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17See supra note 12 (citing to Securities 

Exchange Act Release No. 72137). 

18 17 CFR 200.30–3(a)(34). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3On July 7, 2017, the SEC approved FINRA’s 

consolidated rule change to: (1) restructure FINRA’s 

representative-level qualification examination 

program; (2) adopt amendments to consolidate 

NASD and Incorporated NYSE rules as FINRA’s 

consolidated qualification and registration rules; 

and (3) amend FINRA’s CE requirements. See 

Exchange Act Release No. 81098 (July 7, 2017), 82 

FR 32419 (July 13, 2017) (SR–FINRA–2017–007). 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(6). 

6See 15 U.S.C. 78o–4(b)(2)(A). 

7See 15 U.S.C. 78o–4(b)(2)(A)(iii). 

appropriate notice and comment can 

take place after the proposed 

amendment is effective. The primary 

purpose of the amendment is to allocate 

surveillance, investigation, and 

enforcement responsibilities for Rule 

14e–4 under the Act, as well as certain 

provisions of Regulation SHO. By 

declaring it effective today, the 

Amended Plan can become effective and 

be implemented without undue delay. 

The Commission notes that the prior 

version of this plan immediately prior to 

this proposed amendment was 

published for comment and the 

Commission did not receive any 

comments thereon.17 Furthermore, the 

Commission does not believe that the 

amendment to the plan raises any new 

regulatory issues that the Commission 

has not previously considered. 

VI. Conclusion 

This order gives effect to the 

Amended Plan filed with the 

Commission in File No. 4–709. The 

Parties shall notify all members affected 

by the Amended Plan of their rights and 

obligations under the Amended Plan. 

It is therefore ordered, pursuant to 

Section 17(d) of the Act, that the 

Amended Plan in File No. 4–709, 

between the FINRA and BOX, filed 

pursuant to Rule 17d–2 under the Act, 

hereby is approved and declared 

effective. 

It is further ordered that BOX is 

relieved of those responsibilities 

allocated to FINRA under the Amended 

Plan in File No. 4–709. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13594 Filed 6–25–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83483; File No. SR–MSRB– 

2018–04] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To, Among Other Things, 

Amend MSRB Rule G–3 To Restructure 

the MSRB’s Current Municipal 

Securities Representative Qualification 

Examination and Harmonize Certain 

MSRB Qualification Requirements With 

FINRA Rules 

June 20, 2018. 

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 June 8, 2018 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 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The MSRB filed with the Commission 

a proposed rule change to amend MSRB 

Rule G–3, on professional qualification 

requirements, to (i) restructure the 

MSRB’s current Municipal Securities 

Representative Qualification 

Examination (‘‘Series 52’’); (ii) 

harmonize certain MSRB qualification 

requirements with the Financial 

Industry Regulatory Authority’s 

(‘‘FINRA’’) rule change to make 

modifications to its representative-level 

qualification program, consolidate 

NASD and Incorporated NYSE 

registration and qualification rules, and 

amend its continuing education (‘‘CE’’) 

requirements (hereinafter ‘‘FINRA’s 

consolidated rule change’’); 3 and (iii) 

make technical changes to Rule G–3 

(collectively the ‘‘proposed rule 

change’’). The MSRB has filed the 

proposed rule change for immediate 

effectiveness pursuant to Section 

19(b)(3)(A) of the Act 4 and Rule 19b– 

4(f)(6) 5 thereunder. The MSRB proposes 

an operative date of October 1, 2018, to 

coincide with the effective date of 

FINRA’s consolidated rule change. 

The text of the proposed rule change 

is available on the MSRB’s website at 

www.msrb.org/Rules-andInterpretations/SEC-Filings/2018- 

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 

MSRB The MSRB is charged with 

setting professional qualification 

standards for brokers, dealers, and 

municipal securities dealers (‘‘dealers’’), 

and municipal advisors. Specifically, 

Section 15B(b)(2)(A) of the Act 

authorizes the MSRB to prescribe 

‘‘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.’’ 6 Section 15B(b)(2)(A)(iii) of 

the Act also provides that the Board 

may appropriately classify associated 

persons of dealers and municipal 

advisors and require persons in any 

such class to pass tests prescribed by the 

Board.7 Accordingly, over the years, the 

MSRB has adopted professional 

qualification standards to ensure that 

associated persons of dealers and 

municipal advisors attain and maintain 

specified levels of competence and 

knowledge for each classification 

category. The purpose of the proposed 

rule change is to generally harmonize 

Rule G–3 with approved amendments to 


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8See Regulatory Notice 09–70 (FINRA Requests 

Comment on Proposed Consolidated FINRA Rules 

Governing Registration and Qualification 

Requirements) (December 2009). 

9FINRA received over 20 comments in response 

to Regulatory Notice 09–70. 

10See Regulatory Notice 15–20 (FINRA Requests 

Comment on a Concept Proposal to Restructure the 

Representative-Level Qualification Examination 

Program) (May 2015). FINRA received over 20 

comments in response to Regulatory Notice 15–20. 

