Document ID: SEC-2021-1352-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2021-10-05T04:00Z

[Federal Register Volume 86, Number 190 (Tuesday, October 5, 2021)]
[Notices]
[Pages 55025-55028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21746]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93206; File No. SR-FINRA-2021-025]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Establish an Administration and Delivery Fee 
for the Municipal Advisor Principal Examination

September 30, 2021.
    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 September 27, 2021, the 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. 
FINRA has designated the proposed rule change as ``establishing or 
changing a due, fee or other charge'' under Section 19(b)(3)(A)(ii) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the 
proposal effective upon receipt of this filing by the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 establish an administration and delivery fee for the new 
Municipal Advisor Principal Examination (``Series 54 examination'').
    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *

Schedule A to the By-Laws of the Corporation

* * * * *

Section 4--Fees \5\
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    \5\ Amendments to some Examination Fees in Section 4 of Schedule 
A to the FINRA By-Laws were approved in SR-FINRA-2020-032 and become 
effective on January 1, 2022. See Securities Exchange Act Release 
No. 90176 (October 14, 2020), 85 FR 66592 (October 20, 2020) (Notice 
of Filing and Immediate Effectiveness of File No. SR-FINRA-2020-
032).
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    (a) through (b) No Change.
    (c) The following fees shall be assessed to each individual who 
takes an examination as described below. These fees are in addition 
to the registration fee described in paragraph (b) and any other 
fees that the owner of an examination that FINRA administers may 
assess.

------------------------------------------------------------------------
       Examination No.            Examination name      Examination fee
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N/A.........................  Securities Industry                    $60
                               Essentials (SIE)
                               Examination.
Series 4....................  Registered Options                     105
                               Principal Examination.
Series 6....................  Investment Company                      40
                               Products and Variable
                               Contracts
                               Representative
                               Examination.
Series 7....................  General Securities                     245
                               Representative
                               Examination.
Series 9....................  General Securities                      80
                               Sales Supervisor
                               Examination--Options
                               Module.
Series 10...................  General Securities                     125
                               Sales Supervisor
                               Examination--General
                               Module.

[[Page 55026]]

 
Series 14...................  Compliance Official                    350
                               Examination.
Series 16...................  Supervisory Analyst                    240
                               Examination.
Series 22...................  Direct Participation                    40
                               Programs
                               Representative
                               Examination.
Series 23...................  General Securities                     100
                               Principal Examination--
                               Sales Supervisor
                               Module.
Series 24...................  General Securities                     120
                               Principal Examination.
Series 26...................  Investment Company                     100
                               Products and Variable
                               Contracts Principal
                               Examination.
Series 27...................  Financial and                          120
                               Operations Principal
                               Examination.
Series 28...................  Introducing Broker-                    100
                               Dealer Financial and
                               Operations Principal
                               Examination.
Series 39...................  Direct Participation                    95
                               Programs Principal
                               Examination.
Series 50...................  Municipal Advisor                      115
                               Representative
                               Examination.
Series 51...................  Municipal Fund                         105
                               Securities Limited
                               Principal Examination.
Series 52...................  Municipal Securities                   110
                               Representative
                               Examination.
Series 53...................  Municipal Securities                   115
                               Principal Examination.
Series 54...................  Municipal Advisor                      115
                               Principal Examination.
Series 57...................  Securities Trader                       60
                               Examination.
Series 79...................  Investment Banking                     245
                               Representative
                               Examination.
Series 82...................  Private Securities                      40
                               Offering
                               Representative
                               Examination.
Series 86...................  Research Analyst                       185
                               Examination--Analysis.
Series 87...................  Research Analyst                       130
                               Examination--Regulator
                               y.
Series 99...................  Operations Professional                 40
                               Examination.
------------------------------------------------------------------------

