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    \184\ 15 U.S.C. 78o(c)(2).
    \185\ 15 U.S.C. 78o-4(d)(2).
    \186\ 15 U.S.C. 78o-4(d)(1).
    \187\ Rule 15c2-12 was adopted under a number of Exchange Act
provisions, including Section 15(c); 15 U.S.C. 78o(c).
---------------------------------------------------------------------------

C. Transition

    The amendments to Rule 15c2-12 will require Participating
Underwriters to reasonably determine whether continuing disclosure
agreements for primary offerings occurring on or after the effective
date of the amendments comply with the provisions of the amendments,
including containing a specific reference to the MSRB as the sole
repository to receive an issuer's or obligated person's continuing
disclosure documents. Commenters generally confirmed that an issue
exists with respect to the handling of continuing disclosure documents
submitted under continuing disclosure agreements entered into by
issuers and obligated persons prior to the effective date of the

final rule amendments.\188\ To address issues that may arise if
continuing disclosure documents submitted pursuant to existing
continuing disclosure agreements must be filed in different locations
from those documents submitted in connection with offerings occurring
on or after the amendments' effective date, we requested comment on
directing Commission staff to withdraw the ``no action'' letters
provided to the current NRMSIRs and designating the MSRB as the sole
NRMSIR.\189\
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    \188\ See, e.g., ICI Letter, at 4, NABL Letter, at 1-2, SPSE
Letter, at 15, and Vanguard Letter, at 3.
    \189\ See Proposing Release, 73 FR at 46146.
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    While some commenters \190\ supported this approach, others
advocated various alternative transition processes.\191\ For example,
one commenter suggested that the Commission could require any
continuing disclosure made pursuant to the amended Rule provide that
issuers make filings with the MSRB electronically with respect to new
undertakings and all undertakings previously entered into by such
issuers.\192\ In the alternative, this commenter suggested that the
Commission issue an interpretive letter stating that an issuer that
chooses to satisfy existing undertakings (namely, that documents be
provided to NRMSIRs and SIDs) by transmitting them to the MSRB would be
acting in a manner consistent with the Rule as amended.\193\ Another
commenter supported the proposed alternative approaches.\194\ The
Commission observes that under the commenter's primary suggestion, the
Commission in effect would mandate the amendment of existing contracts
without the parties' consent. We do not believe that it would be
appropriate to interfere with the terms of existing contracts, which
were the subject of negotiation among the parties. In addition, we note
that the submission to the MSRB of continuing disclosure documents for
past offerings would not occur until a subsequent offering occurs. As
many issuers and obligated persons do not offer securities annually--
many do so only occasionally--there would be a potentially lengthy
period during which some issuers would supply continuing disclosure
documents to the MSRB, while others would continue to supply them to
the NRMSIRs and SIDs under existing continuing disclosure agreements.
The commenter's suggested alternative, that the Commission issue an
interpretive letter stating that an issuer or obligated person that
chooses to satisfy an existing undertaking by transmitting documents to
the MSRB would be acting in a manner consistent with the Rule, as
amended, would also be inappropriate because it would ignore the plain
meaning of those existing contracts that require continuing disclosure
documents to be provided to NRMSIRs and SIDs.
---------------------------------------------------------------------------

    \190\ See SIFMA Letter, at 3-4, ICI Letter, at 3-4, and Vanguard
Letter, at 2-3.
    \191\ See GFOA Letter, at 3, NABL Letter, at 1-2, NASACT Letter,
at 2, and NFMA Letter, at 1.
    \192\ See NABL Letter, at 1-2.
    \193\ Id.
    \194\ See GFOA Letter, at 3.
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    We believe that it would be inefficient, confusing and burdensome
for issuers to submit continuing disclosure documents for offerings
that occurred prior to the effective date of the final amendments to
different locations than for offerings occurring afterwards. Moreover,
having such a bifurcated system would not be in the best interests of
investors and others who seek information about municipal issuers
because it could result in the MSRB collecting only a portion of new
information. We believe that one commenter's suggestion that new
continuing disclosure agreements amend all prior disclosure agreements
of the same issuer would incorporate existing continuing disclosure
into the new centralized system only if and when an issuer returns to
the market, and therefore is not as effective a transition mechanism as
the Commission's approach.
    We believe that it will be more efficient and effective to
implement a sole repository expeditiously. In our view, this can best
be accomplished by creating a mechanism by which issuers or obligated
persons may comply with their existing undertakings by submitting their
continuing disclosure documents to one location, thereby providing
investors and municipal market participants with prompt and easy access
to continuing disclosure documents at no charge. Our proposed approach
to withdraw the ``no action'' letters to the existing NRMSIRs and have
the MSRB be the sole NRMSIR for the submission of continuing disclosure
documents pursuant to continuing disclosure agreements entered into
prior to the effective date of the final amendments was supported by a
number of commenters who addressed this issue.\195\ We believe that,
given the MSRB's proposal to implement the continuing disclosure
feature of its EMMA system that we are approving today, it is
reasonable and sensible for the MSRB also to serve as the sole NRMSIR.
---------------------------------------------------------------------------

    \195\ See ICI Letter, at 4, SIFMA Letter, at 4, and Vanguard
Letter, at 3.
---------------------------------------------------------------------------

    Accordingly, the Commission has determined to implement the
approach that it outlined in the Proposing Release.\196\ We hereby
direct Commission staff to withdraw all ``no action'' letters
recognizing existing NRMSIRs \197\ as of 12 midnight (ET) of the day
preceding the effective date of the final amendments to Rule 15c2-12.
In addition, by amending Rule 15c2-12, we are designating the MSRB as
the sole NRMSIR. Consequently, beginning on the effective date of the
final amendments, continuing disclosure documents that are provided
pursuant to existing continuing disclosure agreements--i.e., those
agreements entered into prior to the effective date of the final
amendments (which typically reference the NRMSIRs as locations to which
a submission should be made)--should be provided to the MSRB in its
capacity as the sole NRMSIR.\198\ Providing all submissions--for both
past and future offerings--to the same location is expected to be less
confusing to, and is expected to simplify the submission process for,
issuers and other obligated persons subject to continuing disclosure
agreements, as well as to investors and others who wish to obtain such
information.\199\
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    \196\ See Proposing Release, 73 FR at 46146.
    \197\ See Letters from Brandon Becker, Director, Division of
Market Regulation (n/k/a Division of Trading and Markets),
Commission, to: Michael R. Bloomberg, President, Bloomberg L.P.,
dated June 26, 1995, and Aaron L. Kaplow, Vice President, Kenny S&P
Information Services, dated June 26, 1995; and Letters from Robert
L.D. Colby, Deputy Director, Division of Market Regulation (n/k/a
Division of Trading and Markets), Commission, to: Peter J. Schmitt,
President, DPC DATA, dated June 23, 1997, and John King, Chief
Operating Officer, Interactive Data, dated December 21, 1999.
    \198\ Issuers or obligated persons with existing limited
undertakings under Rule 15c2-12(d)(2)(ii)(B) that reference the MSRB
rather than the NRMSIRs as the location to submit material event
notices would not be affected by this approach because they would
continue to submit such notices to the MSRB as stated in their
limited undertaking. However, issuers or obligated persons with
existing limited undertakings that reference the NRMSIRs as the
location to submit material event notices would provide such notices
to the MSRB in its capacity as the sole NRMSIR.
    \199\ We note that this approach will result in issuers located
in the three states with SIDs providing continuing disclosure
documents for undertakings entered into prior to the effective date
of the final amendments to both the MSRB and the appropriate SID.
This situation is unavoidable even though SIDS no longer will be
referenced in the Rule as amended, because the obligation to provide
documents to the appropriate SID under existing agreements is not
being affected as a result of our direction to withdraw outstanding
``no action'' letters to the NRMSIRs and designating the MSRB as the
sole NRMSIR for purposes of outstanding continuing disclosure
agreements.

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

    To assist issuers and obligated persons during the period between
the date the Commission adopts the amendments and their effective date,
municipal advisers and lawyers may wish to consider noting to their
clients that the MSRB will become the only NRMSIR on the effective date
and that all continuing disclosure documents should thereafter be
provided to the MSRB alone. We note that the MSRB has indicated plans
for an extensive outreach program to educate issuers and other
obligated persons regarding use of its EMMA system's continuing
disclosure service and to assist filers who have been accustomed to
providing paper documents, which should help further alleviate the
potential for transitional problems.\200\
---------------------------------------------------------------------------

    \200\ See MSRB EMMA Proposal, supra note 12, 73 FR at 46165.\
---------------------------------------------------------------------------

    In determining that the MSRB should become the sole NRMSIR on the
effective date of the final amendments, we considered the continued
accessibility to the public of the documents provided to the existing
NRMSIRs. In the Proposing Release, we sought comment on whether there
are concerns that the NRMSIRs would not retain the historical
continuing disclosure documents and whether commenters anticipate any
problems in obtaining such documents from the current NRMSIRs, if they
were no longer recognized as such. In addition, we requested that, if
commenters foresaw any such problems, they suggest alternative
approaches for the retention of and access to historical information.
    One NRMSIR requested that, in the event that the Commission
determined no longer to designate it as a NRMSIR, it not have any
continuing obligation to serve as a NRMSIR for existing documents and
historical documents.\201\ However, other commenters expressed a
concern that such documents might not remain accessible.\202\ The
Commission understands that each NRMSIR is an information vendor that
has been in that business for a number of years.\203\ While Rule 15c2-
12, as amended, will no longer contemplate use of the current NRMSIRs
for future continuing disclosure documents from issuers and obligated
persons after the effective date of the final amendments, the
Commission believes that the current NRMSIRs could determine it is in
their interest to continue to provide public access to the continuing
disclosure documents they obtained while serving as NRMSIRs, in order
to be able to earn revenue from their respective collections. As a
practical matter, requests for such documents from the NRMSIRs by those
who are not already subscribers to their services may be expected to
decline over time, because more current continuing disclosure documents
will become available without charge from the MSRB.
---------------------------------------------------------------------------

    \201\ See SPSE Letter, at 15.
    \202\ See Vanguard Letter, at 3, and ICI Letter, at 4.
    \203\ See supra note 197.
---------------------------------------------------------------------------

    We also requested comment on any issues or problems that could
arise if investors seek to obtain and compare information from multiple
repositories--e.g., historical continuing disclosure documents from the
NRMSIRs and current continuing disclosure documents from the MSRB-- and
whether there are any alternative methods that would allow them to
obtain complete information about municipal securities, including
obtaining historical information. Two commenters, however, favored
transferring continuing disclosure information to the MSRB if the
NRMSIRs do not retain historical documents.\204\
---------------------------------------------------------------------------

    \204\ See ICI Letter, at 4, and Vanguard Letter, at 3.
---------------------------------------------------------------------------

    We note that transitional issues regarding access to continuing
disclosure documents generally are time limited. Investors presumably
desire to obtain information for only the most recent years. Further,
since final official statements of offerings subject to the Rule must
disclose the failures of an issuer or obligated person to comply with
continuing disclosure undertakings only for the previous five
years,\205\ Participating Underwriters presumably do not desire access
to older information. The Commission believes that the benefits that it
anticipates in connection with the final amendments justify the
transitory challenges of the Rule's conversion from the NRMSIR model to
a model in which the MSRB will be the sole repository.
---------------------------------------------------------------------------

    \205\ See Rule 15c2-12(f)(3), 17 CFR 15c2-12(f)(3).
---------------------------------------------------------------------------

    Some commenters advocated a short transition period \206\ whereas
other commenters stressed that the Commission should allow sufficient
time to allow small issuers to prepare for an electronic-only
process.\207\ We have established July 1, 2009 as the effective date of
these amendments.\208\ We believe that the approximately eight month
period will be adequate to address commenters' concerns regarding the
need for adequate time for issuers to become informed about the MSRB's
new role as the only NRMSIR; become familiar with the continuing
disclosure component of EMMA; arrange to obtain necessary documents in
or convert such documents into the electronic format designated by the
MSRB; and generally adapt their policies and procedures for providing
continuing disclosure documents.
---------------------------------------------------------------------------

