Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Notices 72225 

16Section 19(b)(2) of the Act, as amended by the 

Securities Act Amendments of 1975, Pub. L. 94–29 

(June 4, 1975), grants the Commission flexibility to 

determine what type of proceeding—either oral or 

notice and opportunity for written comments—is 

appropriate for consideration of a particular 

proposal by a self-regulatory organization. See 

Securities Act Amendments of 1975, Senate Comm. 

on Banking, Housing & Urban Affairs, S. Rep. No. 

75, 94th Cong., 1st Sess. 30 (1975). 

17 17 CFR 200.30–3(a)(57). 

1 12 U.S.C. 5465(e)(1). 

2 17 CFR 240.19b–4(n)(1)(i). 

3See Securities Exchange Act Release No. 73343 

(October 14, 2014), 79 FR 62684 (October 20, 2014) 

(SR–OCC–2014–805). 

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

2 17 CFR 240.19b–4. 

invites the written views of interested 

persons concerning (1) the transparency 

and liquidity of the markets for the 

assets in which each Fund would be 

permitted to invest a substantial portion 

of its portfolio and (2) the expected 

effectiveness and efficiency of arbitrage 

with respect to the market price of the 

Funds’ shares and the value of the 

underlying portfolio assets, given the 

transparency and liquidity of the 

markets for those underlying assets. 

Although there do not appear to be 

any issues relevant to approval or 

disapproval which would be facilitated 

by an oral presentation of views, data, 

and arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.16

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by December 26, 2014. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by January 9, 2015. 

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– 

NYSEArca–2014–89 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Numbers SR–NYSEArca–2014–89. 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 such 

filings also will be available for 

inspection and copying at the principal 

office of the Exchange. 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– 

NYSEArca–2014–89 and should be 

submitted on or before December 26, 

2014. Rebuttal comments should be 

submitted by January 9, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28547 Filed 12–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73710; File No. SR–OCC– 

2014–805] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Notice 

of Withdrawal of an Advance Notice 

Concerning Enhancements to the Risk 

Management Framework Applied to the 

Clearance of Confirmed Trades 

Executed in Extended and Overnight 

Trading Sessions 

December 1, 2014. 

On September 17, 2014, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 806(e)(1) of the Payment, 

Clearing, and Settlement Supervision 

Act of 2010 (‘‘Clearing Supervision 

Act’’) 1 and Rule 19b–4(n)(1)(i),2 an 

advance notice concerning 

enhancements to the risk management 

framework applied to the clearance of 

confirmed trades executed in extended 

and overnight trading sessions. Notice 

of the advance notice was published in 

the Federal Register on October 20, 

2014.3 The Commission did not receive 

any comments in response to the 

advance notice. 

On October 28, 2014, OCC filed a 

withdrawal of its advance notice (SR– 

OCC–2014–805) from consideration by 

the Commission. The Commission is 

hereby publishing notice of the 

withdrawal. 

By the Commission. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28544 Filed 12–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73708; File No. SR–MSRB– 

2014–08] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing of a Proposed 

Rule Change Consisting of Proposed 

Amendments to MSRB Rules G–1, on 

Separately Identifiable Department or 

Division of a Bank; G–2, on Standards 

of Professional Qualification; G–3, on 

Professional Qualification 

Requirements; and D–13, on Municipal 

Advisory Activities 

December 1, 2014. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on November 

18, 2014, the Municipal Securities 

Rulemaking Board (the ‘‘MSRB’’ or 

‘‘Board’’) filed with the Securities and 

Exchange Commission (the ‘‘SEC’’ or 

‘‘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 consisting of 

proposed amendments to MSRB Rules 

G–1, on separately identifiable 

department or division of a bank; G–2, 

on standards of professional 

qualification; G–3, on professional 

qualification requirements; and D–13, 

on municipal advisory activities (the 

‘‘proposed rule change’’). The MSRB is 


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72226 Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Notices 

3See Section 15B(b)(2)(A) of the Act, 15 U.S.C. 

78o–4(b)(2)(A). 

4The definition of municipal advisor 

representative would be substantially identical to 

the category of individuals for whom a Form MA– 

I is required to be completed as part of a municipal 

advisor’s registration with the SEC—natural persons 

associated with the municipal advisor engaged in 

municipal advisory activities on behalf of the firm. 

5See Section 15B(e)(4)(A)(i) and (ii) of the Act, 15 

U.S.C. 78o–4(e)(4)(A)(i) and (ii). 

6 17 CFR 240.15Ba1–1(d)(4). 

7Examples of these other schemes include the 

following classifications: Series 7 (General 

Securities Representative) and Series 24 (General 

Securities Principal); Series 42 (Registered Options 

Representative) and Series 4 (Registered Options 

Principal); Series 22 (Direct Participation Programs 

Limited Representative) and Series 39 (Direct 

Participation Programs Limited Principal). 

proposing that these amendments 

become effective 60 days following the 

date of SEC approval. 

The text of the proposed rule change 

is available on the MSRB’s Web site at 

www.msrb.org/Rules-andInterpretations/SEC-Filings/2014- 

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 

Description of the Proposed Rule 

Change 

The purpose of the proposed rule 

change is to establish professional 

qualification requirements for 

municipal advisors and their associated 

persons and to make related changes to 

select MSRB rules. The MSRB is 

charged with setting professional 

standards and continuing education 

requirements for municipal advisors. 

Specifically, the Act requires associated 

persons of brokers, dealers and 

municipal securities dealers (‘‘dealers’’) 

and municipal advisors to pass 

examinations as the MSRB may 

establish to demonstrate that such 

individuals meet the standards of 

competence as the MSRB finds 

necessary or appropriate in the public 

interest or for the protection of investors 

and municipal entities or obligated 

persons.3 A professional qualification 

examination is intended to determine 

whether an individual meets the 

MSRB’s basic qualification standards for 

a particular registration category. The 

examination measures a candidate’s 

knowledge of the business activities, as 

well as the regulatory requirements, 

including MSRB rules, rule 

interpretations and federal law 

applicable to a particular registration 

category. 