11The SEC received another comment letter in 

response to FINRA’s response to comments. See 

Letter from Michele Van Tassel, President, 

Association of Registration Management, to Afshin 

Atabaki, Associate General Counsel, Financial 

Industry Regulatory Authority (July 21, 2017). 

12Specifically, the Commission found that the 

proposed rule change was consistent with Section 

15A(b)(6) of the Exchange Act, 15 U.S.C. 78o– 

3(b)(6), which requires, among other things, that 

FINRA rules 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 15(A)(g)(3) of the Exchange Act, 15 U.S.C. 

78o–3(g)(3), which authorizes FINRA to prescribe 

standards of training, experience, and competence 

for persons associated with FINRA members. 

13An individual’s day-to-day supervisor may be 

a non-registered person, however an appropriately 

registered supervisor would be responsible for 

periodic check-ins to make sure that the individual 

is not acting outside the scope of his or her assigned 

functions. 

14For example, FINRA rules that relate to 

interactions with customers would not be 

applicable to the conduct of a permissivelyregistered individual who does not have any 

customer contact. 

15At this time, the MSRB does not believe it is 

necessary to be prescriptive in this area and identify 

each potential rule that a permissively-qualified 

person would be subject to based on a particular set 

of activities. For example, the MSRB notes that a 

rule such as Rule G–47, on time of trade disclosure, 

would have very little application to a person 

holding a permissive qualification who does not 

have customer contact regarding the purchase or 

sale of municipal securities. Bearing that in mind, 

a facts and circumstances analysis would apply as 

to the securities laws and regulations applicable to 

persons holding permissive qualifications, and such 

a determination would need to be made by the 

dealer, as part of its supervisory obligations, under 

Rule G–27. 

FINRA’s professional qualification and 

registration rules in furtherance of 

promoting regulatory consistency with 

respect to qualification requirements. To 

that end, the MSRB is proposing to (i) 

require the Securities Industry 

Essentials (SIE) examination as a 

prerequisite for the Series 52 

examination; (ii) restructure the Series 

52 examination into a specialized 

knowledge examination; (iii) amend 

Rule G–3 to further harmonize with 

FINRA’s consolidated rule change by 

providing for permissive registrations 

and relief to individuals from having to 

requalify by examination by recognizing 

the financial services affiliate (‘‘FSA’’) 

waiver program; and (iv) make other 

amendments that are technical in 

nature. 

Background 

FINRA’s consolidated rule change 

reflected a multi-year effort to not only 

create a consolidated FINRA rulebook, 

but to create the SIE and tailored, 

specialized knowledge examinations for 

its particular registration categories, and 

also to enhance its registration rules to 

afford firms greater flexibility to develop 

and maintain a depth of registered 

associated persons with professional 

qualifications. The consolidated rule 

change began, in part, in December 

2009, with the publication of FINRA 

Regulatory Notice 09–70 8 requesting 

comment on, among other things: (i) 

Revising the categories of permissive 

registrations to allow any associated 

person to obtain and maintain any 

registration permitted by the member; 

and (ii) establishing a process by which 

a person working for a financial services 

affiliate of a member would be 

permitted to re-associate with a member 

without having to meet the necessary 

qualification requirements.9

In May 2015, in connection with its 

continued efforts to streamline its 

registration and qualification rules, 

FINRA published Regulatory Notice 15– 

20 10 seeking comment on a proposal to 

restructure its representative-level 

qualification examination program. The 

restructured program consists of the SIE 

examination paired with specialized 

knowledge examinations for specific 

representative-level qualifications. The 

SIE examination is designed to cover 

fundamental knowledge that is 

commonly tested across the 

representative-level examinations, such 

as product knowledge, functions of the 

regulatory agencies, and structure of the 

securities markets. Each specialized 

knowledge examination would test 

knowledge of concepts and rules 

specifically corresponding to a 

particular representative-level 

qualification. 

In March 2017, FINRA’s consolidated 

rule change was filed with the SEC to: 

(i) Consolidate, with amendments, the 

NASD and Incorporated NYSE 

qualification and registration rules; (ii) 

restructure FINRA’s representative-level 

qualification examination program with 

the creation of the SIE; and (iii) amend 

FINRA’s CE requirements. All proposed 

amendments were subject to notice and 

comment through FINRA’s previous 

requests for comments. FINRA’s 

proposed rule change was published for 

comment in the Federal Register on 

April 10, 2017; the SEC received 18 

comments in response to the proposal, 

which FINRA responded to on June 26, 

2017.11 The SEC found that the proposal 

was consistent with the requirements of 

the Exchange Act and the rules and 

regulations thereunder and approved 

FINRA’s proposed rule changes.12

Thereafter, FINRA announced that its 

consolidated rule change would become 

effective on October 1, 2018 in 

Regulatory Notice 17–30 (October 2017). 

The MSRB conducted a review of its 

qualifications program to determine 

where it was appropriate to harmonize 

with FINRA’s consolidated rule change. 

Provided below is a detailed description 

of the proposed amendments to Rule 

G–3. 