    \206\ See NFMA Letter, at 1, and Vanguard Letter, at 3.
    \207\ See GFOA Letter, at 2, and NASACT, at 2.
    \208\ Because commenters also addressed the proper length of the
transition period in the context of the MSRB EMMA Proposal, we also
are addressing the issue in the MSRB Approval Order, supra note 12.
---------------------------------------------------------------------------

IV. Paperwork Reduction Act

    The Rule, as amended, contains ``collection of information
requirements'' within the meaning of the Paperwork Reduction Act of
1995 (``PRA'').\209\ In accordance with 44 U.S.C. 3507 and 5 CFR
1320.11, the Commission submitted revisions to the currently approved
collection of information titled ``Municipal Securities Disclosure''
(17 CFR 240.15c2-12) (OMB Control No. 3235-0372) to the Office of
Management and Budget (``OMB''). An agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information
unless it displays a currently valid control number. In the Proposing
Release, the Commission solicited comments on the collection of
information requirements. The Commission noted that the estimates of
the effect that the proposed amendments to the Rule would have on the
collection of information were based on data from various sources,
including the most recent PRA submission for Rule 15c2-12, the MSRB,
and municipal industry participants. Although the Commission received
twenty-three comment letters on the proposed rulemaking, none of the
commenters addressed the estimates regarding its collection of
information aspects. After further consideration, the Commission has
refined the cost estimate that issuers could incur to obtain technology
resources. The Commission continues to believe that all other burden
estimates provided in the Proposing Release are appropriate.
---------------------------------------------------------------------------

    \209\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

A. Summary of Collection of Information

    Prior to these amendments, under paragraph (b) of Rule 15c2-12, a
Participating Underwriter is required: (1) To obtain and review an
official statement ``deemed final'' by an issuer of the securities,
except for the omission of specified information, prior to making a
bid, purchase, offer, or sale of municipal securities; (2) in non-
competitively bid offerings, to send, upon request, a copy of the most
recent preliminary official statement (if one

exists) to potential customers; (3) to send, upon request, a copy of
the final official statement to potential customers for a specified
period of time; (4) to contract with the issuer to receive, within a
specified time, sufficient copies of the final official statement to
comply with the Rule's delivery requirement, and the requirements of
the rules of the MSRB; and (5) before purchasing or selling municipal
securities in connection with an offering, to reasonably determine that
the issuer or obligated person has undertaken, in a written agreement
or contract, for the benefit of holders of such municipal securities,
to provide annual filings, material event notices, and failure to file
notices (i.e., continuing disclosure documents) to each NRMSIR (or,
alternatively, to the MSRB in the case of material event notices and
failure to file notices).\210\ Under the Rule, as amended,
Participating Underwriters will be required to reasonably determine
that the issuer or obligated person has undertaken in a continuing
disclosure agreement to provide continuing disclosure documents to the
MSRB, in an electronic format and accompanied by identifying
information, in each case as prescribed by the MSRB. The final rule
amendments will not substantively change any of the current obligations
of Participating Underwriters, except to the extent that Participating
Underwriters will have to reasonably determine that the issuer or
obligated person has agreed in the continuing disclosure agreement to
provide continuing disclosure documents to a single repository, i.e.,
the MSRB, instead of to multiple NRMSIRs.
---------------------------------------------------------------------------

    \210\ 17 CFR 240.15c2-12(b).
---------------------------------------------------------------------------

    The final amendments also will revise Rule 15c2-12(d)(2)(ii), which
is part of an exemptive provision from the requirements of Rule 15c2-
12(b)(5). Prior to the amendments adopted today, the exemption in Rule
15c2-12(d)(2) provided that paragraph (b)(5) of the Rule, which relates
to the submission of continuing disclosure documents pursuant to
continuing disclosure agreements, would not apply to a primary offering
if three conditions were met: (1) The issuer or the obligated person
has $10 million or less of debt outstanding; \211\ (2) the issuer or
obligated person has undertaken in a written agreement or contract to
provide: (A) Financial information or operating data regarding each
obligated person for which financial information or operating data is
presented in the final official statement, including financial
information and operating data which is customarily prepared by such
obligated person and is publicly available, upon request to any person
or at least annually to the appropriate SID,\212\ and (B) material
event notices to each NRMSIR or the MSRB, as well as the appropriate
SID; \213\ and (3) the final official statement identifies by name,
address and telephone number the persons from which the foregoing
information, data and notices can be obtained. The final amendments
revise the limited undertaking set forth in 15c2-12(d)(2)(ii)(A) and
(B) by deleting references to the NRMSIRs and SIDs and solely
referencing the MSRB. Accordingly, under the amendment to Rule 15c2-
12(d)(2)(ii), a Participating Underwriter will be exempt from its
obligations under paragraph (b)(5) of the Rule if an issuer or
obligated person has agreed in its limited undertaking to provide
financial information, operating data and material event notices to the
MSRB in an electronic format as prescribed by the MSRB, and the
exemption's other conditions are met.
---------------------------------------------------------------------------

    \211\ 17 CFR 240.15c2-12(d)(2)(i).
    \212\ 17 CFR 240.15c2-12(d)(2)(ii)(A).
    \213\ 17 CFR 240.15c2-12(d)(2)(ii)(B).
---------------------------------------------------------------------------

B. Use of Information

    The final amendments will provide for a single repository that
receives submissions in an electronic format to encourage a more
efficient and effective process for the collection and availability of
continuing disclosure documents. The final amendments are intended to
improve the availability of continuing disclosure documents that
provide current information about municipal issuers and their
securities. As a result, investors and other municipal securities
market participants should be able to have ready and prompt access to
the continuing disclosure documents of municipal securities issuers.
This information could be used by retail and institutional investors;
underwriters of municipal securities; other market participants,
including broker-dealers and municipal securities dealers; municipal
securities issuers; vendors of information regarding municipal
securities; the MSRB and its staff; Commission staff; and the public
generally.

C. Respondents

    The final amendments require that a Participating Underwriter in a
primary offering of municipal securities reasonably determine that the
issuer or an obligated person has undertaken in a continuing disclosure
agreement to submit specified continuing disclosure documents to the
MSRB in an electronic format and accompanied by identifying
information, as prescribed by the MSRB. In the Proposing Release, we
estimated that the respondents impacted by the paperwork collection
associated with the Rule would consist of: 250 broker-dealers, 10,000
issuers, and the MSRB. The Commission included this estimated number of
respondents in the Proposing Release and received no comments on this
estimate. The Commission continues to believe that these estimates are
appropriate.

D. Total Annual Reporting and Recordkeeping Burden

    We estimate the aggregate information collection burden for the
amended Rule to consist of the following:
1. Broker-Dealers
    We estimate that the Rule, as amended, will impose a paperwork
collection burden for 250 broker-dealers and will require each of these
broker-dealers an average burden of one hour per year to comply with
the Rule. This burden accounts for the time it will take a broker-
dealer to reasonably determine that the issuer or obligated person has
undertaken, in a written agreement or contract, for the benefit of
holders of such municipal securities, to provide annual filings,
material event notices, and failure to file notices (i.e., continuing
disclosure documents) to the MSRB.
    In addition, we estimate that a broker-dealer will incur a one-time
paperwork burden to have its internal compliance attorney prepare and
issue a notice advising its employees who work on primary offerings of
municipal securities about the final amendments to Rule 15c2-12. We
estimate that it will take the internal compliance attorney
approximately 30 minutes to prepare a notice describing the broker-
dealer's obligations in light of the revisions to the Rule. The task of
preparing and issuing a notice advising the broker-dealer's employees
about the adopted amendments is consistent with the type of compliance
work that a broker-dealer typically handles internally. Accordingly, we
estimate that 250 broker-dealers each will incur a one-time, first-year
burden of 30 minutes to prepare and issue a notice to its employees
regarding the broker dealer's obligations under the adopted amendments.
    Therefore, under the final amendments, the total burden on broker-
dealer respondents will be 375

hours for the first year \214\ and 250 hours for each subsequent
year.\215\ The Commission included these estimates in the Proposing
Release and received no comments on them. The Commission continues to
believe that these estimates are appropriate.
---------------------------------------------------------------------------

    \214\ (250 (maximum estimate of broker-dealers impacted by the
final amendments) x 1 hour) + (250 (maximum estimate of broker-
dealers impacted by the final amendments) x .5 hour (estimate for
one-time burden to issue notice regarding broker-dealer's
obligations under the final amendments)) = 375 hours.
    \215\ 250 (maximum estimate of broker-dealers impacted by the
final amendments) x 1 hour = 250 hours.
---------------------------------------------------------------------------

2. Issuers
    The Commission believes that issuers prepare annual filings and
material event notices as a usual and customary practice in the
municipal securities market. Issuers' undertakings regarding the
submission of annual filings, material event notices, and failure to
file notices that are set forth in continuing disclosure agreements
contemplated by the Rule impose a paperwork burden on issuers of
municipal securities. We estimate that, in connection with the final
amendments to the Rule, 10,000 municipal issuers with continuing
disclosure agreements will prepare approximately 12,000 to 15,000
annual filings yearly.\216\
---------------------------------------------------------------------------

    \216\ The estimate for the number of annual filings includes the
submission of annual financial information or operating data
described in Rule 15c2-12(d)(2)(ii)(A).
---------------------------------------------------------------------------

    The Rule, as amended, provides that, under continuing disclosure
agreements, continuing disclosure documents are to be submitted
electronically to the MSRB, but does not revise the categories of
persons who can submit the documents. Issuers can continue to submit
continuing disclosure documents directly to the repository or can do so
indirectly through an indenture trustee or a designated agent. An
issuer might engage the services of a designated agent as a matter of
convenience to advise it of the timing and type of continuing
disclosure documents that need to be submitted to the repository. We
estimate that approximately 30% of issuers will utilize the services of
a designated agent to submit disclosure documents to the MSRB.
    We estimate that, under the final amendments, an issuer will take
approximately 45 minutes to submit an annual filing to the MSRB in an
electronic format and accompanied by identifying information. This
estimate includes approximately 30 minutes to prepare the annual
filing, which is consistent with the prior paperwork collection
associated with the Rule, plus a new burden of an additional 15 minutes
to convert the information into an electronic format and add any
identifying information that the repository may prescribe. Therefore,
under the final amendments, the total burden on issuers of municipal
securities to submit 15,000 annual filings to the MSRB is estimated to
be 11,250 hours.\217\
---------------------------------------------------------------------------

    \217\ 15,000 (maximum estimate of annual filings) x 45 minutes =
11,250 hours.
---------------------------------------------------------------------------

    We estimate that, under the final amendments, the MSRB annually
will receive approximately 50,000 to 60,000 notices of the occurrence
of a material event.\218\ We also estimate that, under the final
amendments, an issuer will take approximately 45 minutes to submit a
material event notice to the MSRB in an electronic format and
accompanied by identifying information. This estimate includes
approximately 30 minutes to prepare the material event notice, which is
consistent with the prior paperwork collection associated with the
Rule, plus an additional 15 minutes to convert the information into an
electronic format and add any identifying information that the
repository may prescribe. Therefore, under the final amendments, the
total burden on issuers to submit material event notices to the MSRB
will require 45,000 hours.
---------------------------------------------------------------------------

    \218\ This estimate for material event notices includes the
submission of material event notices described in Rule 15c2-
12(d)(2)(ii)(B).
---------------------------------------------------------------------------