MSRB Rule G–3 establishes 

classifications and qualification 

requirements for associated persons of 

dealers. The proposed rule change 

would add the following two new 

registration classifications for municipal 

advisors under Rule G–3: (a) Municipal 

advisor representatives—those 

individuals who engage in municipal 

advisory activities; and (b) municipal 

advisor principals—those individuals 

who engage in the management, 

direction or supervision of the 

municipal advisory activities of the 

municipal advisor and its associated 

persons.4 The proposed amendments 

also would require each prospective 

municipal advisor representative to take 

and pass the municipal advisor 

representative qualification examination 

being developed by the MSRB prior to 

being qualified as a municipal advisor 

representative. Qualification as a 

municipal advisor representative would 

be a prerequisite to qualification as a 

municipal advisor principal. Each 

municipal advisor would be required to 

designate at least one individual as a 

municipal advisor principal who would 

be responsible for supervising the 

municipal advisory activities of the 

municipal advisor, and each municipal 

advisor principal would be required to 

pass the municipal advisor 

representative qualification examination 

to perform the supervisory activities of 

a principal. 

To provide prospective municipal 

advisor representatives with sufficient 

time to prepare for and take the 

examination, the MSRB proposes a oneyear grace period for test takers to pass 

the examination. In addition, given the 

general view of industry participants 

that the 90-day apprenticeship 

requirement for municipal securities 

representatives in Rule G–3 does not 

provide any additional benefit, the 

MSRB proposes to eliminate the 

requirement for municipal securities 

representatives and, similarly, does not 

propose an apprenticeship requirement 

for municipal advisor representatives. 

MSRB Rule G–2 establishes the 

standards of professional qualification 

for dealers and currently provides that 

no dealer shall engage in municipal 

securities activities unless such dealer 

and every natural person associated 

with such dealer is qualified in 

accordance with MSRB rules. The 

proposed rule change amends Rule 

G–2 to add a basic requirement that no 

municipal advisor shall engage in 

municipal advisory activities unless 

such municipal advisor and every 

natural person associated with such 

municipal advisor is qualified in 

accordance with MSRB rules. 

The proposed rule change would also 

amend Rule D–13, on municipal 

advisory activities, to incorporate SEC 

rules by providing that the term 

‘‘municipal advisory activities’’ means, 

except as otherwise specifically 

provided by rule of the Board, the 

activities described in Section 

15B(e)(4)(A)(i) and (ii) of the Act 5 and 

the rules and regulations promulgated 

thereunder. In recognition of the new 

regulatory scheme for municipal 

advisors, the proposed rule change 

would amend Rules G–1 and G–3 to 

provide that dealers and their municipal 

securities representatives may continue 

to perform financial advisory or 

consultative services for issuers in 

connection with the issuance of 

municipal securities, except to the 

extent the municipal securities 

representatives engaged in the activities 

must be qualified as municipal advisor 

representatives to perform such 

services. Finally, Rule G–1 also would 

be amended to provide that, for 

purposes of its municipal advisory 

activities, the term ‘‘separately 

identifiable department or division of a 

bank’’ would have the same meaning as 

in Securities Exchange Act Rule 15Ba1– 

1(d)(4).6

New Registration Classifications 

The proposed amendments to Rule G– 

3 would create two new registration 

classifications: (a) Municipal advisor 

representative and (b) municipal advisor 

principal. These classifications are 

consistent with other regulatory 

schemes, including those for brokerdealers.7

The new classifications would 

distinguish between municipal advisor 

representatives who would be qualified 

to engage in municipal advisory 

activities and municipal advisor 

principals who would be qualified to 

engage in and supervise the municipal 

advisory activities of the municipal 


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Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Notices 72227 

8Rule D–13 defines municipal advisory activities 

as the activities described in Section 15B(e)(4)(A)(i) 

and (ii) of the Act. Rule D–13 would be amended 

to reflect the SEC’s interpretation of the statutory 

definition of municipal advisor. Hence, ‘‘municipal 

advisory activities’’ would mean the activities 

described in Section 15B(e)(4)(A)(i) and (ii) of the 

Act and the rules and regulations promulgated 

thereunder. 

9MSRB Rule G–44 sets forth the obligation of 

municipal advisors to supervise the municipal 

advisory activities of the municipal advisor and its 

associated persons to ensure compliance with 

applicable MSRB and SEC rules. Exchange Act 

Release No. 73415 (Oct. 23, 2014), 79 FR 64423 

(Oct. 29, 2014), File No. SR–MSRB–2014–06, 

available at http://www.sec.gov/rules/sro/msrb/

2014/34-73415.pdf. 

10The MSRB will announce the effective date of 

the municipal advisor representative qualification 

examination at a later date. 

11See MSRB Rule G–3(f), proposed MSRB Rule 

G–3(g) in Exhibit 5. 

12See Exchange Act Release No. 70462 at 6 (Sept. 

20, 2013), 78 FR 67467 at 67469 (Nov. 12, 2013) 

(‘‘SEC Final Registration Rule’’) and Section 

15B(b)(2)(A) of the Act, 15 U.S.C. 78o–4(b)(2)(A). 

advisor and its associated persons. The 

proposed amendments to Rule G–3 

would define a municipal advisor 

representative as a natural person 

associated with a municipal advisor, 

other than a person performing only 

clerical, administrative, support or 

similar functions.8

The proposed amendments would 

define a municipal advisor principal as 

a natural person associated with a 

municipal advisor who is directly 

engaged in the management, direction 

or supervision of the municipal 

advisory activities, as defined in Rule 

D–13, of the municipal advisor. In 

addition, the proposed amendments to 

Rule G–3 would require each municipal 

advisor to designate at least one 

municipal advisor principal to be 

responsible for the municipal advisory 

activities of the municipal advisor.9

Further, the proposed rule change 

would require each municipal advisor 

representative and municipal advisor 

principal to take and pass the municipal 

advisor representative qualification 

examination prior to being qualified as 

a municipal advisor representative or 

municipal advisor principal, 

respectively. The examination is 

discussed in more detail below. 

Grace Period 

To provide for an orderly transition to 

the new professional qualification 

requirements for municipal advisors, 

the MSRB proposes that prospective 

municipal advisor representatives have 

one year from the effective date of the 

examination to pass it.10 During this 

grace period, municipal advisor 

professionals could continue to engage 

in municipal advisory activities. The 

grace period is intended to provide 

municipal advisor representatives with 

sufficient time to study and take (and, 

if necessary retake) the examination 

without causing undue disruption to the 

business of the municipal advisor. As is 

the case for all MSRB qualification 

examinations, individuals who do not 

pass the examination would be 

permitted to retake the examination 

after 30 days. However, any person who 

fails the examination three or more 

times in succession would be prohibited 

from taking the examination for six 

months.11

Prior to the effective date of the 

examination and prior to the 

commencement of the one-year grace 

period, the MSRB will file a study 

outline describing the topics on the 

examination, the percentage of the 

examination devoted to the topic areas, 

and the number of questions on the 

examination. The study outline will also 

contain reference material and sample 

examination questions to assist 

examination takers. The MSRB expects 

that it will provide more information 

about the study outline through a 

webinar or other means, subsequent to 

the filing of the study outline with the 

SEC. A pilot examination is expected to 

be delivered in 2015. The MSRB will 

use the results of the pilot examination 

to set the passing grade, which will be 

added to the study outline. 

