[Federal Register Volume 59, Number 132 (Tuesday, July 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16752]
[[Page Unknown]]
[Federal Register: July 12, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34310; File No. SR-MSRB-94-8]
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-15(a) on Customer
Confirmations
July 5, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``ACT''),\1\ notice is hereby given that on June 7, 1994, the
Municipal Securities Rulemaking Board (``MSRB'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared primarily by MSRB. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
MSRB has filed an interpretation regarding Rule G-15(a). The new
interpretation of the rule allows dealers under certain circumstances
to satisfy the Rule G-15(a)'s requirement that municipal securities
customers be provided a ``written'' confirmation by using the Thomson
Financial Services, Inc. (``TFS'') OASYS Global System.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, MSRB included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
texts of these statements may be examined at the places specified in
Item IV, below. MSRB has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
MSRB's rule change allows the requirement of Rule G-15(a), that
customers be provided ``written'' confirmation at or before the
completion of a transaction in municipal securities, to be satisfied by
a contract confirmation message (``CCM'') sent through the TFS OASYS
Global System. The following conditions must be met before the OASYS
Global System may be used: (i) The customer and dealer have both agreed
to use the OASYS Global system for purposes of confirmation delivery;
(ii) the CCM includes all information required by Rule G-15(a); and
(iii) all other applicable requirements and conditions concerning the
OASYS Global system expressed in the Commission's October 8, 1993, no-
action letter concerning Securities Exchange Act Rule 10b-10 must
continue to be met.\2\
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\2\The no-action letter of October 8, 1993, stated that the
Commission staff will not recommend enforcement action to the
Commission if broker-dealers rely on the OASYS Global system's CCMs
to satisfy the requirements of a confirmation of Rule 10b-10 of the
Act provided (i) The CCMs can be printed or downloaded by the
participants, (ii) the recipient of a CCM must respond through the
system affirming or rejecting the trade, (iii), the CCMs will not be
automatically deleted by the system, and (iv) the use of the system
by the participants ensures that both parties to the transaction
have the capacity to receive the CCMs. Letter from Catherine
McGuire, Chief Counsel, Division of Market Regulation, SEC, to
MariAnne Pisarri, Esq., Pickard and Djinis (October 8, 1993).
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MSRB understands that TFS's OASYS Global system is not a registered
securities clearing agency and is not linked with other registered
securities clearing agencies for purposes of automated confirmation/
acknowledgment required under Rule G-15(d). Therefore, under these
circumstances, use of the OASYS system will not constitute compliance
with Rule G-15(d) regarding automated confirmation/acknowledgement.\3\
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\3\MSRB Rule 15(d)(ii) states, among other things, that no
broker, dealer, or municipal securities dealer who is or whose
clearing agent is a participant in a clearing agency registered with
the Commission shall effect a transaction in any municipal security
to which a CUSIP number has been assigned on a delivery-versus-
payment basis or on a receipt-versus-payment basis for the account
of a customer whose clearing agent with respect to such transfer is
a participant in such a clearing agency or in a clearing agency
interfaced or otherwise linked with such a clearing agency unless
the facilities of such clearing agency or the facilities of a
clearing agency interfaced or otherwise linked with such a clearing
agency are used for the confirmation and acknowledgment of such
transaction.
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MSRB has adopted the rule change pursuant to Section 15B(b)(2)(C)
of the Act, which provides that MSRB's rules shall:
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 market
in municipal securities, and, in general, to protect investors and
the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
MSRB does not believe that the rule change will impose any burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act because it will apply equally to all brokers,
dealers, and municipal securities dealers. Moreover, the rule change
only applies when dealers and customers agree between themselves to use
TFS's OASYS Global system.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
MSRB has not solicited or received comments on the proposed rule
change. MSRB's consideration of the proposed rule change was prompted
by an interpretive inquiry from TFS regarding the interpretation of
Rule G-15(a).
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(i) of the Act and subparagraph (e)(1) of Rule 19b-4
thereunder because it relates to the interpretation of the meaning of
an existing rule. At any time within sixty days of filing of the 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.
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 NW., Washington, DC 20549. Copies
of the submissions, 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, 450 Fifth Street NW., Washington,
DC 20549. Copies of the filing will also be available for inspection
and copying at MSRB's principal offices. All submissions should refer
to File No. SR-MSRB-94-8 and should be submitted by August 2, 1994.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 94-16752 Filed 7-11-94; 8:45 am]
BILLING CODE 8010-01-M
