80 FR 64458 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Series 28 Examination Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 205 (October 23, 2015)

Page Range		64458-64461
FR Document		2015-26914

Federal Register, Volume 80 Issue 205 (Friday, October 23, 2015)

[Federal Register Volume 80, Number 205 (Friday, October 23, 2015)]
[Notices]
[Pages 64458-64461]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-26914]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76190; File No. SR-FINRA-2015-039]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to the Series 28 Examination Program

October 19, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``SEA'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that

[[Page 64459]]

on October 13, 2015, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``constituting a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule'' under Section
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which
renders the proposal effective upon receipt of this filing by the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(i).
\4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

FINRA is filing revisions to the content outline and selection
specifications for the Introducing Broker-Dealer Financial and
Operations Principal (Series 28) examination program.\5\ The proposed
revisions update the material to reflect changes to the laws, rules and
regulations covered by the examination and to incorporate the functions
and associated tasks currently performed by an Introducing Broker-
Dealer Financial and Operations Principal. In addition, FINRA is
proposing to make changes to the format of the content outline. FINRA
is not proposing any textual changes to the By-Laws, Schedules to the
By-Laws or Rules of FINRA.
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\5\ FINRA also is proposing corresponding revisions to the
Series 28 question bank. FINRA is submitting this filing for
immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act
and Rule 19b-4(f)(1) thereunder, and is not filing the question
bank. See Letter to Alden S. Adkins, Senior Vice President and
General Counsel, NASD Regulation, from Belinda Blaine, Associate
Director, Division of Market Regulation, SEC, dated July 24, 2000.
The question bank is available for SEC review.
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The revised content outline is attached.\6\ The Series 28 selection
specifications have been submitted to the Commission under separate
cover with a request for confidential treatment pursuant to SEA Rule
24b-2.\7\
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\6\ The Commission notes that the content outline is attached to
the filing, not to this Notice.
\7\ 17 CFR 240.24b-2.
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The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA and at
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
Section 15A(g)(3) of the Act \8\ authorizes FINRA to prescribe
standards of training, experience, and competence for persons
associated with FINRA members. In accordance with that provision, FINRA
has developed examinations that are designed to establish that persons
associated with FINRA members have attained specified levels of
competence and knowledge, consistent with applicable registration
requirements under FINRA rules. FINRA periodically reviews the content
of the examinations to determine whether revisions are necessary or
appropriate in view of changes pertaining to the subject matter covered
by the examinations.
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\8\ 15 U.S.C. 78o-3(g)(3).
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NASD Rule 1022(c)(1) requires that every member that is subject to
the requirements of SEA Rule 15c3-1,\9\ other than a member operating
pursuant to SEA Rule 15c3-1(a)(1)(ii),\10\ SEA Rule 15c3-1(a)(2)(i)
\11\ or SEA Rule 15c3-1(a)(8),\12\ shall designate as Introducing
Broker-Dealer Financial and Operations Principal \13\ those persons
associated with it, at least one of whom shall be its chief financial
officer, who perform the duties described in paragraph (c)(2) of the
rule. The rule provides that each person associated with a member who
performs such duties shall be required to register as an Introducing
Broker-Dealer Financial and Operations Principal with FINRA and shall
pass an appropriate qualification examination before such registration
may become effective. Paragraph (b)(2) of the rule provides that the
term Introducing Broker-Dealer Financial and Operations Principal shall
mean a person associated with a member whose duties include:
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\9\ 17 CFR 240.15c3-1. SEA Rule 15c3-1 is the SEC's net capital
rule for brokers and dealers.
\10\ 17 CFR 240.15c3-1(a)(1)(ii). SEA Rule 15c3-1(a)(1)(ii)
addresses net capital requirements for brokers or dealers that elect
not to be subject to the Aggregate Indebtedness Standard of
paragraph (a)(1)(i) under Rule 15c3-1.
\11\ 17 CFR 240.15c3-1(a)(2)(i). SEA Rule 15c3-1(a)(2)(i)
addresses net capital requirements for brokers or dealers that carry
customer accounts.
\12\ 17 CFR 240.15c3-1(a)(8). SEA Rule 15c3-1(a)(8) addresses
net capital requirements for municipal securities brokers' brokers,
as defined under the rule.
\13\ The term ``Limited Principal--Introducing Broker/Dealer
Financial and Operations'' as set forth in NASD Rule 1022(c) is
referred to as ``Introducing Broker-Dealer Financial and Operations
Principal'' for purposes of this filing. The term ``principal'' is
defined in NASD Rule 1021(b) (Definition of Principal).
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Final approval and responsibilities for the accuracy of
financial reports submitted to any duly established securities industry
regulatory body;
final preparation of such reports;
supervision of individuals who assist in the preparation
of such reports;
supervision of and responsibility for individuals who are
involved in the actual maintenance of the member's books and records
from which such reports are derived;
supervision and/or performance of the member's
responsibilities under all financial responsibility rules promulgated
pursuant to the provisions of the Act;
overall supervision of and responsibility for the
individuals who are involved in the administration and maintenance of
the member's back office operations; or
any other matter involving the financial and operational
management of the member.
NASD Rule 1022(c)(3) provides that, except as set forth in NASD
Rule 1021(c),\14\ a person designated pursuant to the provisions of
NASD Rule 1022(c)(1) shall not be required to take the Introducing
Broker-Dealer Financial and Operations Principal examination and shall
be qualified for registration as such if the person is qualified to be
registered or is registered as a Financial and Operations Principal as
defined in NASD Rule 1022(b)(2).\15\
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\14\ NASD Rule 1021(c) addresses requirements for examination on
lapse of registration.
\15\ For purposes of this filing, the term ``Financial and
Operations Principal'' is used interchangeably with the term
``Limited Principal--Financial and Operations'' as set forth in NASD
Rule 1022(b). Rule 1022(b)(2) sets forth the duties of a Financial
and Operations Principal. See SR-FINRA-2015-038 (establishing
revisions to the content outline and selection specifications for
the Financial and Operations Principal (Series 27) examination
program).
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NASD Rule 1022(c)(4) provides that a person registered solely as an
Introducing Broker-Dealer Financial and Operations Principal shall not
be qualified to function in a principal capacity with responsibility
over any

