Document ID: SEC-2018-1408-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2018-09-10T04:00Z

[Federal Register Volume 83, Number 175 (Monday, September 10, 2018)]
[Notices]
[Pages 45701-45706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-19502]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84020; File No. SR-FINRA-2018-033]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Section 4(c) of Schedule A to the FINRA 
By-Laws Relating to Qualification Examination Fees

September 4, 2018.
    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 20, 2018, 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: (1) Establish the fee for the Securities Industry 
EssentialsTM (``SIETM'') examination; (2) revise 
the fees for the Investment Company and Variable Contracts Products 
Representative (Series 6), General Securities Representative (Series 
7), Direct Participation Programs Representative (Series 22), 
Securities Trader (Series 57), Investment Banking Representative 
(Series 79), Private Securities Offerings Representative (Series 82) 
and Operations Professional (Series 99) examinations; (3) revise the 
administration and delivery fee for the Municipal Securities 
Representative (Series 52) examination; and (4) remove the Order 
Processing Assistant Representative (Series 11), United Kingdom 
Securities Representative (Series 17), Canada Securities Representative 
(Series 37 and Series 38), Options Representative (Series 42), 
Corporate Securities Representative (Series 62) and Government 
Securities Representative (Series 72) examinations and the associated 
fees. The proposed rule change relates to the restructuring of the 
FINRA representative-level qualification examination program. The 
proposed rule change also makes certain non-substantive technical 
changes to the table of fees under Section 4(c).
    The text of the proposed rule change is available on FINRA's 
website 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
    In July 2017, the SEC approved a proposed rule change to 
restructure the FINRA representative-level qualification examination 
program.\5\ The rule change, which will become effective on October 1, 
2018,\6\ restructures the examination

[[Page 45702]]

