Document ID: SEC-2011-1098-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2011-08-01T04:00Z

[Federal Register Volume 76, Number 147 (Monday, August 1, 2011)]
[Notices]
[Pages 45883-45885]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19324]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64961; File No. SR-FINRA-2011-026]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change Regarding Cancellation or Rescheduling Fees for 
Qualification Examinations and Continuing Education Sessions

July 26, 2011.
    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 July 15, 2011, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by FINRA. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend Section 4(c) of Schedule A to the FINRA 
By-Laws to address cancellation/rescheduling fees for qualification 
examinations and continuing education sessions. Specifically, the 
proposed rule change would (1) Establish a fee for individuals who 
cancel or reschedule a qualification examination or Regulatory Element 
Continuing Education (``Regulatory Element'') session three to ten 
business days prior to the appointment date, and (2) add a reference to 
the fee for individuals who fail to timely appear for a scheduled 
Regulatory Element session or who cancel or reschedule such a session 
within two business days prior to the appointment date.
    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA, and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    As discussed in further detail below, the proposed rule change 
amends Section 4(c) of Schedule A to the FINRA By-Laws to (1) Establish 
a fee for individuals who cancel or reschedule a qualification 
examination or Regulatory Element session three to ten business days 
prior to the appointment date, and (2) add a reference to the fee for 
individuals who fail to timely appear for a scheduled Regulatory 
Element session or who cancel or reschedule such a session within two 
business days prior to the appointment date.
Three- to Ten-Day Cancellation/Rescheduling Fee
    Pursuant to NASD Rules 1021 and 1031, any person engaged in the 
investment banking or securities business of a FINRA member must 
register with FINRA in the category of registration appropriate to the 
function

[[Page 45884]]

