[by Howard Haykin] The MSRB partially amended an earlier rule filing with the SEC pertaining to broker’s brokers, to clarify 2 portions of Proposed Rule G-43.  The MSRB also submitted a letter to the SEC in which it responded to comments received on the broker’s brokers proposal. Original Rule Filing 12-04. The MSRB originally filed on 3/5/12 a proposal adopting new Rule G-43 that consists of:  (i) proposed MSRB Rule G-43 governing the municipal securities activities of broker’s brokers and certain alternative trading systems (“Proposed Rule G-43”);  (ii) proposed amendments to MSRB Rule G-8 (on recordkeeping by broker’s brokers and certain alternative trading systems), MSRB Rule G-9 (on record retention), and MSRB Rule G-18 (on agency trades and trades by broker’s brokers) (collectively, the “Proposed Amendments”); and, (iii) a proposed interpretive notice on the duties of brokers, dealers, and municipal securities dealers (“dealers”) that use the services of broker’s brokers (the “Proposed Notice”). MSRB originally filed the proposed new rule for the following reasons:  (i) broker's brokers play an important role in the provision of secondary market liquidity for retail investors in municipal securities;  (ii) the nature of the enforcement actions brought against broker’s brokers by the SEC and FINRA;  and, (iii) the observations of those enforcement agencies of other trading patterns that indicate some market participants may misuse the role of the broker’s broker in the provision of secondary market liquidity and may cause retail customers who liquidate their municipal securities by means of broker’s brokers to receive unfair prices. Amendment No. 1. The purpose of the current partial amendment filing to provide clarity on what is meant by a “trade” in the context of a broker’s broker.  Because a broker’s broker is an intermediary and would be prohibited by Proposed Rule G-43(c)(i)(H) from engaging in proprietary trading, a trade through a broker’s broker would have two sides - both a purchase from the seller and a sale to the bidder. The term “trade” would be used in Proposed Rule G-43(d)(iv), which would define when a bid-wanted is considered “completed.” This characterization of a trade for purposes of Proposed Rule G-43 does not affect how trades are to be treated under any other MSRB  rule, including but not limited to Rule G-14 on reports of sales or purchases. For further details, go to:   [MSRB Notice 12-24, 5/3/12] and   [Amendment to MSRB Rule Filing 12-04, originally filed 3/5/12]. MSRB Contact. Direct questions to:  Peg Henry, General Counsel, Market Reg. - 703-797-6600.