    We estimate that, under the final amendments, the MSRB annually
will receive approximately 1,500 to 2,000 failure to file notices. We
also estimate that, under the final amendments, an issuer will take
approximately 30 minutes to submit a failure to file notice to the MSRB
in an electronic format and accompanied by identifying information.
This estimate includes approximately 15 minutes to prepare the failure
to file notice, plus an additional 15 minutes to convert the
information into an electronic format and add any identifying
information that the repository would prescribe. Therefore, under the
adopted amendments, the total burden on issuers to prepare and submit
failure to file notices to the MSRB will be 1,000 hours.\219\ Thus, the
estimated 1,000 hours to prepare and submit failure to file notices to
the MSRB represents a new paperwork burden of 1,000 hours.
---------------------------------------------------------------------------

    \219\ 2,000 (maximum estimate of failure to file notices) x 30
minutes = 1,000 hours.
---------------------------------------------------------------------------

    Accordingly, under the final amendments, the total burden on
issuers to submit annual filings, material event notices and failure to
file notices to the MSRB would be 57,250 hours.\220\ The Commission
included these estimates in the Proposing Release and received no
comments on them. The Commission continues to believe that these
estimates are appropriate.
---------------------------------------------------------------------------

    \220\ 11,250 hours (estimated burden for issuers to submit
annual filings) + 45,000 hours (estimated burden for issuers to
submit material event notices) + 1,000 hours (estimated burden for
issuers to submit failure to file notices) = 57,250 hours.
---------------------------------------------------------------------------

3. The MSRB
    Under the final amendments, the MSRB will be the sole repository
and will receive disclosure documents in an electronic, rather than
paper, format. We estimate that the burden on the MSRB to collect,
index, store, retrieve, and make available the pertinent documents
would be the number of hours that its employees would be assigned to
the system for collecting, storing, retrieving, and making available
the documents. In the Proposing Release, we noted that the MSRB advised
that three full-time employees and one half-time employee would be
assigned to these tasks and that each full-time employee would spend
approximately 2,000 hours per year working on these tasks. Therefore,
under the final amendments, the total burden on the MSRB to collect,
store, retrieve, and make available the disclosure documents covered by
the amendments will be 7,000 hours per year.\221\ The Commission
included this estimate in the Proposing Release and received no
comments on it. The Commission continues to believe that this estimate
is appropriate.
---------------------------------------------------------------------------

    \221\ 2,000 hours x 3.5 (3 full time employees and 1 half-time
employee) = 7,000 hours.
---------------------------------------------------------------------------

4. Annual Aggregate Burden for Proposed Amendments
    Accordingly, we estimate that the ongoing annual aggregate
information collection burden for the amended Rule will be 64,500
hours.\222\ The Commission included this estimate in the Proposing
Release and received no comments on it. The Commission continues to
believe that this estimate is appropriate.
---------------------------------------------------------------------------

    \222\ 250 hours (total estimated burden for broker-dealers) +
57,250 hours (total estimated burden for issuers) + 7,000 hours
(total estimated burden for MSRB) = 64,500 hours. The initial first-
year burden would be 64,625 hours: 375 hours (total estimated burden
for broker-dealers in the first year) + 57,250 hours (total
estimated burden for issuers) + 7,000 hours (total estimated burden
for MSRB) = 64,625 hours.
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E. Total Annual Cost Burden

1. Issuers
    The Commission expects that some issuers may be subject to some
costs associated with the electronic

submission of annual filings, material event notices and failure to
file notices, particularly if they (or their agent) were submitting
paper copies of these documents to the repositories. It is likely,
however, that many issuers of municipal securities currently have the
computer equipment and software necessary to convert paper copies of
continuing disclosure documents to electronic copies and to
electronically transmit the documents to the MSRB. For issuers that
currently have such capability, the start-up costs to provide
continuing disclosure documents to the MSRB will be minimal because
they already possess the necessary resources internally. Some issuers
may have the necessary computer equipment to transmit documents
electronically to the MSRB, but may need to upgrade or obtain the
software necessary to submit documents to the MSRB in the electronic
format that it prescribes. For these issuers, the start-up costs will
be the costs of upgrading or acquiring the necessary software. Issuers
that presently do not provide their annual filings, material event
notices and/or failure to file notices in an electronic format and that
are currently sending paper copies of their documents to the
repositories pursuant to their continuing disclosure agreements (or
only providing disclosures upon request) may incur some costs to obtain
electronic copies of such documents if they are prepared by a third
party (e.g., accountant or attorney) or, alternatively, to have a paper
copy converted into an electronic format. These costs can vary
depending on how the issuer elects to convert its continuing disclosure
documents into an electronic format. An issuer may elect to have a
third-party vendor transfer its paper continuing disclosure documents
into the appropriate electronic format. An issuer also may decide to
undertake the work internally, and its costs will vary depending on the
issuer's current technology resources.
    The cost for an issuer to have a third-party vendor transfer its
paper continuing disclosure documents into an appropriate electronic
format can vary depending on what resources are required to transfer
the documents into the appropriate electronic format. One example of
such a transfer is the scanning of paper-based continuing disclosure
documents into an electronic format. We estimate that the cost for an
issuer to have a third-party vendor scan documents will be $6 for the
first page and $2 for each page thereafter. We estimate that material
event and failure to file notices consist of one to two pages, while
annual filings range from eight to ten pages to several hundred pages,
but average about 30 pages in length. Accordingly, the approximate cost
for an issuer to use a third party vendor to scan a material event
notice or failure to file notice will be $8 each, and the approximate
cost to scan an average-sized annual financial statement will be $64.
We further estimate that an issuer will submit one to five continuing
disclosure documents annually. We included these estimates in the
Proposing Release and received no comments on them. We continue to
believe that these estimates are appropriate.
    Alternatively, an issuer that currently does not have the
appropriate technology can elect to purchase the resources to
electronically format the disclosure documents on its own.\223\ We
estimate that an issuer's initial cost to acquire these technology
resources could range from $750 to $4,300.\224\ Some issuers may have
the necessary hardware to transmit documents electronically to the
MSRB, but may need to upgrade or obtain the software necessary to
submit documents to the MSRB in the electronic format that it
prescribes. We estimate that an issuer's cost to update or acquire this
software can range from $50 to $300.\225\ We included these estimates
in the Proposing Release and received no comments on them. We continue
to believe that these estimates are appropriate.
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    \223\ Generally, the technology resources necessary to transfer
a paper document into an electronic format are a computer, scanner
and possibly software to convert the scanned document into the
appropriate electronic document format. Most scanners include a
software package that is capable of converting scanned images into
multiple electronic document formats. An issuer will need to
purchase software only if the issuer (1) has a scanner that does not
include a software package that is capable of converting scanned
images into the appropriate electronic format, or (2) purchases a
scanner that does not include a software package capable of
converting documents into the appropriate electronic format.
    \224\ The estimated cost for an issuer to upgrade or acquire the
necessary technology to transfer its paper continuing disclosure
documents into an electronic format is based on the following
estimates for purchasing the necessary equipment from a commercial
vendor: (1) $500 to $3,000 for a computer; (2) $200 to $1,000 for a
scanner; and (3) $50 to $300 for software to submit documents in an
electronic format.
    \225\ Issuers that need solely to upgrade existing software may
incur costs closer to the lower end of this estimate, while those
issuers that need to purchase completely new software packages may
incur costs closer to the higher end of this estimate.
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    In addition, issuers without direct Internet access may incur some
costs to obtain such access to submit the documents. However, Internet
access is now broadly available to and utilized by businesses,
governments, organizations and the public, and we expect that most
issuers of municipal securities currently have Internet access. In the
event that an issuer does not have Internet access, we estimate the
cost of such access to be approximately $50 per month. Otherwise, there
are multiple free or low cost locations that an issuer can utilize,
such as various commercial sites, which could help an issuer to avoid
the costs of maintaining continuous Internet access solely to submit
documents to the MSRB.
    Accordingly, the Commission estimates that the costs to some
issuers to submit continuing disclosure documents to a single
repository in electronic format includes: (1) An approximate cost of $8
per notice to use a third party vendor to scan a material event notice
or failure to file notice, and an approximate cost of $64 to use a
third party vendor to scan an average-sized annual financial statement;
(2) an approximate cost ranging from $750 to $4,300 to acquire
technology resources to convert continuing disclosure documents into an
electronic format; (3) an approximate cost ranging from $50 to $300
solely to upgrade or acquire the software to submit documents in an
electronic format; and (4) approximately $50 per month to acquire
Internet access.
    For an issuer that does not have Internet access and elects to have
a third party convert continuing disclosure documents into an
electronic format (``Category 1 issuers''), the total maximum external
estimated cost such issuer will incur is $752 per year.\226\ For an
issuer that does not have Internet access and elects to acquire the
technological resources to convert continuing disclosure documents into
an electronic format internally (``Category 2 issuers''), the total
maximum external estimated cost such issuer will incur is $4,900 for
the first year and $600 per year thereafter.\227\ As

