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Self-Regulatory Organizations; Municipal Securities Rulemaking Board (MSRB); Order Granting Approval to Proposed Rule Change Relating to the Establishment of an Optional Procedure for Electronic Submissions of Required Materials Under Rule G-36, on Delivery of Official Statement, Advance Refunding Documents and Forms 36(OS) and G-36(ARD) to the MSRB

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Start Preamble August 1, 2001.

On June 7, 2001, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] a proposed rule change to establish an optional procedure for electronic submissions of required materials under G-36, on delivery of official statements, advance refunding documents and Forms G-36 (OS) and G-36 (ARD) to the MSRB.

The proposed rule change was published for comment in the Federal Register on June 28, 2001.[3] The Commission received no comments on the proposal. This order approves the proposal.

The proposed rule change consists of (i) an amendment to the MSRB facility currently known as the Official Statement and Advance Refunding Document—Paper Submission system (the “OS/ARD Facility”) of the MUNICIPAL SECURITIES INFORMATION LIBRARY® system Start Printed Page 42244(“MSIL®”) [4] and (ii) an amendment to Rule G-36. In its current form, Rule G-36 requires that a broker, dealer or municipal securities dealer that acts as managing or sole underwriter for most primary offerings send the official statement and Form G-36(OS) to the MSIL® system within certain time frames set forth in the rule.[5] In the case of an advance refunding, the managing or sole underwriter must send both the prepared advance refunding documentation and Form G-36(ARD) to the MSIL® system.[6]

In November 1998, the MSRB published an interpretive release describing requisite standards for dealers to satisfy document delivery obligations by means of electronic communications.[7] Since publication of the notice, the MSRB has encouraged modernization of disclosure practices in the primary and secondary municipal securities market. This proposed rule change implements an optional system of electronic submission by underwriters of official statements, advance refunding documents and Form G-36 (ARD) to the MSIL® system. Additionally, the proposed change amends rule G-36 in order to effectuate this electronic system. The new system will allow underwriters to chose between documents submissions in either electronic or paper form.

The Commission must approve a proposed MSRB rule change if the Commission finds the proposal is consistent with the requirements of the Act and the rules and regulations thereunder that govern the MSRB.[8] The Commission finds that the proposed rule change meets this standard. In particular, the Commission finds that the proposed rule is consistent with the requirements of Section 15B(b)(2)(C) of the Act,[9] which requires, in pertinent part, that the MSRB's rules 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, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national system, and, in general, to protect investors and the public interest.

It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act [10] , that the proposed rule change (File No. MSRB-2001-03) be, and it hereby is approved.

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For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[11]

Margaret H. McFarland,

Deputy Secretary.

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3.  See Release No. 34-44458 (June 20, 2001), 66 FR 34495.

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4.  Municipal Securities Information Library and MSIL are registered trademarks of the MSRB.

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5.  For primary offerings subject to Exchange Act Rule 15c2-12, the final official statement and Form G-36(OS) must be sent to the MSIL® system within one business day after receipt of the official statement from the issuer, but no later than ten business days after the sale date of the offering. For most primary offerings exempt from Rule 15c2-12 for which an official statement in final form is being prepared, such official statement and Form G-36(OS) must be sent tot he MSIL® system by the later of one business day after the closing of the underwriting or one business day after receipt of the official statement from the issuer. Rule G-36(c)(iii) provides exemptions from the rule requirements for certain limited types of offerings.

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6.  The advance refunding document and Form G-36(ARD) must be sent to the MSIL® system within five business days after the closing of the underwriting.

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7.  See Rule G-32 Interpretation—Notice Regarding Electronic Delivery and Receipt of Information by Brokers, Dealers and Municipal Securities Dealers, November 20, 1998, MSRB Rule Book, (January 1, 2001) at 161.

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8.  In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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9.  15 U.S.C. 78o-4(b)(2)(C).

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[FR Doc. 01-20083 Filed 8-9-01; 8:45 am]