Description of the Proposed 

Amendments to Rule G–3—Designed To 

Promote Regulatory Consistency With 

FINRA’s Consolidated Rule Change 

Permissive Registrations 

FINRA’s consolidated rule change 

expanded the scope of permissive 

registrations under NASD Rules 1021 

and 1031 to eliminate a constraint that 

only certain associated persons of a 

member could obtain permissive 

registrations and to codify such 

provisions as FINRA Rule 1210.02. 

Specifically, as approved, FINRA Rule 

1210.02 allows any associated person of 

a member to obtain and maintain any 

registration permitted by the member 

irrespective of the functional role of the 

person at the firm. In addition, FINRA 

Rule 1210.02 provides that a person 

maintaining a permissive registration 

would be deemed a registered person of 

the firm and be assigned an 

appropriately registered supervisor who 

would be responsible for periodically 

contacting such individual’s direct 

supervisor to verify that the individual 

is not engaging in activities outside the 

scope of his or her current role.13 The 

individual would nevertheless be 

subject to all FINRA rules to the extent 

relevant to their activities.14

The MSRB is proposing to amend 

Rule G–3 to adopt Supplementary 

Material .03 that would similarly allow 

dealers to have any associated person at 

a dealer maintain certain MSRB 

qualifications. More specifically, any 

individual associated with a dealer 

would be allowed, if permitted by the 

dealer, to obtain and maintain a 

registration as a municipal securities 

representative, a municipal securities 

principal or a municipal fund securities 

limited principal. Additionally, 

proposed Supplementary Material .03 

would make clear that individuals 

maintaining permissive registrations 

pursuant to Rule G–3 would be 

considered qualified persons and, to the 

extent relevant to the person’s activities, 

the person would be subject to 

applicable MSRB rules.15 The MSRB 

recognizes that allowing dealers to 


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16The term ‘‘financial services industry affiliate 

of a member’’ as defined under FINRA Rule 1210.09 

is ‘‘a legal entity that controls, is controlled by or 

is under common control with a member and is 

regulated by the SEC, CFTC, state securities 

authorities, federal or state banking authorities, 

state insurance authorities, or substantially 

equivalent foreign regulatory authorities.’’ 

17An individual who has passed the Municipal 

Securities Representative Qualification 

Examination (Series 52), Municipal Securities 

Principal Qualification Examination (Series 53) and 

Municipal Fund Securities Limited Principal 

Qualification Examination (Series 51), respectively. 

18FINRA’s consolidated rule change amended 

NASD Rule 1021 as FINRA Rule 1210.04. 

19An examination enrollment window is the 

timeframe between a person registering for a 

professional qualification examination and taking 

the examination. 

maintain permissive qualifications for 

associated persons would support a 

greater regulatory understanding of the 

municipal securities market by persons 

currently in capacities not requiring a 

qualification classification, and would 

further develop the knowledge and 

skills of qualified persons, as it relates 

to the municipal securities market, by 

allowing permissive qualifications 

specific to the municipal securities 

business. Additionally, by harmonizing 

with FINRA’s related rule on permissive 

registrations, the industry is afforded 

the opportunity to continue to develop 

a robust workforce and a depth of 

associated persons holding professional 

qualifications for purposes of better 

managing unanticipated staffing 

changes. 

FSA-Waiver Program 

FINRA’s consolidated rule change 

adopted Rule 1210.09, which 

established a waiver program for any 

individual registered with a member 

who subsequently leaves the firm to 

work for a financial services industry 

affiliate of a member,16 whereby, upon 

re-association with a member, an 

individual may be granted a waiver 

from having to requalify by examination 

(‘‘FSA-waiver’’). In order to be granted 

a waiver under FINRA Rule 1210.09, an 

individual must be initially designated 

as FSA-eligible at the time the 

individual terminates association with a 

member and the individual must have 

satisfied the criteria, under FINRA Rule 

1210.09 for an FSA-waiver. 

Additionally, under FINRA Rule 

1210.09, to be eligible for an initial 

designation as an FSA-eligible person 

by a FINRA member, an individual must 

have been registered for a total of five 

years within the most recent 10-year 

period prior to the designation. Once 

designated as FSA-eligible, the 

individual is eligible for an FSA-waiver 

for up to seven years, so long as the 

individual is continuously working for 

a financial services industry affiliate of 

a member and other conditions are 

satisfied. 

Pursuant to FINRA Rule 1240, during 

the period an FSA-eligible person is 

working for a financial services industry 

affiliate, the person is required to 

complete the Regulatory Element 

portion of CE that correlates with such 

person’s most recent registration 

category and based on the same CE 

cycle had the person remained 

registered. Consequently, a person loses 

the ability to qualify for an FSA-waiver 

if such person fails to complete the 

mandatory Regulatory Element portion 

of CE. FINRA Rule 1210.09 provides 

that once an FSA-eligible person reassociates with a FINRA member, the 

firm can file a Form U4 (Uniform 

Application for Securities Industry 

Registration or Transfer) and request 

that the individual’s prior FINRA 

registration(s) be reinstated without 

having to requalify by examination. 

