[Federal Register Volume 62, Number 13 (Tuesday, January 21, 1997)]
[Notices]
[Pages 3069-3070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1303]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38162; File No. SR-MSRB-96-13]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Municipal Securities
Rulemaking Board Relating to Interpretation of Rule G-12(h) on Close-
Outs
January 13, 1997.
On December 23, 1996, the Municipal Securities Rulemaking Board
(``Board'' or ``MSRB'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') a proposed rule change (File No.
SR-MSRB-96-13), pursuant to Section 19(b)(1) of the Securities Exchange
Act of 1934 (``Act'').\1\ The proposed rule change is described in
Items I, II, and III below, which Items have been prepared by the
Board. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Board is filing an interpretive notice concerning rule G-12(h)
on Close-Outs (hereinafter referred to as ``the proposed rule
change''). The rule currently requires that a dealer taking action in a
close-out must provide telephonic notice to the appropriate party,
followed no later than the next business day with a written notice.\2\
The rule further requires that written notices be sent ``return receipt
requested.'' The Board previously has interpreted this provision to
allow the use of certified mail, registered mail, messenger services,
and Depository Trust Company's Participant Exchange Service (``PEX'')
system. Use of these procedures allows the sender to obtain
acknowledgement of delivery of the notice from the recipient.
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\2\ Telephonic and written notices are required when dealers (i)
originate a close-out; (ii) retransmit a close-out; (iii) extend
delivery dates; and (iv) execute a close-out. The Board's Manual on
Close-Out Procedures contains a detailed explanation of the
procedures required by rule G-12(h).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Board included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV, below. The Board has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
(1) Purpose
Dealers have asked whether the use of a facsimile transmission
would satisfy the requirement in the rule that written notices be sent
``return receipt requested.'' The Board has determined that the
requirements of the rule would be satisfied by the facsimile
transmission of written notices as long as the facsimile transmission
provides the sender with an acknowledgment of successful delivery of
the notice. The Board emphasizes that, prior to the sending of written
notices, dealers are required to notify the appropriate parties by
telephone of their intention to take action under Board rule G-12(h) on
close-outs.
(2) Statutory Basis
The Board believes the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act,\3\ which provides that the Board's
rules shall:
\3\ 15 U.S.C. 78o-4(b)(2)(C).
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Be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities, to remove
impediments to and perfect the mechanism of a free and open
[[Page 3070]]
market in municipal securities, and, in general, to protect
investors and the public interest * * *.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Board does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act, since it would apply equally to
all brokers, dealers, and municipal securities dealers.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
The Board has not solicited or received comments on the proposed
rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change constitutes a stated policy, practice or
interpretation with respect to the meaning, administration, or
enforcement of the Board's existing rule G-12(h), and therefore, has
become effective pursuant to Section 19(b)(3)(A) of the Act \4\ and
subparagraph (e) of Rule 19b-4 \5\ thereunder. At any time within 60
days of filing of the proposed rule change, the Commission may
summarily abrogate the rule change if it appears to the Commission that
such action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.
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\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4.
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IV. Solicitation of Comments
Interested people are invited to submit written data, views, and
arguments concerning the foregoing. People making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room. Copies of the filing will also be
available for inspection and copying at the Board's principal offices.
All submissions should refer to File No. SR-MSRB-96-13 and should be
submitted by February 11, 1997.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200-30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-1303 Filed 1-17-97; 8:45 am]
BILLING CODE 8010-01-M