noted in the Proposing Release, the estimated total cost for issuers,
if they all were classified as Category 1 issuers, is $7,520,000 per
year, and the estimated total cost for issuers, if they all were
classified as Category 2 issuers, is $49,000,000 for the first year and
$6,000,000 per year thereafter.\228\ We included these cost estimates
in the Proposing Release and received no comments on them.
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    \226\ [$64 (cost to have third party convert annual filing into
an electronic format) x 2 (maximum estimated number of annual
filings filed per year per issuer)] + [$8 (cost to have third party
convert material event notice or failure to file notice into an
electronic format) x 3 (maximum estimated number of material event
or failure to file notices filed per year per issuer)] + [$50
(estimated monthly Internet charge) x 12 months] = $752. We estimate
that an issuer would file one to five continuing disclosure
documents per year. These documents generally consist of no more
than two annual filings and three material event or failure to file
notices.
    \227\ [$4,300 (maximum estimated one-time cost to acquire
technology to convert continuing disclosure documents into an
electronic format)] + [$50 (estimated monthly Internet charge) x 12
months] = $4,900. After the initial year, issuers who acquire the
technology to convert continuing disclosure documents into an
electronic format internally only will have the cost of securing
Internet access. $50 (estimated monthly Internet charge) x 12 months
= $600.
    \228\ Total cost for Category 1 issuers: 10,000 issuers x $752
(annual cost per issuer to have a third party convert continuing
disclosure documents into an electronic format and for Internet
access) = $7,520,000. Total cost for Category 2 issuers: 10,000
issuers x $4,900 (one-time cost to acquire technology to convert
continuing disclosure documents into an electronic format and annual
cost for Internet access) = $49,000,000. 10,000 issuers x $600
(annual cost per issuer for Internet access) = $6,000,000.
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    After further consideration, we believe that the actual total costs
that are likely to be incurred by issuers to convert continuing
disclosure documents into an electronic format will be less than the
estimated maximum external costs described above. We note that these
total annual cost estimates are based on the assumption that all
issuers subject to continuing disclosure agreements would have to
acquire technology resources necessary to submit continuing disclosure
documents in an electronic format to the MSRB. In the Proposing
Release, we noted our belief that this was a conservative estimate, and
that in all likelihood, many issuers either currently submit continuing
disclosure documents in an electronic format or currently have the
necessary technology resources to submit continuing disclosure
documents in an electronic format.
    In this regard, we noted in the Proposing Release that
approximately 30% of issuers currently utilize the services of a
designated filing agent to submit documents electronically to NRMSIRs.
Moreover, all NRMSIRs currently allow electronic filing of continuing
disclosure documents. We further note that it was reported in 2002 that
approximately 89% of all municipal governments in New York,
Pennsylvania and West Virginia had access to computer technology and
used it in their operations.\229\
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    \229\ See Timothy M. Kelsey, Michael J. Dougherty and Michael
Hattery, Information Technology Use by Local Governments in the
Northeast: Assessment and Needs, 40 Journal of Extension 5, October
2002 (available at http://www.joe.org/joe/2002october/a4.shtml)
(``Journal of Extension'').
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    Finally, even if all issuers currently lack the necessary
technology, we assume that they would be more likely to choose the
lower cost option, i.e., Category 1 with an estimated annual cost of
$7,520,000. To be conservative for purposes of the PRA, however, the
Commission estimates that the annual costs for those issuers that need
to acquire technology resources to submit documents to the MSRB will be
approximately $9,800,000 \230\ for the first year after the adoption of
the final amendments and approximately $1,200,000 \231\ for each year
thereafter.
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    \230\ 2,000 (Category 2 issuers) x $4,900 = $9,800,000. This
estimate assumes 20% of issuers incur Category 2 costs at $4,900 per
issuer. To be conservative, we are using a number approximately
double the percentage of issuers estimated in the Journal of
Extension article. We acknowledge that this estimate yields a sum
greater than the total Category 1 cost.
    \231\ 2,000 (Category 2 issuers) x $600 = $1,200,000.
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    Alternatively, an issuer may elect to use the services of a
designated agent to submit continuing disclosure documents to the MSRB.
As noted above, we believe that approximately 30% of municipal issuers
that submit continuing disclosure documents today rely on the services
of a designated agent. Generally, when issuers utilize the services of
a designated agent, they enter into a contract with the designated
agent for a package of services, including the submission of continuing
disclosure documents, for a single fee. As noted in the Proposing
Release, it is anticipated that five of the largest designated agents
will submit documents electronically to the MSRB via a direct computer-
to-computer interface. We estimate that the start-up cost for an entity
to develop a direct computer-to-computer interface with the MSRB will
range from approximately $69,360 to $138,720.\232\ Thus, the maximum
estimated total start-up cost of developing a direct computer-to-
computer interface by each of the five designated agents for the
submission of continuing disclosure documents to the MSRB is $693,600.
The Commission included these cost estimates in the Proposing Release
and received no comments on them. The Commission continues to believe
that these estimates are appropriate.
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    \232\ As noted in the Proposing Release, the MSRB estimated that
it would take an entity approximately 240 to 480 hours of computer
programming to develop the computer-to-computer interface with the
MSRB. $289 (hourly wage for a senior programmer) x 240 hours =
$69,360. $289 (hourly wage for a senior programmer) x 480 hours =
$138,720. The $289 per hour estimate for a senior programmer is from
SIFMA's Office Salaries in the Securities Industry 2007, modified by
Commission staff to account for an 1,800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
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    The Commission believes that, in light of the estimated cost to
develop and implement a computer-to-computer interface with the MSRB,
it is unlikely that issuers will elect to proceed with this approach
given the availability of less expensive alternatives to submitting
continuing disclosure documents electronically to the MSRB. However,
some issuers may choose to submit their continuing disclosure documents
to the MSRB through a designated agent. A designated agent may submit
continuing disclosure documents along with identifying information to
the MSRB on behalf of numerous issuers. Depending on its business
model, a designated agent may submit continuing disclosure documents
along with identifying information to the MSRB via the Internet or
through a direct computer-to-computer interface. In either case, the
issuer will incur a cost associated with the designated agent's
electronic submission of the pertinent continuing disclosure document
and any identifying information to the MSRB. We estimate that this cost
is approximately $16 per continuing disclosure document.\233\ We
continue to believe that this estimate is appropriate.
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    \233\ This estimate includes the cost of having the designated
agent's compliance clerk submit electronically the pertinent
continuing disclosure document and any identifying information to
the MSRB. 15 minutes (.25 hours) (estimated time per document to
gather identifying information) x $62 (hourly wage for a compliance
clerk) = $15.50 (approximately $16). The $62 per hour estimate for a
compliance clerk is from SIFMA's Office Salaries in the Securities
Industry 2007, modified to account for an 1,800-hour work-year and
multiplied by 2.93 to account for bonuses, firm size, employee
benefits and overhead.
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2. MSRB
    The MSRB will incur costs to develop the computer system to allow
it to collect, store, process, retrieve, and make available continuing
disclosure documents furnished to it by issuers of municipal
securities. The MSRB's start-up costs associated with developing the
portal for continuing disclosure documents, including hardware, an
additional hosting site, and software licensing and acquisition costs,
is estimated to be approximately $1,000,000. In addition, the MSRB's
annual operating costs for this system, excluding salary and other
costs related to employees, is estimated to be approximately $350,000.
Accordingly, we estimate that the total costs for the MSRB is
$1,350,000 for the first year and $350,000 per year thereafter,
exclusive of salary and other costs related to employees.\234\ The

Commission included these cost estimates in the Proposing Release and
did not receive any comments on them. The Commission continues to
believe that these estimates are appropriate.
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    \234\ $1,000,000 (cost to establish computer system) + $350,000
(annual operation costs for computer system, excluding salary and
other related costs for employees) = $1,350,000 (first year cost to
MSRB). After the first year, the only cost would be the annual
operation cost of $350,000. These costs do not include the salary
and other overhead costs related to the employees who would maintain
the system. The Proposing Release noted that MSRB staff advised
Commission staff that the personnel costs associated with operating
the portal for continuing disclosure documents will be approximately
$400,000 per year.
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F. Retention Period of Recordkeeping Requirements

    The final amendments to the Rule do not contain any recordkeeping
requirements. However, as an SRO subject to Rule 17a-1 under the
Exchange Act,\235\ the MSRB is required to retain records of the
collection of information for a period of not less than five years, the
first two years in an easily accessible place.
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    \235\ 17 CFR 240.17a-1.
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G. Collection of Information Is Mandatory

    The collection of information pursuant to the Rule, as amended, is
a mandatory collection of information.

H. Responses to Collection of Information Will Not Be Kept Confidential

    The collection of information pursuant to the Rule, as amended,
will not be confidential and will be publicly available.

V. Costs and Benefits of Proposed Amendments to Rule 15c2-12

    In the Proposing Release the Commission considered certain costs
and benefits of the amendments to Rule 15c2-12. As noted below, the
Commission received a few general comments relating to the costs or
benefits of the proposed amendments. As discussed below, the Commission
is refining its cost analysis relating to the costs that issuers could
incur to obtain technology resources. Other than this cost revision,
the Commission is not modifying its costs and benefits analysis from
that presented in the Proposing Release.

A. Benefits

    Under the Rule, as amended, a Participating Underwriter will be
prohibited from purchasing or selling municipal securities covered by
the Rule in a primary offering, unless it has reasonably determined
that the issuer of a municipal security has undertaken in a continuing
disclosure agreement to provide continuing disclosure documents to the
MSRB.\236\ The Commission believes that providing for a single
repository that receives submissions in an electronic format, rather
than multiple repositories, will encourage a more efficient and
effective process for the collection and availability of continuing
disclosure information. In the Commission's view, a single electronic
point of collection and accessibility of continuing disclosure
documents can assist issuers and obligated persons in complying with
their undertakings. Submission of continuing disclosure documents to
one repository only rather than multiple repositories will reduce the
resources issuers and obligated persons need to devote to the process
of gathering and submitting continuing disclosure documents. Because
the final amendments will provide for the electronic submission and
availability of continuing disclosure documents, the costs to issuers
and obligated persons of gathering and submitting this information
ultimately could be reduced because these entities no longer will have
to gather and submit documents in a paper format.
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    \236\ Under the adopted amendments to paragraph (d)(2)(ii) of
the Rule, a Participating Underwriter would be exempt from its
obligations under paragraph (b)(5) of the Rule as long as an issuer
or obligated person has agreed in its limited undertaking that the
publicly available financial information or operating data described
in paragraph (d)(2)(ii)(A) of the Rule would be submitted to the
MSRB annually, instead of upon request to any person or at least
annually to the appropriate SID, if any, and that the material event
notices described in paragraph (d)(2)(ii)(B) of the Rule would be
submitted to the MSRB, instead of to each NRMSIR or the MSRB and to
the appropriate SID, if any, and as long as the other conditions of
the exemption are met.
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    Most commenters were supportive of the proposed amendments and
believed that a single repository for the collection, storage, and
dissemination of continuing disclosure documents would greatly benefit
investors and other municipal market participants.\237\ Commenters
indicated that the benefits of the proposed amendments include: (1)
Increased transparency of municipal securities disclosure; \238\ (2)
simplifying and improving the efficiency of filing municipal disclosure
information; \239\ (3) improved accessibility to municipal disclosure
information for investors and other market participants; \240\ (4)
assisting broker-dealers and mutual funds in meeting their regulatory
obligations; \241\ and (5) reducing the potential for fraudulent
activities.\242\ In addition, commenters noted that the submission of
municipal disclosure information in an electronic format with indexing
information would: (1) Make finding and using municipal disclosure
information easier for investors and other municipal market
participants; \243\ and (2) help facilitate the creation of new value-
added services by municipal disclosure vendors.\244\
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    \237\ See GFOA Letter, Vanguard Letter, SIFMA Letter, MSRB
Letter, Treasurer of the State of Connecticut Letter, IAA Letter,
NASACT Letter, EDGAR Online Letter, NFMA Letter, NAHEFFA Letter, ICI
Letter, Texas Mac Letter, and Multiple-Markets Letter.
    \238\ See Treasurer of the State of Connecticut Letter, at 1,
and IAA Letter, at 1.
    \239\ See Texas MAC Letter, at 1, and IAA Letter, at 2.
    \240\ See SIFMA Letter, at 2, NASACT Letter, at 1, and ICI
Letter, at 3.
    \241\ See SIFMA Letter, at 2, and ICI Letter, at 3.
    \242\ See ICI Letter, at 3.
    \243\ See ICI Letter, at 3, and IAA Letter, at 3.
    \244\ See Multiple-Markets Letter, at 2.
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    As described more fully in section IV. above, we estimate that the
ongoing annual information collection burden under the adopted
amendments will be 64,500 hours.\245\ This represents a reduction of
59,350 burden hours from the immediately preceding collection of
information.\246\ This overall reduction in the Rule's paperwork
burden--and the costs associated with that burden--principally will
benefit issuers or obligated persons.
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    \245\ The estimated annual information collection burden for the
first year under the final amendments is 64,625 hours.
    \246\ For the first year, there is a reduction of 59,225 burden
hours relative to the immediately preceding collection of
information.
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    The Commission also believes that having a single repository that
receives and makes available submissions in an electronic format will
provide ready and prompt access to this information by investors and
municipal securities market participants. Investors and market
participants will be able to go solely to one location to retrieve
continuing disclosure documents rather than having to approach multiple
locations, thereby allowing for a more convenient means to obtain such
information. In addition, we believe that having one repository that
electronically collects and makes available all continuing disclosure
documents will increase the likelihood that investors and other market
participants will obtain more complete information about municipal
securities, thereby decreasing the potential for fraud.
    We expect that a single repository that receives submissions in an
electronic format could simplify compliance with regulatory
requirements by broker-dealers and others, such as mutual funds, by
providing them with consistent availability of continuing disclosure
documents from a single

source. Information vendors (including those NRMSIRs and SIDs that had
been information repositories for Rule 15c2-12 purposes) and others
also will have ready access to all continuing disclosure documents that
they in turn can use in any value-added products that they create. The
Commission also expects that having a single repository that receives
submissions in an electronic format will make municipal disclosure
information more accessible for all municipal market participants.
    Moreover, providing for a single repository may reduce the
paperwork and other costs that NRMSIRs currently incur because they no
longer will have to maintain personnel and other resources solely in
connection with their status as a NRMSIR. Also, the Commission believes
that the proposed amendments may encourage the dissemination of
information in the information services markets by providing easier
access to continuing disclosure documents. As a result, there
potentially may be an increase in the number of information vendors
disseminating continuing disclosure documents and offering value-added
products because the cost of entry into the municipal securities
information services market may be reduced.