program into a new format whereby all new representative-level 
applicants will be required to take a general knowledge examination 
(the SIE examination) and a tailored, specialized knowledge examination 
(a revised representative-level qualification examination) for their 
particular registered role. As part of the restructuring, FINRA 
developed the SIE examination and revised nine of the existing 
representative-level examinations.\7\ FINRA is also eliminating seven 
representative-level examinations that have become outdated or have 
limited utility.\8\ In January 2018, FINRA filed the content outline 
and selection specifications for the SIE examination with the SEC.\9\ 
In February 2018, FINRA filed the content outlines and selection 
specifications for the revised representative-level qualification 
examinations with the SEC.\10\
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    \5\ See Securities Exchange Act Release No. 81098 (July 7, 
2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR-
FINRA-2017-007). For ease of reference, FINRA revised the titles of 
some of the registration categories as part of SR-FINRA-2017-007. 
For instance, FINRA changed ``Limited Representative--Investment 
Company and Variable Contracts Products'' to ``Investment Company 
and Variable Contracts Products Representative.'' This proposed rule 
change refers to the titles that were approved as part of SR-FINRA-
2017-007, though the changes are not yet effective.
    \6\ See Regulatory Notice 17-30 (October 2017).
    \7\ The following are the nine representative-level 
examinations: Investment Company and Variable Contracts Products 
Representative (Series 6); General Securities Representative (Series 
7); Direct Participation Programs Representative (Series 22); 
Securities Trader (Series 57); Investment Banking Representative 
(Series 79); Private Securities Offerings Representative (Series 
82); Research Analyst (Series 86 and Series 87); and Operations 
Professional (Series 99). See supra note 5.
    \8\ Specifically, FINRA is eliminating the following 
examinations: Order Processing Assistant Representative (Series 11); 
United Kingdom Securities Representative (Series 17); Canada 
Securities Representative (Series 37 and Series 38); Options 
Representative (Series 42); Corporate Securities [sic] 
Representative (Series 62) and Government Securities Representative 
(Series 72). See supra note 5. Individuals maintaining the 
eliminated representative-level registrations will be grandfathered 
(i.e., they may continue to maintain their current registrations on 
or after October 1, 2018, unless their registrations lapse).
    \9\ See Securities Exchange Act Release No. 82578 (January 24, 
2018), 83 FR 4375 (January 30, 2018) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2018-002) (Proposed Rule Change 
Relating to the New Securities Industry Essentials (SIE) 
Examination).
    \10\ See Securities Exchange Act Release No. 82750 (February 21, 
2018), 83 FR 8526 (February 27, 2018) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2018-004) (Proposed 
Rule Change to Revise the Investment Banking Representative (Series 
79) Examination); Securities Exchange Act Release No. 82751 
(February 21, 2018), 83 FR 8559 (February 27, 2018) (Notice of 
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-005) 
(Proposed Rule Change to Revise the Research Analyst (Series 86 and 
87) Examinations); Securities Exchange Act Release No. 82752 
(February 21, 2018), 83 FR 8536 (February 27, 2018) (Notice of 
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-006) 
(Proposed Rule Change to Revise the Operations Professional (Series 
99) Examination); Securities Exchange Act Release No. 82754 
(February 21, 2018), 83 FR 8533 (February 27, 2018) (Notice of 
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-007) 
(Proposed Rule Change to Revise the Investment Company and Variable 
Contracts Products Representative (Series 6) Examination); 
Securities Exchange Act Release No. 82747 (February 21, 2018), 83 FR 
8524 (February 27, 2018) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2018-008) (Proposed Rule Change 
to Revise the General Securities Representative (Series 7) 
Examination); Securities Exchange Act Release No. 82748 (February 
21, 2018), 83 FR 8529 (February 27, 2018) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2018-009) (Proposed 
Rule Change to Revise the Direct Participation Programs 
Representative (Series 22) Examination); Securities Exchange Act 
Release No. 82772 (February 26, 2018), 83 FR 9039 (March 2, 2018) 
(Notice of Filing and Immediate Effectiveness of File No. SR-FINRA-
2018-010) (Proposed Rule Change to Revise the Securities Trader 
(Series 57) Examination); and Securities Exchange Act Release No. 
82774 (February 26, 2018), 83 FR 9050 (March 2, 2018) (Notice of 
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-011) 
(Proposed Rule Change to Revise the Private Securities Offerings 
Representative (Series 82) Examination).
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    The restructured program eliminates duplicative testing of general 
securities knowledge on the current representative-level qualification 
examinations by moving such content into the SIE examination.\11\ The 
SIE examination will test fundamental securities-related knowledge, 
including knowledge of basic products, the structure and function of 
the securities industry, the regulatory agencies and their functions 
and regulated and prohibited practices, whereas the revised 
representative-level qualification examinations will test knowledge 
relevant to day-to-day activities, responsibilities and job functions 
of representatives.
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    \11\ Each of the current representative-level examinations 
covers general securities knowledge, with the exception of the 
Research Analyst (Series 86 and 87) examinations.
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    A previously unregistered individual who is applying for 
registration as a representative,\12\ for the first time on or after 
October 1, 2018, will be required to pass both the SIE examination and 
the appropriate revised representative-level examination for his or her 
particular registered role, or obtain a waiver of the examinations.\13\ 
This requirement also applies to applicants who are seeking a 
representative-level registration as a prerequisite to a principal-
level registration.
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    \12\ FINRA Rule 1220(b) sets forth each representative-level 
registration category and applicable qualification examination.
    \13\ Individuals who are currently, or were previously, 
registered as representatives will be subject to different 
qualification requirements depending on their registration status 
prior to October 1, 2018. Specifically, individuals who registered 
as representatives prior to October 1, 2018, and who continue to 
maintain those registrations on or after October 1, 2018, will not 
be subject to any additional qualification requirements with respect 
to those registrations, provided their registrations do not lapse in 
the future. With the exception of individuals who were registered 
solely as Foreign Associates, individuals whose registration as a 
representative was terminated between October 1, 2016, and September 
30, 2018, also will not be subject to any additional qualification 
requirements with respect to those registrations, provided they re-
register as a representative within two years from the date of their 
last registration.
    In addition, with the exception of individuals who were 
registered solely as Order Processing Assistant Representatives or 
Foreign Associates, individuals whose registration as a 
representative was terminated between October 1, 2014, and September 
30, 2016, will be considered to have passed the SIE examination, 
provided they re-register as a representative within four years from 
the date of their last registration. Thus, to re-register as a 
representative, such individuals would be required to pass the 
appropriate revised representative-level examination for their 
particular registered role, or obtain a waiver of the examination. 
Finally, individuals whose registration as a representative was 
terminated prior to October 1, 2014 will be required to pass both 
the SIE examination and the appropriate revised representative-level 
examination for their particular registered role, or obtain a waiver 
of the examinations, if they want to re-register as a representative 
on or after October 1, 2018.
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    In addition, the SIE examination will be available to associated 
persons of firms who are not required to register as well as to 
individuals who are not associated persons of firms, including members 
of the public.\14\
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    \14\ While individuals who are not associated persons are 
eligible to take the SIE examination, passing the SIE examination 
alone will not qualify them for registration with FINRA. Rather, to 
be eligible for registration, an individual must also be associated 
with a firm, pass an appropriate qualification examination(s) for 
representative or principal and satisfy the other requirements 
relating to the registration process. Further, a passing result on 
the SIE examination would only be valid for four years. Therefore, 
an individual who passes the SIE examination and is not an 
associated person at the time would have up to four years from the 
date he or she passes the SIE examination to become an associated 
person of a firm and pass a representative-level examination, or 
obtain a waiver of the examination, and register as a representative 
without having to retake the SIE examination.
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    The proposed rule change amends Section 4(c) of Schedule A to the 
FINRA By-Laws to establish the fee for the SIE examination, revise the 
fees for the representative-level examinations that FINRA is retaining 
and remove the representative-level examinations that FINRA is 
eliminating and the associated fees.
    FINRA currently administers examinations electronically through the 
PROCTOR system \15\ at testing centers operated by a vendor under 
contract with FINRA. FINRA charges an examination fee to candidates for 
FINRA-sponsored and co-sponsored examinations to cover the development, 
maintenance and delivery of these examinations. FINRA considers the 
following factors when establishing or revising an examination fee: (1) 
Number of test questions; (2) seat time; \16\ (3) staff

