MSRB NOTICE 2008-13 (March 5, 2008)

AMENDMENT FILED TO RULE A-3, ON MEMBERSHIP ON THE BOARD, AND RULE A-4, ON MEETINGS OF THE BOARD

On March 5, 2008, the Municipal Securities Rulemaking Board filed with the Securities and Exchange Commission (“SEC”) amendments to Rule A-3, on membership on the Board, and to Rule A-4, on Meetings of the Board.[1] The Board has been reviewing its Administrative Rules and by-laws to ensure that they are consistent with current good corporate governance practices, and clarifying and updating its rules to bring them in line with modern practice. 

Among other things, Rule A-3, on membership on the Board, directs the Board and the Board’s Nominating Committee to consider the “need” to maintain broad geographic representation on the Board, as well as diversity in the size and type of dealers represented, in considering persons to serve on the Nominating Committee or for Board membership.  The Board has determined to modify this provision in the rule in order to provide greater flexibility in the appointment of persons to the Nominating Committee and the nomination of candidates to the Board.  This modification will facilitate the Board and Nominating Committee’s consideration of a broader range of factors for nomination and will encourage consideration of well-qualified candidates with diverse backgrounds, unique experience and complementary skills, together with consideration of geographic representation and diversity in the size and type of dealers represented.   

Rule A-4, among other things, provides a process for calling special meetings of the Board, including how the notice of the time and place of the special meeting shall be provided to Board members.  The current provision requires the Secretary of the Board to call a meeting at the request of the Chairman of the Board or at the request of not less than three Board members.  In addition, the rule provides that the notice of the special meeting shall be mailed to each member not later than the seventh calendar day preceding the date on which the meeting is to be held.  The Board has modified the rule to enable the Chairman of the Board to call a special meeting of the Board directly, without the assistance of the Secretary of the Board.  In addition, the Board has provided that notices for the time and place of a special meeting shall be provided to each member and the Secretary of the Board with three-day’s advance notice.  Further, the modification permits the Board to waive such advance notice by unanimous consent of all Board members attending such meeting.  The modification takes into consideration the realities of modern communications and permits the Board to convene quickly, but with unanimous consent, in the event of a market or other emergency.

The amendments became effective upon filing with the SEC. 

Questions about the amendment may be directed to Catherine A. Courtney, Assistant General Counsel.

March 5, 2008

TEXT OF AMENDMENTS [2]

Rule A-3. Membership on the Board

(a) – (b) No change.

(c) Nomination and Election of Members.

(i) No change.

(ii) The Board will appoint a Nominating Committee composed of nine members. The membership of the Nominating Committee shall consist of six Board members and three persons who are not members of the Board. Of the six Board members, two shall be bank representatives, two shall be broker-dealer representatives, and two shall be public representatives. Of the three non-Board members, one shall be associated with and representative of bank dealers, one shall be associated with and representative of brokers, dealers, and municipal securities dealers other than bank dealers, and one shall not be associated with any broker, dealer, or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling any broker or dealer which is not a broker, dealer or municipal securities dealer that effects municipal securities transactions). In appointing persons to serve on the Nominating Committee, factors to be considered include, without limitation,[the need to achieve broad geographic representation on such Committee, as well as] diversity in the geographic location, size and type of brokers, dealers and municipal securities dealers represented on such Committee.

(iii) No change.

(iv) The Nominating Committee shall nominate one person for each of the Board positions to be filled and shall submit the nominees to the Board for approval. In making such nominations, factors to be considered include, without limitation,[the need to maintain broad geographic representation on the Board, as well as] diversity in the geographic location, size and type of brokers, dealers, and municipal securities dealer represented.  Each nomination shall be accompanied by a statement indicating the position for which such person is nominated, the nominee’s qualifications to serve as a member of the Board, and information concerning the nominee’s association with any broker, dealer, or municipal securities dealer. The names of the nominees will be confidential.

(v) - (vii) No change.

(d) - (f) No change.

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Rule A-4. Meetings of the Board

(a) Meetings. Regular meetings of the Board shall be held at least quarterly and at such time and place as from time to time determined by resolution of the Board or provided by rule of the Board. Special meetings of the Board shall be called by [theSecretary to the Board at the request of] the Chairman of the Board or at the written request of not less than three members, which request shall in each case specify the purpose or purposes of the meeting. At special meetings, the Board shall consider only those specific matters for which the meeting was called, unless all members consent either at the meeting or in writing before or after the meeting to the consideration of other matters.

(b) Notice of Meetings. Notice of the time and place of special meetings of the Board shall be provided [mailed] to each member, as well as to the Secretary of the Board, [at such member's address appearing in the records of the Board, not later than the seventh calendar day preceding the date on which the meeting is to be held, or by telephone, e-mail or personal delivery] not later than the third calendar day preceding the date on which the meeting is to be held or as otherwise required by law,provided that such advance notice may be waived by unanimous consent of all Board members attending such meeting. [Written notice of special meetings of the Board shall be signed by the Secretary to the Board.] Notice of a special meeting shall also set forth the purpose or purposes of the meeting [and the name or names of the person or persons at whose request the meeting is being called]. Notice of a special meeting need not be given to any member who submits a signed waiver of notice before or after the meeting, or who attends the meeting without protesting, prior thereto or at the commencement thereof, the lack of notice to such member. No notice of regular meetings of the Board shall be required.

(c) - (d) No change.

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[1] File No. SR-MSRB-2008-02.  Comments on the amendment should be submitted to the SEC and should reference this file number.

[2] Brackets denote deletions and underlying denotes additions to the rule.