B. Costs

    The Commission does not expect broker-dealers to incur any
additional recurring costs as a result of the Rule 15c2-12 amendments,
because the amendments will not alter substantively the existing Rule's
requirements for these entities, except with respect to the place to
which issuers would agree to make filings. The final amendments will
change the location where the continuing disclosure documents of
issuers or obligated persons will be submitted pursuant to continuing
disclosure agreements. As noted above, we estimate that the annual
information collection burden for each broker-dealer under the Rule
will be one hour. This annual burden is identical to the burden that a
broker-dealer previously had under the Rule. Accordingly, we estimate
that it will cost each broker-dealer $270 annually to comply with the
Rule, as amended.\247\
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    \247\ 1 hour (estimated annual information collection burden for
each broker-dealer) x $270 (hourly cost for a broker-dealer's
internal compliance attorney) = $270. The hourly rate for the
compliance attorney is from SIFMA's Management & Professional
Earnings in the Securities Industry 2007, modified to account for an
1,800-hour work-year and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
---------------------------------------------------------------------------

    We further estimate that a broker-dealer may have a one-time
internal cost associated with having an in-house compliance attorney
prepare and issue a memorandum advising the broker-dealer's employees
who work on primary offerings of municipal securities about the
amendments to Rule 15c2-12. Our estimate is that it will take internal
counsel approximately 30 minutes to prepare this memorandum, for a cost
of approximately $135.\248\
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    \248\ See Section IV.D.1., supra.
---------------------------------------------------------------------------

    We believe that the ongoing obligations of broker-dealers under the
Rule will be handled internally because compliance with these
obligations is consistent with the type of work that a broker-dealer
typically handles internally. We do not believe that a broker-dealer
will have any recurring external costs associated with the amendments
to the Rule.
    The Commission received one comment letter regarding the
obligations of a broker-dealer under the revised Rule, particularly
with respect to its reasonably determining that the issuer or obligated
person has contractually agreed to provide identifying information as
prescribed by the MSRB.\249\ This commenter stated that this
requirement would not be unreasonably burdensome on broker-dealers that
are Participating Underwriters. The Commission included in the
Proposing Release the foregoing cost estimate regarding a broker-
dealer's obligations under the Rule, as amended, and received no
comments regarding this cost estimates.
---------------------------------------------------------------------------

    \249\ See SIFMA Letter, at 3.
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    Although Rule 15c2-12 relates to the obligations of broker-dealers,
issuers or obligated persons indirectly could incur costs as a result
of the adopted amendments. In connection with today's amendments,
issuers of municipal securities will undertake in their continuing
disclosure agreements to provide continuing disclosure documents to the
MSRB, either directly or indirectly through an indenture trustee or a
designated agent. In either case, some issuers may be subject to the
costs associated with the electronic filing of annual filings, material
event notices and failure to file notices, particularly if they (or
their agent) were submitting paper copies of these documents to the
NRMSIRs. For those issuers that delivered their continuing disclosure
documents electronically to the NRMSIRs, there is expected to be
minimal change in costs as a result of the Rule's new requirement that
documents be submitted electronically.
    Issuers that had not been providing their annual filings, material
event notices and/or failure to file notices in an electronic format
and were sending paper copies of their documents to the NRMSIRs
pursuant to their continuing disclosure agreements may incur some costs
to obtain electronic copies of such documents from the party who
prepared them or, alternatively, to have a paper copy converted into an
electronic format. These costs will vary depending on how the issuer
elects to convert their continuing disclosure documents into an
electronic format. An issuer can elect to have a third-party vendor
transfer their paper continuing disclosure documents into the
appropriate electronic format. An issuer also can decide to undertake
the work internally, and its costs will vary depending on the issuer's
technology resources. An issuer also will need to have Internet access
to submit documents electronically and will incur the costs of
maintaining such service, if the issuer currently does not have
Internet access, unless it relies on other sources of Internet access.
    It is likely, however, that most issuers of municipal securities
currently possess the computer equipment and software necessary to
convert paper copies of continuing disclosure documents to electronic
copies and to electronically transmit the documents to the MSRB. For
issuers that currently have such capability, the start-up costs to
provide continuing disclosure documents to the MSRB will be minimal
because they already will have the necessary resources internally.
    As described more fully in section IV. above, we estimate that the
costs to some issuers to submit continuing disclosure documents to the
MSRB in an electronic format may include: (1) An approximate cost of $8
per notice to use a third party vendor to scan a material event notice
or failure to file notice, and an approximate cost of $64 to use a
third party vendor to scan an average-sized annual financial statement;
(2) an approximate cost ranging from $750 and $4,300 to acquire
technology resources to convert continuing disclosure documents into an
electronic format; (3) approximately $50 to $300 to upgrade or acquire
the software to submit documents in an electronic format; (4)
approximately $50 per month to acquire Internet access; and (5) an
approximate cost of $16 per continuing disclosure document to have a
designated agent submit electronically continuing disclosure documents
and identifying information to the MSRB. As noted in the Proposing
Release, for an issuer that does not have Internet access and elects to
have a third party convert continuing disclosure documents into an
electronic format, the maximum external estimated cost such issuer will
incur is $752 per

year.\250\ As noted in the Proposing Release, for an issuer that does
not have Internet access and elects to acquire the technological
resources to convert continuing disclosure documents into an electronic
format internally, the maximum external estimated cost such issuer will
incur is $4,900 for the first year and $600 per year thereafter.\251\
As noted in the Proposing Release, the estimated total cost for
issuers, if they all were classified as Category 1 issuers, is
$7,520,000 per year, and the estimated total cost for issuers, if they
all were classified as Category 2 issuers, is $49,000,000 for the first
year and $6,000,000 per year thereafter.\252\ We included these cost
estimates in the Proposing Release and received no comments on them. In
the Proposing Release, the Commission indicated that we believe that
most issuers either currently submit continuing disclosure documents in
an electronic format, or currently have the necessary technology
resources to submit continuing disclosure documents in an electronic
format. Accordingly, we believe that the actual total costs that will
be incurred by issuers to convert continuing disclosure documents into
an electronic format will be less than the estimated maximum external
costs described above and discussed more fully in section IV. above.
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    \250\ [$64 (cost to have third party convert annual filing into
an electronic format) x 2 (maximum estimated number of annual
filings filed per year per issuer)] + [$8 (cost to have third party
convert material event notice or failure to file notice into an
electronic format) x 3 (maximum estimated number of material event
or failure to file notices filed per year per issuer)] + [$50
(estimated monthly Internet charge) x 12 months] = $752. We estimate
that an issuer would file one to five continuing disclosure
documents per year. These documents generally consist of no more
than two annual filings and three material event or failure to file
notices.
    \251\ [$4,300 (maximum estimated one-time cost to acquire
technology to convert continuing disclosure documents into an
electronic format)] + [$50 (estimated monthly Internet charge) x 12
months] = $4,900. After the initial year, issuers who acquire the
technology to convert continuing disclosure documents into an
electronic format internally only will have the cost of securing
Internet access. $50 (estimated monthly Internet charge) x 12 months
= $600.
    \252\ Total cost for Category 1 issuers: 10,000 issuers x $752
(annual cost per issuer to have a third party convert continuing
disclosure documents into an electronic format and for Internet
access) = $7,520,000. Total cost for Category 2 issuers: 10,000
issuers x $4,900 (one-time cost to acquire technology to convert
continuing disclosure documents into an electronic format and annual
cost for Internet access) = $49,000,000. 10,000 issuers x $600
(annual cost per issuer for Internet access) = $6,000,000. To
provide an estimate of the total costs to issuers that would not be
under-inclusive, we assumed that all 10,000 issuers are Category 1
issuers and Category 2 issuers.
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    The Commission estimates that the annual costs for those issuers
that need to acquire technology resources to submit documents to the
MSRB will be approximately $9,800,000 \253\ for the first year after
the adoption of the final amendments and approximately $1,200,000 \254\
for each year thereafter.
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    \253\ 2,000 (Category 2 issuers) x $4,900 = $9,800,000. This
estimate assumes 20% of issuers incur Category 2 costs at $4,900 per
issuer. To be conservative, we are using a number approximately
double the percentage of issuers estimated in the Journal of
Extension article. We acknowledge that this estimate yields a sum
greater than the total Category 1 cost.
    \254\ 2,000 (Category 2 issuers) x $600 = $1,200,000.
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    Also, as more fully described in section IV. above, the total
estimated cost of five designated agents to develop computer-to-
computer interfaces for the submission of documents to the MSRB is
$693,600. The Commission included this cost estimate in the Proposing
Release and received no comments regarding it. The Commission continues
to believe that this estimate is appropriate.
    Issuers or obligated persons also will have to provide certain
identifying information to the repository pursuant to their
undertakings in continuing disclosure agreements. As described more
fully in section IV. above, we estimate that each issuer will submit
one to five continuing disclosure documents annually to the MSRB, for a
maximum estimated annual labor cost of approximately $232.50 per
issuer,\255\ which equates to a total maximum annual cost of $2,325,000
for all issuers ($232.50 x 10,000 issuers). The Commission included
these cost estimates for issuers in the Proposing Release and received
no comments regarding these estimates. The Commission continues to
believe that these estimates are appropriate.
---------------------------------------------------------------------------

    \255\ 5 (maximum estimated number of continuing disclosure filed
per year per issuer) x $62 (hourly wage for a compliance clerk) x 45
minutes (.75 hours) (average estimated time for compliance clerk to
submit a continuing disclosure document electronically) = $232.50.
The $62 per hour estimate for a compliance clerk is from SIFMA's
Office Salaries in the Securities Industry 2007, modified to account
for an 1,800-hour work-year and multiplied by 2.93 to account for
bonuses, firm size, employee benefits and overhead. In order to
provide an estimate of total costs for issuers that would not be
under-inclusive, the Commission elected to use the higher end of the
estimate of annual submissions of continuing disclosure documents.
---------------------------------------------------------------------------

    The Commission expects that the costs to issuers may vary somewhat,
depending on the issuer's size. In the Proposing Release, we noted our
belief that any such difference would be attributable to the fact that
larger issuers may tend to have more issuances of municipal securities;
thus, larger issuers may tend to submit more documents than smaller
issuers. We indicated that the costs of submitting documents under the
proposal could be greater for larger issuers. Although no commenters
took issue with any of the specific cost estimates set forth in the
Proposing Release, two commenters discussed generally the potential
costs of aspects of the proposed amendments, particularly with respect
to smaller issuers.\256\ One of these commenters noted that small
issuers relying on the exemption contained in paragraph (d)(2) of the
Rule would incur increased costs associated with the electronic filing
of the information set forth in the exemption.\257\ Prior to today's
amendments, the exemption in paragraph (d)(2) of the Rule would not
apply to a primary offering if, among other conditions, the issuer or
obligated person has undertaken in a written agreement or contract to
provide financial information or operating data regarding each
obligated person for which financial information or operating data is
presented in the final official statement, including financial
information and operating data which is customarily prepared by such
obligated person and is publicly available, upon request to any person
or at least annually to the appropriate SID.\258\ After today's
amendments, Participating Underwriters seeking to utilize the exemption
will need to reasonably determine that such issuer or obligated person
has undertaken to provide such information to the MSRB annually. The
amendment to paragraph (d)(2) of the Rule does not affect the nature of
a Participating Underwriter's obligation to reasonably determine that a
small issuer has undertaken to deliver continuing disclosure documents
to fulfill the conditions of the exemption; rather, it affects what the
Participating Underwriter needs to determine regarding the undertaking
with respect to the location where such documents are to be sent.
Specifically, the final amendments do not revise the provision limiting
the commitment to provide annual financial or operating data only if
such information is customarily prepared by such obligated person and
is publicly available. We recognize that one effect of the amendments
will be that some small issuers will submit annual financial
information and operating data to the MSRB when currently they do not
regularly submit such disclosures to any repository. We do not believe
that electronically formatting information a small issuer already has
and makes publicly

available will be a significant burden. In addition, we do not believe
that the final amendments would result in small issuers providing
voluminous filings. Further, the costs that these issuers could incur
to send documents electronically to the MSRB are included in the cost
estimates for issuers discussed above. The only difference between the
prior provision and the amended Rule is that, while issuers previously
provided such information and data upon request, they now must provide
it to the MSRB annually. The other commenter noted that some smaller
issuers may have to purchase new software to submit electronic
documents, but it further stated that the overall savings that an
electronic-based repository will provide will benefit state and local
governments and authorities.\259\
---------------------------------------------------------------------------