The MSRB is proposing to amend 

Rule G–3 to adopt Supplementary 

Material .04 that would allow a 

municipal securities representative, 

municipal securities principal and/or a 

municipal fund securities limited 

principal 17 to be eligible for a waiver 

from having to requalify by 

examination, for such MSRB 

qualifications, if the following 

conditions are met: 

1. An individual must have been 

registered with a dealer for a total of five 

years within the most recent 10-year 

period prior to working for a financial 

services industry affiliate, which shall 

be a legal entity that controls, is 

controlled by or is under common 

control with a dealer and is regulated by 

the SEC, CFTC, state securities 

authorities, federal or state banking 

authorities, state insurance authorities, 

or substantially equivalent foreign 

regulatory authorities. 

2. The individual has continuously 

worked for a financial services industry 

affiliate(s) of a dealer since terminating 

association with a dealer; 

3. The individual has completed the 

Regulatory Element portion of CE 

consistent with the requirements under 

Rule G–3(i)(i)(A) based on the person’s 

most recent registration status and such 

CE has been completed based on the 

same cycle, as if the person had 

remained registered; 

4. The individual does not have any 

pending or adverse regulatory matters, 

or terminations and has not otherwise 

been subject to a statutory 

disqualification while working for a 

financial services industry affiliate(s) of 

a dealer; and 

5. The waiver request is made within 

seven years of the individual’s initial 

designation as an FSA-eligible person. 

The MSRB is also proposing to amend 

Rule G–3(h)(i) to provide that associated 

persons that have met the conditions 

under Supplementary Material .04 shall 

be granted an FSA-waiver consistent 

with Rule G–3(h)(i)(A) and (B). 

Providing for such waivers allows 

associated persons of dealers a greater 

opportunity to enhance their financial 

services industry knowledge without 

having to requalify by examination each 

time a person decides to explore 

different career opportunities with a 

financial services industry affiliate of a 

dealer. 

Qualified Persons Functioning as 

Principals for a Limited Period 

Currently Rule G–3(b)(ii)(D) provides 

that an individual qualified as a 

municipal securities representative, 

general securities representative or 

general securities principal may 

function as a municipal securities 

principal for a period of 90 days before 

passing the Series 53 exam; and 

pursuant to Rule G–3(b)(iv)(B)(4) an 

individual qualified as a general 

securities representative, investment 

company/variable contracts limited 

representative, general securities 

principal or investment company/ 

variable contracts limited principal may 

function as a municipal fund securities 

limited principal for a period of 90 days 

before passing the Series 51 exam. In 

addition, Rule G–3(c)(ii)(D) provides 

that an individual qualified as a 

municipal securities representative, 

general securities representative or 

general securities principal may 

function as a municipal securities sales 

principal for a period of 90 days before 

passing the General Securities Sales 

Supervisory Qualification Examination 

(Series 9/10). 

FINRA’s consolidated rule change 

modified a similar FINRA provision 18

permitting a registered person of a 

member to function as a principal before 

passing the applicable principal 

examination, increasing the time period 

from 90 calendar days to 120 calendar 

days, to better align the time frame with 

the current examination enrollment 

window.19 In addition, FINRA imposed 

an experience requirement providing 

that a registered person must have at 

least 18 months of experience 

functioning as a registered 

representative within the five-year 

period immediately prior to being 

permitted to function as a principal, 


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20The MSRB believes that this prohibition is 

adequately addressed currently in Rule G– 

3(i)(i)(A)(2) and, therefore, is not proposing to adopt 

FINRA’s provision that more specifically articulates 

that such persons are prohibited from accepting or 

soliciting business. 

without the applicable principal 

qualification examination. 

Accordingly, the MSRB is proposing 

to amend Rule G–3(b) and (c) to extend 

the limited time period in which a 

person could function as a principal 

without being qualified with a principal 

examination, assuming other 

qualification requirements are met, from 

90 days to 120 calendar days in 

furtherance of also better aligning with 

the current examination enrollment 

window. The MSRB is also proposing to 

amend Rule G–3(b) and (c) to require 

that, before a qualified representative 

can be permitted to function as a 

principal for 120 calendar days without 

passing a principal examination, the 

qualified representative must have at 

least 18 months of experience within 

the five-year period immediately 

preceding the designation as principal. 

The MSRB believes that establishing an 

experience requirement ensures that 

individuals designated to supervise 

activities have an appropriate level of 

experience as a qualified representative 

before acting as a principal without 

passing the principal examination. For 

this reason, the 18-month experience 

requirement will not apply to a 

qualified principal who is designated to 

function in another principal capacity 

for 120 days before passing the 

additional principal qualification 

examination. 

Continuing Education Program 

Requirements 

A. Regulatory Element 

Currently, Rule G–3(i)(i)(A)(2) 

provides that any registered persons 

who have not completed the Regulatory 

Element portion of CE within the 

prescribed time frames will have their 

municipal securities registration(s) 

deemed inactive until the Regulatory 

Element requirements have been 

satisfied. Rule G–3(i)(i)(A)(2) also 

requires for any person whose 

registration has been deemed inactive 

that such person must cease all 

activities as a registered person and 

prohibits such person from performing 

any duties and functioning in any 

capacity requiring registration. 