[[Page 45703]]

effort associated with test development and delivery; (4) corporate 
overhead; and (5) operational and technology costs associated with 
maintaining the PROCTOR system (i.e., item banking, test authoring and 
test delivery).
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    \15\ PROCTOR is a computer system that is specifically designed 
for the administration and delivery of computer-based testing and 
training.
    \16\ FINRA pays its delivery vendor an hourly rate for seat time 
at test delivery centers. The seat time, which varies based on the 
length of an examination, includes the session time for an 
examination as well as an additional 30 minutes to cover 
administrative procedures relating to the examination process.
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    The SIE examination consists of 75 scored questions \17\ and has a 
session time of one hour and 45 minutes. The revised representative-
level examinations consist of fewer scored questions than the current 
examinations and have reduced session times, with the exception of the 
Research Analyst (Series 86 and Series 87) examinations.\18\ Consistent 
with its process for establishing and revising examination fees, FINRA 
is proposing to establish a fee of $60 for the SIE examination. In 
addition, FINRA is proposing to reduce the fee for each individual 
revised representative-level examination, with the exception of the 
revised Series 86 and Series 87 examinations.\19\ Specifically, FINRA 
is proposing the following fees for the revised representative-level 
examinations: Series 6 ($40); Series 7 ($245); Series 22 ($40); Series 
57 ($60); Series 79 ($245); Series 82 ($40); Series 86 ($185); Series 
87 ($130); and Series 99 ($40).
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    \17\ The SIE examination and each of the revised representative-
level examinations also include five to ten unscored pretest 
questions. Pretest questions are designed to ensure that new 
examination items meet acceptable testing standards prior to use.
    \18\ The revised Series 86 and Series 87 examinations have the 
same number of scored questions and session times as the current 
Series 86 and Series 87 examinations.
    \19\ FINRA is not proposing any changes to the fees for the 
Series 86 and Series 87 examinations as the test lengths for these 
examinations are not changing.
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    FINRA is creating an enrollment system separate from the Central 
Registration Depository (``CRD[supreg]'') system to allow individuals 
who are not associated persons of a firm, including members of the 
public, to enroll and pay the SIE examination fee. This system would 
also be available to associated persons of firms who are not required 
to be registered with FINRA. FINRA is not proposing any changes, at 
this time, to the principal-level examinations or the associated 
fees.\20\
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    \20\ FINRA is currently evaluating whether the principal-level 
examinations could be restructured in a manner similar to the 
representative-level examinations.
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    The table below compares the current and future examination fees, 
number of scored questions on each examination and examination session 
times associated with each representative category that FINRA is 
retaining.

