80 FR 64465 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Series 27 Examination Program

SECURITIES AND EXCHANGE COMMISSION

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

Page Range		64465-64468
FR Document		2015-26913
Federal Register, Volume 80 Issue 205 (Friday, October 23, 2015)
[Federal Register Volume 80, Number 205 (Friday, October 23, 2015)]
[Notices]
[Pages 64465-64468]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-26913]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76189; File No. SR-FINRA-2015-038]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the Series 27 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 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

[[Page 64466]]

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 Financial and Operations Principal (Series 27) 
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 a 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 27 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 27 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(b)(1) requires that each member that operates 
pursuant to the provisions of SEA Rule 15c3-1(a)(1)(ii),\9\ SEA Rule 
15c3-1(a)(2)(i) \10\ or SEA Rule 15c3-1(a)(8) \11\ shall designate as 
Financial and Operations Principal \12\ those persons associated with 
it, at least one of whom shall be its chief financial officer, who 
perform the duties described in paragraph (b)(2) of the rule. The rule 
provides that each person associated with a member who performs such 
duties shall be required to register as a 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 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(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.
    \10\ 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.
    \11\ 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.
    \12\ The term ``Limited Principal--Financial and Operations'' as 
set forth in NASD Rule 1022(b) is referred to as ``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 responsibility 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(b)(3) provides that a person registered solely as a 
Financial and Operations Principal shall not be qualified to function 
in a principal capacity with responsibility over any area of business 
activity not described in paragraph (b)(2) of the rule.
    In consultation with a committee of industry representatives, FINRA 
recently undertook a review of the Series 27 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 a 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 seven sections. The 
following are the seven sections and the number of questions associated 
with each of the sections, denoted Section 1 through Section 7:
    1. Keeping And Preservation of Records and Broker-Dealer Financial 
Reporting Requirements, 15 questions;
    2. Net Capital Requirements, 44 questions;
    3. Customer Protection, 36 questions;
    4. Municipal Securities Rulemaking Board--Regulations, 9 questions;
    5. Extensions Of Credit In The Securities Industry, 8 questions;
    6. Procedural Rules, 12 questions; and
    7. Other Relevant Regulation and Interpretations, 21 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.

[[Page 64467]]

Proposed Revisions
    To develop the revised outline, FINRA conducted a job analysis 
study of 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 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 a Financial 
and Operations Principal.
    Specifically, FINRA is proposing to divide the content outline into 
five major job functions that are performed by a Financial and 
Operations Principal. The following are the five major job functions, 
denoted Function 1 through Function 5, with the associated number of 
questions:
    Function 1: Financial Reporting, 25 questions;
    Function 2: Operations, General Securities Industry Regulations, 
and Preservation of Books and Records, 42 questions;
    Function 3: Customer Protection, 24 questions;
    Function 4: Net Capital, 41 questions; and
    Function 5: Funding and Cash Management, 13 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 a 
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; five tasks (3.1-3.5) associated with Function 3; seven 
tasks (4.1-4.7) associated with Function 4; and two tasks (5.1-5.2) 
associated with Function 5.\13\ By way of example, one such task (Task 
2.2) is to prepare and preserve financial records to ensure accuracy 
and completeness of internal financial documents.\14\ Further, the 
outline lists the knowledge required to perform each function and 
associated tasks (e.g., general ledger and sub-ledgers).\15\ 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).\16\
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    \13\ See Exhibit 3a, Outline Pages 6-20. The Commission notes 
that all references to Exhibit 3a refer to Exhibit 3a to the 
proposed rule change.
    \14\ See Exhibit 3a, Outline Page 10.
    \15\ See Exhibit 3a, Outline Page 10.
    \16\ 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).\17\ Further, based on 
the MSRB's elimination of the Financial and Operations Principal 
requirements in MSRB Rule G-3(d), the revised outline does not include 
any MSRB rules.\18\
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    \17\ See Rule Conversion Chart, available at http://www.finra.org/Industry/Regulation/FINRARules/p085560.
    \18\ See Securities Exchange Act Release No. 72743 (August 1, 
2014), 79 FR 46290 (August 7, 2014) (Order Approving File No. SR-
MSRB-2014-04).
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    FINRA is proposing similar changes to the Series 27 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; \19\ (2) provide more details regarding the purpose of the 
examination; \20\ (3) provide more details on the application 
procedures; \21\ (4) provide more details on the development and 
maintenance of the content outline and examination; \22\ (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; \23\ 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.\24\
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    \19\ See Exhibit 3a, Outline Page 2.
    \20\ See Exhibit 3a, Outline Page 3.
    \21\ See Exhibit 3a, Outline Page 3.
    \22\ See Exhibit 3a, Outline Page 4.
    \23\ See Exhibit 3a, Outline Page 5.
    \24\ See Exhibit 3a, Outline Page 5.
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    The number of questions on the Series 27 examination will remain at 
145 scored multiple-choice questions,\25\ and candidates will continue 
to have 225 minutes to complete the examination. Currently, a score of 
70 percent is required to pass the examination. The passing score for 
the revised Series 27 examination will be 69 percent.
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    \25\ Consistent with FINRA's practice of including ``pre-test'' 
questions on certain qualification examinations, which is designed 
to ensure that new examination questions meet acceptable testing 
standards prior to use for scoring purposes, the examination 
includes ten additional, unidentified pre-test questions that do not 
contribute towards the candidate's score. Therefore, the examination 
actually consists of 155 questions, 145 of which are scored. The ten 
pre-test questions are randomly distributed throughout the 
examination.
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Availability of Content Outlines
    The current Series 27 content outline is available on FINRA's Web 
site, at http://www.finra.org/industry/qualification-exams. The revised 
Series 27 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 27 
examination program on December 14, 2015. FINRA will 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 27 
examination program are consistent with the provisions of Section 
15A(b)(6) of the Act,\26\ 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,\27\ 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 a Financial and Operations Principal.
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    \26\ 15 U.S.C. 78o-3(b)(6).
    \27\ 15 U.S.C. 78o-3(g)(3).

