and Stability'' (discussing various limitations on future increases
of the Rate Card Fees). See also Exhibit 3(a), ``Chart 5--Historical
Effective Fee Rate Changes.''
    \117\ See related discussion supra under ``Proposed Annual Rate
Card Approach.''
---------------------------------------------------------------------------

Baseline and Reasonable Alternative Approaches
    The current fee assessment structure is used as a baseline to
evaluate the benefits, the costs, and the burden on competition of the
proposed Annual Rate Card Process. Furthermore, the proposed rate
increase for Market Activity Fees and Municipal Advisor Professional
Fee for the Fiscal Year 2023 Annual Rate Card would have occurred
regardless of which fee structure is adopted since excess reserves are
being eliminated through the 2021 Temporary Fee Reduction and the need
to cure the Fiscal Year 2023 structural budget deficit; therefore, the
Board's assessment in this section focuses on the comparison of the two
fee structures setting aside the increases to the rates of assessment
for the Rate Card Fees proposed by the Rate Card Amendments for Fiscal
Year 2023 extending to December 2023.
    In addition to the proposed new fee rate setting approach, the MSRB
also considered a few other fee assessment options but ultimately
decided that the proposed Rate Card Fee structure is the best approach
to ensure a stable revenue stream for the MSRB while reducing the
volatility from Market Activity Fees assessed and the need for ad hoc
fee filings with the Commission, without instituting a fundamental
change in how the MSRB assesses fees that may disrupt regulated
entities' financial expectations and operations.
    For example, one alternative the MSRB reviewed was to include other
sources of revenue in the Annual Rate Card Process. The MSRB evaluated
whether to include in the variable rate card pool approach the
municipal funds underwriting fees, annual fees, and initial fees.
However, the MSRB ultimately decided not to include those fees for a
variety of reasons, including the fact that each of those fees
constitutes a much smaller proportion than the four categories in the
proposed Annual Rate Card Process.\118\
---------------------------------------------------------------------------

    \118\ See notes 14, 15, 18, and 22 supra and related discussion
for explanations of why the Board to determined not to include
certain fees in the Rate Card Fees and the Annual Rate Card Process.
---------------------------------------------------------------------------

    Additionally, the Board also considered a different way to
apportion fees within each class of fee payer but decided that the
proposed Annual Rate Card Process is the best way to achieve
proportionate revenue based on the MSRB's available information, i.e.,
underwriters pay based on their volume underwritten, trading firms pay
based on their trading activities (in par value and trade count), and
municipal advisory firms pay based on the headcount of a firm.
    A fee assessment method based on a percentage of each municipal
advisory firm's revenue, for example, would not be feasible at this
time as it could require establishing a significantly more burdensome
recordkeeping and reporting requirement. The MSRB does

not currently require municipal advisory firms to report such
information under existing rules; and, more importantly, many municipal
advisory firms would likely have business activities not solely related
to municipal advisory services. In addition, it would increase the
burden on municipal advisory firms as municipal advisory firms would
have the responsibility to collect the relevant information to be used
for MSRB's fee assessment and also would then be required to report it.
The MSRB believes at this time that the costs and burdens associated
with collecting and reporting such information are not justified, and
the Municipal Advisor Annual Professional Fee for each person
associated with the firm who is qualified is a reasonable proxy for the
size of relevant business activities conducted by each municipal
advisory firm.
Benefits, Costs, and Burden on Competition
    The proposed amendments to MSRB rules would result in a new fee
approach intended to align revenues and expenses more closely and to
reduce the year-to-year volatility in the amount of fees assessed (and,
as a result, reduce the likelihood of accumulating excess reserves) by
targeting each fee category to a pre-determined proportion of the total
revenue based on respective projected volumes.\119\ The proposed Annual
Rate Card Process would result in more frequent (annual), but smaller
downward and upward, adjustments to keep revenues more closely aligned
with budgeted expenses.
---------------------------------------------------------------------------

    \119\ See, e.g., related discussion supra under ``Proposed
Annual Rate Card Approach--Objectives of the Annual Rate Card'' and
``Proposed Annual Rate Card Approach--Process for Setting the Annual
Rate Card.''
---------------------------------------------------------------------------

