81 FR 7180 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Content Outline for the Series 9/10 Examination Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 27 (February 10, 2016)

[Federal Register Volume 81, Number 27 (Wednesday, February 10, 2016)]
[Notices]
[Pages 7180-7182]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-02604]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77051; File No. SR-MSRB-2016-02]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change Relating to the Content Outline for the Series 9/10 Examination 
Program

February 4, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on January 22, 2016, the Municipal 
Securities Rulemaking Board (the ``MSRB'' or ``Board'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the MSRB. The MSRB 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

    The MSRB filed with the Commission proposed revisions to the 
content outline for the Municipal Securities Sales Principal (Series 9/
10) examination program (the ``proposed rule change''). The MSRB 
proposes to implement the revised Series 9/10 examination program on 
March 7, 2016. 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 Municipal Securities Sales Principal. In addition, the 
Board is proposing to make changes to the format of the content 
outline. The MSRB is not proposing in this filing any textual change to 
its rules.\5\
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    \5\ The Financial Industry Regulatory Authority (``FINRA'') 
filed changes to the Series 9/10 question bank and selection 
specifications with the SEC on December 23, 2015. See Release No. 
34-76812 (December 31, 2015), 81 FR 834 (January 7, 2016) (File No. 
SR-FINRA-2015-058).
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    The text of the proposed rule change is available on the MSRB's Web 
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2016-Filings.aspx, at the MSRB's principal office, 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, the MSRB 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. The MSRB 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
Background
    The MSRB has established a professional qualifications program that 
prescribes standards of training, experience, and competency for 
brokers, dealers and municipal securities dealers (collectively, 
``dealers'') and their associated persons. Section 15B(b)(2)(A) of the 
Act requires associated persons of dealers to meet such standards of 
training, experience, competence, and such other qualifications as the 
MSRB finds necessary or appropriate in the public interest or for the 
protection of investors and municipal entities or obligated persons.\6\ 
The MSRB has developed examinations that are designed to establish that 
persons associated with dealers that effect transactions in municipal 
securities and municipal advisors who engage in municipal advisory 
activities have attained specified levels of competence and knowledge. 
The content outline for each examination serves as a guide to the 
subject matter tested on the examination and provides learning 
objectives associated with each subject matter to assist candidates in 
preparing for each examination. Each content outline also provides 
sample questions similar to the type of questions that may be found on 
the examination. The

[[Page 7181]]

