Amendments Approved

The Securities and Exchange Commission has approved two sets of technical amendments. The amendments became operative on June 1, 2000 and September 19, 2000.

Questions about the amendments may be directed to Ernesto A. Lanza, Associate General Counsel.

On May 2, 2000, the Board filed with the Securities and Exchange Commission (“SEC”) technical amendments to rules A-3, on membership on the Board, G-15, on confirmation, clearance and settlement of transactions with customers, G-17, on conduct of municipal securities business, and G-18, on execution of transactions.^[1] The amendments became operative on June 1, 2000.

The Board adopted technical amendments to rules A-3, G-15, G-17 and G-18 for the purpose of making the following non-substantive changes:

· The amendments to subsections (a)(i), (c)(ii) and (c)(vi) of rule A-3 correct an unintended omission from the technical amendments with respect to the definition of public representatives on the Board and its Nominating Committee adopted by the MSRB in 1999 (the “1999 Technical Amendments”). These amendments make the rule language consistent with Section 15B(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”).

· The amendments to rule G-15(d)(ii) make subsection and paragraph references consistent with the MSRB’s general usage of such references throughout the rules.

· The amendments to rule G-17 change certain terminology used in the rule from “municipal securities business” to “municipal securities activities” to avoid any ambiguity with the term “municipal securities business” as used in rules G-37 and G-38. The term “municipal securities business” as used in rules G-37 and G-38 has a specific limited definition, whereas rule G-17 uses that term in a manner intended to include all of the municipal securities activities of the dealer or its associated persons.^[2]

· The amendment to rule G-18 deletes a definition of “broker’s broker” that pre-dated the SEC’s definition of that term under Exchange Act Rule 15c3-1(a)(8)(ii). Because the language used to define brokers’ broker differs in the two definitions, it is possible that some ambiguity may exist as to whether the term is intended to cover the same universe of dealers under the general federal securities laws and MSRB rules. The deletion of this definition from rule G-18 eliminates this potential ambiguity.^[3]

On July 14, 2000, the Board filed with the SEC technical amendments to rules G-8, on books and records to be made by brokers, dealers and municipal securities dealers, and G-15, on confirmation, clearance and settlement of transactions with customers.^[4] The amendments became operative on September 19, 2000.

The Board adopted technical amendments to rules G-8 and G-15 for the purpose of making the following non-substantive changes:

· On March 16, 2000, the SEC approved amendments to rule G-8 as well as to rules G-27, on supervision, and G-9, on preservation of records (the “Supervision Amendments”), relating to supervisory procedures for review of correspondence with the public.^[5] The Supervision Amendments also become effective on September 19, 2000. Among other things, they provide for the maintenance of records of written supervisory procedures and of correspondence relating to a municipal securities representative’s municipal securities activities.

Under current rule G-8(f), a non-bank dealer is deemed to be in compliance with its recordkeeping obligations under rule G-8 if it is in compliance with the SEC’s recordkeeping rule (Exchange Act Rule 17a-3), provided that the dealer must still maintain certain types of records identified in rule G-8 that are specifically required under Board rules and are unique to the municipal securities market. The technical amendment to rule G-8(f) requires a non-bank dealer relying on Exchange Act Rule 17a-3 for the maintenance of its books and records to nonetheless maintain the records of supervisory procedures and correspondence required by the recent amendments.

· The amendment to rule G-15(d)(ii)(B)(2)(d) makes a paragraph reference consistent with the Board’s general usage of such references throughout the rules.

September 20, 2000

^[2] The amendments to rule G-17 are consistent with similar amendments made to rules A-14, A-15, G-3 and G-27 in the 1999 Technical Amendments.

^[3] Rule D-1 provides that, unless the context otherwise specifically requires, the terms used in Board rules shall have the respective meanings set forth in the Exchange Act and the rules and regulations of the Commission thereunder. Thus, the deletion of the definition of brokers’ broker from rule G-18 would automatically result in this term having the same meaning as set forth under Exchange Act Rule 15c3-1(a)(8)(ii).

^[5]See Exchange Act Rel. No. 42538 (March 16, 2000), 65 FR 15675 (March 23, 2000).