    \256\ See NABL Letter, at 2, and GFOA Letter, at 2.
    \257\ See NABL Letter, at 2.
    \258\ 17 CFR 240.15c2-12(d)(2)(ii)(A).
    \259\ See GFOA Letter, at 2.
---------------------------------------------------------------------------

    Further, the Commission does not anticipate that issuers will incur
any costs associated with the need to revise the template for
continuing disclosure agreements. The Proposing Release noted that,
based on conversations between Commission staff and NABL staff, NABL
members advised that the cost of revising the template for continuing
disclosure agreements to reflect the rule amendments will be
insignificant and thus unlikely to be passed on to issuers. We received
no comments regarding this estimate and continue to believe that it is
appropriate.
    As discussed in section IV. above, the MSRB will incur costs to
develop the computer system to allow it to collect, store, process,
retrieve, and make available continuing disclosure documents furnished
to it by issuers of municipal securities. We stated in the Proposing
Release that the MSRB's start-up costs associated with developing the
portal for continuing disclosure documents, including hardware, an
additional hosting site, and software licensing and acquisition costs,
will be approximately $1,000,000; that the MSRB's ongoing costs of
operating the system, including allocated costs associated with such
items as office space and licensing fees, will be approximately
$1,350,000 for the first year and $350,000 per year thereafter; and
that the MSRB's personnel costs associated with operating the portal
for continuing disclosure documents will be approximately $400,000 per
year.\260\ We received no comments regarding these estimates and
continue to believe that they are appropriate.
---------------------------------------------------------------------------

    \260\ This figure represents the estimated personnel costs
associated with the MSRB's devoting three and one-half persons to
the operation of the continuing disclosure portal.
---------------------------------------------------------------------------

    Some NRMSIRs and other vendors of municipal disclosure information
may incur costs in transitioning their business models as a result of
the final amendments that call for the MSRB to serve as the single
repository for continuing disclosure documents. In the Proposing
Release, we noted that any NRMSIR that provided municipal disclosure
documents as its primary business model could face a significant
decline in its business, and thus in income, as a result of the
proposed amendments, as well as the possible withdrawal of the ``no
action'' letters issued to the NRMSIRs and the designation of the MSRB
as the sole NRMSIR for existing continuing disclosure agreements. As a
result, the NRMSIRs could experience an immediate decline in income
with respect to those parts of their business that provide municipal
disclosure documents to persons who request them. We also noted that
NRMSIRs could have some costs if they continued to maintain historical
continuing disclosure information that they have already received under
existing continuing disclosure agreements. Two commenters that are
NRMSIRs submitted comment letters opposing the proposed
amendments.\261\ One of these commenters acknowledged generally that
the proposed amendments could affect its business model.\262\ However,
neither of these commenters provided any specific cost estimates of the
impact of the proposed amendments on their operations. In addition, one
potential consequence of the final amendments is that there could be
fewer value-added products available to investors, market participants
and others, and the potential reduction in such products is not
quantifiable.\263\ The Commission included a discussion of the
potential costs for NRMSIRs under the amended Rule in the Proposing
Release and received no specific comments addressing these costs. The
Commission believes that the potential costs discussed in the Proposing
Release are still appropriate.
---------------------------------------------------------------------------

    \261\ See DPC Data Letter and SPSE Letter.
    \262\ See DPC Data Letter at 1.
    \263\ See Section VI. infra for a discussion of the competitive
impact of the amendments on the NRMSIRs.
---------------------------------------------------------------------------

    Finally, under the final amendments, Rule 15c2-12 no longer will
refer to SIDs. The rule amendments will not affect the legal
obligations of issuers or obligated persons to provide continuing
disclosure documents, along with any other submissions, to the
appropriate SID, if any, that may be required under the appropriate
state law. In addition, the final amendments will have no effect on the
obligations of issuers and obligated persons under outstanding
continuing disclosure agreements entered into prior to the effective
date of today's amendments to the Rule, to submit continuing disclosure
documents to the appropriate SID, if any, as stated in their existing
continuing disclosure agreements, nor on their obligation to make any
other submissions that may be required under the appropriate state law.
SIDs are membership organizations and use information submitted to them
in products for their members. While SIDs can charge fees for requested
documents, we do not believe that this is a primary source of revenue
for them. As discussed above, the Commission received a number of
comments regarding the proposed removal of references to SIDs from the
Rule.\264\ However, none of these comments included any discussions of
the cost implications of removing references to SIDs from the Rule. In
the Proposing Release, the Commission indicated that it does not expect
that SIDs will experience a decline in operations or incur any costs as
a result of the proposed amendments. The Commission received no
comments regarding this statement and we continue to believe that this
statement is appropriate.
---------------------------------------------------------------------------

    \264\ See GFOA Letter, SIFMA Letter, Texas MAC Letter, OMAC
Letter, and Multiple-Markets Letter.
---------------------------------------------------------------------------

    In summary, the Commission estimates that the total annual cost for
all respondents in the first year, under the amended Rule, is
approximately $14,602,350.\265\ The Commission also estimates that the
total annual cost for all respondents after the first year, under the
amended Rule, is approximately $4,275,000.\266\
---------------------------------------------------------------------------

    \265\ ($33,750 (estimated annual cost for broker-dealers in year
one) + (($9,800,000 (estimated annual cost for issuers to acquire
technology resources) + $2,325,000 (estimated annual cost for all
issuers' labor hours) + $693,600 (estimated one-time cost for
development of designated agents computer interface)) total
estimated annual costs for issuers in year one) + $1,750,000
(maximum estimated annual cost for the MSRB in year one)) =
$14,602,350.
    \266\ ($1,200,000 (estimated annual cost for issuers to convert
documents into an electronic format) + $2,325,000 (estimated annual
cost for all issuers' labor hours)) estimated annual costs for
issuers) + $750,000 (maximum estimated annual cost for the MSRB)) =
$4,275,000.

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

VI. Consideration of Burden and Promotion of Efficiency, Competition,
and Capital Formation

    Section 3(f) of the Exchange Act \267\ requires the Commission,
whenever it engages in rulemaking and is required to consider or
determine whether an action is necessary or appropriate in the public
interest, to consider whether the action would promote efficiency,
competition, and capital formation. In addition, section 23(a)(2) of
the Exchange Act \268\ requires the Commission, when adopting rules
under the Exchange Act, to consider the impact such rules would have on
competition. Section 23(a)(2) of the Exchange Act also prohibits the
Commission from adopting any rule that would impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Exchange Act.
---------------------------------------------------------------------------

    \267\ 15 U.S.C. 78c(f).
    \268\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    In the Proposing Release, we considered the proposed amendments to
Rule 15c2-12 in light of the standards set forth in the above-noted
Exchange Act provisions. We solicited comment on whether, if adopted,
the proposed amendments would result in any anti-competitive effects or
would promote efficiency, competition, and capital formation. We asked
commenters to provide empirical data or other facts to support their
views on any anti-competitive effects or any burdens on efficiency,
competition, or capital formation that might result from adoption of
the proposed amendments.
    We believe that the amendments to the Rule will help make the
municipal securities disclosure process more efficient and help
conserve resources for municipal security issuers, as well as for
investors and market participants. Under the regulatory framework that
existed prior to today's amendments, issuers of municipal securities in
their continuing disclosure agreements undertook to submit continuing
disclosure documents to four separate NRMSIRs, and they submitted such
documents in paper or electronic form. The Commission anticipates that
the final rule amendments likely will promote the efficiency of the
municipal disclosure process by reducing the resources municipal
security issuers will need to devote to the process of submitting
continuing disclosure documents.
    As noted above, the Commission has long been interested in reducing
the potential for fraud in the municipal securities market. At the time
the Commission adopted Rule 15c2-12 in 1989 and adopted the 1994
Amendments, disclosure documents were submitted in paper form. The
Commission believed that, in such an environment where document
retrieval would be handled manually, the establishment of one or more
repositories could be beneficial in widening the retrieval and
availability of information in the secondary market, since the public
could obtain the disclosure documents from multiple locations. The
Commission's objective of deterring the potential for fraud by
facilitating greater availability of municipal securities information
remains unchanged.
    However, there have been significant inefficiencies in the current
use of multiple repositories that likely have affected the public's
ability to retrieve continuing disclosure documents.\269\ In this
regard, the Commission noted in the 1989 Adopting Release that ``the
creation of multiple repositories should be accompanied by the
development of an information linkage among these repositories'' so as
to afford ``the widest retrieval and dissemination of information in
the secondary market.'' \270\ Although the Commission in the 1989
Adopting Release supported the development of an information linkage
among the repositories, none was established to help broaden the
availability of the disclosure information. Also, since the adoption of
the 1994 Amendments, there have been significant advancements in
technology and information systems, including the use of the Internet,
to provide information quickly and inexpensively to market participants
and investors. In this regard, the Commission believes that the use of
a single repository to receive, in an electronic format, and make
available continuing disclosure documents in an electronic format will
substantially and effectively increase the availability of municipal
securities information about municipal issues and enhance the
efficiency of the secondary trading market for these securities.
---------------------------------------------------------------------------

    \269\ See supra note 35.
    \270\ See 1989 Adopting Release, supra note 18.
---------------------------------------------------------------------------

    In addition, we believe that having a single repository for
electronically submitted information will provide investors, market
participants, and others with a more efficient and convenient means to
obtain continuing disclosure documents and will help increase the
likelihood that investors, market participants, and others will make
more informed investment decisions regarding whether to buy, sell or
hold municipal securities. The Commission believes that the final
amendments will foster a more efficient means of municipal disclosure
and, as a result, the Commission is approving the adoption of the
proposed amendments to Rule 15c2-12.
    With respect to the Exchange Act goal of promoting competition, the
Commission notes that, when we adopted Rule 15c2-12 in 1989, we
strongly supported the development of one or more central repositories
for municipal disclosure documents.\271\ The Commission ``recognize[d]
the benefits that may accrue from the creation of competing private
repositories,'' and indicated that ``the creation of central sources
for municipal offering documents is an important first step that may
eventually encourage widespread use of repositories to disseminate
annual reports and other current information about issuers to the
secondary markets.'' \272\ Further, when we adopted the 1994
Amendments, the Commission stated that the ``requirement to deliver
disclosure to the NRMSIRs and the appropriate SID also allay[ed] the
anti-competitive concerns raised by the creation of a single
repository.'' \273\
---------------------------------------------------------------------------

    \271\ See 1989 Adopting Release at 54 FR 28807, supra note 18.
See also 1994 Proposing Release, supra note 113.
    \272\ See 1989 Adopting Release, supra note 18. See also 1994
Proposing Release, supra note 113.
    \273\ See 1994 Amendments, supra note 21.
---------------------------------------------------------------------------