[[Page 64460]]

area of business activity not described in paragraph (c)(2) of the
rule. The rule provides that such person shall not be qualified to
function in a principal capacity at a member unless the member operates
under paragraph (c)(1) of the rule.
In consultation with a committee of industry representatives, FINRA
recently undertook a review of the Series 28 examination program. As a
result of this review, FINRA is proposing to make revisions to the
content outline to reflect changes to the laws, rules and regulations
covered by the examination and to incorporate the functions and
associated tasks currently performed by an Introducing Broker-Dealer
Financial and Operations Principal. FINRA also is proposing to make
changes to the format of the content outline.
Current Outline
The current content outline is divided into five sections. The
following are the five sections and the number of questions associated
with each of the sections, denoted Section 1 through Section 5:
1. Keeping And Preservation of Records and Broker-Dealer Financial
Reporting Requirements, 16 questions;
2. Net Capital Requirements, 36 questions;
3. Customer Protection, 10 questions;
4. Uniform Practice Rules, 5 questions; and
5. Other Relevant Regulations and Interpretations, 28 questions.
Each section also includes the applicable laws, rules and
regulations associated with that section. The current outline also
includes a preface (addressing, among other things, the purpose,
administration and scoring of the examination), sample questions and
reference materials.
Proposed Revisions
To develop the revised outline, FINRA conducted a job analysis
study of Introducing Broker-Dealer Financial and Operations Principals,
which included the use of a survey. The study provided detailed
information regarding the day-to-day roles, responsibilities and job
functions of Introducing Broker-Dealer Financial and Operations
Principals. As a result, FINRA is proposing to revise the structure of
the outline as described below to include functions and associated
tasks that reflect the day-to-day activities of an Introducing Broker-
Dealer Financial and Operations Principal.
Specifically, FINRA is proposing to divide the content outline into
four major job functions that are performed by an Introducing Broker-
Dealer Financial and Operations Principal. The following are the four
major job functions, denoted Function 1 through Function 4, with the
associated number of questions:
Function 1: Financial Reporting, 16 questions;
Function 2: Operations, General Securities Industry Regulations,
and Preservation of Books and Records, 30 questions;
Function 3: Net Capital, 31 questions; and
Function 4: Customer Protection, Funding and Cash Management, 18
questions.
As noted above, each major job function includes an assigned number
of questions. FINRA determined the number of questions for each
function based on the results of the job analysis study. Thus, compared
to the existing outline, the allocation of questions in the revised
outline more closely reflects the current day-to-day activities of an
Introducing Broker-Dealer Financial and Operations Principal.
Each function also includes specific tasks describing activities
associated with performing that function. There are five tasks (1.1-
1.5) associated with Function 1; three tasks (2.1-2.3) associated with
Function 2; seven tasks (3.1-3.7) associated with Function 3; and three
tasks (4.1-4.3) associated with Function 4.\16\ By way of example, one
such task (Task 2.2) is prepare and preserve financial records to
ensure accuracy and completeness of internal financial documents.\17\
Further, the outline lists the knowledge required to perform each
function and associated tasks (e.g., general ledger and sub-
ledgers).\18\ In addition, where applicable, the outline lists the
laws, rules and regulations a candidate is expected to know to perform
each function and associated tasks. These include the applicable FINRA
Rules (e.g., FINRA Rule 4160), NASD Rules (e.g., NASD Rule 2340) and
SEC rules (e.g., SEA Rule 17a-4).\19\
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\16\ See Exhibit 3a, Outline Pages 6-17. The Commission notes
that all references to Exhibit 3a refer to Exhibit 3a to the
proposed rule change.
\17\ See Exhibit 3a, Outline Page 10.
\18\ See Exhibit 3a, Outline Page 10.
\19\ See Exhibit 3a, Outline Page 10.
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As noted above, FINRA also is proposing to revise the content
outline to reflect changes to the laws, rules and regulations covered
by the examination. Among other revisions, FINRA is proposing to revise
the content outline to reflect the adoption of rules in the
consolidated FINRA rulebook (e.g., NASD Rule 2430 (Charges for Services
Performed) and NASD Rule 3110 (Books and Records) were adopted as FINRA
Rule 2122 (Charges for Services Performed) and FINRA Rule 4510 Series
(Books and Records Requirements), respectively).\20\
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\20\ See Rule Conversion Chart, available at http://
www.finra.org/Industry/Regulation/FINRARules/p085560.
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FINRA is proposing similar changes to the Series 28 selection
specifications and question bank.
Finally, FINRA is proposing to make changes to the format of the
content outline, including the preface, sample questions and reference
materials. Among other changes, FINRA is proposing to: (1) Add a table
of contents; \21\ (2) provide more details regarding the purpose of the
examination; \22\ (3) provide more details on the application
procedures; \23\ (4) provide more details on the development and
maintenance of the content outline and examination; \24\ (5) explain
that the passing scores are established by FINRA staff, in consultation
with a committee of industry representatives, using a standard setting
procedure and that the scores are an absolute standard independent of
the performance of candidates taking the examination; \25\ and (6) note
that each candidate will receive a score report at the end of the test
session, which will indicate a pass or fail status and include a score
profile listing the candidate's performance on each major content area
covered on the examination.\26\
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\21\ See Exhibit 3a, Outline Page 2.
\22\ See Exhibit 3a, Outline Page 3.
\23\ See Exhibit 3a, Outline Page 3.
\24\ See Exhibit 3a, Outline Page 4.
\25\ See Exhibit 3a, Outline Page 5.
\26\ See Exhibit 3a, Outline Page 5.
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The number of questions on the Series 28 examination will remain at
95 multiple-choice questions, and candidates will continue to have 120
minutes to complete the examination. Currently, a score of 70 percent
is required to pass the examination. The passing score for the revised
Series 28 examination will be 69 percent.
Availability of Content Outlines
The current Series 28 content outline is available on FINRA's Web
site, at http://www.finra.org/industry/qualification-exams. The revised
Series 28 content outline will replace the current content outline on
FINRA's Web site.
FINRA is filing the proposed rule change for immediate
effectiveness. FINRA proposes to implement the revised Series 28
examination program on December 14, 2015. FINRA will

