Document ID: SEC-2012-1954-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Municipal Securities Rulemaking Board
Posted Date: 2012-11-27T05:00Z

[Federal Register Volume 77, Number 228 (Tuesday, November 27, 2012)]
[Notices]
[Pages 70855-70857]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28742]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68274; File No. SR-MSRB-2012-09]

Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of Revisions to the 
Study Outline for the Municipal Securities Principal Qualification 
Examination (Series 53)

November 20, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``the Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 16, 2012, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (``Commission'') 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 organization pursuant to Section 19(b)(3)(A)(i) \3\ of the 
Act and Rule 19b-4(f)(1) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The implementation date of 
the proposed rule change, as well as the effective date of the revised 
study outline, will be December 22, 2012. 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 for the Municipal Securities Principal Qualification 
Examination (Series 53).
    The text of the proposed rule change is available on the MSRB's Web 
site at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2012-Filings.aspx, at the MSRB's principal office, 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, 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 \5\ 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, municipal entities, 
or obligated persons. 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 and those who supervise such persons 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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    \5\ 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; maintenance of records with respect to 
municipal securities activities; and training of municipal securities 
principals and municipal securities representatives. The only 
examination that qualifies a municipal securities principal is the 
Municipal Securities Principal Qualification Examination (Series 53).
    The Series 53 examination is designed to determine whether an 
individual meets the Board's qualification standards for municipal 
securities principals. To do this, the examination measures a 
candidate's knowledge of Board rules, rule interpretations, and federal 
statutory provisions applicable to municipal securities activities. It 
also measures an individual's ability to apply these rules and 
interpretations to given fact situations. The examination consists of 
100 multiple-choice questions. Each question is worth one point, and 
the passing grade is 70%. Candidates are allowed three and one-half 
hours for each testing session.
    The study outline serves as a guide to the subject matter tested by 
the Series 53 examination. It lists the topics covered by the 
examination, and provides learning objectives associated with those 
topics that are intended to assist candidates preparing for the 
examination. The outline also provides sample questions similar to the 
type used in the examination. The arrangement of the subject matter in 
the study outline reflects the various aspects of municipal securities 
activity within a securities firm or bank dealer and the tasks of a 
municipal securities principal in supervising such activities. 
Reference is made to the appropriate MSRB rule or federal regulation 
which governs each task.
    In order to assist candidates preparing for the Series 53 
examination, the study outline has been updated to remove rescinded 
rules and include amendments and additions to MSRB

[[Page 70856]]

