Notice of Amendment to Rule G-40 and Form G-40, on E-mail Contacts

On August 7, 2002, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) a technical amendment to Rule G-40 and Form G-40, on electronic mail contacts.[1]  The amendment will become operative on September 8, 2002.

SUMMARY OF AMENDMENT 

On June 6, 2002 the SEC approved new MSRB Rule G-40, on electronic mail (“E-mail”) contacts, and new Form G-40, as well as related amendments to Rule G-8, on books and records, and Rule G-9, on preservation of records.[2]  The new Rule requires each broker, dealer and municipal securities dealer (collectively referred to as “dealers”) to use new Form G-40 to appoint an E-mail contact to serve as the official contact person for purposes of electronic communication between the dealer and the MSRB.  This E-mail contact must be a registered municipal securities principal with the dealer.  Dealers have the option of appointing a second contact who, under the rule as originally adopted, also must be a municipal securities principal with the dealer. 

The MSRB recently sent letters to its current list of dealers requesting that they complete new Form G-40.  In response to this mailing, the MSRB received numerous phone calls from dealers that have only one municipal securities principal and wish to appoint a second (optional) e-mail contact who is not a principal.  Accordingly, the MSRB has determined to amend Rule G-40 and Form G-40 to accommodate these dealers by eliminating the requirement that the second contact must be a municipal securities principal.  The amendment also distinguishes between the two e-mail contacts by referring to the official contact person as the “Primary Contact” and the secondary person as the “Optional Contact.”

CLARIFICATION FOR DEALERS ENGAGED SOLELY IN MUNICIPAL FUND SECURITIES BUSINESS

It has come to the MSRB’s attention that for many dealers their only municipal securities business consists of transactions in municipal fund securities (i.e., Section 529 college savings plans and local government investment pools).  Many of these dealers currently have a Series 24 or 26 principal, but not a Series 53 municipal securities principal.  By early next year, all firms will be required to have either a Series 53 municipal securities principal or a new Series 51 municipal fund securities limited principal, depending upon their business activities.  In the interim, Rule G-3, on professional qualification, allows dealers that engage solely in municipal fund securities business to appoint a Series 24 or 26 to act as principal with respect to such business.  This principal has all the powers and responsibilities of a municipal securities principal.  Thus, such dealers may appoint a Series 24 or 26 principal as their Primary e-mail contact pursuant to Rule G-40.  As noted above, all dealers will be required to have either a Series 53 or 51 principal by early next year.  At that time, these dealers will be asked to update their Form G-40 electronically via the MSRB’s web site.

August 7, 2002

TEXT OF AMENDMENT [3]

Rule G-40.  Electronic Mail Contacts.

(a)(i) Each broker, dealer or municipal securities dealer shall appoint an 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 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 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, 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.