Document ID: SEC-2015-1511-0001
Agency: sec
Document Type: Notice
Title: Self-egulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2015-09-15T04:00Z

[Federal Register Volume 80, Number 178 (Tuesday, September 15, 2015)]
[Notices]
[Pages 55407-55410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23095]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75865; File No. SR-FINRA-2015-031]

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 Representative Examination (``Series 50 
Examination'')

September 9, 2015.
    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 1, 2015, 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. 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.

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[[Page 55408]]

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 Representative Examination (``Series 50 
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

    (a) through (b) No Change.
    (c) The following fees shall be assessed to each individual who 
registers to take 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.

Series 4--Registered Options Principal--$105
Series 6--Investment Company Products/Variable Contracts 
Representative--$100
Series 7--General Securities Representative--$305
Series 9--General Securities Sales Supervisor--Options Module--$80
Series 10--General Securities Sales Supervisor--General Module--$125
Series 11--Assistant Representative--Order Processing--$80
Series 14--Compliance Official--$350
Series 16--Supervisory Analyst--$240
Series 17--Limited Registered Representative--$80
Series 22--Direct Participation Programs Representative--$100
Series 23--General Securities Principal Sales Supervisor Module--$100
Series 24--General Securities Principal--$120
Series 26--Investment Company Products/Variable Contracts Principal--
$100
Series 27--Financial and Operations Principal--$120
Series 28--Introducing Broker-Dealer Financial and Operations 
Principal--$100
Series 37--Canada Module of S7 (Options Required)--$185
Series 38--Canada Module of S7 (No Options Required)--$185
Series 39--Direct Participation Programs Principal--$95
Series 42--Registered Options Representative--$75
Series 50--Municipal Advisor Representative--$115
Series 51--Municipal Fund Securities Limited Principal--$105
Series 52--Municipal Securities Representative--$130
Series 53--Municipal Securities Principal--$115
Series 55--Limited Representative--Equity Trader--$110
Series 62--Corporate Securities Limited Representative--$95
Series 72--Government Securities Representative--$110
Series 79--Investment Banking Qualification Examination--$305
Series 82--Limited Representative--Private Securities Offering--$95
Series 86--Research Analyst--Analysis--$185
Series 87--Research Analyst--Regulatory--$130
Series 99--Operations Professional--$130

    (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 50 
examination. On February 26, 2015, the Commission approved amendments 
to Municipal Securities Rulemaking Board (``MSRB'') Rule G-3 to 
establish two new registration classifications for municipal advisors: 
\3\ (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).\4\ To qualify as a 
municipal advisor representative or municipal advisor principal, an 
individual must pass an appropriate qualification examination (the 
Series 50 examination) before his or her registration can become 
effective.
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    \3\ 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).
    \4\ See Securities Exchange Act Release No. 74384 (February 26, 
2015), 80 FR 11706 (March 4, 2015) (Order Approving File No. SR-
MSRB-2014-08).
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    Because the Series 50 examination is a new examination for two new 
registration classifications for municipal advisors, the MSRB plans to 
launch a pilot test of the examination in early 2016 to validate its 
bank of test questions and set the passing score for the permanent 
examination. A permanent Series 50 examination is expected to be in 
place in 2016.
    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 MSRB and other self-regulatory organizations.\5\ The SEC has 
designated FINRA to administer and deliver the Series 50 examination 
for municipal advisors.\6\
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    \5\ 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).
    \6\ 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 23 [sic], 2013), 78 FR 67467 (November 12, 2013) 
(Registration of Municipal Advisors).
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    FINRA currently administers examinations electronically through the 
PROCTOR[supreg] system \7\ at testing centers operated by vendors under 
contract