    The proposed Annual Rate Card Process addresses the following goals
and issues the Board identified before initiating the Fee Review and
would therefore achieve the intended benefits:
     Continue to maintain a fair and equitable balance of fees
among all regulated entities, as the MSRB's new fee approach proposal
does not change the division of fees amongst regulated entities;
     Design a durable fee structure for MSRB's long-term needs;
     Ensure that excess reserves would not likely be built up
at a high level again by reviewing the actual reserves compared to the
targeted reserves annually and incorporating any needed adjustments
directly into the Annual Rate Card Process;
     Mitigate the need for an ad hoc ``rebate'' process, as any
excess revenue would be used to reduce future years' fees; and
     Lower year-to-year variability in fee assessments, which
would smooth out regulated entities' budget outlays.
    For the Annual Rate Card proposed by the Rate Card Amendments, the
proposed rate increases for Market Activity Fees,\120\ which would be
applicable to all dealers who conduct municipal market business, and
for Municipal Advisor Professional Fee, which would be applicable to
all municipal advisory firms, are intended to pay for the expenses of
operating and administering the Board, including execution of the
MSRB's Strategic Plan for ongoing technology and data investments, and
would occur regardless of which fee structure the MSRB would adopt.
Aside from the proposed rate increases for this Annual Rate Card, the
Board does not believe the proposed Annual Rate Card Process would
create any additional costs for regulated entities when compared to the
current fee structure, as the aggregate fees assessed using the
proposed Annual Rate Card Process over the course of multiple years
would be equivalent to the aggregate fees assessed using the current
fee structure, except with less year-to-year fluctuation since over or
under revenue assessments related to market volatility would be
operationalized through the Rate Card Process.
---------------------------------------------------------------------------

    \120\ These increases would be the first rate increases to any
of the three Market Activity Fees since Fiscal Year 2011. As
mentioned above, the Transaction Fee was last raised in Fiscal Year
2011 and the Trade Count Fee was initiated in Fiscal Year 2011 as
the technology fee. The Underwriting Fee was not changed in Fiscal
Year 2011 but was last changed in Fiscal Year 2016, when it was
reduced. In addition, the annual and initial fees paid by both
dealers and municipal advisory firms were last raised in Fiscal Year
2016.
---------------------------------------------------------------------------

    The proposed Annual Rate Card Process would introduce a new fee
structure to reduce year-to-year fluctuation in the amount of market-
based fees paid by each regulated entity over time. The MSRB believes
that the proposed Annual Rate Card Process would not have an impact on
competition and, consequently, would not impose any burden on
competition, relieve a burden on competition, nor promote competition.
The MSRB believes the proposed rate increase for the Fiscal Year 2023
Annual Rate Card (extending to December 2023) is necessary and
appropriate to ensure prudent funding for the Board and that such fee
increases are reasonably and fairly designed to be proportionately
distributed across regulated entities in such a way that would not harm
competition among regulated entities, nor otherwise harm the
functioning of the municipal securities market. As a result, the Board
does not believe that the proposed rate increase would result in any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as it would be applicable to
all regulated entities. The Board also believes that no firm would be
unduly burdened as compared to another firm in terms of the proposed
rate increase. Dealers with different levels of underwriting and
trading activities as well as municipal advisory firms with a range of
headcounts would all be impacted proportionately by the proposed Annual
Rate Card Process, including the proposed increases for the rates of
assessment for the Fiscal Year 2023 Annual Rate Card.

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

    The Board did not solicit comment on the proposed rule change.
Therefore, there are no comments on the proposed rule change received
from members, participants, or others.\121\
---------------------------------------------------------------------------

    \121\ The Commission received five comment letters in response
to the proposed rule change that the MSRB filed on June 2, 2022,
which was subsequently withdrawn on July 21, 2022. This proposed
rule change, while fundamentally consistent with the withdrawn
filing, seeks to provide further clarification on the MSRB's annual
rate card process in response to those comments. See Exhibit 3(b),
``Comparison of Withdrawn Fee Filing to Current Fee Filing.''
---------------------------------------------------------------------------

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

    The foregoing rule change related to the Rate Card Amendments has
become effective pursuant to Section 19(b)(3)(A) of the Act \122\ and
paragraph (f) of Rule 19b-4 \123\ thereunder. Because the foregoing
proposed rule change related to the Technical Amendments does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \124\ and Rule
19b-4(f)(6) \125\ thereunder.
---------------------------------------------------------------------------

    \122\ 15 U.S.C. 78s(b)(3)(A).
    \123\ 17 CFR 240.19b-4(f).
    \124\ 15 U.S.C. 78s(b)(3)(A).
    \125\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may

temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please
include File Number SR-MSRB-2022-06 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-2022-06. 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MSRB-2022-06 and should be submitted on
or before August 30, 2022.
---------------------------------------------------------------------------

    \126\ 17 CFR 200.30-3a(a)(2).

    For the Commission, by the Office of Municipal Securities,
pursuant to delegated authority.\126\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17002 Filed 8-8-22; 8:45 am]
BILLING CODE 8011-01-P