rules that have been promulgated since the last revision of the study 
outline.\6\ The descriptions for some rules listed have been changed 
accordingly. The changes are technical in nature and will not change 
the specifications for the examination. The MSRB will announce the 
December 22, 2012 implementation date of the revised study outline in a 
notice to be published at least 30 days prior to such implementation 
date.
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    \6\ See Release No. 34-54141, File No. SR-MSRB-2006-05 (June 27, 
2006).
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    A summary of the changes to the study outline for the Series 53 
examination, detailed by major topic headings, is provided below. 
Changes are stated as revisions to the current outline.
Introduction
     Fn. 1: References to ``NASD'' are changed to ``FINRA;'' 
FINRA URL is corrected.
Part Two--General Supervision
Definitional Rules
     ``Municipal advisory activities, D-13'' is added.
Qualification and Registration
     ``Name or address'' is added to the description for Rule 
A-15.
     ``Preservation'' is added to the description For Rules G-
7; G-9; and Exchange Act Rule 17a-4.
     ``Municipal securities sales limited representatives'' is 
added to the description of Rule G-3(a)(i) and (ii) to reflect 
amendment to the rule.
Supervisory Responsibilities
     Rule citation for ``Written record of designations'' is 
changed to ``G-27(b)(ii)(B)'' to reflect amendment to the rule.
     Rule citation for ``Appropriate principal'' is changed to 
``G-27(b)(ii)(C)'' to reflect amendment to the rule.
     Topic heading and rule citation is changed to ``Duty to 
establish, maintain and enforce supervisory control policies and 
written procedures'' to reflect amendment to the rule.
Conduct of Business
     ``Definitions; general standard for advertisements'' is 
added to the description for Rule G-21(a).
     ``Product'' is added to the topic description for Rule G-
21(e).
Part Three--Sales Supervision
Opening Customer Accounts
     Rule citation for ``Review and approval by a principal'' 
is changed to ``G-27(c)(i)(G)(1)'' to reflect amendment to the rule.
Communications With Customers
     Rule citation for ``Review and retention of 
correspondence'' is changed to ``G-27(e)'' to reflect amendment to the 
rule.
Discretionary Accounts
     Rule citation for ``Written supervisory procedures'' is 
changed to ``G-27 (c)(i)'' to reflect amendment to the rule.
Part Four--Origination and Syndication
Financial Advisors
     Rule citation for ``applicability of state or local law'' 
is changed to G-23(f) to reflect amendment to the rule.
     ``Basis of compensation'' is deleted; ``Agreement with 
respect to financial advisory relationship'' is added for the 
description of Rule G-23(c). Changes reflect the amendment to the rule.
     The description of Rule G-23(d) is changed to 
``Prohibition on engaging in underwriting activities'' in accordance 
with the amendment to the rule.
     ``Disclosures to customers, G-23(h)'' is deleted in 
accordance with the amendment to the rule.
     ``Disclosures to issuer of corporate affiliation, G-
23(f)'' is deleted in accordance with the amendment to the rule.
     ``Records concerning the activities of financial advisors, 
G-23(g); G-9'' is deleted in accordance with the amendment to the rule.
     ``Responsibility to make official statement available'' is 
changed to ``Preparation of official statement by financial advisors;'' 
rule citation is changed to ``G-32(c)'' in accordance with the 
amendment to the rule.
New Issue Syndicate Practices
     ``Responsibility of managing underwriters and sole 
underwriters'' is replaced with ``Underwriter submissions to EMMA;'' 
rule citation is changed to ``G-32(b)'' in accordance with amendments 
to the rule.
     ``Delivery of official statements, advance refunding 
documents, and Forms G-36(OS) and G-36(ARD) to the Board or its 
designee; G-36'' is deleted. Rule was rescinded.
     Topic heading is changed to ``Records concerning primary 
offerings'' in accordance with amendment to Rule G-8(a)(viii).
     Topic heading is changed to ``Records concerning 
disclosures in connection with primary offerings pursuant to Rule G-
32'' in accordance with amendment to Rule G-8(a)(xiii).
     ``Records concerning delivery of official statements, 
advance refunding documents and Forms G-36(OS) and G-36(ARD) to the 
Board or its designee; G-8(a)(xv)'' is deleted. Topic is no longer 
tested.
     ``Good faith deposits; G-12(i)'' is deleted. Rule was 
rescinded.
     Rule citation for ``Settlement of syndicate or similar 
account'' is changed to ``G-11(i)'' in accordance with the amendment to 
the rule.
     Topic heading is changed to ``Payments of designations;'' 
rule citation changed to ``G-11(j)'' in accordance with the amendment 
to the rule.
Part Five--Trading
Execution of Transactions
     Topic heading for Rule G-18 is changed to ``Transactions 
as agent'' to reflect amendment to the rule.
     ``Broker's brokers; G-43'' is added.
Reports of Sales or Purchases
     Rule citation for ``Definitions'' is changed to ``G-14, 
RTRS Procedures, Sect. (d)'' for clarification.
     Topic heading for Rule A-13(c) is changed to ``Transaction 
and technology assessments'' in accordance with the amendment to the 
rule.
Recordkeeping Responsibilities
     ``Records of secondary market trading account 
transactions; G-8(a)(xxiv)'' is added.
     ``Broker's brokers activities; G-8(a)(xxv)'' is added.
     ``Records for alternative trading systems; G-8(a)(xxvi)'' 
is added.
Part Six--Operations
Books and Records
     ``Records concerning consultants; G-8(a)(xviii)'' is 
deleted. No longer tested in the examination.
     ``Books and records maintained by transfer agents for 
municipal fund securities transactions; G-8(g)(i)'' is added.
     Correct rule citation is added to ``Compliance with SEC 
rules'' and ``Records to be made'' is deleted as a subtopic.
Sample Questions
    One sample question is deleted and a new sample question is added.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(A) of the Act, which authorizes the MSRB to prescribe 
standards of training, experience, competence, and such other

[[Page 70857]]

qualifications as the Board finds necessary or appropriate in the 
public interest or for the protection of investors and municipal 
entities or obligated persons. Section 15B(b)(2)(A) of the Act also 
provides that the Board may appropriately classify municipal securities 
brokers, municipal securities dealers, and municipal advisors and 
persons associated with municipal securities brokers, municipal 
securities dealers, and municipal advisors and require persons in any 
such class to pass tests prescribed by the Board.
    The MSRB believes that the proposed revisions to the study outline 
for the Series 53 examination are consistent with the provisions of 
Section 15B(b)(2)(A) of the Act in that the revisions will ensure that 
certain key concepts or rules are tested on each administration of the 
examination in order to test the competency of individuals seeking to 
qualify as municipal securities principals with respect to their 
knowledge of MSRB rules and the municipal securities market.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The MSRB 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, as amended. The MSRB believes 
that the proposed rule change will provide benefits to persons seeking 
to become qualified as a municipal securities principal by promoting 
more efficient and effective preparation for such qualification without 
imposing any additional burdens.

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 on the 
proposed rule change.

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) of the Act and paragraph (f) of Rule 19b-4 thereunder. 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 Exchange Act.

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-MSRB-2012-09 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-MSRB-2012-09. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of 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-2012-09, and should be 
submitted on or before December 18, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28742 Filed 11-26-12; 8:45 am]
BILLING CODE 8011-01-P