FINRA’s consolidated rule change 

codified existing guidance in NASD’s 

Notice to Members 95–35, regarding the 

impact of failing to complete the 

Regulatory Element portion of CE on a 

person’s activities and compensation, as 

FINRA Rule 1240(a)(2). Specifically, 

approved FINRA Rule 1240(a)(2) 

provides that any person whose 

registration has been deemed inactive 

under the rule may not accept or solicit 

business or receive any compensation 

for the purchase or sale of securities.20

FINRA’s approved rule also prescribes 

that a person deemed inactive for failing 

to complete the Regulatory Element 

portion of CE within the prescribed time 

frames may, if it does not violate the 

firm’s policy, receive trail or residual 

commissions resulting from transactions 

that were completed before the person’s 

registration status was deemed inactive. 

The MSRB is proposing to amend Rule 

G–3(i)(i)(A)(2) to adopt the provision 

restricting any person whose municipal 

securities registration(s) have been 

deemed inactive for failing to complete 

the Regulatory Element portion of CE 

from receiving any compensation for 

transactions in municipal securities, 

except for trails, residual commissions, 

or like compensation resulting from 

transactions completed before the 

person’s inactive status, unless the 

dealer’s policy prohibits such trails, 

residual commissions or like 

compensation. The MSRB recognizes 

that, by adding the clause ‘‘like 

compensation,’’ the proposed 

amendment would provide flexibility as 

to the types of compensation permitted 

under the rule as compared to FINRA’s 

approved rule. However, the MSRB 

believes that such differentiation is 

warranted to recognize the various 

compensation arrangements for 

associated persons of dealers with 

respect to transactions in municipal 

securities. For example, the 

compensation received by an associated 

person that is part of a dealer’s public 

finance underwriting team is generally 

not characterized as commissions. 

B. Firm Element 

Currently, Rule G–3(i)(i)(B), on Firm 

Element continuing education, requires 

that a dealer maintain a continuing 

education program for its covered 

registered persons to enhance their 

securities knowledge, skill and 

professionalism. The MSRB has 

supported a principles-based approach 

to compliance in this area and afforded 

dealers’ considerable flexibility in 

developing the scope and content for 

their Firm Element portion of CE subject 

to the enumerated minimum standards 

for a firm’s training programs. A dealer’s 

Firm Element portion of CE, as 

prescribed in Rule G–3(i)(i)(B)(2)(b), 

must cover, with respect to municipal 

securities products, services and 

strategies offered by the dealer, at a 

minimum: 

(i) General investment features and 

associated risk factors; 

(ii) Suitability and sales practice 

considerations; and 

(iii) Applicable regulatory 

requirements. 

FINRA’s consolidated rule change 

also requires, pursuant to FINRA Rule 

1240, that each member maintain a 

continuing education program for its 

covered registered persons to enhance 

their securities knowledge, skill and 

professionalism and that the training be 

appropriate for the business of the 

member and, at a minimum, cover, 

among other things, training in ethics 

and professional responsibility. The 

MSRB is proposing to amend Rule G– 

3(i)(i)(B)(2)(b) to adopt a similar 

provision to require dealers to also 

include training in ethics and 

professional responsibility for its 

registered persons. The MSRB believes 

such training promotes high standards 

of professionalism for registered 

persons. 

Registration Status of Armed Forces 

The MSRB does not currently have a 

rule that provides an inactive status for 

an associated person that volunteers for 

or is called to active military service in 

the Armed Forces of the United States 

that would allow such person’s 

registration to be tolled. 

FINRA’s consolidated rule change 

consolidated NASD Rule IM–1000–2 as 

FINRA Rule 1210.10 with certain 

changes, which affords relief to a 

registered person who volunteers for or 

is called to active military service in the 

Armed Forces of the United States by 

tolling such person’s lapse of 

registration and CE obligations. More 

specifically, FINRA Rule 1210.10 

allows, after proper notification to 

FINRA, for a member to place a 

registered person on inactive status, 

whereby such person does not have to 

re-register upon returning to active 

employment. An associated person who 

is placed on inactive status may either 

return to active employment with the 

firm the person remained registered 

with during the person’s inactive status 

period or associate with a different firm. 

FINRA Rule 1210.10 also relieves 

registered persons on such inactive 

status from having to complete either 

the Regulatory Element or Firm Element 

portion of CE during their active 

military service. 

Additionally, during the pendency of 

the registered person’s inactive status, 

the person may continue to receive 

transaction-based compensation, 

including continuing commissions. The 

employing member may also allow an 

inactive person to enter into an 


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21More specifically, FINRA’s rule states that the 

two-year period for lapse of registration of its 

representative and principal-level qualifications 

and the four-year expiration for the SIE examination 

would be tolled for the period the individual is on 

active service. 

22The notice required to preserve such deferral 

shall be in the form of a letter to the MSRB that 

includes the individual’s name (including, if 

applicable, the individual’s CRD number), the start 

and end dates of the individual’s active U.S. 

military service and the branch of service. Such 

notice shall be provided to the MSRB electronically 

at Compliance@msrb.org. 

