and ``registered clearing agency''
as ``a clearing agency as defined in, and registered in accordance
with, the Exchange Act.'' The proposed rule change would include
these same definitions. See proposed Rule G-26(a)(iv)-(v).
    \70\ See proposed Rule G-26(k).
---------------------------------------------------------------------------

Transfer of Residual Positions
    When both the carrying party and the receiving party are direct
participants in a clearing agency registered with the SEC offering
automated customer securities account transfer capabilities, FINRA Rule
11870(n) requires each party to transfer credit balances that occur in
any transferred account assets (both cash and securities) through the
automated service within 10 business days after the credit balances
accrue to the account for a minimum period of six months. Given that
the majority of customer account transfers subject to Rule G-26 occur
manually, the MSRB believes it is important to provide clarity on the
obligation and timing required to transfer such credit balances for any
customer account transfer, so the proposed rule change would include a
provision with the same 10-business-day requirement as FINRA Rule
11870(n) that is not limited to when both parties are direct
participants in a clearing agency registered with the SEC offering
automated customer securities account transfer capabilities.\71\
---------------------------------------------------------------------------

    \71\ See proposed Rule G-26(g).
---------------------------------------------------------------------------

Written Procedures
    Current Rule G-26 does not itself include any requirement for
policies and procedures, but Supplementary Material .01 to FINRA Rule
11870 requires the establishment, maintenance and enforcement of
written procedures to affect and supervise customer account transfers.
The MSRB believes it is important for dealers to document the
procedures they follow to effect customer account transfers and to
require explicitly written procedures for supervision of the same,
which is consistent with MSRB Rule G-27, on supervision. Accordingly,
the proposed rule change would include such a requirement.\72\
---------------------------------------------------------------------------

    \72\ See Supplementary Material .02 to proposed Rule G-26.
---------------------------------------------------------------------------

FINRA Rule 11650--Transfer Fees
    Neither current Rule G-26 nor any other MSRB rule specifically
addresses transfer fees. However, FINRA Rule 11650, on transfer fees,
specifies that the party at the instance of which a transfer of
securities is made shall pay all service charges of the transfer agent.
The MSRB believes it is important to clarify which party is responsible
for the fees incurred for a customer account transfer. Accordingly, the
proposed rule change would include a provision identical to FINRA Rule
11650.\73\
---------------------------------------------------------------------------

    \73\ See Supplementary Material .03 to proposed Rule G-26.
---------------------------------------------------------------------------

2. Statutory Basis
    Section 15B(b)(2) of the Act \74\ provides that:
---------------------------------------------------------------------------

    \74\ 15 U.S.C. 78o-4(b)(2).

[t]he Board shall propose and adopt rules to effect the purposes of
this title with respect to transactions in municipal securities
effected by brokers, dealers, and municipal securities dealers and
advice provided to or on behalf of municipal entities or obligated
persons by brokers, dealers, municipal securities dealers, and
municipal advisors with respect to municipal financial products, the
issuance of municipal securities, and solicitations of municipal
entities or obligated persons undertaken by brokers, dealers,
---------------------------------------------------------------------------
municipal securities dealers, and municipal advisors.

    Section 15B(b)(2)(C) of the Act \75\ provides that the MSRB's rules
shall:
---------------------------------------------------------------------------

    \75\ 15 U.S.C. 78o-4(b)(2)(C).

be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principals 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.

    The MSRB believes that the proposed rule change is consistent with
the provisions of Sections 15B(b)(2) \76\ and 15B(b)(2)(C) \77\ of the
Act because it would re-establish consistency with the customer account
transfer rules of other SROs by conforming to significant updates by
the NSCC, the NYSE and FINRA that have relevance to municipal
securities. Further, the MSRB believes that including certain
provisions from the other rules in the proposed rule change will make
the transfer of customer securities account assets more flexible, less
burdensome, and more efficient, while reducing confusion and risk to
investors and allowing them to better move their securities to their
dealer of choice. The MSRB believes the proposed rule change will
promote fairness and provide greater efficiency in the transfer of
customer accounts, which should prevent fraudulent and manipulative
acts and practices, promote just and equitable principals of trade,
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, remove impediments to and perfect the mechanism of
a free and open market in municipal securities and municipal financial
products, and, in general, protect investors and the public interest.
---------------------------------------------------------------------------

    \76\ 15 U.S.C. 78o-4(b)(2).
    \77\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    The MSRB also believes that the proposed rule change is consistent
with

Section 15B(b)(2)(G) of the Act,\78\ which provides that the MSRB's
rules shall:
---------------------------------------------------------------------------

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

prescribe records to be made and kept by municipal securities
brokers, municipal securities dealers, and municipal advisors and
---------------------------------------------------------------------------
the periods for which such records shall be preserved.