                        FINRA Representative-Level Registrations and Related Examinations
----------------------------------------------------------------------------------------------------------------
 Registration category (CRD system   Current examination(s) fee [number of   Future examinations fee [number of
            designation)                scored questions, session time]        scored questions, session time]
----------------------------------------------------------------------------------------------------------------
Investment Company and Variable      Series 6: $100 [100 questions, two     SIE: $60 [75 questions, one hour and
 Contracts Products Representative    hours and 15 minutes].                 45 minutes] + Revised Series 6: $40
 (IR).                                                                       [50 questions, one hour and 30
                                                                             minutes]; Combined Exam Fee ($100).
General Securities Representative    Series 7: $305 [250 questions, six     SIE: $60 [75 questions, one hour and
 (GS).                                hours].                                45 minutes] + Revised Series 7:
                                                                             $245 [125 questions, three hours
                                                                             and 45 minutes]; Combined Exam Fee
                                                                             ($305).
Direct Participation Programs        Series 22: $100 [100 questions, two    SIE: $60 [75 questions, one hour and
 Representative (DR).                 hours and 30 minutes].                 45 minutes] + Revised Series 22:
                                                                             $40 [50 questions, one hour and 30
                                                                             minutes]; Combined Exam Fee ($100).
Securities Trader (TD).............  Series 57: $120 [125 questions, three  SIE: $60 [75 questions, one hour and
                                      hours and 45 minutes].                 45 minutes] + Revised Series 57:
                                                                             $60 [50 questions, one hour and 45
                                                                             minutes]; Combined Exam Fee ($120).
Investment Banking Representative    Series 79: $305 [175 questions, five   SIE: $60 [75 questions, one hour and
 (IB).                                hours].                                45 minutes] + Revised Series 79:
                                                                             $245 [75 questions, two hours and
                                                                             30 minutes]; Combined Exam Fee
                                                                             ($305).
Private Securities Offerings         Series 82: $95 [100 questions, two     SIE: $60 [75 questions, one hour and
 Representative (PR).                 hours and 30 minutes];.                45 minutes] + Revised Series 82:
                                                                             $40 [50 questions, one hour and 30
                                                                             minutes]; Combined Exam Fee ($100).
Research Analyst (RS)..............  Series 7: $305 [250 questions, six     SIE: $60 [75 questions, one hour and
                                      hours] + Series 86: $185 [100          45 minutes] + Revised Series 86:
                                      questions, four hours and 30           $185 [100 questions, four hours and
                                      minutes] + Series 87: $130 [50         30 minutes] + Revised Series 87:
                                      questions, one hour and 45 minutes];   $130 [50 questions, one hour and 45
                                      Combined Exam Fee ($620).              minutes]; Combined Exam Fee
                                                                             ($375).\21\
Operations Professional (OS).......  Series 99: $130 [100 questions, two    SIE: $60 [75 questions, one hour and
                                      hours and 30 minutes].                 45 minutes] + Revised Series 99:
                                                                             $40 [50 questions, one hour and 30
                                                                             minutes]; Combined Exam Fee ($100).
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    As the table illustrates, the proposed examination fees for 
representative registrations will remain the same or be lower than the 
current examination fees for representative registrations, with the 
exception of registration as a Private Securities Offerings 
Representative. As noted in the table, the overall examination fee for 
registration as a Private Securities Offerings Representative will 
increase by $5.
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    \21\ Beginning on October 1, 2018, individuals registering as 
Research Analysts will no longer be required to pass the General 
Securities Representative (Series 7) examination.
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    FINRA also administers and delivers examinations sponsored (i.e., 
developed) by other entities, including the Municipal Securities 
Rulemaking Board (``MSRB''). 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 for the examination. 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. For example, the fee to take the Municipal Securities 
Representative (Series 52) examination is currently $280. Of this 
amount, $130 is the FINRA administration and delivery fee, and

