June 13, 2018

Brent J. Fields
Secretary
Securities and Exchange Commission
100 F Street NE.
Washington, DC 20549-1090

Re: File No. 265-28; Recommendation of Market Structure Subcommittee of the Investor Advisory Committee; Select Enhancements to Protect Retail Investors in Municipal and Corporate Bonds

Dear Mr. Fields:

The Municipal Securities Division of the Securities Industry and Financial Markets Association (“SIFMA”)1 has reviewed the June 5 draft Recommendation (“Recommendation”) of Market Structure Subcommittee of the Securities Exchange Commission (“SEC”) Investor Advisory Committee2 to be considered at the SEC Investor Advisory Committee meeting on June 14, 2018. SIFMA’s Municipal Securities Division members include the vast majority of regulated brokers, dealers, and municipal securities dealers in the municipal securities market. As such, SIFMA’s Municipal Securities Division members feel strongly that municipal securities regulation should support fair, efficient, and transparent markets. Accordingly, we respectfully submit our comments on the Recommendation to the SEC Investor Advisory Committee.

I. Proposed Amendments to Rule 15c2-12

The Recommendation encourages the SEC to work toward passage of its proposed amendments to Rule 15c2-12 after taking into account key feedback from various stakeholders, to improve disclosure regarding financial obligations incurred by issuers of municipal securities. SIFMA appreciates that the Committee supports adding clarity in the final rule, where appropriate. However, SIFMA members believe that there are significant issues with the current proposed amendments to Rule 15c2-12, that unchanged, will make it extremely difficult for investors, retail investors in particular, to find the very information the SEC wants to make available.3

SIFMA agrees with the Recommendation that a term that needs to be better defined and limited is “financial obligation”,4 which should pick up solely “a direct purchase, private placement, or bank loan” but should not be as broad as currently written, which might pick up items such as ordinary course leases. Further, SIFMA notes that at least one member of the Committee suggested that the term “material” may be difficult to define and should be removed from the proposed amendments or made clearer. Rather than a vague materiality qualifier, we recommend a clear, bright-line condition for disclosure, similar to one used elsewhere by the SEC in disclosure filings. We believe the SEC can and should provide guidance in applying the term to specific contexts with respect to municipal securities. Finally, we have significant concerns that the current draft of proposed amendments will be far more time consuming and costly for brokers, dealers, and municipal securities dealers, than estimated by the SEC, both in the context of their time of trade obligations under MSRB Rule G-47 and in the context of an underwriter’s duty in connection with a primary offering. We urge the SEC to take these and our prior comments, together with other stakeholder comments, into consideration as they work toward passage of the proposed amendments.

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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 $18.5 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 Available at: https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac061418-marketstructure-subcommittee-recommendation.pdf.

3 See Letter from Leslie M. Norwood, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association, dated May 15, 2017, to Brent J. Fields, Secretary, SEC (regarding Proposed Amendments to Exchange Act Rule 15c2-12; File No. S7-01-17) available at: https://www.sifma.org/wpcontent/uploads/2017/05/SIFMA-Submits Comments-to-the-SEC-on-Proposed-Amendments-to-Rule-15c2-12.pdf.

4 Id.