[[Page 64461]]

announce the proposed rule change and the implementation date in a
Regulatory Notice.
2. Statutory Basis
FINRA believes that the proposed revisions to the Series 28
examination program are consistent with the provisions of Section
15A(b)(6) of the Act,\27\ which requires, among other things, that
FINRA rules must be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
and, in general, to protect investors and the public interest, and
Section 15A(g)(3) of the Act,\28\ which authorizes FINRA to prescribe
standards of training, experience, and competence for persons
associated with FINRA members. FINRA believes that the proposed
revisions will further these purposes by updating the examination
program to reflect changes to the laws, rules and regulations covered
by the examination and to incorporate the functions and associated
tasks currently performed by an Introducing Broker-Dealer Financial and
Operations Principal.
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\27\ 15 U.S.C. 78o-3(b)(6).
\28\ 15 U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The updated examination aligns
with the functions and associated tasks currently performed by an
Introducing Broker-Dealer Financial and Operations Principal and tests
knowledge of the most current laws, rules, regulations and skills
relevant to those functions and associated tasks. As such, the proposed
revisions would make the examination more efficient and effective.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \29\ and paragraph (f)(1) of Rule 19b-4
thereunder.\30\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Act. If
the Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule should be approved
or disapproved.
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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 17 CFR 240.19b-4(f)(1).
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IV. Solicitation of Comments

Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2015-039 on the subject line.

Paper Comments

Send paper comments in triplicate to Robert W. Errett,
Deputy Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2015-039. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-FINRA-2015-039 and should be
submitted on or before November 13, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26914 Filed 10-22-15; 8:45 am]
BILLING CODE 8011-01-P

64458 Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices

multiple-choice questions,19 and and associated tasks currently All submissions should refer to File
candidates will have three hours and 45 performed by associated persons Number SR–FINRA–2015–042. This file
minutes to complete the examination. engaged in securities trading and tests number should be included on the
The passing score will be 70 percent. knowledge of the laws, rules, subject line if email is used. To help the
regulations and skills relevant to those Commission process and review your
Availability of Content Outline
functions and associated tasks. comments more efficiently, please use
The Series 57 content outline is only one method. The Commission will
available on FINRA’s Web site, at http:// C. Self-Regulatory Organization’s post all comments on the Commission’s
www.finra.org/industry/qualification- Statement on Comments on the Internet Web site (http://www.sec.gov/
exams. Proposed Rule Change Received From rules/sro.shtml). Copies of the
FINRA is filing the proposed rule Members, Participants, or Others submission, all subsequent
change for immediate effectiveness. Written comments were neither amendments, all written statements
FINRA proposes to implement the solicited nor received. with respect to the proposed rule
Series 57 examination on January 4, change that are filed with the
2016. FINRA will announce the III. Date of Effectiveness of the Commission, and all written
proposed rule change and the Proposed Rule Change and Timing for communications relating to the
implementation date in a Regulatory Commission Action proposed rule change between the
Notice. Because the foregoing proposed rule Commission and any person, other than
2. Statutory Basis change does not: (i) Significantly affect those that may be withheld from the
the protection of investors or the public public in accordance with the
FINRA believes that the proposed rule provisions of 5 U.S.C. 552, will be
interest; (ii) impose any significant
change is consistent with the provisions available for Web site viewing and
burden on competition; and (iii) become
of Section 15A(b)(6) of the Act,20 which printing in the Commission’s Public
operative for 30 days from the date on
requires, among other things, that Reference Room, 100 F Street NE.,
which it was filed, or such shorter time
FINRA rules must be designed to Washington, DC 20549, on official
as the Commission may designate, it has
prevent fraudulent and manipulative business days between the hours of 10
become effective pursuant to Section
acts and practices, to promote just and a.m. and 3 p.m. Copies of such filing
19(b)(3)(A) of the Act 22 and Rule 19b–
equitable principles of trade, and, in also will be available for inspection and
general, to protect investors and the 4(f)(6) thereunder.23
At any time within 60 days of the copying at the principal office of
public interest, and Section 15A(g)(3) of FINRA. All comments received will be
the Act,21 which authorizes FINRA to filing of the proposed rule change, the
Commission summarily may posted without change; the Commission
prescribe standards of training, does not edit personal identifying
experience, and competence for persons temporarily suspend such rule change if
it appears to the Commission that such information from submissions. You
associated with FINRA members. should submit only information that
FINRA believes that the proposed rule action is necessary or appropriate in the
public interest, for the protection of you wish to make available publicly. All
change furthers these purposes by submissions should refer to File
establishing the qualification investors, or otherwise in furtherance of
Number SR–FINRA–2015–042 and
examination that individuals, including the purposes of the Act. If the
should be submitted on or before
associated persons of FINRA members, Commission takes such action, the
November 13, 2015.
must pass to register and function as Commission shall institute proceedings
to determine whether the proposed rule For the Commission, by the Division of
Securities Traders and Securities Trader Trading and Markets, pursuant to delegated
Principals. The examination is intended should be approved or disapproved.
authority.24
to safeguard the investing public by IV. Solicitation of Comments Robert W. Errett,
helping to ensure that individuals Deputy Secretary.
registering as Securities Traders, as well Interested persons are invited to
submit written data, views and [FR Doc. 2015–26912 Filed 10–22–15; 8:45 am]
as those responsible for the supervision
of securities trading activities, are arguments concerning the foregoing, BILLING CODE 8011–01–P