the individual will be performing. As part of the registration process, 
securities professionals must pass a qualification examination to 
demonstrate competence in the areas in which they will work. In 
addition, such individuals must complete the appropriate Regulatory 
Element program subsequent to their initial qualification and 
registration with FINRA, as set forth in NASD Rule 1120.\3\ The 
qualification examinations and Regulatory Element programs cover a 
broad range of subjects regarding financial markets and products, 
individual responsibilities, securities industry rules, and regulatory 
structure. FINRA develops, maintains, and delivers all qualification 
examinations and Regulatory Element programs for individuals who are 
registered or seeking registration with FINRA. FINRA also delivers 
examinations sponsored by the North American Securities Administrators 
Association, the National Futures Association, the Federal Deposit 
Insurance Corporation, and others. FINRA currently administers 
examinations and Regulatory Element programs via computer at testing 
centers operated by vendors under contract with FINRA.
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    \3\ The SEC has approved the adoption of NASD Rule 1120 
(Continuing Education Requirements) as FINRA Rule 1250 (Continuing 
Education Requirements) in the consolidated FINRA rulebook with 
certain changes. See Securities Exchange Act Release No. 64687 (June 
16, 2011), 76 FR 36586 (June 22, 2011) (Order Approving SR-FINRA-
2011-013). FINRA will issue a Regulatory Notice announcing the 
effective date of FINRA Rule 1250 in the near future.
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    To request and schedule an appointment for a qualification 
examination, a FINRA member must file a Form U4 (Uniform Application 
for Securities Industry Registration or Transfer) through the Central 
Registration Depository (``Web CRD[supreg]'').\4\ After the request is 
processed, a scheduling window will be posted on Web CRD. For 
Regulatory Element programs, registered persons in covered registration 
categories will automatically become enrolled for the requisite program 
on the second anniversary of their initial securities registration and 
every three years thereafter. Once an individual or an individual's 
firm receives the enrollment notification for an examination or 
Regulatory Element session, the individual may then contact a FINRA 
authorized testing center to schedule an appointment.
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    \4\ Individuals who are not employed or associated with a FINRA 
member must file a Form U10 (Uniform Examination Request for Non-
FINRA candidates) with FINRA to schedule an examination.
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    After an examination or Regulatory Element session has been 
scheduled, an individual may cancel or reschedule the appointment by 
contacting the testing center. Currently, FINRA does not impose a fee 
for cancelling or rescheduling an appointment if it is done by noon two 
business days before the scheduled appointment. FINRA charges a 
cancellation fee equal to the examination or Regulatory Element session 
fee if this deadline is not met, if an individual does not appear for 
an appointment, or if an individual arrives so late for an appointment 
that the examination or Regulatory Element session cannot begin without 
disrupting the testing center's schedule.\5\
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    \5\ Further information about the cancellation policy can be 
found on FINRA's Web site at http://www.finra.org/Industry/Compliance/Registration/QualificationsExams/RegisteredReps/Qualifications/P120071.
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    FINRA has determined that individuals who cancel or reschedule an 
appointment more than two business days before the scheduled 
appointment date also place an administrative burden on test-delivery 
vendors and degrade the efficiency of test center resource utilization. 
To discourage such behavior, FINRA is proposing to implement a fee for 
individuals who cancel or reschedule a qualification examination or 
Regulatory Element session within three to ten business days of a 
scheduled appointment date.\6\ The amount of the proposed fee would be 
one-half of the fee of the examination or Regulatory Element session 
being cancelled or rescheduled.\7\ FINRA believes that this fee will 
help to control the overall costs associated with the delivery of 
examinations and Regulatory Element programs and the resultant 
examination and Regulatory Element session fees charged to individuals 
for examinations and Regulatory Element programs.
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    \6\ The cancellation/rescheduling fee will be assessed for the 
qualification examinations set forth in Section 4(c) of Schedule A 
to the FINRA By-Laws and all Regulatory Element programs. In 
addition, depending on the terms of agreement, the fee also may 
apply for those qualification examinations that FINRA delivers for 
other entities.
    \7\ The fee must be paid at the time of cancellation or 
rescheduling. In those circumstances where the fee is not paid in a 
timely manner, FINRA, instead, will assess a fee equal to the 
examination or Regulatory Element session fee if the individual does 
not appear for the scheduled appointment.
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Continuing Education Failure To Timely Appear/Late Cancellation or 
Rescheduling Fee
    As previously mentioned, FINRA assesses a fee equal to the 
examination or Regulatory Element session fee to individuals who fail 
to timely appear for an appointment or who cancel or reschedule an 
examination or Regulatory Element session within two business days of 
the scheduled appointment date.\8\ Although Section 4(c) of Schedule A 
to the FINRA By-Laws currently sets forth this fee for qualification 
examinations, it does not set forth the fee with respect to the 
Regulatory Element program. Consequently, FINRA is proposing to amend 
Section 4(c) of Schedule A to the FINRA By-Laws to add a reference to 
this Regulatory Element program fee. The proposed rule change would 
also specifically reference the time period for which this fee applies 
(i.e., within two business days prior to the appointment date).
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    \8\ FINRA considers an individual who fails to cancel or 
reschedule an examination or Regulatory Element session by noon two 
business days before the scheduled appointment to have failed timely 
to cancel or reschedule the appointment under Section 4(c)(2) of 
Schedule A to the FINRA By-Laws. See supra note 7.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. FINRA is proposing that the implementation date of the 
proposed rule change will be September 1, 2011.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A of the Act,\9\ in general, and with Section 
15A(b)(5) of the Act,\10\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system 
which FINRA operates or controls. FINRA believes that it is an 
equitable allocation to assess a fee on those individuals who cancel a 
qualification examination or Regulatory Element session within three to 
ten business days of a scheduled appointment date, because such 
behavior places an administrative burden on test-delivery vendors and 
degrades the efficiency of test center resource utilization. FINRA 
further believes that the amount of the fee, which is one-half of the 
current fee for individuals who fail to appear for a scheduled 
appointment or who cancel/reschedule an appointment within two business 
days of a scheduled appointment date, is reasonable because it will 
help to control the overall costs associated with the delivery of 
examinations and Regulatory Element programs while also recognizing the 
lesser burden that results from those individuals who provide 
additional notice by cancelling/rescheduling an appointment three to 
ten business days

[[Page 45885]]

before the scheduled appointment date. FINRA further believes that the 
amount of the fee is reasonable because it will dissuade individuals 
from cancelling or rescheduling an appointment three to ten business 
days before the scheduled appointment date.
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    \9\ 15 U.S.C. 78o-3(b)(5).
    \10\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\12\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act. If 
the Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2011-026 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

    All submissions should refer to File Number SR-FINRA-2011-026. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of FINRA. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make publicly 
available. All submissions should refer to File Number SR-FINRA-2011-
026 and should be submitted on or before August 22, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19324 Filed 7-29-11; 8:45 am]
BILLING CODE 8011-01-P