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[[Page 64468]]

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 a 
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 \28\ and paragraph (f)(1) of Rule 19b-4 
thereunder.\29\ 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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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 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 [email protected]. Please include 
File Number SR-FINRA-2015-038 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-2015-038. 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-2015-038 and should be 
submitted on or before November 13, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26913 Filed 10-22-15; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices 64465

to investors by providing them with filing. The Commission believes that available for Web site viewing and
additional investment alternatives. waiving the 30-day operative delay is printing in the Commission’s Public
consistent with the protection of Reference Room, 100 F Street NE.,
B. Self-Regulatory Organization’s
investors and the public interest, as it Washington, DC 20549 on official
Statement on Burden on Competition
will allow the Exchange to continue to business days between the hours of
Phlx does not believe that the list mini options on the Google Class A 10:00 a.m. and 3:00 p.m. Copies of such
proposed rule change will impose any shares, now Alphabet’s Class A shares, filing also will be available for
burden on competition that is not following Google’s reorganization. For inspection and copying at the principal
necessary or appropriate in furtherance this reason, the Commission designates office of the Exchange. All comments
of the purposes of the Act. The the proposed rule change to be operative received will be posted without change;
proposed change does not impose any upon filing.12 the Commission does not edit personal
burden on intra-market competition At any time within 60 days of the identifying information from
because it applies to all members and filing of the proposed rule change, the submissions. You should submit only
member organizations uniformly. There Commission summarily may information that you wish to make
is no burden on inter-market temporarily suspend such rule change if available publicly. All submissions
competition because the Exchange is it appears to the Commission that such should refer to File Number SR–PHLX–
merely attempting to continue to permit action is necessary or appropriate in the 2015–82, and should be submitted on or
trading of GOOGL as a Mini Options, as public interest, for the protection of before November 13, 2015.
is the case today. As a result, there will investors, or otherwise in furtherance of
For the Commission, by the Division of
be no substantive changes to the the purposes of the Act.
Trading and Markets, pursuant to delegated
Exchange’s operations or its rules. authority.13
IV. Solicitation of Comments
C. Self-Regulatory Organization’s Interested persons are invited to Robert W. Errett,
Statement on Comments on the submit written data, views, and Deputy Secretary.
Proposed Rule Change Received From arguments concerning the foregoing, [FR Doc. 2015–26915 Filed 10–22–15; 8:45 am]
Members, Participants, or Others including whether the proposed rule BILLING CODE 8011–01–P
No written comments were either change is consistent with the Act.
solicited or received. Comments may be submitted by any of
the following methods: SECURITIES AND EXCHANGE
III. Date of Effectiveness of the COMMISSION
Proposed Rule Change and Timing for Electronic Comments
Commission Action • Use the Commission’s Internet [Release No. 34–76189; File No. SR–FINRA–
Because the proposed rule change comment form (http://www.sec.gov/ 2015–038]