    The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(G) of the Act \79\ because it would require dealers
to document the procedures they follow to effect customer account
transfers and to require explicitly written procedures for supervision
of the same.
---------------------------------------------------------------------------

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

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

    Section 15B(b)(2)(C) of the Act \80\ requires that MSRB rules not
be designed to impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. In determining
whether these standards have been met, the MSRB was guided by the
Board's Policy on the Use of Economic Analysis in MSRB Rulemaking. In
accordance with this policy, the Board has evaluated the potential
impacts on competition of the proposed rule change, including in
comparison to reasonable alternative regulatory approaches, relative to
the baseline. The MSRB does not believe the proposed rule change
imposes any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
---------------------------------------------------------------------------

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

    The MSRB does not believe the proposed rule change will create a
burden on competition, as all municipal securities brokers and
municipal securities dealers would be subject to the same modified
requirements for customer account transfers. The MSRB believes that the
proposed rule change may reduce inefficiencies that stem from
uncertainty and confusion associated with existing Rule G-26. The MSRB
also believes that dealers may benefit from clarifications and
revisions that more closely reflect the securities industry standard,
which may, in turn, reduce operational risk to dealers and investors.
Finally, the MSRB believes that the proposed rule change will make the
transfer of customer municipal securities account assets more flexible,
less burdensome, and more efficient, while reducing confusion and risk
to investors and allowing them to more conveniently move their
municipal securities to their dealer of choice.

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

    The MSRB received three comment letters in response to the Request
for Comment.\81\ The comment letters are summarized below by topic, and
the MSRB's responses are provided.
---------------------------------------------------------------------------

    \81\ See Letters from: Mike Nicholas, Chief Executive Officer,
Bond Dealers of America (``BDA''), dated February 17, 2017; Michael
Paganini (``Paganini''), dated January 6, 2017; and Leslie M.
Norwood, Managing Director and Associate General Counsel, SIFMA,
dated February 17, 2017.
---------------------------------------------------------------------------

The Need for Rule G-26
    SIFMA supported the stated purpose of the draft amendments to
modernize Rule G-26 and promote a uniform customer account transfer
standard, but it suggests some alternative approaches to achieve that
end. Specifically, SIFMA recognized that Rule G-26 is only applicable
to municipal securities brokers and municipal securities dealers,
particularly those with municipal security-only accounts and bank
dealers, but believes the rule is unnecessary. Further, SIFMA noted
that the firms subject to Rule G-26 are a small fraction of the total
number of firms and, for the most part, are not direct clearing
participants of the NSCC and, therefore, not eligible to participate in
the ACATS process.\82\ SIFMA stated that, because these firms are not
members of the NYSE or FINRA and, therefore, not subject to NYSE Rule
412 and FINRA Rule 11870, they are exempt from participating in ACATS
under Rule G-26. Finally, SIFMA believes that there are few customer
account transfers that occur ex-clearing (i.e., a manual process
outside of ACATS), making Rule G-26 redundant, and suggests that the
MSRB eliminate it.
---------------------------------------------------------------------------

    \82\ As of May 16, 2017, there were 27 bank dealers registered
with the MSRB.
---------------------------------------------------------------------------

    Although SIFMA is correct that most of the firms subject to Rule G-
26 do not participate in ACATS, SIFMA did not recognize that, from the
rule's inception, it has been intended to cover these firms, which are
not subject to NSCC, FINRA or NYSE rules, regardless of how few of them
there may be and regardless of how few customer account transfers they
may perform.\83\ As such, the MSRB believes that there remains a need
for Rule G-26 to address the manual processes used by these firms in
transferring customer accounts.
---------------------------------------------------------------------------

    \83\ See Exchange Act Release No. 22810 (Jan. 17, 1986), 51 FR
3287 (Jan. 24, 1986) (SR-MSRB-86-2).
---------------------------------------------------------------------------