arrangement of the subject matter in the content outline reflects the 
various job functions typically performed within a dealer by an 
individual with that qualification. The MSRB periodically reviews the 
content outline for each examination to determine whether revisions are 
necessary or appropriate in view of changes pertaining to the subject 
matter covered by the examination.\7\
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    \6\ Section 15B(b)(2)(A)(iii) of the Act, 15 U.S.C. 78o-
4(b)(2)(A)(iii).
    \7\ On occasion, this review may be conducted in coordination 
with FINRA or other self-regulatory organizations.
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    MSRB Rule G-3(c) defines an individual associated with a dealer 
whose supervisory activities with respect to municipal securities are 
limited exclusively to supervising sales to and purchases from 
customers of municipal securities as a Municipal Securities Sales 
Principal. Pursuant to MSRB Rule G-3(c), every Municipal Securities 
Sales Principal is required to take and pass the General Securities 
Sales Supervisor Qualification Examination prior to acting in such 
capacity.\8\
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    \8\ The General Securities Sales Principal is defined in NASD 
Rule 1022(g).
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    In consultation with a committee of industry representatives and 
FINRA, the MSRB participated in a review of the Series 9/10 examination 
program. As a result of this review, the MSRB 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 performed by a Municipal Securities 
Sales Principal.
Current Content Outline
    The current content outline is divided into six sections. The 
following are the six sections and the number of questions associated 
with each of the sections, denoted Section 1 through Section 6:
    1. Hiring, Qualifications, and Continuing Education, 9 questions;
    2. Supervision of Accounts and Sales Activities, 94 questions;
    3. Conduct of Associated Persons, 14 questions;
    4. Recordkeeping Requirements, 8 questions;
    5. Municipal Securities Regulation, 20 questions;
    6. Options Regulation, 55 questions.
    Each section also includes the applicable laws, rules and 
regulations associated with that section. The current content outline 
also includes a preface (addressing, among other things, the purpose, 
administration and scoring of the examination), sample questions and 
reference materials.
Proposed Revisions
    The MSRB is proposing to divide the content outline into two parts 
with eight major job functions that are performed by a Municipal 
Securities Sales Principal. The following are the two parts, each with 
four major job functions, denoted as Parts 1 and 2 with Function 1 
through Function 4, respectively, with the associated number of 
questions:
    Part 1:
    Function 1: Supervise Associated Persons and Personnel Management 
Activities, 28 questions;
    Function 2: Supervise the Opening and Maintenance of Customer 
Accounts, 49 questions;
    Function 3: Supervise Sales Practices and General Trading 
Activities, 52 questions;
    Function 4: Supervise Communications with the Public, 16 questions.
    Part 2:
    Function 1: Supervise the Opening and Maintenance of Customer 
Options Accounts, 18 questions;
    Function 2: Supervise Sales Practices and General Options Trading 
Activities, 19 questions;
    Function 3: Supervise Options Communications, 5 questions;
    Function 4: Supervise Associated Persons and Personnel Management 
Activities, 13 questions.
    The MSRB is proposing to adjust the number of questions assigned to 
each major job function to ensure that the overall examination better 
reflects the key tasks performed by a Municipal Securities Sales 
Principal. The allocation of questions on the revised Series 9/10 
examination will place greater emphasis on key tasks such as 
supervision of registered persons, sales practices and compliance. Each 
function also includes specific tasks describing activities associated 
with performing that function. In Part 1, there are five tasks (1.1-
1.5) associated with Function 1; four tasks (2.1-2.4) associated with 
Function 2; five tasks (3.1-3.5) associated with Function 3; and four 
tasks (4.1-4.4) associated with Function 4. In Part 2, there are three 
tasks (1.1-1.3) associated with Function 1; four tasks (2.1-2.4) 
associated with Function 2; three tasks (3.1-3.3) associated with 
Function 3; and one task (4.1) associated with Function 4. Further, the 
content outline lists the knowledge required to perform each function 
and associated tasks (e.g., types of retail communications, required 
approvals). In addition, where applicable, the content outline lists 
the laws, rules and regulations a candidate is expected to know to 
perform each function and associated tasks. These include the 
applicable MSRB Rules (e.g., MSRB Rule G-27(e)). A job analysis study 
was conducted of General Securities Sales Supervisors that are 
qualified with the 9/10 examination, which included the use of a 
survey, in developing each function and associated tasks typically 
performed in the conduct of their activity and, as a result, updating 
the required knowledge set forth in the revised content outline. The 
functions and associated tasks, which appear in the revised content 
outline for the first time, reflect the day-to-day activities of a 
General Securities Sales Supervisor.
    The MSRB is also proposing to revise the content outline to reflect 
changes to the laws, rules and regulations covered by the examination. 
Among other revisions, certain revisions are being made to reflect the 
adoption of rules in the consolidated FINRA rulebook (e.g., NASD Rule 
2310 (Recommendations to Customers (Suitability), NASD Rule 2212 
(Telemarketing) and NASD Rule 3110 (Books and Records) were adopted as 
FINRA Rule 2111 (Suitability), FINRA Rule 3230 (Telemarketing) and 
FINRA Rule 4510 Series (Books and Records Requirements), respectively).
    Finally, the MSRB is proposing to make changes to the format of the 
content outline, including the preface, sample questions and reference 
materials. Proposed changes include: (1) Adding a table of contents; 
(2) providing more details regarding the purpose of the examination; 
(3) providing more details on the application procedures; (4) providing 
more details on the development and maintenance of the content outline 
and examination; (5) explaining that the passing scores are established 
by FINRA staff, in consultation with a committee of industry 
representatives, using a standard setting procedure, and that a 
statistical adjustment process known as equating is used in scoring 
exams; and (6) noting that each candidate will receive a report at the 
end of the test session that 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. The number of questions 
on the Series 9/10 examination will remain at 200 multiple-choice 
questions (55 on the Series 9 and 145 on the Series 10). Candidates 
will continue to have 90 minutes to complete the Series 9 examination 
and 240 minutes to complete the Series 10 examination. The passing 
score for the Series 9 is 70 percent and the passing score for the 
Series 10 is 70 percent. These are unchanged.

[[Page 7182]]

Availability of the Content Outline
    The revised Series 9/10 content outline will replace the current 
content outline on FINRA's Web site.\9\
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    \9\ See www.finra.org/brokerqualifications/exams.
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2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
the provisions of Section 15B(b)(2)(A) of the Act,\10\ which authorizes 
the MSRB, in part, to prescribe for associated persons of dealers 
``standards of training, experience, competence, and such other 
qualifications as the Board finds necessary or appropriate in the 
public interest or for the protection of investors and municipal 
entities or obligated persons.''
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    \10\ 15 U.S.C. 78o-4(b)(2)(A).
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    The MSRB believes that the proposed rule change is consistent with 
the provisions of Section 15(B)(b)(2)(A) of the Act \11\ in that the 
revisions will ensure that certain key concepts and rules are tested on 
the Series 9/10 in order to test the competency of individuals seeking 
to qualify as Municipal Securities Sales Principals with respect to 
their knowledge of MSRB rules and the municipal securities market.
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    \11\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB 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 Series 9/10 content 
outline aligns with the functions and associated tasks currently 
performed by a Municipal Securities Sales Principal and tests knowledge 
of the most current laws, rules, and regulations and skills relevant to 
those functions and associated tasks. As such, the proposed rule change 
would make the examinations 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 on the 
proposed rule change.

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \12\ and paragraph (f)(1) of Rule 19b-4 
thereunder.\13\ 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-MSRB-2016-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549.

All submissions should refer to File Number SR-MSRB-2016-02. 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 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the MSRB. 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-MSRB-2016-02 and should be 
submitted on or before March 2, 2016.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, pursuant to delegated authority.\14\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02604 Filed 2-9-16; 8:45 am]
 BILLING CODE 8011-01-P