[[Page 45704]]

$150 is the development fee determined by the FINRA client, the 
MSRB.\22\
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    \22\ See MSRB Rule A-16 (Examination Fees).
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    In conjunction with FINRA's rule change to restructure its 
representative-level qualification examination program, the MSRB filed 
a proposed rule change to, among other things, restructure the Series 
52 examination program.\23\ Specifically, under the MSRB's proposed 
rule change, individuals registering as Municipal Securities 
Representatives would be required to take and pass the SIE examination 
in addition to a revised Series 52 examination. In addition, the MSRB 
filed a proposed rule change to reduce the number of scored questions 
on the Series 52 examination (from 115 questions to 75 questions) and 
the session time for the examination (from three hours and 30 minutes 
to two hours and 30 minutes),\24\ which would reduce the overall seat 
time for the examination and, in turn, reduce FINRA's administration 
and delivery fee for the examination by $20. Accordingly, FINRA is 
proposing to amend Section 4(c) of Schedule A to the FINRA By-Laws to 
reduce the administration and delivery fee for the Series 52 
examination from $130 to $110.
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    \23\ See Securities Exchange Act Release No. 83483 (June 20, 
2018), 83 FR 29855 (June 26, 2018) (Notice of Filing and Immediate 
Effectiveness of File No. SR-MSRB-2018-04). The proposed rule change 
will become effective on October 1, 2018, which coincides with the 
effective date of FINRA's rule change.
    \24\ See Securities Exchange Act Release No. 83572 (June 29, 
2018), 83 FR 31580 (July 6, 2018) (Notice of Filing and Immediate 
Effectiveness of File No. SR-MSRB-2018-05). This proposed rule 
change will also become effective on October 1, 2018.
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    Finally, FINRA is proposing to make certain non-substantive 
technical changes to the table of fees under Section 4(c) of Schedule A 
to the FINRA By-Laws, such as adding headings to the table.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The implementation date will be October 1, 2018, to 
coincide with the implementation of the restructured representative-
level examination program. FINRA will also announce the implementation 
date of the proposed rule change in a Regulatory Notice.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\25\ 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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    \25\ 15 U.S.C. 78o-3(b)(5).
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    FINRA believes that the proposed rule change constitutes an 
equitable allocation of fees as the examination fees will be used to 
cover FINRA's costs in developing, maintaining and delivering the SIE 
examination and the revised representative-level examinations. FINRA 
further believes that the proposed examination fees are reasonable 
because they correspond to the costs associated with each examination 
and are, for the most part, the same or lower than the current 
examination fees for representative registrations. Accordingly, FINRA 
believes that the proposed examination fees are equitably allocated and 
reasonable. In addition, FINRA believes that the proposed rule change 
constitutes an equitable allocation of fees with respect to FINRA's 
portion of the fee for the revised Series 52 examination, which 
represents FINRA's reduced costs for administering and delivering the 
revised examination.