does not (i) significantly affect the rules/sro.shtml); or
• Send an email to rule-comments@ Self-Regulatory Organizations;
protection of investors or the public
sec.gov. Please include File Number SR– Financial Industry Regulatory
interest; (ii) impose any significant
PHLX–2015–82 on the subject line. Authority, Inc.; Notice of Filing and
burden on competition; and (iii) become
Immediate Effectiveness of a Proposed
operative for 30 days from the date on Paper Comments Rule Change Relating to the Series 27
which it was filed, or such shorter time
as the Commission may designate if • Send paper comments in triplicate Examination Program
consistent with the protection of to Brent J. Fields, Secretary, Securities
October 19, 2015.
investors and the public interest, the and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the
proposed rule change has become Securities Exchange Act of 1934 (‘‘Act’’
effective pursuant to Section 19(b)(3)(A) All submissions should refer to File
or ‘‘SEA’’) 1 and Rule 19b–4
of the Act 8 and Rule 19b–4(f)(6) Number SR–PHLX–2015–82. This file
thereunder,2 notice is hereby given that
thereunder.9 number should be included on the
on October 13, 2015, Financial Industry
A proposed rule change filed under subject line if email is used. To help the
Regulatory Authority, Inc. (‘‘FINRA’’)
Rule 19b–4(f)(6) 10 normally does not Commission process and review your
filed with the Securities and Exchange
become operative for 30 days after the comments more efficiently, please use
Commission (‘‘SEC’’ or ‘‘Commission’’)
date of filing. However, pursuant to only one method. The Commission will
the proposed rule change as described
Rule 19b–4(f)(6)(iii) 11 the Commission post all comments on the Commission’s
in Items I, II, and III below, which Items
may designate a shorter time if such Internet Web site (http://www.sec.gov/
have been prepared by FINRA. FINRA
action is consistent with the protection rules/sro.shtml). Copies of the
has designated the proposed rule change
of investors and the public interest. submission, all subsequent
as ‘‘constituting a stated policy,
The Exchange has asked the amendments, all written statements
practice, or interpretation with respect
Commission to waive the 30-day with respect to the proposed rule
to the meaning, administration, or
operative delay so that the proposal may change that are filed with the
enforcement of an existing rule’’ under
become operative immediately upon Commission, and all written
Section 19(b)(3)(A)(i) of the Act 3 and
communications relating to the
Rule 19b–4(f)(1) thereunder,4 which
8 15 U.S.C. 78s(b)(3)(A). proposed rule change between the
renders the proposal effective upon
9 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– Commission and any person, other than
4(f)(6)(iii) requires the Exchange to give the receipt of this filing by the Commission.
those that may be withheld from the
mstockstill on DSK4VPTVN1PROD with NOTICES

Commission written notice of the Exchange’s intent The Commission is publishing this
public in accordance with the
to file the proposed rule change, along with a brief notice to solicit comments on the
description and text of the proposed rule change, provisions of 5 U.S.C. 552, will be
at least five business days prior to the date of filing
13 17 CFR 200.30–3(a)(12).
of the proposed rule change, or such shorter time 12 For purposes only of waiving the 30-day
1 15 U.S.C. 78s(b)(1).
as designated by the Commission. The Commission operative delay, the Commission has also
deems this requirement to have been met. considered the proposed rule’s impact on
2 17 CFR 240.19b–4.
10 17 CFR 240.19b–4(f)(6). 3 15 U.S.C. 78s(b)(3)(A)(i).
efficiency, competition, and capital formation. See
11 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f). 4 17 CFR 240.19b–4(f)(1).