Uniform Requirement—Grandfathering 

The proposed rule change would 

require that all persons deemed 

municipal advisor representatives under 

Rule G–3 pass the qualification 

examination, regardless of whether such 

persons have passed other MSRB or 

MSRB-recognized examinations (such as 

the Series 52 or 7 examinations), or 

previously have been engaged in 

municipal advisory activities. While 

commenters requested, as discussed 

below, that the MSRB waive the 

requirement or ‘‘grandfather’’ those 

individuals who have passed certain 

other professional qualifications 

examinations or have experience in 

providing municipal advisory services, 

the MSRB believes that the significant 

changes that accompany the new 

regulatory regime for municipal 

advisors dictate that each individual 

engaged in municipal advisory activities 

demonstrate a minimum level of 

knowledge of the job responsibilities 

and regulatory requirements by passing 

a general qualification examination. 

The MSRB has considered this issue 

carefully and has determined that the 

practice of grandfathering will not 

effectively ensure a minimum level of 

competency by those individuals acting 

as municipal advisor representatives. 

For example, the MSRB has no practical 

means to determine whether an 

individual is competent based on 

experience. The MSRB believes that 

Congress, through the Act, requires 

more than reliance on a representation 

of competence.12 As for those who 

suggest they have demonstrated a basic 

competence by passing another 

qualification examination, the MSRB 

believes the job responsibilities of a 

municipal advisor professional and the 

regulations governing such individuals 

are sufficiently distinct in application as 

to require that they pass a separate 

examination. 

Waivers 

The Board will consider waiving the 

requirement that a municipal advisor 

representative or municipal advisor 

principal pass the municipal advisor 

representative qualification examination 

in extraordinary cases: (1) Where the 

applicant participated in the 

development of the municipal advisor 

representative qualification examination 

as a member of the Board’s Professional 

Qualifications Advisory Committee 

(PQAC); or (2) where good cause is 

shown by an applicant who previously 

qualified as a municipal advisor 

representative by passing the municipal 

advisor representative qualification 

examination and such qualification 

lapsed. The Board will review each 

waiver request on its individual merits, 

taking into consideration relevant facts 

presented by the applicant. For 

example, the Board may consider 

granting a waiver for an individual 

whose municipal advisor representative 

qualification lapsed but who 

demonstrated subsequent investment 

industry or related professional 

experience. 

Apprenticeship 

MSRB Rule G–3 currently requires a 

municipal securities representative to 

serve an apprenticeship period of 90 

days before transacting business with 

any member of the public or receiving 

compensation for such activities. The 

intent of the provision was to ensure 

that persons with no prior experience in 

the securities industry would learn from 

an experienced professional before 

conducting business with the public. 

Regulated entities have provided 

feedback that the requirement does not 

provide any additional benefit because 

the 90-day training period is short and 

the rule provides no specific training 

requirements. Moreover, the SEC 

approved a similar rule change by 

Financial Industry Regulatory Authority 


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13See FINRA Regulatory Notice 08–64 (Oct. 

2008). Exchange Act Release No. 58103 (Jul. 3, 

2008), 73 FR 40403 (Jul. 14, 2008), File No. SR– 

FINRA–2008–036. 

14See Section 15B(b)(2)(A) of the Act, 15 U.S.C. 

78o–4(b)(2)(A). 

15See 78 FR 67467 at 67469 (Nov. 12, 2013). 

16See Section 15B(b)(2)(L)(iii) of the Act, 15 

U.S.C. 78o–4(b)(2)(L)(iii). 

17See Section 15B(b)(2)(L)(iv) of the Act, 15 

U.S.C. 78o–4(b)(2)(L)(iv). 

18See Section 15B(b)(2)(C) of the Act, 15 U.S.C. 

78o–4(b)(2)(C). 

(FINRA) in eliminating the 

apprenticeship requirement established 

under prior New York Stock Exchange 

(NYSE) Rule 345 for certain registered 

persons, noting that the change would 

permit its member firms to determine, 

consistent with their supervisory 

obligations, the extent and duration of 

the initial training of such registered 

persons.13 The MSRB believes that 

dealers and municipal advisors should 

determine the length and nature of the 

initial training for newly registered 

persons, consistent with the approach 

taken by FINRA. Consequently, the 

MSRB proposes to eliminate the 

apprenticeship requirement for 

municipal securities representatives and 

proposes no such requirement for 

municipal advisor representatives. 

Technical Amendments 

The MSRB is amending Rule G– 

3(a)(ii) to correctly re-letter G–3(a)(ii)(D) 

as G–3(a)(ii)(C). 

Effective Date 

The MSRB is proposing that these 

amendments become effective 60 days 

following the date of SEC approval. The 

effective date and the compliance date 

of the municipal advisor representative 

qualification examination will be 

announced by the MSRB with at least 30 

days notice. The one-year grace period 

will extend from the effective date to the 

compliance date. 

2. Statutory Basis 

The MSRB believes that the proposed 

rule change is consistent with Section 

15B(b)(2)(A) of the Act,14 which 

provides that the MSRB’s rules shall: 

provide that no municipal securities broker 

or municipal securities dealer shall effect any 

transaction in, or induce or attempt to induce 

the purchase or sale of, any municipal 

security, and no broker, dealer, municipal 

securities dealer, or municipal advisor shall 

provide advice to or on behalf of a municipal 

entity or obligated person with respect to 

municipal financial products or the issuance 

of municipal securities, unless . . . such 

municipal securities broker or municipal 

securities dealer and every natural person 

associated with such municipal securities 

broker or municipal securities dealer meet 

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. 

This provision provides the MSRB 

with authority to establish standards of 

competence as the MSRB finds 

necessary to carry out its regulatory 

duties. It also provides that, in 

connection with the definition and 

application of such standards, the 

MSRB may appropriately classify 

municipal advisors and their associated 

persons, 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 an examination 

regarding such standards of 

competence. 