    SIFMA alternatively suggested that, if the MSRB does not eliminate
Rule G-26, it should amend the rule to incorporate FINRA Rule 11870 by
reference, similar to what the NYSE has done in its Rule 412 and what
the Board has done in MSRB Rule G-41, on anti-money laundering
compliance programs.\84\ SIFMA specifically proposed that the rule
state that dealers ``shall comply with FINRA Rule 11870, concerning the
transfer of customer accounts between members, and any amendments
thereto, as if such Rule is part of MSRB's Rules.'' SIFMA believed this
``methodology is the most efficient way to reduce confusion and risk to
investors, and reduce regulatory risk to dealers,'' which SIFMA stated
have largely not been complying with the rule. SIFMA further believes
this would ensure that all dealers are covered by a rule and that there
is harmonization between the various SROs' rules.
---------------------------------------------------------------------------

    \84\ Rule G-41 provides that dealers will be deemed to be in
compliance with anti-money laundering program requirements if they
establish and implement a program that is in compliance with the
rules, regulations or requirements governing the establishment and
maintenance of anti-money laundering programs of the registered
securities association of which the dealer is a member or the
appropriate regulatory agency as defined in the Exchange Act.
---------------------------------------------------------------------------

    Although amending Rule G-26 to incorporate FINRA Rule 11870 by
reference could be a simple and efficient solution to provide a uniform
industry standard, the MSRB does not typically incorporate other
regulators' rules by reference. The MSRB believes that, while the
incorporation by reference approach suggested by SIFMA may enhance
harmonization with FINRA's rules, that approach would raise significant
concerns for the MSRB, given its statutory mandate and mission. For
example, if FINRA or its staff were to provide an interpretation of
FINRA Rule 11870, the MSRB automatically would be adopting that
interpretation without deliberately considering the issues that may be
unique to, or the interpretation's ramifications for, the municipal
securities market. Further, there are municipal securities dealers that
are not members of FINRA. Those dealers may not have notice of FINRA's
rule interpretations unless the MSRB were to monitor FINRA's rulemaking
and independently notify dealers. Therefore, if the MSRB were to
regulate customer account transfers over which it has jurisdiction by
simply incorporating a FINRA rule by reference, the MSRB potentially
could be seen as delegating its core mission to protect investors,
issuers, and the public interest and to promote a fair and efficient
municipal market.

Consistency With FINRA Rule 11870 and the Definition of
``Nontransferable Asset''
    As discussed in the Request for Comment, FINRA Rule 11870(f)(1)
requires that any fail contracts resulting from an account transfer,
which includes municipal securities, be included in a dealer's fail
file and that, not later than 30 business days following the date
delivery was due, the dealer shall take steps to obtain physical
possession or control of the municipal securities so failed to receive
by initiating a buy-in procedure or otherwise.\85\ This 30-day time
frame, however, is inconsistent with Rule G-26, which, through
reference to MSRB Rule G-12(h), provides 10 calendar days with the
option for a one-time extension of 10 calendar days, totaling up to 20
calendar days, for dealers to close out failed inter-dealer municipal
securities transactions.\86\ The Request for Comment also noted that an
additional layer of inconsistency and complexity arises due to the
system used to process most failed securities resulting from customer
account transfers and inter-dealer transactions. Specifically, an
inter-dealer transaction of municipal securities is processed in the
NSCC's Continuous Net Settlement (``CNS'') system to be paired up with
potentially another counterparty and settled.\87\ Any CNS-eligible
municipal security in a customer account transfer that fails to be
delivered also enters CNS. Once in CNS, it is difficult to determine
which fails resulted from inter-dealer transactions or customer account
transfers, and the counterparties that are paired up may not be the
same counterparties to the original transaction/transfer. As a result,
it may be unclear with which rule and corresponding time frame firms
should comply--Rule G-12(h) or FINRA Rule 11870.
---------------------------------------------------------------------------

