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MSRB Notice

Notice of Filing and Immediate Effectiveness of Proposal to Delay Implementation of Amendments to Rule G-27, on Supervision

On September 14, 2007, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) a proposed rule change to delay, until February 29, 2008, implementation of amendments to Rule G-27, on supervision, that were scheduled to become effective on November 26, 2007.[1]  There are no changes to the text of Rule G-27 as amended.  

On May 22, 2007, the SEC approved File Number SR-MSRB-2006-10, which incorporated into Rule G-27 most of the requirements of NASD Rules 3010 (Supervision) and 3012 (Supervisory Control System), to help ensure a coordinated regulatory approach in the area of supervision and to facilitate inspection and enforcement.  The SEC also granted the MSRB’s request for a delayed effective date of November 26, 2007.[2]

Shortly after approval of the amendments, the MSRB began receiving inquiries from industry members indicating some confusion over which type of principal is required based on the activities conducted at branch offices and offices of supervisory jurisdiction.  In addition, the MSRB has received two comment letters which raise certain substantive questions regarding the application of the amendments.  The MSRB is currently reviewing the amendments to Rule G-27 in light of these inquiries and anticipates publishing a notice in the near future addressing the questions and concerns raised.  The commentators also requested that the MSRB delay the effective date of the amendments.  The MSRB believes it is appropriate to delay the implementation of the amendments until February 29, 2008, in light of its pending review of questions on the amendments, anticipated publication of further guidance in this area, and desire to prevent firms from expending unnecessary time and expense in registering as principals certain people who may not need to be so registered.  The delayed implementation date should give firms the time needed to determine which, if any, of their personnel must be registered as a principal (either a municipal securities principal (Series 53) or a municipal fund securities limited principal (Series 51)) based on the activities undertaken at a branch office and/or office of supervisory jurisdiction.

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Questions concerning this notice should be directed to Ernesto A. Lanza, Senior Associate General Counsel, or Jill C. Finder, Associate General Counsel, or Catherine A. Courtney, Assistant General Counsel, at 703-797-6600.

September 14, 2007

[1] File Number SR-MSRB-2007-03.  Comments on the proposal should be submitted to the SEC and should reference this file number.

[2] Exchange Act Release No. 55792 (May 22, 2007); see also MSRB Notice 2007-16 (May 25, 2007).