Professional qualification 

examinations are an established means 

for determining the basic competency of 

individuals in a particular class. The 

proposed rule change would require 

individuals who engage in or supervise 

municipal advisory activities to pass 

such an examination. The MSRB 

believes that requiring prospective 

municipal advisor representatives to 

pass a basic qualification examination 

will protect investors, municipal 

entities and obligated persons by 

ensuring such representatives have a 

basic understanding of the role of a 

municipal advisor representative and 

the rules and regulations governing such 

individuals. 

In its final rule on the permanent 

registration of municipal advisors, the 

SEC noted that ‘‘[t]he new registration 

requirements and regulatory standards 

are intended to mitigate some of the 

problems observed with the conduct of 

some municipal advisors, including 

. . . advice rendered by financial 

advisors without adequate training or 

qualifications. ’’ 15 The municipal 

advisor representative qualification 

examination is consistent with the 

intent to mitigate problems associated 

with advice provided by those 

individuals without adequate training or 

qualifications. 

Additionally, the MSRB believes that 

the proposed rule change is consistent 

with Section 15B(b)(2)(L)(iii) of the 

Act,16 which provides that the MSRB’s 

rules shall, with respect to municipal 

advisors, provide professional 

standards. The proposed rule change 

would establish professional standards 

for those individuals engaged in or 

supervising municipal advisory 

activities by requiring such individuals 

to demonstrate a basic competency 

regarding the role of municipal advisor 

representatives and the rules and 

regulations governing the conduct of 

such persons. 

Section 15B(b)(2)(L)(iv) of the Act 17

requires that rules adopted by the Board 

not impose a regulatory burden on small 

municipal advisors that is not necessary 

or appropriate in the public interest and 

for the protection of investors, 

municipal entities, and obligated 

persons, provided that there is robust 

protection of investors against fraud. 

The MSRB believes that the proposed 

rule change is consistent with this 

provision. While the proposed rule 

change would affect all municipal 

advisors, including small municipal 

advisors, it would be a necessary and 

appropriate regulatory burden in order 

to establish the baseline competence of 

those individuals engaged in municipal 

advisory activities, and it also would 

promote compliance with MSRB rules. 

While there will be one-time costs 

associated with preparing for and taking 

the municipal advisor representative 

qualification examination, the MSRB 

does not believe that such costs will 

impose a regulatory burden on small 

municipal advisors that is not necessary 

or appropriate to protect investors, 

municipal entities and obligated 

persons. A discussion of the economic 

analysis of the proposed rule change 

and its impact on small municipal 

advisors is provided below. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Section 15B(b)(2)(C) of the Act 18

requires that MSRB rules not be 

designed to impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. In determining 

whether this standard has been met, the 

MSRB has been guided by the Board’s 

recently-adopted policy to more 

formally integrate economic analysis 

into the rulemaking process. In 

accordance with this policy the Board 

has evaluated the potential impacts of 

the proposed rule change, including in 

comparison to reasonable alternative 

regulatory approaches. 

The MSRB does not believe that the 

proposed rule change would impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act, in so far as the 

proposed rule change merely establishes 

baseline professional qualification 

standards for all municipal advisors. 

The baseline standard would provide 

the MSRB assurance that individuals 


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19See 78 FR 67467 at 67611 (Nov. 12, 2013). 

20See 78 FR 67467 at 67630 (Nov. 12, 2013). 

21See Section 15B(b)(2)(L)(iv) of the Act, 15 

U.S.C. 78o–4(b)(2)(L)(iv). 

22See MSRB Notice 2014–08 (Mar. 17, 2014) 

(March Notice). 

23Letters were received from Arrow Partners 

(‘‘Arrow’’), Association of Registration Management 

(‘‘ARM’’), Bond Dealers of America (‘‘BDA’’), Cedar 

Partners, Ltd (‘‘Cedar’’), Central States Capital 

Markets (‘‘Central States’’), CFA Institute (‘‘CFA’’), 

Compass Securities Corporation (‘‘Compass’’), 

Dixworks LLC (‘‘Dixworks’’), Fitzgibbon Toigo 

Associates (‘‘Fitzgibbon’’), Fortress Group, Inc. 

(‘‘Fortress’’), Frank Taylor, George K. Baum & 

Company (‘‘George K. Baum’’), Government Credit 

Corporation (‘‘GCC’’), Hamersley Partners, LLC 

(‘‘Hamersley’’), IMMS LLC (‘‘IMMS’’), Investment 

Company Institute (‘‘ICI’’), Jorge Rosso, Monahan & 

Roth, LLC (‘‘Monahan’’), MVision Private Equity 

Advisers USA LLC (‘‘MVision’’), National 

Association of Independent Public Finance 

Advisors (‘‘NAIPFA’’), New Albany Capital 

Partners, LLC (‘‘New Albany’’), Oyster River Capital 

LP (‘‘Oyster River’’), Perkins Fund Marketing LLC 

(‘‘Perkins’’), Raftelis Financial Consultants, Inc. 

(‘‘Raftelis’’), Securities Industry and Financial 

Markets Association (‘‘SIFMA’’), Sonja Sullivan, 

Stacy Havener, Stonehaven, Tessera Capital 

Partners (‘‘Tessera’’), Third Party Marketers 

Association (‘‘3PM’’), Tibor Partners Inc. (‘‘Tibor’’), 

Timothy D. Wasson, Yuba Group (‘‘Yuba’’), Zions 

First National Bank, by W. David Hemingway 

(‘‘Zions Bank I’’), Zions First National Bank, by 

James G. Livingston (‘‘Zions Bank II’’). 

who take and pass the municipal 

advisor representative qualification 

examination demonstrate a basic 

knowledge of the role of a municipal 

advisor representative and the rules and 

regulations governing the conduct of 

individuals engaging in municipal 

advisory activities. The MSRB has 

considered whether it is possible that 

the costs associated with preparing for 

and taking the municipal advisor 

representative qualification 

examination, relative to the baseline of 

no professional qualification 

examination, may affect the competitive 

landscape by leading some municipal 

advisors to exit the market, curtail their 

activities or consolidate with other 

firms. For example, some municipal 

advisors may determine to consolidate 

with other municipal advisors in order 

to benefit from economies of scale (e.g., 

by leveraging existing resources of a 

larger firm to prepare candidates to take 

the qualification examination) rather 

than to incur separately the costs 

associated with the proposed rule 

change. Others may exit the market, 

rather than incurring the cost of 

preparing for and taking a qualification 

examination. 