    (1) through (4) No Change.
    (d) through (i) No Change.
* * * * *

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
    FINRA is proposing amendments to Schedule A to the FINRA By-Laws to 
establish an administration and delivery fee for the Series 54 
examination. The Municipal Securities Rulemaking Board (``MSRB'') has 
established qualification classifications for municipal advisor 
professionals. The Commission approved amendments to MSRB Rule G-3 that 
established two new registration classifications for municipal 
advisors: \6\ (1) Municipal advisor representatives (i.e., those 
individuals who engage in municipal advisory activities); and (2) 
municipal advisor principals (i.e., those individuals who engage in the 
management, direction or supervision of the municipal advisory 
activities of the municipal advisor or its associated persons).\7\ Both 
municipal advisor representatives and municipal advisor principals are 
required to pass the Municipal Advisor Representative Examination 
(``Series 50 examination'') to be qualified in accordance with MSRB 
rules.\8\
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    \6\ The term ``municipal advisor'' is defined to mean a person 
that: (i) Provides advice to or on behalf of a municipal entity or 
obligated person with respect to municipal financial products or the 
issuance of municipal securities, including advice with respect to 
the structure, timing, terms, and other similar matters concerning 
such financial products or issues; or (ii) undertakes a solicitation 
of a municipal entity. The definition includes financial advisors, 
guaranteed investment contract brokers, third-party marketers, 
placement agents, solicitors, finders, and swap advisors that are 
engaged in municipal advisory activities, unless they are 
statutorily excluded. The definition does not include a municipal 
entity or an employee of a municipal entity. See 15 U.S.C. 78o-
4(e)(4).
    \7\ See Securities Exchange Act Release No. 74384 (February 26, 
2015), 80 FR 11706 (March 4, 2015) (Notice of Filing of Amendment 
Nos. 1 & 2 and Order Granting Accelerated Approval of File No. SR-
MSRB-2014-08).
    \8\ See Securities Exchange Act Release No. 75865 (September 9, 
2015), 80 FR 55407 (September 15, 2015) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2015-031).
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    MSRB Rule G-3(e)(ii)(A) was amended to establish additional 
qualification requirements for municipal advisor principals, including 
the requirement to pass the Series 54 examination.\9\ Under the amended 
rule, municipal advisor principals are required to pass both the Series 
50 examination and the Series 54 examination prior to becoming 
qualified as a municipal advisor principal.\10\
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    \9\ See Securities Exchange Act Release No. 84630 (November 20, 
2018), 83 FR 60927 (November 27, 2018) (Order Approving File No. SR-
MSRB-2018-07).
    \10\ Supra note 9.
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    To provide persons who function as municipal advisor principals 
with sufficient time to satisfy the requirement to pass the new Series 
54 examination, the MSRB initially included a one-year grace period 
from the effective date of the Series 54 examination, during which a 
person functioning as a municipal advisor principal would be permitted 
to continue to engage in the management, direction or supervision of 
the municipal advisory activities of the municipal advisor and its 
associated persons so long as such person is qualified with the Series 
50 examination.\11\
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    \11\ Supra note 9.
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    The date by which individuals are required to become qualified with 
the Series 54 examination has been extended three times due to impacts 
related to the pandemic. In April 2020, the MSRB extended the date by 
which individuals were required to become qualified with the Series 54 
examination from November 12, 2020 to March 31, 2021.\12\ In December 
2020, the MSRB further extended the time period from March 31, 2021 to 
November 12, 2021.\13\ In September 2021, the MSRB further extended the 
time period from November 12, 2021 to November 30, 2021.\14\
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    \12\ See Securities Exchange Act Release No. 88694 (April 20, 
2020), 85 FR 23088 (April 24, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-MSRB-2020-01).
    \13\ See Securities Exchange Act Release No. 90621 (December 9, 
2020), 85 FR 81254 (December 15, 2020) (Notice of Filing and 
Immediate Effectiveness of File No. SR-MSRB-2020-09).
    \14\ See Securities Exchange Act Release No. 92938 (September 
10, 2020), 86 FR 51696 (September 16, 2021) (Notice of Filing and 
Immediate Effectiveness of File No. SR-MSRB-2021-05).
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    FINRA develops, maintains, and delivers all FINRA qualification 
examinations for individuals who are registered or seeking registration 
with FINRA. FINRA also administers and delivers examinations developed 
by the

[[Page 55027]]