[[Page 55409]]

with FINRA. 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 will charge an administration and 
delivery fee of $115 for the Series 50 examination.\8\ The proposed 
administration and delivery fee will offset FINRA's costs associated 
with the administration and delivery of the Series 50 examination and 
contribute to FINRA's overall revenue. The administration and delivery 
fee charged by FINRA for the Series 50 examination will be used, in 
part, to cover the fees that vendors charge FINRA for delivering 
qualification examinations through their networks of test delivery 
centers and PROCTOR system maintenance and enhancement expenses.
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    \7\ PROCTOR is a computer system that is specifically designed 
for the administration and delivery of computer-based testing and 
training.
    \8\ 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 will be $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.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. FINRA is proposing that the implementation date of the 
proposed rule change will be September 21, 2015.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\9\ 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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    \9\ 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 administration and delivery fee, in 
part, will be used to cover FINRA's costs in administering and 
delivering the examination and will be assessed only on those 
individuals who take the Series 50 examination. FINRA further believes 
that the proposed administration and delivery fee for the Series 50 
examination is reasonable because it is aligned with the overall cost 
associated with the Series 50 examination program.
    Accordingly, FINRA believes that the proposed administration and 
delivery fee for the Series 50 examination is equitably allocated and 
reasonable.

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 50 
examination will have a limited economic impact on the industry.
    FINRA would administer 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. However, in establishing an administration and 
delivery fee of $115 for the Series 50 examination, FINRA applied the 
same criteria as it does for establishing the fees for other 
examinations with similar characteristics related to test length and 
projected volume. The MSRB has indicated that approximately 3,900 
individuals will be taking the examination for the initial round of 
testing. Based on FINRA's experience with other industry tests, FINRA 
projects that the annual testing volumes will be approximately five to 
ten percent of the total registrant volume. The administration and 
delivery fees may be paid by the individuals taking the examination or 
their associated firms. The proposed administration and delivery fee 
will also offset FINRA's costs associated with the administration and 
delivery of the Series 50 examination and contribute to FINRA's overall 
revenue. The Series 50 examination is anticipated to have the same 
number of questions (and thus seat time at test centers) as the Series 
53 (Municipal Securities Principal) examination, which is sponsored by 
the MSRB and administered and delivered by FINRA for a fee of $115.
Economic Impact Assessment

Need for the Rule

    This proposal is in response to amendments to MSRB Rule G-3. As 
discussed above, the Commission approved amendments to MSRB Rule G-3 to 
establish two new registration classifications for municipal advisors: 
Municipal advisor representatives and municipal advisor principals. To 
qualify as a municipal advisor representative or municipal advisor 
principal, an individual must pass an appropriate qualification 
examination before his or her registration can become effective. The 
SEC has designated FINRA to administer and deliver the examination for 
municipal advisors. Accordingly, FINRA needs to establish the 
administration and delivery fee for the examination.

Regulatory Objective

    FINRA aims to establish an administration and delivery fee that 
would allow FINRA to recover its costs for providing this service and 
to contribute to FINRA's overall revenue.

Economic Baseline

    The Series 50 examination is a new examination for two new 
registration classifications for municipal advisors established by 
amendments to MSRB Rule G-3. The economic impact of the amendments 
depends on the current classifications and qualification requirements 
for municipal advisor professionals engaging in or supervising 
municipal advisory activities. As noted above, FINRA would administer 
this examination as a service provider to the MSRB as designated by the 
SEC. Accordingly, the scope of the economic impact assessment of this 
proposal is limited to the impact of the establishment of the 
administration and delivery fee.

Economic Impacts

    The impact of the proposed administration and delivery fee on the 
industry will depend on the demand for the examination. The MSRB has 
indicated that approximately 3,900 individuals will be taking the 
examination for the initial round of testing. Based on FINRA's 
experience with other industry tests, FINRA projects that the 
anticipated annual testing volumes will be approximately five to ten 
percent of the total registrant volume. The administration and delivery 
fees may be paid by the individuals taking the examination or their 
associated firms.
    The proposed administration and delivery fee will offset FINRA's 
costs associated with the administration and delivery of the Series 50 
examination and contribute to FINRA's overall revenue. FINRA has based 
its administration and delivery fee on costs related to test delivery 
(which are primarily driven by the length of the testing appointment), 
annual testing volumes, operational support costs and a nominal margin. 
The pricing was also evaluated against testing programs of comparable 
test length, annual projected testing volumes and support services to 
ensure comparability. FINRA staff

[[Page 55410]]

review revenue and expenses annually to determine if any adjustments 
should be made to account for changes in expenses associated with the 
delivery and support of all testing programs.

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 \10\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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-2015-031 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2015-031. 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 FINRA. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-FINRA-2015-031, and should 
be submitted on or before October 6, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-23095 Filed 9-14-15; 8:45 am]
 BILLING CODE 8011-01-P