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.
Economic Impact Assessment
    FINRA has undertaken an economic impact assessment, as set forth 
below, to further analyze the regulatory need for the proposed rule 
change, the economic baseline of analysis, the economic impact and the 
alternatives considered.
Regulatory Need
    FINRA has restructured the representative-level qualification 
examination program by creating the SIE examination, revising some of 
the representative-level qualification examinations and eliminating 
others. The proposed rule change amends Section 4(c) of Schedule A to 
the FINRA By-Laws to establish the fee for the SIE examination, revise 
the fees for the representative-level qualification examinations that 
FINRA is retaining and remove the fees for the representative-level 
qualification examinations that FINRA is eliminating. The proposed fees 
cover the development, maintenance and delivery of the SIE examination 
and the revised representative-level examinations with minimum impact 
on the examination costs for representatives.
    Further, as a result of the MSRB's restructuring of the Series 52 
examination program, the proposed rule change amends Section 4(c) of 
Schedule A to the FINRA By-Laws to reduce FINRA's administration and 
delivery fee for the revised Series 52 examination.
Economic Baseline
    The economic baseline for the proposed rule change is the current 
FINRA representative-level examinations, and the fees for these 
examinations. The current representative-level examination program 
consists of 16 examinations (Series 6, 7, 11, 17, 22, 37, 38, 42, 57, 
62, 72, 79, 82, 86, 87 and 99). In 2017, there were approximately 
102,000 representative-level registrations requested. The Series 7, 
Series 6 and Series 79 are the top three examinations in terms of 
candidate volume, constituting approximately 92% of the total 
representative-level registration volume. Current fees range between 
$95 and $305 per examination, and the fee schedule reflects the length 
of the examination, which is also correlated with the effort necessary 
to prepare and evaluate the examinations. As noted above, FINRA is 
eliminating a limited number of representative-level examinations that 
represent a small percentage of candidate volume. The current and 
proposed fees for the retained representative-level examinations are 
provided above.
    The economic baseline for the proposed rule change relating to the 
Series 52 examination is the current fee associated with FINRA's 
administration and delivery of the examination. In 2017, there were 
approximately 830 Municipal Securities Representative registrations 
requested. FINRA's fee for administering and delivering the Series 52 
examination is currently $130.
Economic Impact
    For purposes of this discussion, FINRA has identified the 
potentially material impacts of the proposed fees.
    The cumulative examination fees for a given registration as a 
representative under FINRA's proposed structure are the same as those 
under the current structure, with the exception of the categories of 
Private Securities Offerings Representative, Research Analyst and 
Operations Professional. For example, the current examination fee for 
registration as a General Securities Representative is $305 (the fee 
for the current Series 7 examination). Under the proposed fee 
structure, the cumulative examination fee to register as a General 
Securities Representative would remain $305 ($60 for the SIE 
examination and $245 for the revised Series 7 examination). There will 
be some economic impacts associated with

[[Page 45705]]