    \85\ A buy-in occurs when the seller in a transaction, who
failed to deliver the securities sold to the buyer, purchases all or
any part of the securities necessary to complete the transaction at
the current market, with the seller bearing any burden from any
change in the market price, and any benefit from any change in the
market price remaining with the buyer.
    \86\ The MSRB notes that market participants were very
supportive of, and, in fact, suggested the time frames recently
adopted in Rule G-12(h) for closing out failed inter-dealer
transactions. The MSRB further notes that the inconsistency between
the timing of FINRA's buy-in procedures under FINRA Rule 11870(f)(1)
(30 business days) and the timing of the MSRB's previous close-out
procedures for inter-dealer transactions (up to 90 business days)
existed prior to the amendments to Rule G-12(h).
    \87\ As a key part of the CNS system, NSCC acts as the central
counterparty for clearance and settlement for virtually all broker-
to-broker equity, corporate and municipal bond and unit investment
trust trading in the United States. CNS processes include an
automated book-entry accounting system that centralizes settlement
and maintains an orderly flow of security and money balances.
---------------------------------------------------------------------------

    To avoid these inconsistencies and uncertainties, the draft
amendments in the Request for Comment proposed to amend the definition
of ``nontransferable asset'' to include any customer long position in a
municipal security that allocates to a short position, which resulted
from either the carrying party's trading activity or failure to receive
the securities it purchased to fill a customer's municipal securities
order (i.e., an inter-dealer transaction fail). In the Request for
Comment, the MSRB noted that, if FINRA were to similarly amend Rule
11870 to make these short positions nontransferable, then customer
account transfers of municipal securities would be significantly less
likely to fail and there might no longer be a need to establish fail
contracts and provide a process by which those fails could be closed
out, eliminating the timing inconsistencies and ambiguity. The MSRB
further noted that dealers may not be subject to the costs associated
with these transfer fails, as well as the complication and confusion
that may arise on coupon payment dates from the need to provide
substitute interest for tax-exempt municipal securities. The MSRB
stated its belief that this draft amendment would have the additional
benefits of reducing counterparty risk and increasing investor
confidence.
    SIFMA recognized the inconsistency between Rule G-26 and FINRA Rule
11870, as well as the complexity in CNS created by the inconsistency;
however, it disagreed with the MSRB's analysis that the draft amendment
to the definition of ``nontransferable asset'' would reduce
counterparty risk and increase customer confidence, and it believed
that it would be disruptive to industry practice and outside of
standard ACATS procedures. SIFMA stated that ``[a]utomated systems fail
to be efficient if they require manual processes, such as validating if
a long municipal security position is allocated to a short firm
position.'' BDA also had concerns and believes that the proposed
amendment to the definition is unworkable. BDA stated that significant
operational changes would have to occur in order to make the change
feasible because current dealer systems are not designed to code or
segregate inter-dealer transaction fails and account transfer fails,
and because most firms track fails at the firm level, not at the
account level for compliance with regulatory issues, such as properly
tracking substitute interest. BDA urged the MSRB to engage in dealer
outreach to find a different solution that better aligns with existing
dealer systems and processes.
    As an alternative to amending the definition of ``nontransferable
asset,'' SIFMA believed that FINRA Rule 11870 must be amended as soon
as practicable to reflect the recent amendments to Rule G-12 relating
to close-outs to eliminate the inconsistency in the time frames.
Accordingly, SIFMA suggested that FINRA simply cross-reference Rule G-
12(h), and any amendments thereto, for any fail contracts in municipal
securities resulting from customer account transfers.\88\ BDA commented
that it did not see a policy reason to amend Rule G-26, but BDA's
letter did not confront the inconsistency between Rule G-26 and FINRA
Rule 11870, and the related complexity created in CNS. BDA further
questioned the need for any changes by FINRA to FINRA Rule 11870, and
believed FINRA Rule 11870(f) is an adequate standard with which Rule G-
26 should harmonize instead.
---------------------------------------------------------------------------

    \88\ SIFMA also suggested that FINRA consolidate its rules
relating to customer account transfers, including related fees, into
FINRA Rule 11870.
---------------------------------------------------------------------------

