Document ID: SEC-2011-1342-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2011-09-07T04:00Z

[Federal Register Volume 76, Number 173 (Wednesday, September 7, 2011)]
[Notices]
[Pages 55443-55445]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22765]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65222; File No. SR-FINRA-2011-041]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Adopt the Selection Specifications and Study 
Outline for the Operations Professional (``Series 99'') Examination 
Program

August 30, 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 August 22, 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 and 
II below, which Items have been prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to adopt the selection specifications and 
content outline for the Operations Professional (``Series 99'') 
examination program.\4\
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    \4\ Based upon instruction from the Commission staff, FINRA is 
submitting SR-FINRA-2011-041 for immediate effectiveness pursuant to 
Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder, and 
is not filing the question bank for Commission review. See Letter 
from Belinda Blaine, Associate Director, Division of Market 
Regulation, SEC, to Alden S. Adkins, Senior Vice President and 
General Counsel, NASD Regulation, dated July 24, 2000. The question 
bank is available for Commission review.
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    The Series 99 examination program is proposed in connection with 
FINRA Rule 1230(b)(6), a new representative registration category and 
qualification examination requirement for certain operations personnel. 
FINRA is not proposing any textual changes to its By-Laws, Schedules to 
the By-Laws or rules.
    A description of the Series 99 examination is included in the 
attached content outline. Additional information on the examination is 
included in the Series 99 selection specifications, which FINRA has 
submitted under separate cover with a request for confidential 
treatment to the Commission's Secretary pursuant to Rule 24b-2 under 
the Act.\5\
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    \5\ 17 CFR 240.24b-2.
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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
    On June 16, 2011, the Commission approved FINRA Rule 1230(b)(6), 
which establishes a registration category and qualification examination 
requirement for certain operations personnel--Operations 
Professionals.\6\ FINRA is expanding its registration provisions to 
require registration of certain individuals (``covered persons'') who 
are engaged in, responsible for or supervising certain member 
operations functions (``covered functions'') to enhance the regulatory 
structure surrounding these areas.\7\ FINRA Rule 1230(b)(6) is 
intended, among other things, to increase covered persons' awareness 
and knowledge that they are operating in a regulated environment 
designed to protect investors' interests and the integrity of the 
operations of a broker-dealer.
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    \6\ See Securities Exchange Act Release No. 64687 (June 16, 
2011), 76 FR 36586 (June 22, 2011) (Order Approving File No. SR-
FINRA-2011-013). In addition to adopting FINRA Rule 1230(b)(6), the 
rule change adopted NASD Rule 1120 (Continuing Education 
Requirements) as new FINRA Rule 1250 (Continuing Education 
Requirements) with certain changes, including expanding the scope of 
``covered registered persons'' subject to the Firm Element to 
include persons registered as Operations Professionals. See 
Regulatory Notice 11-33 (July 2011).
    \7\ See Regulatory Notice 11-33 (July 2011) for information 
regarding the implementation period for Operations Professionals 
subject to FINRA Rule 1230(b)(6).
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    Pursuant to Section 15A(g)(3)(B) of the Act,\8\ FINRA is authorized 
to prescribe standards of training, experience, and competence for 
persons associated with FINRA members. The

[[Page 55444]]

Series 99 examination program has been developed to provide reasonable 
assurance that covered persons understand their professional 
responsibilities, including key regulatory and control themes, as well 
as the importance of identifying and escalating red flags that may harm 
a firm, its customers, the integrity of the marketplace or the public. 
The examination will test applicants on general securities industry 
knowledge and its associated regulations and rules.\9\
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    \8\ 15 U.S.C. 78o-3(g)(3)(B).
    \9\ FINRA Rule 1230(b)(6)(D) sets forth an exception to the 
Operations Professional qualification examination requirement for 
persons who currently hold certain registrations (each an ``eligible 
registration'') or have held one during the two years immediately 
prior to registering as an Operations Professional. The exception 
also applies to persons who do not hold an eligible registration, 
but prefer an alternative to taking the Operations Professional 
examination. Such persons may register in an eligible registration 
category (subject to passing the corresponding qualification 
examination or obtaining a waiver) and use such registration to 
qualify for Operations Professional registration.
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    The Series 99 examination consists of 100 multiple-choice 
questions.\10\ Candidates will be allowed 150 minutes to complete the 
examination. Candidates will receive an informational breakdown of 
their performance on each section of the examination, along with their 
overall score and pass/fail status at the completion of the testing 
session.\11\
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    \10\ To ensure that new exam questions meet acceptable testing 
standards prior to use, each examination includes 10 additional, 
unidentified ``pre-test'' questions that do not contribute towards 
the candidate's score. The 10 pre-test questions are randomly 
distributed throughout the examination.
    \11\ Candidates for the Series 99 examination will be able to 
schedule and take the examination starting on October 17, 2011. 
Because this is a new examination for a new registration category, 
FINRA will be assessing the effectiveness of the examination by in 
part, evaluating the candidates' performance during the first 60 
days of the administration of the examination. Therefore, candidates 
who take the examination within the first 60 days (between October 
17, 2011 and December 16, 2011) will not receive their test results 
on the day that they take the examination. Instead, such candidates' 
firms will be notified of test results (i.e., the candidate's score 
and whether the candidate has passed or failed the examination) on 
or shortly after December 16, 2011. The test results will be posted 
to the Central Registration Depository system (``CRD[supreg] 
system'') at that time. Candidates who fail the examination during 
the initial 60-day rollout will be provided an opportunity to retake 
the examination at no additional cost.
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    A content outline has been prepared to assist member firms in 
preparing candidates for the Series 99 examination and is available at 
http://www.finra.org/brokerqualifications/registeredrep. The content 
outline describes the following three topical sections comprising the 
examination: (1) Basic Knowledge Associated with the Securities 
Industry (32 questions); (2) Basic Knowledge Associated with Broker-
Dealer Operations (48 questions); and (3) Professional Conduct and 
Ethical Considerations (20 questions).
    The selection specifications for the Series 99 examination, which 
FINRA has submitted under separate cover with a request for 
confidential treatment to the Commission's Secretary pursuant to Rule 
24b-2 under the Act,\12\ describe additional confidential information 
regarding the examination.
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    \12\ 17 CFR 240.24b-2.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date of the proposed rule change and 
corresponding FINRA Rule 1230(b)(6) will be October 17, 2011.
2. Statutory Basis
    FINRA believes that the proposed Series 99 examination program is 
consistent with Section 15A(b)(6) of the Act,\13\ 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 15A(g)(3) of the Act,\14\ which authorizes 
FINRA to prescribe standards of training, experience, and competence 
for persons associated with FINRA members. FINRA believes the proposed 
rule change to expand FINRA's registration and qualification 
requirements to Operations Professionals will help ensure that investor 
protection mechanisms are in place in all areas of a member's business 
that could harm the member, a customer, the integrity of the 
marketplace or the public.
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    \13\ 15 U.S.C. 78o-3(b)(6).
    \14\ 15 U.S.C. 78o-3(g)(3).
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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

    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 \15\ and Rule 
19b4(f)(6) thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
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    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.

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-2011-041 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-2011-041. 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

[[Page 55445]]

public in accordance with the provisions of 5 U.S.C. 552, will be 
available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street, NE., Washington, DC 20549, on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal office of FINRA. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
SR-FINRA-2011-041 and should be submitted on or before September 28, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Elizabeth M. Murphy,
Secretary.
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    \17\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-22765 Filed 9-6-11; 8:45 am]
BILLING CODE 8011-01-P