    There have been significant advances in technology and information
collection and delivery since that time, as discussed throughout this
release and the Proposing Release, that indicate that having multiple
repositories may not be necessary because the widespread availability
and dissemination of information can be achieved through different,
more efficient, means. Because the current environment differs markedly
from the time when Rule 15c2-12 was adopted in 1989 and subsequently
amended in 1994, the Commission believes that it is appropriate to
adopt an approach that utilizes the significant technological advances,
such as the development and use of various electronic formats, which
have occurred in the intervening years.
    The Commission's adoption of amendments to the Rule to provide for
the use of a single repository for continuing disclosure documents will
help further the Exchange Act objective of promoting competition
because information about municipal securities, provided in an
electronic format, will be more widely available to market
professionals, investors, information vendors, and others as a result
of the final amendments. For example, the Commission believes that
competition

among vendors may increase because vendors can utilize this information
to provide value-added services to municipal market participants. Our
adoption of amendments to the Rule also may promote competition in the
purchase and sale of municipal securities because the greater
availability of information, delivered electronically through a single
repository, may instill greater investor confidence in the municipal
securities market. Moreover, this greater availability of information
also may encourage improvement in the completeness and timeliness of
issuer disclosures and may foster interest in municipal securities by
individual and institutional customers. As a result, more investors may
be attracted to this market sector and broker-dealers may compete for
their business.
    The Commission received two comment letters from NRMSIRs that
raised concerns about the competitive effects of the proposed
amendments.\274\ The primary concerns, raised by both commenters,
relate to the MSRB's role as the sole repository of continuing
disclosure documents and the competitive effects this would have on
existing vendors of municipal disclosure information. One of these
commenters stated that the Commission's proposal ``would allow the MSRB
to impose restrictions on municipal issuers and obligated persons by
limiting the filings to a single, electronic format.'' \275\ In
addition, this commenter noted that the Commission's proposal would
place the MSRB ``in direct competition with commercial vendors who have
served the market as practical implementers of Rule 15c2-12 without any
subsidy for more than a decade.'' \276\ The other commenter expressed
similar sentiments and cited to the Commission's statements in adopting
Rule 15c2-12 in 1989 and amendments to the Rule in 1994, which
discussed possible anti-competitive concerns over the creation of a
single repository.\277\ This commenter noted its view that eliminating
the NRMSIR function would upset the balance between its current
business model and have an impact on its ability to provide value-added
products and services.\278\ It disputed the Commission's view that the
potential burdens on competition would be justified by the proposed
amendments' adoption because, in its view, the current issues with
municipal disclosure lie in the quality and timeliness of the
information that is filed.\279\ The commenter also urged the Commission
to adopt an alternative approach.\280\ Under its proposal, the MSRB
would not be the sole repository for municipal disclosure
information.\281\ Instead, the commenter proposed having an unspecified
entity serve as a central electronic post office for municipal
disclosure information where ``issuers and obligors would file
documents through a single electronic format'' and such entity ``would
then forward the centrally-filed documents in real time to the
NRMSIRs.'' \282\ The commenter expressed no opinion regarding the
identity of the entity that should serve as the central electronic post
office or how such entity would be chosen.\283\
---------------------------------------------------------------------------

    \274\ See DPC DATA Letter and SPSE Letter.
    \275\ See DPC DATA Letter, at 1.
    \276\ See DPC DATA Letter, at 2.
    \277\ See SPSE Letter, at 5-7.
    \278\ See SPSE Letter, at 7.
    \279\ See SPSE Letter, at 7-8.
    \280\ See SPSE Letter, at 3-5.
    \281\ See SPSE Letter, at 4.
    \282\ Id.
    \283\ Id.
---------------------------------------------------------------------------

    Although these commenters raised concerns about the competitive
impact of the proposed amendments, circumstances have changed since we
last considered Rule 15c2-12 amendments in 1994, as discussed
throughout this release and in the Proposing Release. The NRMSIRs did
not develop a linkage, technology developments have occurred to make it
easier to access information; and access to municipal information
remains costly and not easy to obtain for many individuals. For these
reasons, we believe that there should be one repository. We continue to
believe that one of the benefits in having the MSRB as the sole
repository will be the MSRB's ability to provide a ready source of
continuing disclosure documents to other information vendors who wish
to use that information for their products. Private vendors can utilize
the MSRB in its capacity as a repository as a means to collect
information from the continuing disclosure documents to create value-
added products for their customers.\284\ Commercial vendors will be
able to readily access the information made available by the MSRB to
re-disseminate it or use it in whatever value-added products they may
wish to provide. In fact, a single repository in which documents are
submitted in an electronic format may encourage the private information
vendors to disseminate municipal securities information by reducing the
cost of entry into the information services market. Existing vendors
may need to make some adjustments to their infrastructure, facilities,
or services offered. However, some vendors may determine that they no
longer need to invest in the infrastructure and facilities necessary to
collect and store continuing disclosure documents, and new entrants
into the market will not need to obtain the information from multiple
locations, but rather can readily access such information from one
centralized source. Thus, all vendors are expected to be able to obtain
easily continuing disclosure documents and to be able to compete in
providing value-added services. With respect to the comment regarding
the ``quality and timeliness'' of the information issuers file, the
Commission believes that the greater availability of information which
will result from the final amendments to the Rule also may encourage
improvement in the completeness and timeliness of disclosures by
issuers and obligated persons and may foster interest in municipal
securities by retail and institutional customers.
---------------------------------------------------------------------------

    \284\ The Commission notes that both the DPC DATA Letter and the
SPSE Letter raised concerns with the potential subscription fees
associated with having the MSRB as the single repository. The
Commission notes that the MSRB will be required to file a proposed
rule change with the Commission pursuant to Section 19(b) of the
Exchange Act regarding any subscription fees for a data stream that
it proposes as well as any changes to those fees.
---------------------------------------------------------------------------

    We previously stated that we would specifically consider the
competitive implications of the MSRB becoming a repository.\285\ In
addition, we stated that if we were to conclude that the MSRB's status
as a repository might have adverse competitive implications, we would
consider whether we should take any action to address these
effects.\286\ As noted earlier, we recognize that competition with
respect to certain information services regarding municipal securities
that are provided by the existing NRMSIRs may decline should the MSRB
become the central repository. The two commenters that raised
competitive concerns suggested that a decrease in competition could
occur as a result of the Commission's rulemaking.\287\ We continue to
believe that one of the benefits in having the MSRB as the sole
repository will be the MSRB's ability to provide a ready source of
continuing disclosure documents to other information vendors who wish
to use that information for their products. Private vendors can utilize
the MSRB in its capacity as a repository as a means to collect
information from the continuing

disclosure documents to create value-added products for their
customers.
---------------------------------------------------------------------------

    \285\ See Securities Exchange Act Release No. 28081, supra note
131.
    \286\ Id.
    \287\ See DPC DATA Letter and SPSE Letter.
---------------------------------------------------------------------------

    Regarding the comment that our proposal would permit the MSRB to
impose restrictions on municipal issuers and obligated persons by
limiting the filings to a single format, we note that the MSRB must
file with the Commission under section 19(b) of the Exchange Act the
format it proposes to prescribe and any changes to that format. Thus,
the format that the MSRB proposes to prescribe, and any subsequent
changes to that format, would have to be consistent with the Exchange
Act. With regard to the comments favoring a central electronic post
office, as we noted above, we believe that this approach is less likely
to achieve the benefits of the proposed amendments. For example, with a
central post office there would continue to be no single location to
which investors, particularly individuals, could turn for free access
to information regarding municipal securities. Instead, individuals or
entities that wish to obtain such information would find it necessary
first to access the central post office to find out what documents
might be available from NRMSIRs and SIDs and then to contact one or
more NRMSIRs or SIDs and pay their fees to obtain the document or
documents they seek. This would be a less efficient process than that
contemplated by the final amendments, in which interested persons could
directly access, view and print for free continuing disclosure
documents from one place--the MSRB's Internet site.
    We do not believe that there are competitive implications that will
uniquely apply to the MSRB in its capacity as the sole repository as
opposed to any another entity that could be the sole repository. In
fact, we believe that, because the MSRB will be the sole repository,
its status as an SRO will provide an additional level of Commission
oversight, as changes to its rules relating to continuing disclosure
documents will have to be filed for Commission consideration as a
proposed rule change under section 19(b) of the Exchange Act.
Accordingly, we believe that any competitive impact that could result
from the MSRB's status as the sole repository would be justified by the
benefits that such status could provide.
    We, therefore, believe that any potential effect on competition
that may arise from the adoption of the Rule 15c2-12 amendments is
justified by the more efficient and effective process for the
collection and availability of continuing disclosure documents that
will result. A single repository for the electronic collection and
availability of these documents will foster the Exchange Act objective
of promoting competition by simplifying the method of submission of
continuing disclosure documents to one location and making the
documents more readily accessible to investors and others by virtue of
the documents being in an electronic format.
    We believe that the proposed amendments may have a positive effect
on capital formation by municipal securities issuers. The Rule is
addressed to the obligations of broker-dealers participating in a
primary offering of municipal securities (i.e., Participating
Underwriters). Because continuing disclosure documents will be
submitted electronically to a single repository, investors and other
market participants will be able to obtain information about these
issuers more readily than they could in the past. They no longer will
have to contact several NRMSIRs to make sure that they have obtained
complete information about the municipal issuer. Easier access to
continuing disclosure documents regarding municipal securities may
provide investors and other market participants with more complete
information about municipal issuers. Moreover, this ready availability
of continuing disclosure documents may encourage investors to consider
purchasing new issuances of municipal securities because they will be
able to readily access information from a single repository and review
that information in light of other available information when making an
investment decision, decreasing the potential for fraud. As a result,
we believe that our amendments to Rule 15c2-12 will help foster the
Exchange Act goal of capital formation.
    We proposed to delete references to the SIDs in Rule 15c2-12. Since
we are adopting amendments to the Rule that provide for a single
repository for the electronic collection and availability of continuing
disclosure documents that are aimed at improving disclosure in the
municipal securities market, we believe that it is no longer necessary
to require in the Rule that Participating Underwriters reasonably
determine that issuers and obligated persons have contractually agreed
to provide continuing disclosure documents to the appropriate SID.
    Five commenters specifically addressed the deletion of SIDs from
the Rule.\288\ Most of them commented that the MSRB should provide a
data feed to SIDs of documents related to issuers in their states in
order that issuers who may be required by their states to send
continuing disclosure documents to a SID need not provide them to both
the MSRB and a SID.\289\ They believed this would be more efficient for
both issuers and SIDs and result in more complete and consistent data
availability of information from SIDs and the MSRB. Furthermore, some
of these commenters suggested that there should be no charge to SIDs to
receive such a data feed.\290\ We agree that it is important for the
document collections of the MSRB and SIDs to be consistent to avoid
uneven access to information that could result, depending on the source
from which continuing disclosure documents were obtained. However, the
specific operations of the MSRB's repository, such as data feeds, are
related to the MSRB's operation of the collection system and are
subject to the rule filing process under section 19(b) of the Exchange
Act and are not an issue before us with respect to the amendments to
the Rule.\291\
---------------------------------------------------------------------------

    \288\ See GFOA Letter, SIFMA Letter, Texas MAC Letter, OMAC
Letter, and Multiple-Markets Letter.
    \289\ See GFOA Letter, Texas MAC Letter, OMAC Letter, and
Multiple-Markets Letter.
    \290\ See GFOA Letter and Multiple-Markets Letter.
    \291\ See MSRB Approval Order, supra note 12.
---------------------------------------------------------------------------

    We note that the amendments will not affect the legal obligations
of issuers and obligated persons to provide continuing disclosure
documents, along with any other submissions, to the appropriate SID, if
any, that are required under the relevant state law. In addition, the
amendments will have no effect on the obligations of issuers and
obligated persons under outstanding continuing disclosure agreements
entered into prior to any effective date of the amendments to the Rule
to submit continuing disclosure documents to the appropriate SID, if
any, as stated in their existing continuing disclosure agreements, nor
on their obligation to make any other submissions that are required
under the relevant state law. Accordingly, the Commission does not
believe that its deletion of references to SIDs in Rule 15c2-12 will
have any potential effect on efficiency, competition or capital
formation.