competent to perform their job including whether the proposed rule
functions. change is consistent with the Act.
Comments may be submitted by any of SECURITIES AND EXCHANGE
B. Self-Regulatory Organization’s the following methods: COMMISSION
Statement on Burden on Competition [Release No. 34–76190; File No. SR–FINRA–
Electronic Comments
FINRA does not believe that the 2015–039]
proposed rule change will result in any • Use the Commission’s Internet
burden on competition that is not comment form (http://www.sec.gov/ Self-Regulatory Organizations;
necessary or appropriate in furtherance rules/sro.shtml); or Financial Industry Regulatory
of the purposes of the Act. The new • Send an email to rule-comments@ Authority, Inc.; Notice of Filing and
examination aligns with the functions sec.gov. Please include File Number SR– Immediate Effectiveness of a Proposed
FINRA–2015–042 on the subject line. Rule Change Relating to the Series 28
19 Consistent with FINRA’s practice of including Examination Program
‘‘pretest’’ items on qualification examinations, Paper Comments
which is designed to ensure that new examination
October 19, 2015.
• Send paper comments in triplicate
mstockstill on DSK4VPTVN1PROD with NOTICES

items meet acceptable testing standards prior to use Pursuant to Section 19(b)(1) of the
for scoring purposes, the examination includes 10 to Robert W. Errett, Deputy Secretary, Securities Exchange Act of 1934 (‘‘Act’’
additional, unidentified pretest items that do not Securities and Exchange Commission, or ‘‘SEA’’) 1 and Rule 19b–4
contribute towards the candidate’s score. Therefore, 100 F Street NE., Washington, DC
the examination actually consists of 135 items, 125 thereunder,2 notice is hereby given that
of which are scored. The 10 pretest items are
20549–1090.
randomly distributed throughout the examination. 24 17 CFR 200.30–3(a)(12).
20 15 U.S.C. 78o–3(b)(6). 22 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
21 15 U.S.C. 78o–3(g)(3). 23 17 CFR 240.19b–4(f)(6). 2 17 CFR 240.19b–4.

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Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices 64459