    Given both SIFMA's and BDA's concerns about the operational changes
needed and the corresponding costs that would result from such a
change, the MSRB, at this time, does not believe amending the
definition of ``nontransferable asset'' to include any customer long
position in a municipal security that allocates to a short position is
appropriate, particularly without certainty that FINRA would similarly
amend FINRA Rule 11870 to ensure that all short municipal securities
positions in customer account transfers receive identical treatment.
Miscellaneous Comments
    As discussed above, in response to comments from SIFMA, the
proposed rule change would amend the definition of ``nontransferable
asset'' to include proprietary products of the carrying party and would
allow for either the carrying party or the receiving party (or both) to
provide the list of nontransferable assets to a customer and request
their disposition.\89\ Additionally, Paganini believed that firms are
``very inefficient when it comes to account transfers of specific types
of assets i.e., some municipal bonds,'' and that ``it is exasperating,
frustrating, and time consuming for the private investor'' when there
is a problem with an account transfer. He recommended that there be
some type of enforcement mechanism or financial penalty for transfers
that cannot be

accomplished within a reasonable time period. The MSRB notes that
dealers are expected to comply with the appropriate customer account
transfer rule, including Rule G-26 (and the time frames included
therein) where applicable, and that, if they do not, they could be
subject to an enforcement action for violating the rule.
---------------------------------------------------------------------------

    \89\ See Definition of ``Nontransferable Asset'' and Transfer
Instructions supra.
---------------------------------------------------------------------------

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period of up to 90 days (i) as
the Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

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_ADDRESS>Please include
File Number SR-MSRB-2017-03 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-2017-03. 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 Web site (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 Web site 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; the Commission does
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-2017-03 and should be
submitted on or before July 5, 2017.

    For the Commission, pursuant to delegated authority.\90\
---------------------------------------------------------------------------

    \90\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-12266 Filed 6-13-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 5 (Monday, January 9, 2012)]
[Notices]
[Pages 1076-1077]
[FR Doc No: 2012-105]

=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[USCG-2011-0975]

National Maritime Security Advisory Committee; Meeting

AGENCY: Coast Guard, DHS.

ACTION: Notice of Federal Advisory Committee Meeting.

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SUMMARY: The National Maritime Security Advisory Committee (NMSAC) will
meet on January 18-19, 2012 in Washington, DC to discuss various issues
relating to national maritime security. This meeting will be open to
the public.

DATES: The Committee will meet on Wednesday, January 18, 2012 from 9
a.m. to 3 p.m. and Thursday, January 19, 2012 from 9 a.m. to 12 p.m.
This

meeting may close early if all business is finished.
    All written material and requests to make oral presentations should
reach the Coast Guard on or before January 9, 2012.

ADDRESSES: The Committee will meet at the American Bureau of Shipping,
1400 Key Blvd., Suite 800, Arlington, VA 22209. Seating is very
limited, members of the public wishing to attend should register with
Mr. Ryan Owens, Alternate Designated Federal Official (ADFO) of NMSAC,
telephone<PHONE_NUMBER> or<EMAIL_ADDRESS>no later than January
9, 2012. Additionally, this meeting will be broadcasted via a web
enabled interactive online format and teleconference.
    To participate via teleconference, dial<PHONE_NUMBER>, the pass
code to join is 3038389. Additionally, if you would like to
participate in this meeting via the online web format, please log onto
https://connect.hsin.gov/r11254182 and follow the online instructions
to register for this meeting.
    For information on facilities or services for individuals with
disabilities or to request special assistance at the meeting, contact
the person listed in the FOR FURTHER INFORMATION CONTACT section as
soon as possible.
    To facilitate public participation, we are inviting public comment
on the issues to be considered by the committee as listed in the
``Agenda'' section below. You may submit written comments no later than
January 9, 2012, and identified by docket number [USCG-2011-0975] using
one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instruction for submitting comments.
     Mail: Docket Management Facility (M-30), U.S. Department
of Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590-0001. We encourage use of
electronic submissions because security screening may delay delivery of
mail.
     Fax:<PHONE_NUMBER>.
     Hand Delivery: Same as mail address above, between 9 a.m.
and 5 p.m., Monday through Friday, except Federal Holidays. The
telephone number is<PHONE_NUMBER>.
    Instructions: All submissions received must include the words
``Department of Homeland Security'' and docket number [USCG-2011-0975].
All submissions received will be posted without alteration at
www.regulations.gov, including any personal information provided. You
may review a Privacy Act notice regarding our public dockets in the
January 17, 2008 issue of the Federal Register (73 FR 3316).
    Docket: Any background information or presentations available prior
to the meeting will be published in the docket. For access to the
docket to read background documents or submissions received by the
NMSAC, go to http://www.regulations.gov, insert ``USCG-2011-0975) in
the ``Keyword'' box, and then click ``Search''.
    Public comment period will be held during the meetings on January
18, 2012, from 2 p.m. to 3 p.m., and January 19, 2012 from 11 a.m. to
12 p.m. Speakers are requested to limit their comments to 5 minutes.
Please note that the public comment period will end following the last
call for comments. Contact the person listed in the FOR FURTHER
INFORMATION CONTACT section below to register as a speaker.