In the SEC Final Registration Rule, the 

SEC recognized that municipal advisors 

would incur programmatic costs, 

including ‘‘costs to meet standards of 

training, experience, competence, and 

other qualifications, as well as 

continuing education requirements, that 

the MSRB may establish in the 

future.’’ 19 Such exits from the market 

may lead to a reduced pool of municipal 

advisors. However, the SEC also noted 

that the market for municipal advisory 

services is likely to remain competitive 

despite the potential exit of some 

municipal advisors (including small 

entity municipal advisors), 

consolidation of municipal advisors, or 

lack of new entrants into the market.20

It is also possible that competition for 

municipal advisory services can be 

affected by whether incremental costs 

associated with the municipal advisor 

representative qualification examination 

are passed on to advisory clients. The 

amount of costs passed on may be 

influenced by the size of the municipal 

advisory firm. For smaller municipal 

advisors with fewer clients, the 

incremental costs associated with the 

qualification examination may represent 

a greater percentage of annual revenues, 

and, thus, such advisors may be more 

likely to pass those costs along to their 

advisory clients. As noted above, 

however, the costs of preparing for and 

taking the examination would be 

incurred only once for each municipal 

advisor representative, assuming the 

representative passed the examination 

on the first occasion. 

The Act provides that MSRB rules 

may not impose a regulatory burden on 

small municipal advisors that is not 

necessary or appropriate in the public 

interest and for the protection of 

investors, municipal entities, and 

obligated persons provided that there is 

robust protection of investors against 

fraud.21 The MSRB is sensitive to the 

potential impact of the requirements 

contained in the proposed rule change 

on small municipal advisors. The MSRB 

understands that some small municipal 

advisors and sole proprietors, unlike 

larger municipal advisory firms, may 

not employ full-time staff to train 

individuals to take and pass 

professional qualification examinations 

and that the cost of complying with the 

requirements of the proposed rule 

change may be proportionally higher for 

these smaller firms. To minimize 

potential disruption to firms’ business 

activities and to allow sufficient time for 

municipal advisor professionals to 

study for the examination, the proposed 

rule change would provide covered 

registered persons with a one-year grace 

period to pass the examination. The 

MSRB recognizes that requiring all 

individuals engaged in municipal 

advisory activities to take the 

examination means that many 

individuals with ongoing business 

obligations would be required to 

prepare for and take the examination in 

addition to fulfilling their business 

commitments. The MSRB believes that 

the one-year grace period would provide 

such individuals with sufficient 

flexibility to plan their examination 

preparation time around their existing 

and ongoing business obligations. Going 

forward, new municipal advisor 

professionals entering the market would 

be able to study for and take the 

examination before incurring municipal 

advisory business commitments. The 

MSRB believes that the proposed rule 

change is consistent with the Act’s 

provision with respect to burdens 

imposed on small municipal advisors 

because the financial burden of 

preparing for and taking the 

qualification examination is offset by 

the need to ensure that municipal 

advisor professionals have a basic level 

of competency. 

On March 17, 2014, the MSRB 

published a request for public comment 

on a draft of the proposed rule change.22

In response, the MSRB received thirtyfive comment letters.23 The comments, 

which are summarized in Section 5 

below, focused principally on the 

qualification examination. 

The qualification examination is 

intended to determine whether a 

municipal advisor representative meets 

a minimum level of competency and, in 

general, commenters acknowledged that 

municipal advisor representatives 

should meet or exceed a minimum level 

of competency. However, several 

commenters expressed concerns about 

implementation costs associated with 

the proposed examination. These 

commenters suggested that the MSRB 

consider alternatives for determining a 

municipal advisor representative’s 

competency. Although the suggested 

alternatives vary, they fall into two main 

categories. First, several commenters 

asked the MSRB to reconsider the scope 

of the proposed qualification 

examination, suggesting the 

examination should be administered 

separately or as part of an existing 

qualification examination. Second, 

commenters suggested that municipal 

advisor professionals be grandfathered 

based on either their experience or their 

existing professional qualifications. 

These options are discussed in Section 

5 below. 

Commenters expressed concerns 

about the costs of preparing for and 

taking a qualification examination. 

SIFMA offered estimates of the costs to 

firms and individuals associated with 

taking the examination. These costs 

included fees per examination, study 

materials, the value of time used to 


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24BDA also expressed concern about the 

administration of the qualification examination, 

positing that the number of individuals taking the 

examination would create congestion at 

examination centers and may result in professionals 

unable to complete their required testing. The 

MSRB is confident that FINRA—assuming it is 

designated as the administrator of the municipal 

advisor representative qualification examination 

under Section 15B(c)(7)(A)(iii) of the Act—and the 

examination centers employed by FINRA have the 

capacity to accommodate all individuals who will 

be required to take the qualification examination 

during the one-year grace period and thereafter. 25See 78 FR 67467 at 67589 (Nov. 12, 2013). 

study for the exam, recordkeeping costs, 

and compliance costs. Although many 

of these costs are unknown, SIFMA 

estimates that the known likely costs to 

individuals and firms will be at least 

$5,000 per individual taking the 

examination. In addition, SIFMA noted 

that costs also would be incurred by the 

MSRB to support development of 

questions for the new examination and 

by FINRA to administer the 

examination. SIFMA argued that these 

costs would ‘‘multiply exponentially’’ 

as potentially thousands of people who 

are or will be dually registered as 

municipal securities representatives and 

municipal advisory representatives—or 

will be moving from one classification 

to another—will need to take an 

additional qualification examination 

and incur additional expenses. SIFMA 

suggested that costs could be reduced by 

broadening the scope of the Series 52 

examination to include questions 

related to competency as a municipal 

advisor representative. 

BDA estimated costs of up to 

$100,000 per individual to meet the 

requirements as a municipal securities 

representative and as a municipal 

advisor representative. BDA did not 

explain how it arrived at this estimate, 

although it indicated that the figure 

includes the lost time of municipal 

advisor representatives that could have 

been used serving clients. BDA assumes 

that 75,000 individuals (33,000 

individuals from non-dealer municipal 

advisors and 42,000 from dealermunicipal advisors) would need to take 

the new examination.24 The product of 

BDA’s estimated cost per individual and 

their estimated number of test takers 

yields a total estimated cost in the 

billions of dollars. Although BDA 

admits that it performed a ‘‘back of the 

envelope’’ assessment of the costs, the 

MSRB does not believe this cost 

estimate has adequate foundation. 