on October 13, 2015, Financial Industry II. Self-Regulatory Organization’s chief financial officer, who perform the
Regulatory Authority, Inc. (‘‘FINRA’’) Statement of the Purpose of, and duties described in paragraph (c)(2) of
filed with the Securities and Exchange Statutory Basis for, the Proposed Rule the rule. The rule provides that each
Commission (‘‘SEC’’ or ‘‘Commission’’) Change person associated with a member who
the proposed rule change as described In its filing with the Commission, performs such duties shall be required
in Items I, II, and III below, which Items FINRA included statements concerning to register as an Introducing Broker-
have been prepared by FINRA. FINRA the purpose of and basis for the Dealer Financial and Operations
has designated the proposed rule change proposed rule change and discussed any Principal with FINRA and shall pass an
as ‘‘constituting a stated policy, comments it received on the proposed appropriate qualification examination
practice, or interpretation with respect rule change. The text of these statements before such registration may become
to the meaning, administration, or may be examined at the places specified effective. Paragraph (b)(2) of the rule
enforcement of an existing rule’’ under in Item IV below. FINRA has prepared provides that the term Introducing
Section 19(b)(3)(A)(i) of the Act 3 and summaries, set forth in sections A, B, Broker-Dealer Financial and Operations
Rule 19b–4(f)(1) thereunder,4 which and C below, of the most significant Principal shall mean a person associated
renders the proposal effective upon aspects of such statements. with a member whose duties include:
receipt of this filing by the Commission. • Final approval and responsibilities
The Commission is publishing this A. Self-Regulatory Organization’s for the accuracy of financial reports
notice to solicit comments on the Statement of the Purpose of, and submitted to any duly established
proposed rule change from interested Statutory Basis for, the Proposed Rule securities industry regulatory body;
persons. Change • final preparation of such reports;
1. Purpose • supervision of individuals who
I. Self-Regulatory Organization’s assist in the preparation of such reports;
Statement of the Terms of Substance of Section 15A(g)(3) of the Act 8 • supervision of and responsibility
the Proposed Rule Change authorizes FINRA to prescribe standards for individuals who are involved in the
of training, experience, and competence actual maintenance of the member’s
FINRA is filing revisions to the for persons associated with FINRA books and records from which such
content outline and selection members. In accordance with that reports are derived;
specifications for the Introducing provision, FINRA has developed • supervision and/or performance of
Broker-Dealer Financial and Operations examinations that are designed to the member’s responsibilities under all
Principal (Series 28) examination establish that persons associated with financial responsibility rules
program.5 The proposed revisions FINRA members have attained specified promulgated pursuant to the provisions
update the material to reflect changes to levels of competence and knowledge, of the Act;
the laws, rules and regulations covered consistent with applicable registration • overall supervision of and
by the examination and to incorporate requirements under FINRA rules. responsibility for the individuals who
the functions and associated tasks FINRA periodically reviews the content are involved in the administration and
currently performed by an Introducing of the examinations to determine maintenance of the member’s back
Broker-Dealer Financial and Operations whether revisions are necessary or office operations; or
Principal. In addition, FINRA is appropriate in view of changes • any other matter involving the
