[Federal Register Volume 63, Number 138 (Monday, July 20, 1998)]
[Notices]
[Pages 38868-38869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19181]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40195; File No. SR-MSRB-98-7]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Municipal Securities
Rulemaking Board Relating to Fee for Backlog Document Collection of its
Official Statement/Advance Refunding Document Subsystem of the
Municipal Securities Information Library
July 13, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 16, 1998, the Municipal Securities Rulemaking Board (``Board''
or ``MSRB'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change is described in Items I, II,
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) (1994).
\2\ 17 CFR 240.19b-4 (1997).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Board is filing herewith a proposed rule change to change
certain fees relating to the operation of its Official Statement/
Advance Refunding Document (``OS/ARD'') subsystem of the Municipal
Securities Information Library (``MSIL'')
system.\3\ The Board is establishing a price of $8,000 (plus delivery
or postage charges) of each of its annual ``backlog'' collections of
official statements and refunding documents.
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\3\ Municipal Securities Information Library and MSIL are
registered trademarks of the Board. The MSIL system, which
was approved in Securities Exchange Act Release No. 29298 (June 13,
1991), 56 FR 28194 (June 19, 1991, is a central facility through
which information about municipal securities is collected, stored
and disseminated.
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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 purposed 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. The U.S. has prepared summaries, set forth in Section 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 Purposed Rule Change
1. Purpose
The OS/ARD subsystem is a central electronic facility through which
information collected and stored pursuant to MSRB Rule G-36 is made
available electronically and in paper form to market participants and
information vendors.\4\ The annual subscription fee for daily
electronic images of current year documents from the OS/ARD system
currently is $14,000.\5\ The fees for backlog document collections are
substantially less than fees for an annual subscription because an
annual subscription requires the Board to send electronic media to the
subscriber each business day, but a backlog collection requires fewer
resources.\6\
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\4\ Rule G-36 requires underwriters to provide copies of final
official statements and advance refunding documents within certain
specified time frames for most new issues issued since January 1,
1990.
\5\ Securities Exchange Act Release No. 37361 (June 25, 1996),
61 FR 34463 (July 2, 1996).
\6\ The backlog fee plus delivery costs for 1996 if $7,000; 1995
is $9,000; 1994 is $7,000; 1993 is $9,000; 1992 is $7,000; 1991 is
$8,000; 1990 is $6,000. See Securities Exchange Act Release No.
38694 (May 29, 1997), 62 FR 30919 (June 5, 1997) (1996 fee);
Securities Exchange Act Release No. 37361 (June 25, 1996), 61 FR
34463 (July 2, 1996) (1995 fee); Securities Exchange Act Release No.
35848 (June 14, 1995), 60 FR 32187 (June 20, 1995) (1994 Fee);
Securities Exchange Act Release No. 34602 (Aug. 25, 1994), 59 FR
45319 (Sept. 1, 1994) (1993 and 1991 fees); and Securities Exchange
Act Release No.32482 (June 16, 1993), 58 FR 34115 (June 23, 1993)
(1992 and 1990 fees). The fees for the backlog collections vary
based on the number of documents received and processed in any given
year.
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As of January 1, 1998, the Board terminated its contract with its
imaging contractor and began operating the Board's own imaging
subsystem. Part of this change was to begin storing OS/ARD images on
CD-ROM instead of
[[Page 38869]]
magneto-optical disk or digital audio tape (DAT). This change in media
has made the cost of selling annual backlog collections more even.
Thus, the Board is establishing a price of $8,000 (plus delivery or
postage charges) for each annual backlog collection.\7\
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\7\ This price would apply to all prior backlog collections as
well as the annual backlog collection for 1997 and future annual
backlog collections. Telephone conversation with Ernesto A. Lanza,
Assistant General Counsel, Board, and Karl Varner, Attorney, SEC, on
July 2, 1998.
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In its prior filings with the Commission, the Board stated that it
intends to use its general revenues to help fund collecting, indexing
and storing the OS/ARD subsystem's documents. However, the Board stated
its intention that the costs of producing paper and electronic copies
would be completely covered by user fees.\8\ The Board is changing the
fees for the annual backlog collectiuons to defray its cost of
disseminating the electronic collections in a manner that reflects the
change in cost to the Board resulting from the use of new media and in-
house imaging. This is consistent with the Commission's policy that
self-regulatory organizations' fees be based on expenses incurred in
providing information to the public. The Board believes that employing
cost-based prices is in the public interest since it will ensure that a
complete collection of vital information will be available, at fair and
responsible prices, for the life of the municipal securities.
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\8\ Securities Exchange Act Release No. 28197 (July 12, 1990),
55 FR 29436 (July 19, 1990).
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2. Statutory Basis
The Board believes the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act,\9\ which requires, in pertinent part,
that the Board's rules:
\9\ 15 U.S.C. 78o(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 free and open market in
municipal securities, and, in general, to protect investors and the
public interest.
The MSIL system is designed to increase the integrity
and efficiency of the municipal securities market by, among other
things, helping to ensure that the price charged for an issue in the
secondary market reflects all available official information about that
issue. The Board believes the new annual backlog fee is fair and
reasonable in light of the costs associated with disseminating the
information and the services provided by the MSIL system
are available on reasonable and nondiscriminatory terms to any
interested person.
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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The rule change became effective on June 16, 1998, pursuant to
Section 19(b)(3)(A)(ii) of the Act,\10\ because the proposal
establishes a fee. At any time within sixty days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if its 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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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act.\11\ 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. Sec. 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-98-
7 and should be submitted by August 10, 1998.
\11\ In reviewing this proposal, the Commission has considered
the proposed rule change's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-19181 Filed 7-17-98; 8:45 am]
BILLING CODE 8010-01-M