SIFMA’s estimates of cost per 

individual are better supported. 

Although cost estimates will vary, the 

SIFMA estimates appear to be more 

credible and useful and were considered 

by the MSRB. SIFMA notes that there 

will be unknown costs, so their estimate 

should be regarded as a minimum 

amount. The costs to the MSRB and 

FINRA in creating and administering 

the examination are relevant. However, 

a portion of those costs will likely be 

covered by examination fees. Given that 

these fees have been considered as part 

of the costs borne by individuals and 

firms, the relevant costs to the MSRB 

and FINRA would be those costs not 

covered by examination fees. 

The BDA estimate of 75,000 test 

takers appears high and inconsistent 

with the permanent municipal advisor 

registration information received by the 

SEC to date. A more accurate figure has 

been provided by the SEC, which 

estimates in the SEC Final Registration 

Rule that municipal advisors will need 

to submit a new Form MA–I for 

approximately 950 individuals 

annually.25 Using SIFMA’s cost 

estimate, the total cost to the industry 

per year, excluding unknown 

recordkeeping and compliance costs, 

yields an estimate of approximately 

$4,750,000 in annual costs. Of course, in 

the first year the costs would be higher 

because those individuals currently 

engaged in municipal advisory activities 

will take the examination. Based on the 

initial analysis, the Board expects 

approximately 3,000 initial examination 

takers. This could result in a total cost 

of $15 million, using SIFMA’s cost 

estimate of $5,000 per person. Most of 

this cost will be borne by large dealermunicipal advisors that elect to qualify 

a large number of their associated 

persons as municipal advisor 

representatives. The MSRB expects that 

many of these firms will leverage their 

training resources to lower the cost per 

examination candidate. The MSRB also 

believes that the total cost to municipal 

advisors to prepare individuals to take 

the qualification examination will drop 

significantly after the one-year grace 

period, as the number of examination 

takers decreases and then levels off. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Scope of the Qualification Examination 

Commenters expressed varying views 

about the proper scope of a qualification 

examination. BDA offered three 

alternatives for the Board to consider: 

(a) Qualifying municipal advisor 

professionals using the Series 52 

examination; (b) creating a single, new, 

comprehensive examination for all 

municipal securities and advisor 

professionals; and (c) creating a 

supplemental examination for 

previously registered municipal 

securities professionals that would 

cover the new municipal advisor 

material. 

SIFMA recommended that the Board 

consider adding questions to the 

existing Series 52 qualification 

examination. SIFMA stated that this 

alternative would be less burdensome to 

the industry, and would ensure that 

there was no delay in developing 

examination material and administering 

the examination. SIFMA also stated that 

examining municipal securities and 

advisory competency in one 

examination would aid small dealers, 

many of whom perform both functions 

and are very sensitive to compliance 

costs. Further, SIFMA stated that there 

are potentially thousands of individuals 

who are dually registered and would 

benefit from having a single 

examination. This is essentially the 

same approach as the universal 

examination recommended by BDA. 

Consistent with SIFMA’s 

recommendation for a single 

qualification examination, ARM also 

suggested that if the MSRB feels that the 

duties of municipal advisor 

representatives require additional 

expertise that additional questions be 

added to existing examinations rather 

than creating entirely new 

examinations. 

The Board maintains there is a need 

for separate qualification examinations 

because the content of such an 

examination will be designed to meet 

the MSRB’s goal of determining whether 

a prospective municipal advisor 

representative meets the minimum level 

of competency required of a municipal 

advisor professional. The examination, 

while covering a variety of municipal 

advisory activities, will be more targeted 

than a combined examination that 

attempts to evaluate the competence of 

individuals engaged in varied municipal 

securities and municipal advisory 

activities. As discussed below, certain 

commenters take issue with the breadth 

of the proposed municipal advisor 

representative examination because of 

the more limited nature of their 

functions. These concerns could be 

exacerbated by combining the 

municipal advisor and securities 

representative examinations. Although a 

combined examination may be less 

costly to create and administer, and may 

place a smaller cost burden on dealers, 

such an examination may place a larger 

cost burden on non-dealer municipal 

advisors and their associated persons 

who have no need for or interest in 

demonstrating competency as a 

municipal securities representative but 


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26The Investment Company and Variable 

Contracts Products Representative Qualifications 

Examination, (Series 6) authorizes individuals to 

sell a limited set of securities products including, 

mutual funds and variable annuities. 27See MSRB Rule G–3(b)(ii)(B). 

28See Section 15B(b)(2)(L) of the Act, 15 U.S.C. 

78o–4(b)(2)(L). 

would be required to prepare for and 

pass an examination that included 

significant content relating to the role 

and regulation of municipal securities 

representatives. 

BDA suggests, alternatively, that the 

MSRB develop a supplemental 

examination for municipal securities 

representatives. Under this approach, 

municipal advisor professionals not 

qualified as municipal securities 

representatives could take the 

municipal securities representative 

qualification examination and 

municipal advisor supplement or a new 

municipal advisor representative 

qualification examination developed by 

the MSRB. The net effect of this 

alternative is a separate examination for 

municipal advisory activities. While a 

supplemental examination might 

require fewer questions than a standalone examination, the practicalities of 

maintaining many different 

examinations should not be 

underestimated. Moreover, to maintain 

consistency, the MSRB would then need 

to develop a supplemental examination 

for municipal advisors seeking to 

register as municipal securities 

representatives, which would 

necessitate a total of four examinations, 

adding further and unnecessary 

complexity to the registration process. 

Lastly, the MSRB believes that existing 

municipal securities representatives 

should be proficient on those portions 

of a municipal advisor representative 

examination that overlap with the 

municipal securities representative 

examination. 

In contrast to other commenters, ICI 

argued against a single general 

qualification exam. ICI recommended 

that the MSRB create a separate 

qualification examination for those who 

provide advice regarding municipal 

fund securities. ICI cites the MSRB’s 

policy on economic analysis that allows 

for consideration of different rule 

specifications or differing requirements 

for different market participants. 

Alternatively, ICI recommends 

grandfathering those individuals who 

have passed the Series 6 examination.26

The Board believes that passing the 

Series 6 examination would 

demonstrate only a basic competency in 

servicing retail customers who purchase 

mutual funds, interests in 529 college 

savings plans and variable annuities 

and, hence, would not establish an 

individual’s competency as a municipal 

advisor representative. The Board 

appreciates ICI’s contention that the 

activities of municipal advisors who 

provide advice to municipal entities 

regarding municipal fund securities are 

different than the municipal advisory 

activities of traditional municipal 

advisors. The MSRB also acknowledges 

that some of the content on the 

examination will not be directly related 

to municipal fund securities. 

