July 5, 2017
Brent J. Fields
Secretary
Securities and Exchange Commission
100 F Street NE.
Washington, DC 20549-1090
Re: File No. SR-MSRB-2017-03; Notice of Filing of a Proposed Rule Change to Amend MSRB Rule G-26, on Customer Account Transfers
Dear Mr. Fields:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates this opportunity to respond to the Municipal Securities Rulemaking Board’s (“MSRB’s”) proposed rule filing SR-MSRB-2017-03 (the “Proposal”),2 which would amend MSRB Rule G-26, on customer account transfers. We incorporate by reference our prior comment letter to the MSRB as part of this proceeding, and specifically request that the Securities and Exchange Commission (“SEC” or “Commission”) consider the issues raised in that letter as part of its consideration of the Proposal.3 SIFMA and its members strongly urge you to disapprove the proposed rule change in its current form. Although we support the stated purpose of the draft amendments to modernize and harmonize the rule, we believe the draft amendments are not an efficient way to achieve those goals. SIFMA and its members feel the proposed amendments take an approach that is a step backward; instead of supporting rulebook simplification and harmonization, and promoting automation to facilitate faster transactions, the proposed amendments are inapposite.
I. More Efficient and Harmonized Alternatives are Available
As described in detail in our the Prior SIFMA Letter, SIFMA and its members feel strongly that Rule G-26 in its current form is unnecessary. SIFMA believes that if there are any broker, dealer, or municipal securities dealer (collectively, “dealer”) firms not already covered by New York Stock Exchange (“NYSE”) Rule 412 or Financial Industry Regulatory Authority (“FINRA”) Rule 11870 regarding customer account transfers, then it is likely that such a dealer is exempt from participating in ACATS under Rule G-26 as they are not direct clearing participants of the National Securities Clearing Corporation (“NSCC”) eligible to participate in the Automated Customer Account Transfer Service (“ACATS”)4. Thus, SIFMA and its members feel that Rule G 26 is redundant and unnecessary.
1 SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $20 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
2 82 Fed. Reg. 27307 (Jun. 14, 2017) (File No. SR-MSRB-2017-03).
3 Letter from Leslie M. Norwood, SIFMA, to Ronald W. Smith, MSRB, regarding MSRB Notice 2017-01 (Feb. 17, 2017, available at http://www.sifma.org/issues/item.aspx?id=8589965235 (the “Prior SIFMA Letter”)
4 See NSCC Rule 50 (establishing and governing the ACATS process).