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64466 Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices

proposed rule change from interested A. Self-Regulatory Organization’s • supervision of individuals who
persons. Statement of the Purpose of, and assist in the preparation of such reports;
Statutory Basis for, the Proposed Rule • supervision of and responsibility
I. Self-Regulatory Organization’s Change for individuals who are involved in the
Statement of the Terms of Substance of actual maintenance of the member’s
the Proposed Rule Change 1. Purpose books and records from which such
Section 15A(g)(3) of the Act 8 reports are derived;
FINRA is filing revisions to the • supervision and/or performance of
authorizes FINRA to prescribe standards
content outline and selection the member’s responsibilities under all
of training, experience, and competence
specifications for the Financial and financial responsibility rules
for persons associated with FINRA
Operations Principal (Series 27) promulgated pursuant to the provisions
members. In accordance with that
examination program.5 The proposed provision, FINRA has developed of the Act;
revisions update the material to reflect examinations that are designed to • overall supervision of and
changes to the laws, rules and establish that persons associated with responsibility for the individuals who
regulations covered by the examination FINRA members have attained specified are involved in the administration and
and to incorporate the functions and levels of competence and knowledge, maintenance of the member’s back
associated tasks currently performed by consistent with applicable registration office operations; or
a Financial and Operations Principal. In • any other matter involving the
requirements under FINRA rules.
addition, FINRA is proposing to make financial and operational management
FINRA periodically reviews the content
changes to the format of the content of the member.
of the examinations to determine NASD Rule 1022(b)(3) provides that a
outline. FINRA is not proposing any whether revisions are necessary or person registered solely as a Financial
textual changes to the By-Laws, appropriate in view of changes and Operations Principal shall not be
Schedules to the By-Laws or Rules of pertaining to the subject matter covered qualified to function in a principal
FINRA. by the examinations. capacity with responsibility over any
The revised content outline is NASD Rule 1022(b)(1) requires that area of business activity not described
attached.6 The Series 27 selection each member that operates pursuant to in paragraph (b)(2) of the rule.
specifications have been submitted to the provisions of SEA Rule 15c3– In consultation with a committee of
the Commission under separate cover 1(a)(1)(ii),9 SEA Rule 15c3–1(a)(2)(i) 10 industry representatives, FINRA
with a request for confidential treatment or SEA Rule 15c3–1(a)(8) 11 shall recently undertook a review of the
designate as Financial and Operations Series 27 examination program. As a
pursuant to SEA Rule 24b–2.7
Principal 12 those persons associated result of this review, FINRA is
The text of the proposed rule change with it, at least one of whom shall be its proposing to make revisions to the
is available on FINRA’s Web site at chief financial officer, who perform the content outline to reflect changes to the
http://www.finra.org, at the principal duties described in paragraph (b)(2) of laws, rules and regulations covered by
office of FINRA and at the the rule. The rule provides that each the examination and to incorporate the