proposing to make changes to the format pertaining to the subject matter covered financial and operational management
of the content outline. FINRA is not by the examinations. of the member.
proposing any textual changes to the By- NASD Rule 1022(c)(1) requires that NASD Rule 1022(c)(3) provides that,
Laws, Schedules to the By-Laws or every member that is subject to the except as set forth in NASD Rule
Rules of FINRA. requirements of SEA Rule 15c3–1,9 1021(c),14 a person designated pursuant
The revised content outline is other than a member operating pursuant to the provisions of NASD Rule
attached.6 The Series 28 selection to SEA Rule 15c3–1(a)(1)(ii),10 SEA Rule 1022(c)(1) shall not be required to take
specifications have been submitted to 15c3–1(a)(2)(i) 11 or SEA Rule 15c3– the Introducing Broker-Dealer Financial
the Commission under separate cover 1(a)(8),12 shall designate as Introducing and Operations Principal examination
with a request for confidential treatment Broker-Dealer Financial and Operations and shall be qualified for registration as
pursuant to SEA Rule 24b–2.7 Principal 13 those persons associated such if the person is qualified to be
with it, at least one of whom shall be its registered or is registered as a Financial
The text of the proposed rule change
is available on FINRA’s Web site at 8 15
and Operations Principal as defined in
U.S.C. 78o–3(g)(3).
http://www.finra.org, at the principal 9 17
NASD Rule 1022(b)(2).15
CFR 240.15c3–1. SEA Rule 15c3–1 is the
office of FINRA and at the SEC’s net capital rule for brokers and dealers.
NASD Rule 1022(c)(4) provides that a
Commission’s Public Reference Room. 10 17 CFR 240.15c3–1(a)(1)(ii). SEA Rule 15c3– person registered solely as an
1(a)(1)(ii) addresses net capital requirements for Introducing Broker-Dealer Financial and
brokers or dealers that elect not to be subject to the Operations Principal shall not be
3 15 U.S.C. 78s(b)(3)(A)(i). Aggregate Indebtedness Standard of paragraph
4 17 CFR 240.19b–4(f)(1). (a)(1)(i) under Rule 15c3–1.
qualified to function in a principal
5 FINRA also is proposing corresponding 11 17 CFR 240.15c3–1(a)(2)(i). SEA Rule 15c3– capacity with responsibility over any
revisions to the Series 28 question bank. FINRA is 1(a)(2)(i) addresses net capital requirements for
submitting this filing for immediate effectiveness brokers or dealers that carry customer accounts. 14 NASD Rule 1021(c) addresses requirements for
pursuant to Section 19(b)(3)(A) of the Act and Rule 12 17 CFR 240.15c3–1(a)(8). SEA Rule 15c3– examination on lapse of registration.
19b–4(f)(1) thereunder, and is not filing the 1(a)(8) addresses net capital requirements for 15 For purposes of this filing, the term ‘‘Financial
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question bank. See Letter to Alden S. Adkins, municipal securities brokers’ brokers, as defined and Operations Principal’’ is used interchangeably
Senior Vice President and General Counsel, NASD under the rule. with the term ‘‘Limited Principal—Financial and
Regulation, from Belinda Blaine, Associate Director, 13 The term ‘‘Limited Principal—Introducing Operations’’ as set forth in NASD Rule 1022(b).
Division of Market Regulation, SEC, dated July 24, Broker/Dealer Financial and Operations’’ as set Rule 1022(b)(2) sets forth the duties of a Financial
2000. The question bank is available for SEC forth in NASD Rule 1022(c) is referred to as and Operations Principal. See SR–FINRA–2015–038
review. ‘‘Introducing Broker-Dealer Financial and (establishing revisions to the content outline and
6 The Commission notes that the content outline
Operations Principal’’ for purposes of this filing. selection specifications for the Financial and
is attached to the filing, not to this Notice. The term ‘‘principal’’ is defined in NASD Rule Operations Principal (Series 27) examination
7 17 CFR 240.24b–2. 1021(b) (Definition of Principal). program).