the proposed changes for specific categories of registration. First, 
the total examination fee for registration as a Private Securities 
Offerings Representative will increase by $5. The current examination 
fee for registration as a Private Securities Offerings Representative 
is $95.\26\ Under the restructured program, the total examination fee 
for registration as Private Securities Offerings Representative will be 
$100 ($60 for the SIE examination and $40 for the revised Series 82 
examination). The proposed $40 fee for the revised Series 82 
examination is consistent with the fees of other comparable revised 
examinations (i.e., the revised Series 6, Series 22 and Series 99 
examinations) all of which have similar development, maintenance and 
delivery costs. Second, the examination fees for registration as a 
Research Analyst or an Operations Professional will be reduced.\27\ 
Third, for the eliminated categories and related examinations, 
individuals conducting the activities covered by the eliminated 
examinations may seek registration in one of the remaining categories, 
such as a General Securities Representative, which have higher 
cumulative examination fees.\28\ However, as noted, this represents a 
small group.
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    \26\ While FINRA has maintained a $95 fee for the current Series 
82 examination, the cost of developing, maintaining and delivering 
the current Series 82 examination most closely correlates to the 
cost of developing, maintaining and delivering the current Series 22 
examination, which has a cost of $100.
    \27\ The cumulative examination fee for registration as a 
Research Analyst will be reduced by $245 because, under the 
restructured program, individuals registering as such will no longer 
be required to take the Series 7 examination. The total examination 
fee for registration as an Operations Professional will also be 
reduced by $30.
    \28\ For example, the examination fee for the eliminated 
Corporate Securities Representative (Series 62) category is $95 
while the new cumulative examination fee for registration as a 
General Securities Representative is proposed to be $305.
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    The lifetime examination costs will also vary depending on the 
number of examination attempts by individual test takers. For instance, 
if an individual requires two attempts to pass the current Series 7 
examination, the total cost of the examinations today would be $610 
($305 x 2). If the same individual passed the SIE examination on the 
first attempt, but still required two attempts to pass the revised 
Series 7 examination, the total cost of the examinations would be $550 
($60 for the SIE examination plus $245 x 2 for the revised Series 7 
examination). If, alternatively, the individual required two attempts 
at the SIE examination but passed the revised Series 7 examination on 
the first attempt, the total cost would be $365 ($60 x 2 for the SIE 
examination plus $245 for the revised Series 7 examination). In both of 
these scenarios, because the person could take advantage of passing one 
of the requirements in the first attempt, the aggregate examination 
costs under the proposed fee structure would be less than today. 
Further, as noted above, in some cases, the aggregate examination costs 
are anticipated to be lower or higher, depending on the category in 
which the individual is seeking to register.
    Registered representatives seeking an additional or alternative 
representative registration category would also experience a net 
decrease in examination fees because they would have already satisfied 
the SIE examination requirement, thus only incurring the fees 
associated with the revised representative-level examination. However, 
based on historical data, these individuals represent a relatively 
small percentage of individuals seeking registrations.
    With respect to FINRA's fee for administering and delivering the 
revised Series 52 examination, the fee will be reduced by $20 (from 
$130 to $110) to reflect FINRA's adjusted costs for its portion of the 
fee for the examination.
Impact on Firms
    FINRA believes that the restructured program is likely to decrease 
the total examination fees that firms pay. In aggregate, based on 
FINRA's review of a representative sample of firms, it projects a 
reduction in total examination fees annually. As stated above, the 
examination fees paid to become registered will typically be lower in 
circumstances where multiple examination attempts are needed to pass. 
Under these circumstances, firms will experience a decrease in 
examination fees, to the extent that firms cover these costs for 
individuals. Under the restructured program, at least some of the costs 
associated with qualification will likely transfer to the individuals 
interested in becoming registered representatives. Members may require 
job applicants to pass the SIE examination before they can be 
considered for a position, and may require that the individuals pay the 
SIE examination fee. Further, FINRA understands that some firms today 
seek repayment from representatives for fees associated with 
representative-level examinations. The extent of the economic transfer 
between firm and representative depends upon, among other things, the 
competition between firms for the pool of qualified representatives and 
the size of that pool.
    In addition, broker-dealers and other regulated entities that seek 
to register Municipal Securities Representatives would see a reduction 
in FINRA's portion of the fee for the revised Series 52 examination.
Impact on Individuals
    As described above, firms may require potential registrants to pass 
the SIE examination before they can be considered for a position, in 
which case the SIE examination fee may be incurred by the individual 
and the associated impact may be a shifting of some of the costs 
associated with qualification from the firm to the individual. In such 
a scenario, based on its own experience and in consultation with 
industry experts, FINRA believes the $60 fee for the SIE examination 
would not create a significant barrier to prospective registered 
representatives.
    The restructured program will likely change the total test taking 
time for individuals registering as representatives. For example, the 
total examination session times for registration as a Research Analyst 
decreases by four hours and fifteen minutes. The total session times 
may increase or decrease depending on the registration. To the extent 
that the changed session times lead to a change in test taking time by 
individuals, they may experience an increase or decrease in the 
opportunity cost of their time.
    Finally, some individuals who will not be pursuing registration as 
a representative may still take the SIE examination. These individuals 
include associated persons of firms who are not required to register as 
well as individuals who are not associated persons of firms, such as 
college students, individuals working in related financial service 
industries or who have personal interest in establishing proficiency in 
the subject matter. FINRA believes that the $60 fee for the SIE 
examination may encourage such individuals to take the examination, and 
in turn increase the pool of prospective registered representatives.
Alternatives Considered
    FINRA considered a range of potential fee models in developing the 
proposed rule change, including different (dollar levels of) fees for 
the SIE examination, the representative-level examinations and the SIE 
examination in combination with the representative-level examinations. 
FINRA believes that the proposed fee structure strikes the appropriate 
balance between the operating costs associated with the

[[Page 45706]]

examinations and the impact to individuals and the industry.

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 \29\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\30\ 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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    \29\ 15 U.S.C. 78s(b)(3)(A).
    \30\ 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-comment[email protected]. Please include 
File Number SR-FINRA-2018-033 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-2018-033. 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 10:00 a.m. and 
3:00 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-2018-033 and should be submitted 
on or before October 1, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
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    \31\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-19502 Filed 9-7-18; 8:45 am]
 BILLING CODE 8011-01-P