FOR FURTHER INFORMATION CONTACT: Mr. Ryan Owens, ADFO of NMSAC, 2100
2nd Street SW., Stop 7581, Washington, DC 20593-7581; telephone (202)
372-1108 or email<EMAIL_ADDRESS>If you have any questions on
viewing or submitting material to the docket, call Renee V. Wright,
Program Manager, Docket Operations, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Notice of this meeting is given under the
Federal Advisory Committee Act, 5 U.S.C. App. NMSAC operates under the
authority of 46 U.S.C. 70112. NMSAC provides advice, consults with, and
makes recommendations to the Secretary of Homeland Security, via the
Commandant of the Coast Guard, on matters relating to national maritime
security.

Agenda of Meeting

Day 1

    The agenda for the Committee meeting is as follows:
    (1) Maritime Domain Awareness and Information Sharing. The
Committee will hold a discussion and will be tasked with developing
guidelines and recommendations for the Coast Guard in enhancing
information sharing between the maritime industry and the Federal
Government;
    (2) Maritime Transportation Security Act/Chemical Facility Anti-
Terrorism Standards Harmonization. The Committee will receive a brief
and offer recommendations on the harmonization efforts of the Coast
Guard and the Department of Homeland Security for these two regulatory
programs;
    (3) Transportation Worker Identification Credential. The TWIC
working group will provide an update on the implementation of the TWIC
program from the industry perspective. The Transportation Security
Administration will also provide an update on the development of TWIC
readers;
    (4) Public comment period.

Day 2

    (1) Maritime Transportation Security Act (MTSA). The Committee will
be briefed on upcoming regulatory actions associated with updates to
MTSA;
    (2) Global Supply Chain Security Initiative. Per the SAFE Port Act
(Pub. L. 109-347) NMSAC continues to be consulted in regards to the
Global Supply Chain Security Initiative. The Committee will receive an
update on this initiative;
    (3) Requirements for vessel guards while in port. NMSAC will review
and provide comment on requirements for vessels to post or contract for
guards while in US ports;
    (4) Underwater Terrorism Preparedness Program. NMSAC will receive a
brief on the Coast Guard Underwater Terrorism Preparedness Program;
    (5) Public comment period.

    Dated: December 29, 2011.
P.F. Thomas,
Captain, U.S. Coast Guard, Acting Director of Prevention Policy.
[FR Doc. 2012-105 Filed 1-6-12; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 84, Number 68 (Tuesday, April 9, 2019)]
[Notices]
[Pages 14104-14105]
[FR Doc No: 2019-06975]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. IC19-10-000]

Commission Information Collection Activities (FERC-912); Comment
Request; Extension

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of information collection and request for comments.

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SUMMARY: In compliance with the requirements of the Paperwork Reduction
Act of 1995, the Federal Energy Regulatory Commission (Commission or
FERC) is soliciting public comment on the currently approved
information collection FERC-912 (PURPA Section 210(m) Notification
Requirements Applicable to Cogeneration and Small Power Production
Facilities) and submitting the information collection to the Office of
Management and Budget (OMB) for review. Any interested person may file
comments directly with OMB and should address a copy of those comments
to the Commission as explained below. On January 31, 2019, the
Commission published a Notice in the Federal Register in Docket No.
IC19-10-000 requesting public comments. The Commission received no
public comments and is noting that in the related submittal to OMB.

DATES: Comments on the collection of information are due May 9, 2019.