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Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices 64461

announce the proposed rule change and change, the Commission summarily may should submit only information that
the implementation date in a Regulatory temporarily suspend such rule change if you wish to make available publicly. All
Notice. it appears to the Commission that such submissions should refer to File
action is necessary or appropriate in the Number SR–FINRA–2015–039 and
2. Statutory Basis
public interest, for the protection of should be submitted on or before
FINRA believes that the proposed investors, or otherwise in furtherance of November 13, 2015.
revisions to the Series 28 examination the purposes of the Act. If the For the Commission, by the Division
program are consistent with the Commission takes such action, the of Trading and Markets, pursuant to
provisions of Section 15A(b)(6) of the Commission shall institute proceedings delegated authority.31
Act,27 which requires, among other to determine whether the proposed rule Robert W. Errett,
things, that FINRA rules must be should be approved or disapproved.
designed to prevent fraudulent and Deputy Secretary.
manipulative acts and practices, to IV. Solicitation of Comments [FR Doc. 2015–26914 Filed 10–22–15; 8:45 am]
promote just and equitable principles of Interested persons are invited to BILLING CODE 8011–01–P
trade, and, in general, to protect submit written data, views and
investors and the public interest, and arguments concerning the foregoing,
Section 15A(g)(3) of the Act,28 which including whether the proposed rule SECURITIES AND EXCHANGE
authorizes FINRA to prescribe standards change is consistent with the Act. COMMISSION
of training, experience, and competence Comments may be submitted by any of [Release No. 34–76186; SR–NYSEArca–
for persons associated with FINRA the following methods: 2015–02]
members. FINRA believes that the
proposed revisions will further these Electronic Comments Self-Regulatory Organizations; NYSE
purposes by updating the examination • Use the Commission’s Internet Arca, Inc.; Notice of Withdrawal of a
program to reflect changes to the laws, comment form (http://www.sec.gov/ Proposed Rule Change, as Modified by
rules and regulations covered by the rules/sro.shtml); or Amendment No. 1 Thereto, To Amend
examination and to incorporate the • Send an email to rule- NYSE Arca Equities Rule 8.600 To
functions and associated tasks currently comments@sec.gov. Please include File Adopt Generic Listing Standards for
performed by an Introducing Broker- Number SR–FINRA–2015–039 on the Managed Fund Shares
Dealer Financial and Operations subject line.
October 19, 2015.
Principal. Paper Comments On February 17, 2015, NYSE Arca,
B. Self-Regulatory Organization’s • Send paper comments in triplicate Inc. (‘‘Exchange’’) filed with the
Statement on Burden on Competition to Robert W. Errett, Deputy Secretary, Securities and Exchange Commission
FINRA does not believe that the Securities and Exchange Commission, (‘‘Commission’’), pursuant to Section
proposed rule change will result in any 100 F Street NE., Washington, DC 19(b)(1) of the Securities Exchange Act
burden on competition that is not 20549–1090. of 1934 (‘‘Act’’) 1 and Rule 19b–4
necessary or appropriate in furtherance All submissions should refer to File thereunder,2 a proposed rule change to
of the purposes of the Act. The updated Number SR–FINRA–2015–039. This file amend NYSE Arca Equities Rule 8.600
