Document ID: SEC-2006-0916-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Municipal Securities Rulemaking Board
Posted Date: 2006-07-20T04:00Z

[Federal Register: July 20, 2006 (Volume 71, Number 139)]
[Notices]               
[Page 41289-41291]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jy06-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54141; File No. SR-MSRB-2006-05]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change Relating to Revisions to the Series 53 Examination Program

July 13, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 27, 2006, the Municipal Securities Rulemaking Board (``MSRB'' 
or ``Board''), filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the MSRB. 
The MSRB has designated the proposed rule change as constituting a 
stated policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the self-
regulatory

[[Page 41290]]

organization pursuant to Section 19(b)(3)(A)(i) of the Act,\3\ and Rule 
19b-4(f)(1) thereunder,\4\ which renders the proposal effective upon 
filing with 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)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB is filing with the Commission revisions to the study 
outline and selection specifications for the Municipal Securities 
Principal Qualification Examination (Series 53) program.\5\ The 
proposed revisions update the material to reflect changes to the rules 
and regulations covered in the examination, as well as modify the 
content of the examination program to track more closely the job 
responsibilities of a municipal securities principal. The MSRB is not 
proposing any textual changes to the rules of the MSRB.
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    \5\ The MSRB is also proposing corresponding revisions to the 
Series 53 question bank, but based upon instructions from the 
Commission staff, the MSRB is submitting SR-MSRB-2006-05 for 
immediate effectiveness pursuant to Seciton 19(b)(3)(A)(i) of the 
Act and Rule 19b-4(f)(1) thereunder, and is not filing the question 
bank for Commission review. See letter to Diane G. Klinke, General 
Counsel, MSRB, from Belinda Blaine, Associate Director, Division of 
Market Regulation, SEC, dated July 24, 2000. The question bank is 
available for Commission review.
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    The revised study outline is available on the MSRB's Web site 
(http://www.msrb.org), at the MSRB's principal office, and at the 

Commission's Public Reference Room. The MSRB has omitted the Series 53 
selection specifications from this filing and has submitted the 
specifications under separate cover to the Commission with a request 
for confidential treatment pursuant to Rule 24b-2 under the Act.\6\
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    \6\ 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, 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
    Section 15B(b)(2)(A) of the Act \7\ authorizes the MSRB to 
prescribe standards of training, experience, competence, and such other 
qualifications as the Board finds necessary or appropriate in the 
public interest or for the protection of investors. The MSRB has 
developed examinations that are designed to establish that persons 
associated with brokers, dealers and municipal securities dealers that 
effect transactions in municipal securities have attained specified 
levels of competence and knowledge. The MSRB periodically reviews the 
content of the examinations to determine whether revisions are 
necessary or appropriate in view of changes pertaining to the subject 
matter covered by the examinations.
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    \7\ 15 U.S.C. 78o-4(b)(2)(A).
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    MSRB Rule G-3(b) states that a municipal securities principal has 
responsibility to oversee the municipal securities activities of a 
broker, dealer or municipal securities dealer. In this capacity, a 
municipal securities principal manages, directs or supervises one or 
more of the following activities associated with the conduct of 
municipal securities business: Underwriting; trading; buying or selling 
municipal securities to or from customers; rendering financial advisory 
or consultant services to issuers of municipal securities; 
communications to customers about any municipal securities activities; 
processing, clearing, and (in the case of securities firms) safekeeping 
of municipal securities; and training of principals and 
representatives. The only examination that qualifies a municipal 
securities principal is the Municipal Securities Principal 
Qualification Examination (Series 53).
    A committee of industry members and MSRB staff recently completed a 
review of the job requirements for a municipal securities principal and 
the Series 53 examination program. As a result of this review, the MSRB 
is updating the content of the examination to cover certain rules or 
provisions of rules that were promulgated since the last revision of 
the outline. Areas added to the study outline include:
     Definition of municipal fund security.
     Qualification and numerical requirements for municipal 
fund securities limited principals.
     Records concerning compliance with Rule G-20, on gifts, 
gratuities and non-cash compensation.
     SEC requirements for retention of information on 
associated persons.
     New Rule G-38, on solicitation of municipal securities 
business.
     Requirements regarding municipal fund securities 
advertisements.
     Remarketing activities under Rule G-23, on activities of 
financial advisors.
     Definitions regarding the Real-Time Transaction Reporting 
System.
     Minimum denominations.
     Forwarding official communications.
    The MSRB has deleted from the study outline rules or rule 
provisions that are obsolete or do not have direct impact on the daily 
work of a municipal securities principal. These deletions include:
     Rule G-35, on arbitration.
     Requirements regarding the retaking of qualification 
examinations and the waiver of qualification requirements.
     Old Rule G-38, on consultants.
     References to the scope and notice of Rule G-12(a).
     SEC requirements regarding lost and stolen securities.
    Technical changes have been made to correct the citations for 
various rules that have been amended. In addition, as part of an 
ongoing effort to align the examination more closely to the supervisory 
duties of a municipal securities principal, the MSRB is modifying the 
content of the examination to track the functional workflow of a 
municipal securities principal.
    As a result of the revisions noted above, the MSRB is modifying the 
number of questions on each section of the Series 53 study outline as 
follows: Part One--Federal Regulations, four questions; Part Two--
General Supervision, 21 questions; Part Three--Sales Supervision, 29 
questions; Part Four--Origination and Syndication, 22 questions; and 
Part Six--Operations, 16 questions. Coverage on Part Five--Trading 
remains unchanged with eight questions. The revised examination 
continues to cover areas of knowledge required for effective 
supervision of municipal securities activities.
    The MSRB is proposing these changes to the entire content of the 
Series 53 examination, including the selection specifications and 
question bank. The number of questions on the Series 53 examination 
will remain at 100, and candidates will continue to be allowed three 
and one-half hours for each testing session. Also, each question will 
continue to count one point, and each candidate must correctly answer 
70 percent of the questions in order to receive a passing grade.

[[Page 41291]]

2. Statutory Basis
    The MSRB believes that the proposed revisions to the Series 53 
examination program are consistent with the provisions of Section 
15B(b)(2)(A) of the Act,\8\ which authorizes the MSRB to prescribe 
standards of training, experience, competence, and such other 
qualifications as the Board finds necessary or appropriate in the 
public interest or for the protection of investors. Section 
15B(b)(2)(A) of the Act also provides that the Board may appropriately 
classify municipal securities brokers and municipal securities dealers 
and their associated personnel and require persons in any such class to 
pass tests prescribed by the Board.
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    \8\ 15 U.S.C. 78o-4(b)(2)(A).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB does not believe that the proposed rule change will impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act \9\ and Rule 19b-4(f)(1) thereunder,\10\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
MSRB proposes to implement the revised Series 53 examination program on 
August 1, 2006. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(i).
    \10\ 17 CFR 240.19b-4(f)(1).
    \11\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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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-MSRB-2006-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-MSRB-2006-05. 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 inspection and 
copying in the Commission's Public Reference Room. Copies of such 
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-2006-05 and should be submitted on or before August 
10, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-11492 Filed 7-19-06; 8:45 am]

BILLING CODE 8010-01-P