MSRB NOTICE 2005-30 (MAY 26, 2005)

NOTICE OF FILING OF PROPOSED AMENDMENTS TO RULE G-40, ON ELECTRONIC MAIL CONTACTS, AND FORM G-40

On May 26, 2005, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) a proposed rule change to amend Rule G-40, on electronic mail contacts, and Form G-40 that would: (i) eliminate the need for paper submission of original forms; (ii) require each broker, dealer and municipal securities dealer (collectively “dealers”) to maintain an Internet electronic mail account to permit communication with the MSRB; and (iii) require each dealer to review and, if necessary, update its Primary Contact information each calendar quarter. [1]

SUMMARY OF PROPOSED AMENDMENTS

Rule G-40 requires dealers to use Form G-40 to appoint a “Primary Contact” for purposes of electronic communication between the dealer and the MSRB.  The Primary Contact must be either a Series 53-registered municipal securities principal or a Series 51-registered municipal fund securities limited principal. [2]  Currently, dealers must submit their original Forms G-40 by mail.  Thereafter, any changes to the forms may be made by mail or electronically through the dealer’s electronic G-40 account using the appropriate user ID and password. 

As the process of electronic communication between dealers and the MSRB has evolved over the past few years, it has become apparent that certain changes and enhancements are now required to ensure that this process remains both efficient and practical.  In addition, the MSRB has observed that certain differences exist between Rule G-40 and similar NASD requirements.  Whenever possible, the MSRB attempts to adopt similar provisions and comparable language to NASD rules in order to facilitate dealer understanding of and compliance with such provisions, as well as inspection and enforcement.  NASD requires that each member appoint an “executive representative” to, among other things, serve as the official contact person between the member and the NASD. [3]  NASD also requires that the executive representative maintain an Internet e-mail account for communication with NASD.  And in May 2004, NASD Rule 1150 became effective which requires NASD members to review and, if necessary, update their executive representative designation and contact information within 17 business days after the end of each calendar quarter. [4] 

The MSRB believes that Rule G-40 should contain an update provision similar to NASD’s, and that, like NASD, its entire process should be electronic. Thus, the proposed amendments to Rule G-40 would require dealers to maintain an Internet e-mail account to permit communication with the MSRB, and would require that all Form G-40 submissions – initial forms and subsequent updates and amendments – be completed electronically using the appropriate user ID and password.  In addition, the amendments would require dealers to review and, if necessary, update information on their Primary Contact within 17 business days after the end of each calendar quarter.  The proposed amendments to Rule G-40 necessitate certain changes to Form G-40, including an indication that electronic submission is required. 

 

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Questions concerning this notice should be directed to Jill C. Finder, Assistant General Counsel.

May 26, 2005

TEXT OF AMENDMENTS [5]

Rule G-40.  Electronic Mail Contacts.

        (a)(i) Each broker, dealer or municipal securities dealer shall maintain an Internet electronic mail account to permit communication with the MSRB, and shall appoint a Primary Electronic Mail Contact to serve as the official contact person for purposes of electronic mail communication between the broker, dealer or municipal securities dealer and the MSRB.  Each Primary Electronic Mail Contact shall be a registered municipal securities principal (Series 53 or Series 51) of the broker, dealer or municipal securities dealer.

(ii) Each broker, dealer or municipal securities dealer may appoint an Optional Electronic Mail Contact for purposes of electronic mail communication between the broker, dealer or municipal securities dealer and the MSRB.

(b)(i) Upon completion of its Rule A-12 submissions and assignment of an MSRB Registration Number, each broker, dealer or municipal securities dealer shall electronically submit to the MSRB [by mail] a completed Form G-40 setting forth, in the prescribed format, the following information:

(A) The name of the broker, dealer or municipal securities dealer, and the date.

(B) The MSRB Registration Number of the broker, dealer or municipal securities dealer.

(C) The name of the Primary Electronic Mail Contact, and his/her electronic mail address[,] and telephone number [and Individual Central Registration Depository (CRD) Number].

(D) The name of the Optional Electronic Mail Contact, if any, and his/her electronic mail address and telephone number.

(E) The name, title, [signature] and telephone number of the person who prepared the form.

(ii) A broker, dealer or municipal securities dealer may change the name of its Electronic Mail Contacts or other information previously provided by electronically submitting to the MSRB an amended Form G-40. 

        (c) Each broker, dealer or municipal securities dealer [shall] must review and, if necessary, update information on its Primary Electronic Mail Contact [periodically as requested and prescribed by the MSRB] and [shall] submit such information electronically to the MSRB within 17 business days after the end of each calendar quarter.

Any broker, dealer or municipal securities dealer that, during the 17 business-day update period, submits its initial Form G-40 or modifies or affirms information relating to its Primary Electronic Mail Contact shall be deemed to be in compliance with the quarterly update requirement applicable to the quarter immediately preceding that 17 business-day update period.

           

FORM G-40:  ELECTRONIC MAIL CONTACTS

                                                                                    MSRB Registration Number

                                                                                    _____________________________

Check one:

            ___  Original Form

            ___  Amended Form

                                                                                               

                                                                                               

Name of Dealer: _________________________________________________________

Date: __________________________________________________________________

The dealer named above designates (name) ____________________________________ as its Primary Electronic Mail Contact for purposes of electronic communications with the MSRB.  This Primary Contact person is a Series 53-registered municipal securities principal or a Series 51-registered municipal fund securities limited principal with the dealer.

E-Mail Address of Primary Contact: __________________________________________

Phone Number of Primary Contact: ___________________________________________

[Individual CRD Number of Primary Contact (NASD member firms only): __________]

(Optional):  The dealer named above designates (name) ___________________________

as its Optional Electronic Mail Contact.

E-mail Address of Optional Contact:__________________________________________

Phone Number of Optional Contact: __________________________________________

Name [and title]of person preparing this Form:__________________________________

[Signature: _____________________________________________________________]

Title:__________________________________________________________________

Telephone number: _______________________________________________________

[NEW FORMS MUST BE MAILED TO:

MSRB

1900 Duke Street, Suite 600

Alexandria, VA  22314]

INITIAL FORMS MUST BE SUBMITTED ELECTRONICALLY TO THE MSRB USING THE ID AND PASSWORD ISSUED FOR THIS PURPOSE.

AMENDMENTS TO FORMS [MAY] MUST BE [AMENDED] MADE ELECTRONICALLY BY LOGGING ON TO THE MSRB’S WEB SITE (www.msrb.org) AND USING THE PRIMARY CONTACT’S USER ID AND PASSWORD TO CHANGE INFORMATION RELATING TO THAT PERSON, OR USING THE OPTIONAL CONTACT’S USER ID AND PASSWORD TO CHANGE INFORMATION RELATING TO THAT PERSON.

FOR ASSISTANCE, PLEASE CALL THE MSRB AT (703) 797-6600.


[1] SR-MSRB-2005-08.  Comments on the proposed rule change should be submitted to the SEC and should reference this file number.

[2] Dealers may also appoint an “Optional Contact” and this person does not have to be a registered principal.

[3] Article IV, Section 3 of the NASD By-Laws requires members to appoint and certify to NASD one “executive representative” to represent, vote and act for the member in all NASD affairs.  The executive representative must be a member of the firm’s senior management and a registered principal of the member.

[4] SEC Release No. 34-49497 (March 29, 2004).

[5] Underlining indicates new language; brackets indicate deletions.