Nevertheless, the Board believes that 

individuals who engage in municipal 

advisory activities regarding municipal 

fund securities should demonstrate 

knowledge of the rules and regulations 

governing municipal advisors by taking 

the municipal advisor representative 

qualification examination. 

Grandfathering 

ARM suggested that the MSRB 

consider grandfathering individuals 

who have corresponding registrations as 

a municipal securities representative or 

municipal securities principal on the 

grounds that these individuals have 

completed more encompassing 

examinations and that they are 

experienced municipal securities 

professionals whose expertise should be 

sufficient to engage in municipal 

advisory activities. SIFMA, BDA and 

3PM also recommended that individuals 

who are currently qualified to perform 

municipal securities activities be 

grandfathered. 

Yuba commented that the Board 

should make the supervisor 

examination available before, or 

simultaneously with, the representative 

examination and eliminate the need for 

a supervisor to take both examinations. 

The Board believes it is important that 

the representative examination be 

introduced prior to any principal 

examination because the examination 

will determine the basic competency of 

those individuals who are engaged in 

municipal advisory activity and have 

the most direct impact on municipal 

entities and investors. While the 

supervisory activities of municipal 

advisor principals are important, the 

MSRB will consider an examination for 

principals at a later date, and should not 

delay the introduction of an 

examination that has been in 

preparation for nearly four years. And in 

any event, a principal is customarily 

required to pass the representative 

examination.27

A focused examination for municipal 

advisor professionals will likely be more 

effective in meeting the MSRB’s goal of 

determining whether a municipal 

advisor representative meets a 

minimum level of competency than 

recognizing a professional qualification 

examination for municipal securities 

representatives or accepting the selfreported experience of an individual 

who worked in a previously unregulated 

environment. While it is self-evident 

that relying on existing qualifications 

(such as having passed the Series 52 

examination) or general experience 

would place a smaller cost burden on 

firms and individuals than requiring all 

individuals engaged in municipal 

advisory activities to take and pass a 

new qualification examination, the 

MSRB believes such an examination is 

necessary to establish a baseline of 

competency for municipal advisors. 

The Board determined that 

grandfathering would not be consistent 

with the intent of Congress and the SEC 

in creating a new municipal advisor 

regulatory regime. The new regulation 

was created in response to problems 

that Congress and the SEC observed 

regarding the activities of municipal 

advisors. Requiring municipal advisor 

professionals to take and pass a basic 

qualification examination ensures that 

such individuals demonstrate a 

minimum level of understanding of the 

role and responsibilities of municipal 

advisors and applicable rules and 

regulations. 

By contrast, grandfathering presumes 

that each municipal advisor 

representative has a basic competency 

in the subject matter. Congress 

explicitly called for the development of 

professional standards for municipal 

advisors.28 Given the MSRB’s statutory 

obligation to protect investors, 

municipal entities and obligated 

persons that interact with and/or rely on 

municipal advisor professionals, there 

should be a compelling reason to rely on 

their prior experience as evidence of 

their competence. Even if an individual 

passed the Series 7 or 52 examinations, 

the content was not specifically related 

to municipal advisory activities or the 

regulation of such activities. While 

examinations such as the Series 52 may 

have some overlapping content, the 

examination questions being developed 

for municipal advisor professionals by 

PQAC are being drafted based on the 

particular job responsibilities of 

municipal advisor professionals and the 

rules and regulations governing such 

responsibilities. In this regard, the 

Series 7 and 52 examinations do not 

adequately test the specific job 

responsibilities of municipal advisor 

professionals. 

The focus of the Series 52 

examination is on underwriting, trading, 


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29While the Series 52 examination covers 

concepts related to the activities of a traditional 

financial advisor, those concepts are discrete and 

do not extend to the broader set of municipal 

advisory activities that will be covered on the 

municipal advisor representative qualification 

examination. 30The following commenters suggested using 

FINRA’s approach to grandfathering: BDA, George 

K. Baum, SIFMA, and 3PM. 31See FINRA Regulatory Notice 09–41 (Jul. 2009). 

32See NASD Notice to Members 04–25 (Mar. 

2004). 

33The following commenters were supportive of 

eliminating the apprenticeship requirement: George 

K. Baum, SIFMA, Zions Bank II, Yuba and 3PM. 

34The following commenters were supportive of 

the one-year grace period: BDA, New Albany, ICI, 

SIFMA, Zions Bank II and 3PM. 

35The following commenters raised issues 

regarding the administration and delivery of the 

examination: ARM, BDA and George K. Baum. 

research and sales, not municipal 

advisory activities. Approximately onequarter of the examination covers rules 

and regulations applicable to these 

activities and over half of the 

examination covers municipal securities 

features and principles relevant to 

municipal securities activities. There 

are few questions directly related to the 

job responsibilities of municipal advisor 

professionals, and those that exist are 

generally written from the perspective 

as municipal securities representative. 

Without significant content related to 

the job responsibilities of municipal 

advisor professionals, the Board 

believes that passing the Series 52 

examination does not establish an 

individual’s basic competency to 

perform municipal advisory activities.29

Moreover, the municipal advisor 

regulatory regime is still being 

developed by the Board, and 

individuals who have passed the Series 

52 examination would not have 

demonstrated knowledge of the new 

core municipal advisor regulations. 

Certain commenters urged the Board 

to adopt the approach taken by FINRA 

when implementing the investment 

banking representative qualification 

examination (Series 79).30 FINRA 

grandfathered general securities 

representatives (Series 7 or Series 7 

equivalent) if they opted-in within six 

months of the effective date of the 

rule.31 FINRA explained that the new 

examination would provide a more 

targeted assessment (than the Series 7 

examination) of the competency of 

investment banking professionals. Some 

commenters further suggested that, if 

grandfathering is permitted, the MSRB 

could ensure that relevant municipal 

advisor content is delivered through the 

continuing education program. While 

continuing education is important, it 

should not serve as a substitute for a 

basic competency examination unless 

other alternatives are not feasible. The 

Board believes the approach taken by 

FINRA (then National Association of 

Securities Dealers, ‘‘NASD’’) in 

implementing the research analyst 

qualification examination (Series 86/87) 

is a more appropriate analogue. In that 

instance, no grandfathering was 

permitted due to the FINRA’s desire that 

all research analysts demonstrate the 

same level of analytical competency and 

knowledge of the law.32

The argument for grandfathering 

individuals based on experience is not 

persuasive because the MSRB has no 

way of determining the competence of 

individuals who have been acting as 

municipal advisors but have been 

unregulated at the federal level. While 

it is likely that many municipal advisor 

professionals are experienced and 

knowledgeable and have more than a 

basic level of competency, the MSRB is 

not in a position to review the 

background and experience of each 

professional to determine whether such 

individual is qualified. Qualifying all 

individuals as municipal advisor 

representatives based solely on their 

experience would likely result in the 

qualification of some individuals who 

could not demonstrate a basic 

competency regarding the 

responsibilities of municipal advisors 

and the regulations governing municipal 

advisory activities. 