examination aligns with the functions number should be included on the to adopt generic listing standards for
and associated tasks currently subject line if email is used. To help the Managed Fund Shares. The proposed
performed by an Introducing Broker- Commission process and review your rule change was published for comment
Dealer Financial and Operations comments more efficiently, please use in the Federal Register on March 10,
Principal and tests knowledge of the only one method. The Commission will 2015.3 On April 17, 2015, pursuant to
most current laws, rules, regulations post all comments on the Commission’s Section 19(b)(2) of the Act,4 the
and skills relevant to those functions Internet Web site (http://www.sec.gov/ Commission designated a longer period
and associated tasks. As such, the rules/sro.shtml). Copies of the within which to either approve the
proposed revisions would make the submission, all subsequent proposed rule change, disapprove the
examination more efficient and amendments, all written statements proposed rule change, or institute
effective. with respect to the proposed rule proceedings to determine whether to
change that are filed with the disapprove the proposed rule change.5
C. Self-Regulatory Organization’s On June 3, 2015, the Exchange filed
Commission, and all written
Statement on Comments on the Amendment No. 1 to the proposed rule
Proposed Rule Change Received From communications relating to the
proposed rule change between the change. On June 11, 2015, the
Members, Participants, or Others Commission published a notice of filing
Commission and any person, other than
Written comments were neither those that may be withheld from the
solicited nor received. public in accordance with the
31 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
III. Date of Effectiveness of the provisions of 5 U.S.C. 552, will be 2 17 CFR 240.19b–4.
Proposed Rule Change and Timing for available for Web site viewing and 3 See Securities Exchange Act Release No. 74433

Commission Action printing in the Commission’s Public (Mar. 4, 2015), 80 FR 12690.
Reference Room, 100 F Street NE., 4 15 U.S.C. 78s(b)(2).
The foregoing rule change has become
Washington, DC 20549, on official 5 See Securities Exchange Act Release No. 74755,
effective pursuant to Section 19(b)(3)(A) 80 FR 22762 (Apr. 23, 2015). The Commission
mstockstill on DSK4VPTVN1PROD with NOTICES

business days between the hours of 10
of the Act 29 and paragraph (f)(1) of Rule determined that it was appropriate to designate a
a.m. and 3 p.m. Copies of such filing
19b–4 thereunder.30 At any time within longer period within which to take action on the
also will be available for inspection and proposed rule change so that it has sufficient time
60 days of the filing of the proposed rule
copying at the principal office of to consider the proposed rule change and the
FINRA. All comments received will be comments received. Accordingly, the Commission
27 15 U.S.C. 78o–3(b)(6). designated June 8, 2015 as the date by which it
28 15 U.S.C. 78o–3(g)(3). posted without change; the Commission should approve, disapprove, or institute
29 15 U.S.C. 78s(b)(3)(A). does not edit personal identifying proceedings to determine whether to disapprove the
30 17 CFR 240.19b–4(f)(1). information from submissions. You proposed rule change.

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Document Created: 2015-12-14 15:31:48
Document Modified: 2015-12-14 15:31:48

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 64458