23The notice required shall be in the form of a 

letter to the MSRB on firm letterhead that includes 

the firm’s MSRB ID number, the individual’s name 

(including, if applicable, the individual’s CRD 

number), the start and end dates of the individual’s 

active U.S. military service and the branch of 

service. Such notice shall be provided to the MSRB 

electronically at Compliance@msrb.org. 

24The notice required shall be in the form of a 

letter to the MSRB on firm letterhead that includes 

the firm’s MSRB ID number, the individual’s name 

(including, if applicable, the individual’s CRD 

number), the start and end dates of the individual’s 

active military service and the branch of service. 

Such notice shall be provided to the MSRB 

electronically at Compliance@msrb.org. 

25 Individuals do not have to be associated with 

a FINRA member to take the SIE examination, 

unlike FINRA’s representative-level qualification 

examinations. 

agreement with a registered person of 

the member to take over and service 

clients’ accounts, on behalf of the 

person, and to share transaction-related 

compensation based upon business 

generated by the accounts. 

A person who is no longer registered 

with a member will generally have their 

professional qualifications lapse after a 

period of two years. However, FINRA 

Rule 1210.10 provides that, for purposes 

of determining the two year period, a 

formerly registered person who 

volunteers for or is called to active 

military service will have that time 

tolled, commencing on the date the 

person began active service.21 FINRA 

Rule 1210.10 also provides that a sole 

proprietor who volunteers for or is 

called to active military service will be 

placed on inactive status and, in 

addition to the relief provided under 

FINRA Rule 1210.10, as a registered 

person, the sole proprietor will not be 

required to pay dues or assessments 

during the inactive period and will not 

be required to pay an admission fee 

upon returning to his or her investment 

banking or securities business. 

Rule G–3 generally provides that an 

individual who is not associated with a 

dealer or municipal advisor for a period 

of more than two years will have his or 

her professional qualifications lapse, 

requiring such person to requalify by 

examination upon re-associating with a 

dealer or municipal advisor. The MSRB 

is proposing to amend Rule G–3 to 

adopt Supplementary Material .05, 

which would provide that, for purposes 

of determining the two-year period, a 

formerly qualified associated person 

who volunteers for or is called to active 

U.S. military service will have that time 

tolled commencing on the date the 

person began active military service. 

Importantly, Supplementary Material 

.05 would preserve the time tolled by 

establishing that the MSRB must receive 

notice of the person’s period of active 

U.S. military service within 90 days 

following the completion of such 

person’s active U.S. military service.22

Absent such notice, the deferral will 

terminate and the period of time while 

on active U.S. military service will not 

have been tolled. 

In addition, proposed Supplementary 

Material .05 would permit an associated 

person of a dealer or municipal advisor 

that is qualified under Rule G–3, upon 

volunteering for or being called to active 

U.S. military service, to be deemed 

inactive until the associated person 

returns from active U.S. military service. 

Additionally, under the proposed rule 

change, during the period the associated 

person is on active U.S. military service, 

the person would remain eligible for 

transaction-related compensation, 

including continuing commissions and 

the firm could permit the inactive 

person to enter into an agreement with 

a qualified associated person of the 

dealer or municipal advisor to have 

such qualified associated person service 

clients on behalf of the inactive person 

and share transaction-related 

compensation resulting from the 

municipal securities or municipal 

advisory business generated by the 

accounts. In addition, an associated 

person of a dealer or municipal advisor 

would not be subject to the applicable 

CE obligations under Rule G–3(i) during 

the period of active U.S. military 

service, provided the MSRB receives 

notice of the associated person’s period 

of active U.S. military service within 30 

days of completion of such service.23

Proposed Supplementary Material .05 

would also provide that a dealer or 

municipal advisor sole proprietor who 

temporarily closes his or her business 

by reason of volunteering for or being 

called into active U.S. military service 

shall be placed, on an inactive status 

after notice to the MSRB. As a result, in 

addition to the relief provided to the 

sole proprietor as a qualified associated 

person, the sole proprietor will not be 

required to pay fees pursuant to Rules 

A–11 or A–12 that, if applicable, accrue 

during the inactive period. Further, 

upon returning from active U.S. military 

service, the dealer or municipal advisor 

sole proprietor must provide the MSRB 

notice within 30 calendar days that the 

sole proprietor has returned to his or her 

business.24

Waiting Periods for Retaking a Failed 

Examination 

Rule G–3(g) allows any associated 

person of a broker, dealer, municipal 

securities dealer or municipal advisor 

who fails to pass an MSRB qualification 

examination to take the examination 

again after a period of 30 days has 

elapsed from the date of the prior 

examination, except that any person 

who fails to pass an examination three 

or more times in succession shall be 

prohibited from taking the examination 

again until a period of six months has 

elapsed from the date of such person’s 

last attempt to pass the examination. 