ADDRESSES: Comments filed with OMB, identified by OMB Control No. 1902-
0225, should be sent via email to the Office of Information and
Regulatory Affairs: [email protected]. Attention: Federal Energy
Regulatory Commission Desk Officer.
    A copy of the comments should also be sent to the Commission, in
Docket No. IC19-10-000, by either of the following methods:
     eFiling at Commission's Website: http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery/Courier: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE,
Washington, DC 20426.
    Instructions: All submissions must be formatted and filed in
accordance with submission guidelines at: http://www.ferc.gov/help/submission-guide.asp. For user assistance, contact FERC Online Support
by email at [email protected], or by phone at:<PHONE_NUMBER>
(toll-free), or<PHONE_NUMBER> for TTY.
    Docket: Users interested in receiving automatic notification of
activity in this docket or in viewing/downloading comments and
issuances in this docket may do so at http://www.ferc.gov/docs-filing/docs-filing.asp.

FOR FURTHER INFORMATION CONTACT: Ellen Brown may be reached by email at
[email protected], telephone at<PHONE_NUMBER>, and fax at (202)
273-0873.

SUPPLEMENTARY INFORMATION:
    Title: FERC-912, PURPA Section 210(m) Notification Requirements
Applicable to Cogeneration and Small Power Production Facilities.
    OMB Control No.: 1902-0237.
    Type of Request: Three-year extension of the FERC-912 information
collection requirements with no changes to the current reporting and
recordkeeping requirements.
    Abstract: On 8/8/2005, the Energy Policy Act of 2005 (EPAct 2005)
\1\ was signed into law. Section 1253(a) of EPAct 2005 amends Section
210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) by
adding subsection ``(m),'' that provides, based on a specified showing,
for the termination and subsequent reinstatement of an electric
utility's obligation to purchase from, and sell energy and capacity to,
qualifying facilities (QFs). 18 CFR 292.309-292.313 are the
implementing regulations, and provide procedures for:
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    \1\ Public Law 109-58, 119 Stat. 594 (2005).
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     An electric utility to file an application for the
termination of its obligation to purchase energy and capacity from, or
sell to, a QF; \2\ and
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    \2\ 18 CFR 292.310 and 292.312.
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     An affected entity or person to subsequently apply to the
Commission for an order reinstating the electric utility's obligation
to purchase energy and capacity from, or sell to, a QF.\3\
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    \3\ 18 CFR 292.311 and 292.313.
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    Type of Respondent: Electric utilities, principally.

    Estimate of Annual Burden: \4\ The Commission estimates the annual
burden and cost, as follows.\5\
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    \4\ ``Burden'' is the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. For further
explanation of what is included in the information collection
burden, refer to Title 5 Code of Federal Regulations 1320.3.
    \5\ The Commission staff believes the FERC FTE (full-time
equivalent) average salary plus benefits is representative of wages
for the industry respondents. The FERC 2018 average salary plus
benefits for one FERC FTE is $164,820/year (or $79.00/hour). (This
is an update to the cost figures used in the 60-day Notice.)

                FERC-912, PURPA Section 210(m) Notification Requirements Applicable to Cogeneration and Small Power Production Facilities
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                                                       Number of                      Average burden hrs. &                                  Cost per
                                       Number of     responses per   Total number        average cost per       Total annual burden hrs.    respondent
                                      respondents     respondent     of responses         response  ($)         & total annual cost ($)         ($)
                                               (1)             (2)     (1) x (2) =  (4)......................  (3) x (4) = (5)..........     (5) / (1) =
                                                                               (3)                                                                   (6)
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Termination of obligation to                     7               1               7  12 hrs.; $948............  84 hrs.; $6,636..........            $948
 purchase.
Reinstatement of obligations to                  0               0               0  0 hrs.; $0...............  0 hrs.; $0...............               0
 purchase.
Termination of obligation to sell.               2               1               2  8 hrs.; $632.............  16 hrs.; $1,264..........             632
Reinstatement of obligation to                   0               0               0  0 hrs.; $0...............  0 hrs.; $0...............               0
 sell.
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    Total.........................  ..............  ..............  ..............  .........................  100 hrs.; $7,900.........           1,580
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    Comments: Comments are invited on: (1) Whether the collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information will have practical
utility; (2) the accuracy of the agency's estimate of the burden and
cost of the collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility and clarity of the information collection; and (4) ways to
minimize the burden of the collection of information on those who are
to respond, including the use of automated collection techniques or
other forms of information technology.

    Dated: April 3, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2019-06975 Filed 4-8-19; 8:45 am]
 BILLING CODE 6717-01-P