[Federal Register Volume 60, Number 226 (Friday, November 24, 1995)]
[Notices]
[Pages 58120-58122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28623]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36486; File No. SR-MSRB-95-16]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval to Proposed Rule Change by Municipal
Securities Rulemaking Relating to Arbitration Rules
November 16, 1995.
Pursuant to section 19(b)(1) of the Securities Exchange Act of
1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on November 9,
1995, the Municipal Securities Rulemaking Board (``MSRB'' or ``Board'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the MSRB. The Commission is publishing this
notice to solicit
[[Page 58121]]
comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Board proposes to amend Board rule G-35 \1\ (``Arbitration
Code'') by amending Section 25 of the Arbitration Code in order to
conform that Section to its counterpart in the Uniform Code of
Arbitration (``Uniform Code'') developed by the Securities Industry
Conference on Arbitration (``SICA'').
\1\ MSRB Manual, General Rules, Rule G-35 (CCH) para. 3671.
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Below is the text of the proposed rule change. Proposed new
language is italicized; proposed deletions are in brackets.
Rule G-35. Arbitration.
* * * * *
Section 25. Interpretation of Arbitration Code.
The [panel of] arbitrators shall be empowered to interpret and
determine the applicability of all provisions under this Arbitration
Code and to take appropriate action to obtain compliance with any
ruling by the arbitrator(s). [any s] Such interpretations [or
determination] and actions to obtain compliance shall be final and
binding upon the parties.
* * * * *
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
The purpose of the proposed rule change is to amend Section 25 of
the Arbitration Code in order to conform it to section 22 of the
Uniform Code. Consistent with the Uniform Code, the Board proposes to
amend Section 25 in order to clarify and codify the arbitrators'
existing authority to enforce their rulings in the event of non-
compliance by a party. Appropriate arbitral action under this provision
could include the assessment of fees or costs, preclusion of documents
or witnesses, or initiation of a disciplinary referral. Currently, such
sanctions for non-compliance with the arbitrator's rulings are
infrequently ordered or requested because the arbitrators and parties
may be unaware of an arbitrator's power. It is expected that the
arbitrators will exercise such power primarily in the area of failure
to comply with discovery requests. As amended, Section 25 will specify
that such arbitral rulings, as well as interpretations of the Uniform
Code, will be final and binding upon the parties.
The proposed rule change is consistent with Sections 15B(b)(2)(C)
and 15B(b)(2)(D) of the Act. Section 15B(b)(2)(C) requires, in
pertinent part, that the Board's rules be designed:
to promote just and equitable principles of trade . . . to remove
impediments to and perfect the mechanism of a free and open market
in municipal securities, and, in general, to protect investors and
the public interest. . . .
Section 15B(b)(2)(D) provides that the Board shall, if it deems
appropriate:
provide for the arbitration of claims, disputes, and controversies
relating to transactions in municipal securities: Provided, however,
That no person other than a municipal securities broker, municipal
securities dealer, or person associated with such a municipal
securities broker or municipal securities dealer may be compelled to
submit to such arbitration except at his instance and in accordance
with section 29 of this title.
The proposed rule change will facilitate the just and timely resolution
of disputes between customers and dealers, thereby furthering the
Board's statutory mandate 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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Commission believes that the proposed rule change should be
given accelerated effectiveness pursuant to Section 19(b)(2) of the
Act. In that regard, the Commission finds that the proposed rule change
is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to the Board, and, in particular, the
requirements of Sections 15B(b)(2)(C) and 15B(b)(2)(D) thereof.
Specifically, the Commission concludes that accelerated effectiveness
of the proposal is appropriate because the substantive amendments
proposed in this rule change were previously proposed by other self-
regulatory organizations (``SROs''), were not the subject of public
comment, and have been approved by the Commission.\2\ Because the
proposal is designed to protect investors and the public interest by
providing for uniformity in the rules governing the administration of
arbitration facilities offered by the SROs, the Commission finds good
cause for approving the foregoing rule change on an accelerated basis
prior to the thirtieth day after the date of publication thereof in the
Federal Register.
\2\ See, e.g., Securities Exchange Act Release No. 35263 (Jan.
23, 1995), 60 FR 5741 (Jan. 30, 1995) (order granting accelerated
approval to SR-CBOE-94-51); Securities Exchange Act Release No.
34344 (July 11, 1994), 59 FR 36453 (July 18, 1994) (order approving
SR-MSE-93-9); Securities Exchange Act Release No. 31464 (Nov. 16,
1992), 57 FR 55011 (Nov. 23, 1992) (order approving SR-NASD-92-33).
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IV. Solicitation of Comment
Interested persons are invited to submit written data, views and
arguments concerning the foregoing. Persons 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 principal office of MSRB.
All submissions should refer to file number SR-MSRB-95-16 and should be
submitted by December 15, 1995.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\3\ that the proposed rule change SR-MSRB-95-16, amending Section 25 of
the Arbitration
[[Page 58122]]
Code in order to conform that Section to the Uniform Code, is hereby
approved.
\3\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-28623 Filed 11-22-95; 8:45 am]
BILLING CODE 8010-01-M