FINRA’s consolidated rule change 

consolidated NASD Rule 1070(e) as 

FINRA Rule 1210.06 to provide that a 

person who fails a FINRA examination 

may retake the examination after 30 

calendar days from the date of the 

person’s last attempt to pass the 

examination, except a person who fails 

an examination three or more times in 

succession within a two-year period 

may only retake the examination after 

180 calendar days from the date of the 

person’s last attempt to pass the 

examination. In addition, FINRA Rule 

1210.06 extended these provisions to 

the SIE examination. 

Although generally consistent with 

FINRA’s approved rule, to promote 

regulatory consistency, the MSRB is 

proposing to amend to Rule G–3(g), on 

retaking of qualification examinations, 

to change the term ‘‘six months’’ to ‘‘180 

calendar days’’ and to add ‘‘within a 

two-year period’’ after the phrase ‘‘three 

of more times in succession.’’ The 

addition of the phrase is intended to 

clarify the frequency with which 

FINRA’s test delivery system resets a 

candidate’s exam history data. 

Restructuring of the MSRB’s 

Professional Qualification Examination 

Program 

A. Accepting the SIE Examination and 

Revising the Municipal Securities 

Representative Qualification 

Examination 

FINRA’s consolidated rule change 

established the SIE exam to eliminate 

the duplicative testing of general 

securities knowledge across its current 

representative-level qualification 

examinations by moving such content 

into the SIE exam.25 With the 

establishment of the SIE exam, FINRA 

restructured its representative-level 

exams into specialized knowledge 

examinations to test knowledge of 


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26MSRB staff reviewed the SIE content outline 

and provided substantive comments to ensure 

relevant MSRB rules were incorporated and content 

specific to municipal securities was addressed on 

the outline. FINRA filed the content outline and 

selection specifications for the new SIE 

examination with the SEC for immediate 

effectiveness. See Exchange Act Release No. 82578 

(January 24, 2018), 83 FR 4375 (January 30, 2018) 

(SR–FINRA–2018–002). 

27The passing score for the SIE exam will be 

published on FINRA’s website prior to the first 

administration of the examination in October 2018. 

28An exception to the rule, allows only persons 

having been duly qualified as a general securities 

representative by reason of having passed the 

General Securities Representative Qualification 

Examination before November 7, 2011 to qualify as 

a municipal securities representative. 

29The content outlines for MSRB’s qualification 

examinations serve as a guide to the subject matters 

tested on each examination. The MSRB’s Series 52/ 

53 Subcommittee of the Professional Qualification 

Advisory Committee has been reviewing the current 

content covered on the Series 52 examination to 

determine the revisions that will be necessary to 

appropriately modify the Series 52 into a 

specialized knowledge examination. In connection 

with the filing of this proposed rule change, and in 

advance of the October 1, 2018 effective date of the 

proposed rule change, the MSRB anticipates filing 

with the SEC a revised Series 52 content outline to 

reflect the modifications to the Series 52 

examination and the removal of duplicative content 

that would appear on the SIE exam. 

30Since the SIE examination is meant to 

eliminate duplicative testing of general content 

across representative-level examinations and 

thereby, affording the opportunity for 

representative-level examinations to become more 

specialized knowledge examinations there is no 

impact to the Series 51 exam and Series 53 exam 

that would necessitate restructuring of those 

principal-level exams. 

31 15 U.S.C. 78o–4(b)(2)(A). 

concepts and rules specifically 

corresponding to a particular 

representative-level qualification. 

FINRA Rule 1210.03, on qualification 

examinations, provides that before a 

person can become registered as a 

representative, such person must pass 

the SIE exam and an appropriate 

representative-level qualification 

examination. 

In developing the SIE exam, FINRA 

established a committee of industry 

professionals to create the content 

outline for the SIE exam and invited 

staff from the MSRB’s Professional 

Qualifications department to participate 

on the committee.26 The SIE exam 

content outline is divided into four 

sections, with each section addressing 

the essential areas of general knowledge. 

The SIE exam will consist of 75 scored 

multiple-choice questions.27 Pursuant to 

FINRA Rule 1210.08, a passing score on 

the SIE exam would be valid for four 

years and a person that passes the SIE 

exam would have up to four years to 

pass a representative-level qualification 

examination in order to become 

registered in a representative-level 

capacity. 

The sections and the associated 

number of questions for each section 

are: 

• Section 1: Knowledge of Capital 

Markets (12 questions); 

• Section 2: Understanding Products 

and Their Risks (33 questions); 

• Section 3: Understanding Trading, 

Customer Accounts and Prohibited 

Activities (23 questions); and 

• Section 4: Overview of the 

Regulatory Framework (7 questions). 

Rule G–3(a)(ii), on qualification 

requirements, provides that ‘‘every 

municipal securities representative shall 

take and pass the Municipal Securities 

Representative Qualification 

Examination prior to being qualified as 

a municipal securities 

representative.’’ 28 The Series 52 is 

designed to establish that persons 

associated with dealers that effect 

transactions in municipal securities 

have attained specified levels of 

competence and knowledge to become 

registered as municipal securities 

representatives. 