Given the new regulatory regime for 

municipal advisors, the differences in 

size and type of municipal advisors, as 

well as the varied experience and 

background of municipal advisor 

professionals, it is important that each 

individual demonstrate a basic 

competency. 

Apprenticeship, Grace Period, and 

Classifications 

Commenters broadly supported the 

elimination of the apprenticeship 

requirement for municipal securities 

representatives and not establishing one 

for municipal advisor representatives.33

There also was broad support for 

establishing a one-year grace period to 

provide municipal advisor 

representatives with sufficient time to 

study and take the examination without 

causing undue disruption to the 

business of the municipal advisor.34

3PM, however, suggested that more time 

was necessary, and NAIPFA said it 

could not opine as to whether the oneyear grace period would be sufficient 

because it was unsure if the study guide 

would be available before the grace 

period commenced. As noted above, 

prior to the commencement of the grace 

period, the MSRB will file with the SEC 

a study outline for the examination and 

then conduct a pilot examination. The 

pilot examination will likely be 

administered in 2015 and will enable 

the Board to establish a passing score for 

the examination. After a passing score is 

established, the MSRB will issue a 

regulatory notice establishing an 

effective date and compliance date for 

the examination. The grace period will 

commence on the effective date and 

conclude on the compliance date. 

Municipal Advisor Representative 

Examination Delivery and 

Administration 

Several commenters raised questions 

regarding the administration and 

delivery of the examination, specifically 

about retention of the registration 

information for non-dealer municipal 

advisors that are not included in 

FINRA’s central registration 

depository.35 Commenters want to 

ensure a similar process is in place for 

non-dealer municipal advisors. 

Similarly, commenters asked that the 

MSRB utilize the existing securities 

industry registration forms (e.g., Form 

U4). These issues are beyond the scope 

of the proposed rule change. The MSRB 

will address the administration of the 

examination at a later date. 

Comment on the Implication of Revising 

Rule G–1 

In response to the proposed revisions 

to MSRB Rule G–1, Zions Bank (Zions 

Bank I) commented that the proposed 

amendments should not be interpreted 

or applied in any way that would 

preclude a bank, or a separately 

identifiable department or division of a 

bank (‘‘SID’’), or a bank affiliate, from 

engaging in municipal securities and 

municipal advisory activities. It is not 

the intent of the amendments to 

preclude banks, SIDS, or bank affiliates 

from engaging in a broad range of 

municipal securities and/or municipal 

advisory activities, so long as they are 

properly registered under MSRB rules 

and the federal securities laws and 

otherwise comply with any limitations 

therein. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period of 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 


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36 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.15Ga–1. 

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

5 17 CFR 240.19b–4(f)(6). 

6Pub. L. 111–203, 124 Stat. 1376 (2010). 

7See 17 CFR 240.15Ga–1. 

8 17 CFR 232.314. 

9 17 CFR 240.15Ga–1. 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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–2014–08 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–2014–08. 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– 

2014–08 and should be submitted on or 

before December 26, 2014. 

For the Commission, pursuant to delegated 

authority.36

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28543 Filed 12–4–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73707; File No. SR–MSRB– 

2014–09] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change Consisting of Amendments to 

MSRB’s Electronic Municipal Market 

Access (EMMA) System To Add 

Disclosures Related to Municipal 

Asset-Backed Securities 

December 1, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on November 25, 2014, the Municipal 

Securities Rulemaking Board (the 

‘‘MSRB’’ or ‘‘Board’’) filed with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘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 is filing with the 

Commission a proposed rule change 

consisting of amendments to the 

MSRB’s Electronic Municipal Market 

Access (‘‘EMMA’’) system to add 

disclosures related to municipal assetbacked securities (‘‘ABS’’) required 

under Exchange Act Rule 15Ga–1 3 to be 

filed on Form ABS–15G to the list of 

categories of continuing disclosures that 

EMMA will accept and disseminate 

publicly (the ‘‘proposed rule change’’). 

The proposed rule change also makes 

minor changes of a technical nature, 

including removing outdated language, 

updating the naming convention used 

for published submitter and subscriber 

specification documents and updating 

information concerning how users can 

access submitter and subscriber 

specification documents (‘‘technical 

amendments’’). The MSRB filed the 

proposed rule change under Section 

19(b)(3)(A)(iii) of the Exchange Act 4

and Rule 19b–4(f)(6) 5 thereunder as a 

noncontroversial rule change that 

renders the proposal effective upon 

filing. The proposed rule change will be 

made operative no earlier than January 

9, 2015 and no later than January 31, 

2015, with the precise effective date in 

that range to be announced by the 

MSRB in a notice published on the 

MSRB Web site. 

The text of the proposed rule change 

is available on the MSRB’s Web site at 

www.msrb.org/Rules-andInterpretations/SEC-Filings/2014- 

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 

Pursuant to Section 943 of the DoddFrank Wall Street Reform and Consumer 

Protection Act,6 the SEC adopted new 

rules related to representations and 

warranties in ABS. One of these rules, 

Exchange Act Rule 15Ga–1,7 requires, 

among other things, certain disclosures 

related to municipal ABS to be filed on 

Form ABS–15G. Pursuant to Rule 314 of 

Regulation S–T,8 the SEC identified 

EMMA, in addition to the Electronic 

Data Gathering, Analysis, and Retrieval 

system (‘‘EDGAR’’), as a venue that a 

municipal securitizer may use to make 

submissions of Form ABS–15G in 

compliance with Exchange Act Rule 

15Ga–1.9 Accordingly, the proposed 

rule change consists of amendments to 

the EMMA system to add disclosures 

related to municipal ABS required 


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