VII. Regulatory Flexibility Act Certification

    The Commission certified, under section 605(b) of the Regulatory
Flexibility Act,\292\ that, when adopted, the proposed amendments to
the Rule would not have a significant economic impact on a substantial
number of small entities. This certification was set forth in section
VIII. of the Proposing

Release.\293\ The Commission solicited comments regarding this
certification and received no comments. The Commission continues to
believe this certification is appropriate.
---------------------------------------------------------------------------

    \292\ 5 U.S.C. 605(b).
    \293\ See Proposing Release, supra note 3.
---------------------------------------------------------------------------

VIII. Statutory Authority

    Pursuant to the Exchange Act, and particularly Sections 2, 3(b),
10, 15(c), 15B and 23(a)(1) thereof, 15 U.S.C. 78b, 78c(b), 78j,
78o(c), 78o-4, and 78w(a)(1), the Commission is adopting amendments to
Sec.  240.15c2-12 of Title 17 of the Code of Federal Regulations in the
manner set forth below.

List of Subjects in 17 CFR Part 240

    Brokers, Reporting and recordkeeping requirements, Securities.

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For the reasons set out in the preamble, Title 17, Chapter II, of the
Code of Federal Regulations is amended as follows.

Text of Rule Amendments

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

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1. The authority citation for part 240 continues to read in part as
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4,
80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise
noted.
* * * * *

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2. Section 240.15c2-12 is amended by:
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a. Revising paragraph (b)(4)(ii), the introductory text of paragraph
(b)(5)(i), and paragraphs (b)(5)(i)(A) and (B);
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 b. In the introductory text of paragraph (b)(5)(i)(C) and in paragraph
(b)(5)(i)(D) remove the phrase ``to each nationally recognized
municipal securities information repository or to the Municipal
Securities Rulemaking Board, and to the appropriate state information
depository, if any,'';
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 c. In paragraph (b)(5)(ii)(C) remove the phrase ``, and to whom it
will be provided'';
0
 d. Adding paragraph (b)(5)(iv);
0
 e. Revising paragraph (d)(2)(ii); and
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 f. Revising paragraphs (f)(3) and (f)(9).
    The additions and revisions read as follows.

Sec.  240.15c2-12  Municipal securities disclosure.

* * * * *
    (b) * * *
    (4) * * *
    (ii) The time when the official statement is available to any
person from the Municipal Securities Rulemaking Board, but in no case
less than twenty-five days following the end of the underwriting
period, the Participating Underwriter in an Offering shall send no
later than the next business day, by first-class mail or other equally
prompt means, to any potential customer, on request, a single copy of
the final official statement.
    (5)(i) A Participating Underwriter shall not purchase or sell
municipal securities in connection with an Offering unless the
Participating Underwriter has reasonably determined that an issuer of
municipal securities, or an obligated person for whom financial or
operating data is presented in the final official statement has
undertaken, either individually or in combination with other issuers of
such municipal securities or obligated persons, in a written agreement
or contract for the benefit of holders of such securities, to provide
the following to the Municipal Securities Rulemaking Board in an
electronic format as prescribed by the Municipal Securities Rulemaking
Board, either directly or indirectly through an indenture trustee or a
designated agent:
    (A) Annual financial information for each obligated person for whom
financial information or operating data is presented in the final
official statement, or, for each obligated person meeting the objective
criteria specified in the undertaking and used to select the obligated
persons for whom financial information or operating data is presented
in the final official statement, except that, in the case of pooled
obligations, the undertaking shall specify such objective criteria;
    (B) If not submitted as part of the annual financial information,
then when and if available, audited financial statements for each
obligated person covered by paragraph (b)(5)(i)(A) of this section;
* * * * *
    (iv) Such written agreement or contract for the benefit of holders
of such securities also shall provide that all documents provided to
the Municipal Securities Rulemaking Board shall be accompanied by
identifying information as prescribed by the Municipal Securities
Rulemaking Board.
* * * * *
    (d) * * *
    (2) * * *
    (ii) An issuer of municipal securities or obligated person has
undertaken, either individually or in combination with other issuers of
municipal securities or obligated persons, in a written agreement or
contract for the benefit of holders of such municipal securities, to
provide the following to the Municipal Securities Rulemaking Board in
an electronic format as prescribed by the Municipal Securities
Rulemaking Board:
    (A) At least annually, financial information or operating data
regarding each obligated person for which financial information or
operating data is presented in the final official statement, as
specified in the undertaking, which financial information and operating
data shall include, at a minimum, that financial information and
operating data which is customarily prepared by such obligated person
and is publicly available; and
    (B) In a timely manner, notice of events specified in paragraph
(b)(5)(i)(C) of this section with respect to the securities that are
the subject of the Offering, if material; and
    (C) Such written agreement or contract for the benefit of holders
of such securities also shall provide that all documents provided to
the Municipal Securities Rulemaking Board shall be accompanied by
identifying information as prescribed by the Municipal Securities
Rulemaking Board; and
* * * * *
    (f) * * *
    (3) The term final official statement means a document or set of
documents prepared by an issuer of municipal securities or its
representatives that is complete as of the date delivered to the
Participating Underwriter(s) and that sets forth information concerning
the terms of the proposed issue of securities; information, including
financial information or operating data, concerning such issuers of
municipal securities and those other entities, enterprises, funds,
accounts, and other persons material to an evaluation of the Offering;
and a description of the undertakings to be provided pursuant to
paragraph (b)(5)(i), paragraph (d)(2)(ii), and paragraph (d)(2)(iii) of
this section, if applicable, and of any instances in the previous five
years in which each person specified pursuant to paragraph (b)(5)(ii)
of this section failed to comply, in all material respects, with any
previous undertakings in a written contract or agreement specified in
paragraph (b)(5)(i) of this section. Financial information or operating
data may be set forth in the document or set of documents, or may be
included by specific reference to documents available to the public on
the Municipal

Securities Rulemaking Board's Internet Web site or filed with the
Commission.
* * * * *
    (9) The term annual financial information means financial
information or operating data, provided at least annually, of the type
included in the final official statement with respect to an obligated
person, or in the case where no financial information or operating data
was provided in the final official statement with respect to such
obligated person, of the type included in the final official statement
with respect to those obligated persons that meet the objective
criteria applied to select the persons for which financial information
or operating data will be provided on an annual basis. Financial
information or operating data may be set forth in the document or set
of documents, or may be included by specific reference to documents
available to the public on the Municipal Securities Rulemaking Board's
Internet Web site or filed with the Commission.
* * * * *

    By the Commission.

    Dated: December 5, 2008.
Florence E. Harmon,
Acting Secretary.

    Note: Exhibit A to the Preamble will not appear in the Code of
Federal Regulations

Exhibit A

Key to Comment Letters Cited in Adopting Release Amendment to Municipal
Securities Disclosure (File No. S7-21-08)

    1. Letter from Fran Busby to 21st Century Disclosure Initiative,
Commission, dated October 7, 2008 (``Busby Letter'').
    2. Letter from Susan Gaffney, Director, Federal Liasion Center,
Government Finance Officers Association (``GFOA''), to Florence E.
Harmon, Acting Secretary, Commission, dated September 24, 2008
(``GFOA Letter'').
    3. Letter from Christopher Alwine, Head of Municipal Money
Market and Bond Groups, The Vanguard Group, Inc. (``Vanguard''), to
Florence E. Harmon, Acting Secretary, Commission, dated September
24, 2008 (``Vanguard Letter'').
    4. Letter from Leslie M. Norwood, Managing Director and
Associate General Counsel, Securities Industry and Financial Markets
Association (``SIFMA''), to Florence E. Harmon, Acting Secretary,
Commission, dated September 22, 2008 (``SIFMA Letter'').
    5. Letter from Paula Stuart, Chief Executive Officer, Digital
Assurance Certification, LLC (``DAC''), to Florence E. Harmon,
Acting Secretary, Commission, dated September 22, 2008 (``DAC
Letter'').
    6. Letter from Louis V. Eccleston, President, Standard & Poor's
Securities Evaluations, Inc. (``SPSE''), to Florence E. Harmon,
Acting Secretary, Commission, dated September 22, 2008 (``SPSE
Letter'').
    7. Letter from Frank Chin, Chair, Municipal Securities
Rulemaking Board (``MSRB''), to Florence E. Harmon, Acting
Secretary, Commission, dated September 22, 2008 (``MSRB Letter'').
    8. Letter from William A. Holby, President, National Association
of Bond Lawyers (``NABL''), to Florence E. Harmon, Acting Secretary,
Commission, dated September 22, 2008 (``NABL Letter'').
    9. Letter from Jennifer S. Choi, Assistant General Counsel,
Investment Adviser Association (``IAA''), to Florence E. Harmon,
Acting Secretary, Commission, dated September 22, 2008 (``IAA
Letter'').
    10. Letter from Denise L. Nappier, Treasurer, State of
Connecticut, to Christopher Cox, Chairman, Commission, dated
September 22, 2008 (``Treasurer of the State of Connecticut
Letter'').
    11. Letter from Richard T. McNamar, Chief Executive Officer, e-
certus, Inc. (``e-certus''), to Christopher Cox, Chairman,
Commission, and to Ernesto A. Lanza, Senior Associate General
Counsel, MSRB, dated September 22, 2008 (``e-certus Letter'').
    12. Letter from Laura Slaughter, Executive Director, Municipal
Advisory Council of Texas (``Texas MAC''), to Christopher Cox,
Chairman, Commission, and to Ernesto A. Lanza, Senior Associate
General Counsel, MSRB, dated September 22, 2008 (``Texas MAC
Letter'').
    13. Letter from Thomas H. McTavish, President, National
Association of State Auditors, Comptrollers and Treasurers
(``NASACT''), to Florence E. Harmon, Acting Secretary, Commission,
dated September 22, 2008 (``NASACT Letter'').
    14. Letter from K.W. Gurney, Director, Ohio Municipal Advisory
Council (``OMAC''), to Christopher Cox, Chairman, Commission, and to
Ernesto A. Lanza, Senior Associate General Counsel, MSRB, dated
September 22, 2008 (``OMAC Letter'').
    15. Letter from Karrie McMillan, General Counsel, Investment
Company Institute (``ICI''), to Florence E. Harmon, Acting
Secretary, Commission, dated September 22, 2008 (``ICI Letter'').
    16. Letter from Robert Donovan, Executive Director, Rhode Island
Health and Educational Building Corporation, and Steven Fillebrown,
Director of Research, Investor Relations and Compliance, New Jersey
Healthcare Financing Authority, on behalf of the National
Association of Health and Education Facilities Finance Authorities
(``NAHEFFA''), to Florence E. Harmon, Acting Secretary, Commission,
dated September 22, 2008 (``NAHEFFA Letter'').
    17. Letter from Cate Long, Multiple-Markets (``Multiple-
Markets''), to Florence E. Harmon, Acting Secretary, Commission,
dated September 19, 2008 (``Multiple-Markets Letter'').
    18. Letter from Robert Yolland, Chairman, National Federation of
Municipal Analysts (``NFMA''), to Florence E. Harmon, Acting
Secretary, Commission, dated September 19, 2008 (``NFMA Letter'').
    19. Letter from Peter J. Schmitt, Chief Executive Officer, DPC
DATA, Inc. (``DPC DATA''), to Florence E. Harmon, Acting Secretary,
Commission, dated September 18, 2008 (``DPC DATA Letter'').
    20. Letter from Philip D. Moyer, Chief Executive Officer and
President, EDGAR Online, Inc. (``EDGAR Online''), to Christopher
Cox, Chairman, Commission, and to Ernesto Lanza, Senior Associate
General Counsel, MSRB, dated September 9, 2008 (``EDGAR Online
Letter'').
    21. Letter from Al B. Dickman, Professional Investor, to
Florence E. Harmon, Acting Secretary, Commission, dated September 5,
2008 (``Dickman Letter'').
    22. Letter from Elizabeth V. Mooney, to Florence E. Harmon,
Acting Secretary, Commission, dated August 21, 2008 (``Mooney
Letter'').
    23. Letter from Aramintha Grant, to Florence E. Harmon, Acting
Secretary, Commission, dated August 17, 2008 (``Grant Letter'').

[FR Doc. E8-29336 Filed 12-12-08; 8:45 am]

BILLING CODE 8011-01-P