[Federal Register Volume 76, Number 20 (Monday, January 31, 2011)]
[Notices]
[Pages 5417-5418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1985]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63764; File No. SR-MSRB-2010-17]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Granting Approval of Proposed Rule Change Consisting of
Amendments to Rule A-3, on Membership on the Board
January 25, 2011.
I. Introduction
On November 30, 2010, the Municipal Securities Rulemaking Board
(``MSRB'' or ``Board''), filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Exchange Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule consisting of amendments to Rule A-3, on
membership on the Board, in order to establish a Nominating Committee
in compliance with MSRB transitional Rule A-3(i). The proposed rule
change was published for comment in the Federal Register on December
17, 2010.\3\ The Commission received no comment letters about the
proposed rule change.\4\ This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 63533 (December 13,
2010), 75 FR 79061 (December 17, 2010) (the ``Commission's
Notice'').
\4\ On January 13, 2011, Commissioner Aguilar, along with
Michael E. Coe, Counsel to the Commissioner, met with
representatives of the National Association of Independent Public
Finance Advisors to discuss the proposed rule change among other
matters. See Memorandum from Michael E. Coe, dated January 13, 2011.
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II. Description of the Proposed Rule Change
The purpose of the proposed rule change is to make changes to MSRB
Rule A-3(c) as are necessary and appropriate prior to the creation of
the Nominating Committee of the MSRB.
On September 30, 2010, the SEC approved MSRB Rule A-3(i), a
transitional rule for MSRB fiscal year 2011 intended to implement the
requirements of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111-203, 124 Stat. 1376 (2010) (the ``Dodd-
Frank Act'').\5\ The transitional rule provides that on or after
October 1, 2010, and prior to the formation of the Nominating Committee
for purposes of nominating Board members for fiscal year 2012, the
Board will amend the provisions of Rule A-3(c) to (a) reflect the
composition of the Board as provided under the Dodd-Frank Act, (b)
assure that the Nominating Committee will be composed of a majority of
public members and will have fair representation of broker-dealers,
bank dealers, and municipal advisors, and (c) reflect such other
considerations consistent with the provisions of Section 15B of the
Exchange Act and the Dodd-Frank Act as the Board deems appropriate. The
proposed rule change is intended to amend Rule A-3(c) to comply with
the requirements of transitional Rule A-3(i), as approved by the SEC.
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\5\ See Exchange Act Release No. 63025 (September 30, 2010), 75
FR 61806 (October 6, 2010).
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Consistent with Rule A-3(i), the Nominating Committee (hereinafter,
``Nominating and Governance Committee'') would consist of eleven
members, six of whom would be public members and five of whom would be
industry members. The Chair of the Committee would be a public member.
Establishing an eleven member committee would allow for fair
representation of regulated entities by reserving five positions for
brokers, dealers, municipal securities dealers and municipal advisors.
Each constituency identified in the Dodd-Frank Act would be
guaranteed a minimum of one seat on the Nominating and Governance
Committee but the level of each constituency would be capped to avoid
overweighting of any one over the others. These ranges of membership
are as follows:
Six public members consisting of (a) at least one, but no
more than three, representative of institutional or retail investors;
(b) at least one, but no more than three, representative of municipal
entities; (c) at least one, but no more than three, members of the
public with knowledge of or experience in the municipal industry and
not representative of investors or municipal entities;\6\ and
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\6\ In order to ensure balance on the committee and reflect the
breadth of public representatives on the Board, the proposal would
require one to three committee members be selected from Board
members who are not representative of municipal entities or
investors.
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Five regulated members, consisting of (a) at least one,
but no more than two, representative of broker-dealers; (b) at
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least one, but no more than two, representative of bank dealers; and
(c) at least one, but no more than two, representative of non-dealer
municipal advisors.
The Board believes this formulation is consistent with the Dodd-
Frank Act and Rule A-3(i) in that it provides for a majority of public
members on the Committee and fair representation of regulated entities.
The MSRB also believes it is important that the Chair of the Nominating
and Governance Committee be a public member, both as a governance best
practice and in recognition of the majority of public members on the
Board, as mandated by the Dodd-Frank Act.
A more complete description of the proposal is contained in the
Commission's Notice.\7\
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\7\ See supra note 3.
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III. Discussion and Commission Findings
The Commission has carefully considered the proposed rule change
and finds that the proposed rule change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to the MSRB \8\ and, in particular, the
requirements of Section 15B(b)(2)(B) of the Exchange Act \9\ and the
rules and regulations thereunder. Section 15B(b)(2)(B) of the Exchange
Act provides that the MSRB's rules shall:
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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).
\9\ 15 U.S.C. 78o-4(b)(2)(B).
Establish fair procedures for the nomination and election of
members of the Board and assure fair representation in such
nominations and elections of public representatives, broker dealer
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representatives, bank representatives, and advisor representatives.
The Commission believes that the proposed rule change is consistent
with the Exchange Act as amended by the Dodd-Frank Act, in that it
would provide for the creation of an MSRB Nominating and Governance
Committee that reflects the composition of the Board as provided under
the Dodd-Frank Act and would help assure that the Nominating and
Governance Committee would be composed of a majority of public members
and have fair representation of broker-dealers, bank dealers, and
municipal advisors, consistent with MSRB Rule A-3(i) as approved by the
SEC.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\10\ that the proposed rule change (SR-MSRB-2010-17), be,
and it hereby is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1985 Filed 1-28-11; 8:45 am]
BILLING CODE 8011-01-P