Commission’s Public Reference Room. person associated with a member who functions and associated tasks currently
performs such duties shall be required performed by a Financial and
II. Self-Regulatory Organization’s
to register as a Financial and Operations Operations Principal. FINRA also is
Statement of the Purpose of, and Principal with FINRA and shall pass an proposing to make changes to the format
Statutory Basis for, the Proposed Rule appropriate qualification examination of the content outline.
Change before such registration may become
effective. Paragraph (b)(2) of the rule Current Outline
In its filing with the Commission,
provides that the term Financial and The current content outline is divided
FINRA included statements concerning into seven sections. The following are
Operations Principal shall mean a
the purpose of and basis for the the seven sections and the number of
person associated with a member whose
proposed rule change and discussed any questions associated with each of the
duties include:
comments it received on the proposed sections, denoted Section 1 through
• Final approval and responsibility
rule change. The text of these statements Section 7:
for the accuracy of financial reports
may be examined at the places specified 1. Keeping And Preservation of
submitted to any duly established
in Item IV below. FINRA has prepared securities industry regulatory body; Records and Broker-Dealer Financial
summaries, set forth in sections A, B, Reporting Requirements, 15 questions;
• final preparation of such reports; 2. Net Capital Requirements, 44
and C below, of the most significant
aspects of such statements. questions;
8 15 U.S.C. 78o–3(g)(3). 3. Customer Protection, 36 questions;
9 17 CFR 240.15c3–1(a)(1)(ii). SEA Rule 15c3– 4. Municipal Securities Rulemaking
1(a)(1)(ii) addresses net capital requirements for
brokers or dealers that elect not to be subject to the Board—Regulations, 9 questions;
5 FINRA also is proposing corresponding
Aggregate Indebtedness Standard of paragraph 5. Extensions Of Credit In The
revisions to the Series 27 question bank. FINRA is (a)(1)(i) under Rule 15c3–1. Securities Industry, 8 questions;
submitting this filing for immediate effectiveness 10 17 CFR 240.15c3–1(a)(2)(i). SEA Rule 15c3– 6. Procedural Rules, 12 questions; and
pursuant to Section 19(b)(3)(A) of the Act and Rule 1(a)(2)(i) addresses net capital requirements for 7. Other Relevant Regulation and
19b–4(f)(1) thereunder, and is not filing the brokers or dealers that carry customer accounts. Interpretations, 21 questions.
11 17 CFR 240.15c3–1(a)(8). SEA Rule 15c3–
question bank. See Letter to Alden S. Adkins,
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Each section also includes the
Senior Vice President and General Counsel, NASD 1(a)(8) addresses net capital requirements for
municipal securities brokers’ brokers, as defined applicable laws, rules and regulations
Regulation, from Belinda Blaine, Associate Director,
Division of Market Regulation, SEC, dated July 24, under the rule. associated with that section. The current
2000. The question bank is available for SEC
12 The term ‘‘Limited Principal—Financial and outline also includes a preface
Operations’’ as set forth in NASD Rule 1022(b) is (addressing, among other things, the
review.
referred to as ‘‘Financial and Operations Principal’’
6 The Commission notes that the content outline
for purposes of this filing. The term ‘‘principal’’ is
purpose, administration and scoring of
is attached to the filing, not to this Notice. defined in NASD Rule 1021(b) (Definition of the examination), sample questions and
7 17 CFR 240.24b–2. Principal). reference materials.