MSRB and other self-regulatory organizations.\15\ The SEC has 
designated FINRA to administer and deliver the Series 54 examination 
for municipal advisors.\16\
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    \15\ In this regard, the Exchange Act provides that a registered 
securities association shall administer required qualification 
examinations for municipal securities brokers and municipal 
securities dealers who are members of the association. See 15 U.S.C. 
78o-4(c)(7)(A)(i).
    \16\ See Securities Exchange Act Release No. 75714 (August 17, 
2015) 80 FR 50883 (August 21, 2015) (Designation of the Financial 
Industry Regulatory Authority to Administer Professional 
Qualification Tests for Associated Persons of Registered Municipal 
Advisors). Section 15B(c)(7)(A)(iii) of the Exchange Act requires 
that the SEC or its designee administer qualification examinations 
for municipal advisors. The SEC previously designated FINRA to 
examine FINRA members' activities as registered municipal advisors 
and evaluate compliance by such members with federal securities 
laws, SEC rules and regulations, and MSRB rules applicable to 
municipal advisors. See Securities Exchange Act Release No. 70462 
(September 20, 2013), 78 FR 67468 (November 12, 2013) (S7-45-10) 
(Registration of Municipal Advisors).
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    FINRA currently administers examinations electronically through the 
PROCTOR[supreg] system \17\ at testing centers operated by vendors 
under contract with FINRA.\18\ For qualification examinations sponsored 
by a FINRA client and administered by FINRA, FINRA charges an 
administration and delivery fee that represents either a portion of or 
the entire examination fee. Consistent with this practice, FINRA 
charges an administration and delivery fee of $115 for the Series 50 
examination.\19\
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    \17\ PROCTOR is a computer system that is specifically designed 
for the administration and delivery of computer-based testing and 
training.
    \18\ The MSRB has temporarily allowed the Series 54 examination 
to be taken online as an interim accommodation for individuals who 
need to become appropriately qualified as a municipal advisor 
principal before the compliance date. See supra note 14.
    \19\ The administration and delivery fee represents a portion of 
the entire examination fee when a FINRA client has established an 
additional fee for an examination that it sponsors. The fee to take 
the Series 50 examination is $265. Of this amount, $115 is the FINRA 
administration and delivery fee, and $150 is the development fee 
determined by the FINRA client, the MSRB. See MSRB Rule A-16. See 
also supra note 8.
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    The proposed administration and delivery fee for the Series 54 exam 
is also $115.\20\ The proposed administration and delivery fee will 
offset FINRA's costs associated with the administration and delivery of 
the Series 54 examination and, as discussed below, contribute to 
supporting FINRA's other operations.
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    \20\ The fee to take the Series 54 examination is $265. Of this 
amount, $115 is the FINRA administration and delivery fee, and $150 
is the development fee determined by the FINRA client, the MSRB. See 
MSRB Rule A-16. See also Securities Exchange Act Release No. 85135 
(February 14, 2019), 84 FR 5513, 5514 n.15 (February 21, 2019) 
(Notice of Filing and Immediate Effectiveness of File No. SR-MSRB-
2019-02).
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date and the implementation date will be 
the date of filing.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\21\ which requires, among 
other things, that FINRA rules provide for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls.
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    \21\ 15 U.S.C. 78o-3(b)(5).
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Reasonableness of the Proposed Fee
    FINRA believes that the proposed administration and delivery fee 
for the Series 54 examination is reasonable. In establishing an 
administration and delivery fee of $115 for the Series 54 examination, 
FINRA applied the same criteria as it does for establishing the fees 
for other examinations with similar characteristics related to test 
length and volume. In particular, the Series 54 examination fee is 
consistent with the fee charged for the Series 50 examination, which 
has the same number of questions (and thus requires the same testing 
time).
    The proposed administration and delivery fee will be used to cover 
FINRA's costs associated with the administration and delivery of the 
Series 54 examination, including the fees that vendors charge FINRA for 
delivering qualification examinations through their test delivery 
networks and PROCTOR system maintenance and enhancement expenses. The 
proposed fee also will contribute to supporting FINRA's other 
operations. As FINRA has explained previously, it is not feasible to 
associate a direct affiliated revenue stream for each of its programs 
and thus numerous operations and services must be funded by other 
revenue sources, which include both general regulatory assessments and 
use-based fees.\22\
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    \22\ See supra note 5.
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The Proposed Fee Is Equitable and Not Unfairly Discriminatory
    FINRA believes that the proposed administration and delivery fee 
for the Series 54 examination is equitable and not unfairly 
discriminatory. The proposed fee is a use-based fee and FINRA will 
charge the fee each time a municipal advisor representative accesses 
the content. Thus, the exam for municipal advisor principals will be 
available on the same terms to every municipal advisor representative.

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. FINRA believes that the 
establishment of the administration and delivery fee for the Series 54 
examination will have a limited economic impact on the industry.
    MSRB rules require every municipal advisor to have at least one 
municipal advisor principal.\23\ There are approximately 500 registered 
municipal advisors.\24\ The administration and delivery fees may be 
paid by the individuals taking the examination or their associated 
firms.
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    \23\ MSRB Rule G-3(e)(iii).
    \24\ See MSRB-Registered Municipal Advisor Firms with Series-50 
Qualified Representatives (Sept. 20, 2021, 2:06 p.m.), https://msrb.org/MARegistrants.
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    FINRA administers this examination as a service provider to the 
MSRB as designated by the SEC. In providing this service, FINRA is not 
exercising regulatory discretion and therefore is not itself imposing 
burdens on those individuals who may choose to sit for the examination. 
FINRA does exercise discretion in establishing the administration and 
delivery fee. Regardless of whether individuals pay the fee or some 
part of the fee is paid by firms, FINRA believes that the proposal is 
likely to have minimal effects on firms' costs or liquidity. The 
proposal will therefore have at most minimal competitive effects.

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 \25\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\26\ 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

[[Page 55028]]

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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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 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 email to rule-comments@sec.gov. Please include 
File Number SR-FINRA-2021-025 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 Number SR-FINRA-2021-025. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10 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. Persons submitting comments are cautioned that 
we do not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
FINRA-2021-025 and should be submitted on or before October 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21746 Filed 10-4-21; 8:45 am]
BILLING CODE 8011-01-P