The Series 52, in its current format, 

has general securities knowledge 

content that will be tested on the future 

SIE exam. The MSRB, therefore, intends 

to restructure the Series 52 as a 

specialized knowledge examination to 

better focus the content of the 

examination more specifically to 

municipal securities knowledge. 

Accordingly, the MSRB is proposing an 

amendment to Rule G–3(a)(ii) that 

would require an individual to pass 

both the SIE exam and the revised 

Series 52 29 in order to become qualified 

as a municipal securities 

representative.30 Additionally, the 

MSRB will continue to recognize, in 

their revised forms as specialized 

knowledge examinations, the Municipal 

Securities Sales Limited Representative 

Examination (Series 7) and the Limited 

Representative-Investment Company 

Variable Contracts Product 

Representative Examination (Series 6) in 

furtherance of regulatory consistency 

and for purposes of avoiding impact to 

the current distribution channel for the 

sale of municipal securities. 

2. Statutory Basis 

The MSRB believes that the proposed 

rule change is consistent with Section 

15B(b)(2)(A) of the Act,31 which 

provides that the MSRB’s rules shall 

prescribe: 

such 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. In connection with the definition 

and application of such standards the Board 

may . . . specify that all or any portion of 

such standards shall be applicable to any 

such class; and require persons in any such 

class to pass tests . . . 

The MSRB believes that, by requiring 

persons to take and pass a professional 

qualification examination, such 

requirement promotes public 

confidence by ensuring the minimum 

standards of training, experience and 

competence required by the Board are 

being achieved. The MSRB also believes 

that the restructuring of its current 

qualification examination program is 

consistent with and in furtherance of 

the stated objectives of Section 

15B(b)(2)(A) of the Act because by 

ensuring the Series 52 specialized 

knowledge examination focuses on the 

most relevant laws, rules and 

regulations of the municipal securities 

market, investors are more well 

protected. Also, by more closely 

aligning the Series 52 specialized 

knowledge examination content to the 

functions and activities performed by a 

municipal securities representative, 

such associated persons are more likely 

to fully grasp the prescribed regulatory 

standards, which aides to preserve the 

integrity of the municipal securities 

market. Importantly, without 

compromising the qualification 

standards, the proposed rule change 

would improve the efficiency of the 

examination program by eliminating 

duplicative testing of general securities 

knowledge. 

Moreover, consistent with Section 

15B(b)(2)(A) of the Act, permitting such 

persons to work at an industry affiliate 

of a dealer without having to requalify 

by examination upon re-registering with 

a dealer, by permitting them to seek a 

waiver from re-examination, lends itself 

to a greater understanding of the 

financial services industry. Further, the 

proposed rule change would allow 

individuals to maintain their knowledge 

base while working in areas ancillary to 

the municipal securities market, thereby 

providing such market professionals 

additional securities knowledge, which, 

in turn, promotes confidence in market 

professionals. The proposed rule change 

would also expand the scope of 

permissive qualifications, which, among 

other things, would allow dealers to 

develop a depth of associated persons 

with qualifications to respond to 

unanticipated personnel changes and 

would encourage a greater 

understanding of the municipal 

securities markets. As proposed, by 

allowing individuals to function in a 

principal capacity for a limited period 

of time before having to pass a 

principal-level examination would 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices 29861 

32 15 U.S.C. 78s(b)(3)(A). 

33 17 CFR 240.19b–4(f)(6). 

34 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

minimize operational disruptions to a 

dealer. 

Lastly, under the proposed rule 

change, allowing associated persons that 

volunteer for or are called into active 

U.S. military service to be placed in an 

inactive status allows for regulatory 

consistency and promotes the public 

interest. 

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 

proposed rule change reflects the 

MSRB’s belief that its registration 

requirements should be generally 

harmonized with FINRA’s consolidated 

rule change for purposes of regulatory 

efficiency and that such changes do not 

attach additional burdens on dealers, 

and as applicable, municipal advisors. 

In addition, the MSRB’s restructuring of 

its qualification examination program to 

better align with the functions and 

associated tasks currently performed by 

a municipal securities representative 

makes for a more effective qualification 

examination. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Board did not solicit comment on 

the proposed change. Therefore, there 

are no comments on the proposed rule 

change received from members, 

participants or others. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 32 and Rule 19b– 

4(f)(6) thereunder.33

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. 

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– 

MSRB–2018–04 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–2018–04. 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 website (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 website 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. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MSRB–2018–04 and should 

be submitted on or before July 17, 2018. 

For the Commission, pursuant to delegated 

authority.34

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13619 Filed 6–25–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

(Release No. 34–83482; File No. SR– 

NASDAQ–2018–046) 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Rule 

4702 

June 20, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 8, 

2018, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 4702(b)(12)(A) so that Participants 

can choose to have their Limit On Close 

Orders rejected if subject to being repriced when entered between 3:50 p.m. 

ET and immediately prior to 3:55 p.m. 

ET. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://nasdaq.cchwallstreet.com, at the 

principal office of the Exchange, 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 

Exchange 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 

Exchange has prepared summaries, set 


sradovich on DSK3GMQ082PROD with NOTICES