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64468 Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices

B. Self-Regulatory Organization’s 100 F Street NE., Washington, DC for an exemption from sections 17(a)(1)
Statement on Burden on Competition 20549–1090. and (2) of the Act. The requested order
FINRA does not believe that the All submissions should refer to File would permit certain registered open-
proposed rule change will result in any Number SR–FINRA–2015–038. This file end investment companies to acquire
burden on competition that is not number should be included on the shares of certain registered open-end
necessary or appropriate in furtherance subject line if email is used. To help the investment companies, registered
of the purposes of the Act. The updated Commission process and review your closed-end investment companies,
examination aligns with the functions comments more efficiently, please use business development companies, as
and associated tasks currently only one method. The Commission will defined in section 2(a)(48) of the Act,
performed by a Financial and post all comments on the Commission’s and unit investment trusts (collectively,
Operations Principal and tests Internet Web site (http://www.sec.gov/ ‘‘Underlying Funds’’) that are within
knowledge of the most current laws, rules/sro.shtml). Copies of the and outside the same group of
rules, regulations and skills relevant to submission, all subsequent investment companies as the acquiring
those functions and associated tasks. As amendments, all written statements investment companies, in excess of the
with respect to the proposed rule limits in section 12(d)(1) of the Act.
such, the proposed revisions would
make the examination more efficient change that are filed with the
Commission, and all written APPLICANTS: AAM ETF Trust, a
and effective. Massachusetts business trust that
communications relating to the
C. Self-Regulatory Organization’s proposed rule change between the intends to register under the Act as an
Statement on Comments on the Commission and any person, other than open-end management investment
Proposed Rule Change Received From those that may be withheld from the company with multiple series and
Members, Participants, or Others public in accordance with the Advisors Asset Management, Inc., a
provisions of 5 U.S.C. 552, will be Delaware Corporation registered as an
Written comments were neither
available for Web site viewing and investment adviser under the
solicited nor received.
printing in the Commission’s Public Investment Advisers Act of 1940.
III. Date of Effectiveness of the Reference Room, 100 F Street NE., FILING DATES: The application was filed
Proposed Rule Change and Timing for Washington, DC 20549, on official on August 20, 2015.
Commission Action business days between the hours of 10 HEARING OR NOTIFICATION OF HEARING: An
The foregoing rule change has become a.m. and 3 p.m. Copies of such filing order granting the requested relief will
effective pursuant to Section 19(b)(3)(A) also will be available for inspection and be issued unless the Commission orders
of the Act 28 and paragraph (f)(1) of Rule copying at the principal office of a hearing. Interested persons may
19b–4 thereunder.29 At any time within FINRA. All comments received will be request a hearing by writing to the
60 days of the filing of the proposed rule posted without change; the Commission Commission’s Secretary and serving
change, the Commission summarily may does not edit personal identifying applicants with a copy of the request,
temporarily suspend such rule change if information from submissions. You personally or by mail. Hearing requests
it appears to the Commission that such should submit only information that should be received by the Commission
action is necessary or appropriate in the you wish to make available publicly. All by 5:30 p.m. on November 13, 2015 and
public interest, for the protection of submissions should refer to File should be accompanied by proof of
investors, or otherwise in furtherance of Number SR–FINRA–2015–038 and service on the applicants, in the form of
the purposes of the Act. If the should be submitted on or before an affidavit, or, for lawyers, a certificate
Commission takes such action, the November 13, 2015. of service. Pursuant to Rule 0–5 under
Commission shall institute proceedings For the Commission, by the Division of the Act, hearing requests should state
to determine whether the proposed rule Trading and Markets, pursuant to delegated the nature of the writer’s interest, any
should be approved or disapproved. authority.30 facts bearing upon the desirability of a
Robert W. Errett, hearing on the matter, the reason for the
IV. Solicitation of Comments request, and the issues contested.
Deputy Secretary.
Interested persons are invited to [FR Doc. 2015–26913 Filed 10–22–15; 8:45 am] Persons who wish to be notified of a
submit written data, views and BILLING CODE 8011–01–P hearing may request notification by
arguments concerning the foregoing, writing to the Commission’s Secretary.
including whether the proposed rule ADDRESSES: Brent J. Fields, Secretary,
change is consistent with the Act. SECURITIES AND EXCHANGE U.S. Securities and Exchange
Comments may be submitted by any of COMMISSION Commission, 100 F Street NE.,
the following methods: Washington, DC 20549–1090.
Investment Company Act Release No. Applicants: c/o Scott I. Colyer, Advisors
Electronic Comments 31870; File No. 812–14536 Advisors Asset Management, Inc., 18925 Base
• Use the Commission’s Internet Asset Management, Inc. and AAM ETF Camp Road, Suite 203, Monument,
comment form (http://www.sec.gov/ Trust; Notice of Application Colorado 80132.
rules/sro.shtml); or
FOR FURTHER INFORMATION CONTACT:
• Send an email to rule-comments@ October 19, 2015.
sec.gov. Please include File Number SR– AGENCY: Securities and Exchange Barbara T. Heussler, Senior Counsel, at
FINRA–2015–038 on the subject line. Commission (‘‘Commission’’). (202) 551–6990, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
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ACTION: Notice of an application for an
Paper Comments order under section 12(d)(1)(J) of the (Division of Investment Management,
• Send paper comments in triplicate Investment Company Act of 1940 (the Chief Counsel’s Office).
to Robert W. Errett, Deputy Secretary, ‘‘Act’’) for an exemption from sections SUPPLEMENTARY INFORMATION: The
Securities and Exchange Commission, 12(d)(1)(A), (B), and (C) of the Act and following is a summary of the
under sections 6(c) and 17(b) of the Act application. The complete application
28 15 U.S.C. 78s(b)(3)(A). may be obtained via the Commission’s
29 17 CFR 240.19b–4(f)(1). 30 17 CFR 200.30–3(a)(12). Web site by searching for the file

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Document Created: 2015-12-14 15:32:02
Document Modified: 2015-12-14 15:32:02
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 64465