[Federal Register Volume 64, Number 134 (Wednesday, July 14, 1999)]
[Notices]
[Pages 38061-38062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17886]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41604; File No. SR-MSRB-99-6]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Municipal Securities
Rulemaking Board To Revise the Test Specifications and Study Outline
for the Board's Municipal Securities Representative Qualification
Examination (Test Series 52)
July 7, 1999.
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 23, 1999,\3\ the Municipal Securities Rulemaking Board
(``Board'' or ``MSRB'') 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 prepare by the
Board. 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\ The Board filed the proposed rule change to replace the File
No. SR-MSRB-99-05, which it withdrew on June 23, 1999. The proposed
rule change has been filed by the Board as a non-controversial rule
change under Rule 19b-4(f)(6) under the Act. On May 20, 1999, the
Board provided the Commission with written notice of its intent to
file the proposed rule change, which was at least five days prior to
the filing date, as required by Rule 19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Board is filing the proposed rule change to revise the test
specifications and study outline for the Board`s Municipal Securities
Representative Qualification Examination (Test Series 52). The Board
requests that the Commission delay the effectiveness of the revised
study outline until August 1, 1999, in order to provide time to modify
the examination to reflect the changes to the test specifications in
the study outline and to circulate to the industry information
concerning the revisions.
II. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
In its filing with the Commission, the Board 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
texts of these statements may be examined at the places specified in
Item IV below. The Board 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
The Series 52 examination qualifies a candidate as a municipal
securities representative.\4\ A candidate may also qualify as a
municipal securities representative by taking the General Securities
Representative Examination (Test Series 7), which borrows questions
from the Series 52 examination. Specific subjects and questions have
been updated from time to time in the Series 52 examination to reflect
changes in Board rules or applicable federal regulations. An ad hoc
committee from the Board's Professional Qualifications Advisory
Committee (``PQAC'') \5\ determined that coverage of certain subject
areas in the study outline should either be expanded to provide greater
detail to candidates studying for the Series 52 examination or de-
emphasized to reflect changed practices and products within the
municipal securities industry. Topics that are no longer relevant were
deleted and other topics were added or revised to reflect additions to
or changes in practices,
[[Page 38062]]
products, and Board rules since the outline was last revised. The
revised outline also provides for the inclusion of new Board rules as
they are promulgated.
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\4\ MSRB Rule G-3(a)(i) defines the term ``municipal securities
representative'' as: a natural person associated with a broker,
dealer or municipal securities dealer, other than a person whose
functions are solely clerical or ministerial, whose activities
include one or more of the following: (A) Underwriting, trading or
sales of municipal securities; (B) financial advisory or consultant
services for issuers in connection with the issuance of municipal
securities; (C) research or investment advice with respect to
municipal securities; or (D) any other activities which involve
communication, directly or indirectly, with public investors in
municipal securities; provided, however, that the activities
enumerated in subparagraphs (C) and (D) above shall be limited to
such activities as they relate to the activities enumerated in
subparagraphs (A) and (B) above.
\5\ PQAC is composed of the Representative Examination
Subcommittee and the Principal Examination Subcommittee. The
subcommittees are composed of individuals with extensive experience
in the securities industry. The committee members are employed by
securities firms and bank dealers and come from diverse geographic
locations.
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In the revised study outline, existing topics have been expanded to
include the following terms, products, or concepts:
taxable municipals
multi-modal
tax-exempt commercial paper
forwards (forward delivery)
capital appreciation bonds (zeros)
current refundings
advance refunding
de minimis exemption on OID bonds
Bloomberg, BOND EXPRESS and BONDTRAC
swing coupon
locked market
municipal bond contract
municipal over bond (MOB) spread
growth
speculation
tax law changes
construction fund
enhanced securities
letters of credit
guaranteed investment contract (GIC)
advance refunded
insured
average life (sinking fund)
dollar value of a basis point
convexity
derivatives
value of a plus (1/64)
Consumer Price Index (CPI)
unemployment rate
housing starts
foreign trade deficits
purchasing manager's report
leading/lagging/co-existent indicators
Producer Price Index (PPI)
gross domestic product
international economic activity
compression
Major topics added since the last published revision of the study
outline are:
duration (under the heading of mathematical calculations
and methods)
rule G-37, on political contributions and prohibitions on
municipal securities business
rule G-38, on consultants
rule G-39, on telemarketing
Major topics deleted since the last published revision of the study
outline are: \6\
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\6\ Phone call between Ronald W. Smith, Senior Legal Associate,
MSRB, and Sonia Patton, Attorney, Division of Market Regulation,
Commission, on July 6, 1999.
New/Public Housing Authority (NHA/PHA) bonds
Mortgage backed bonds
Pass-through securities
Flower bonds
Arbitration (rule G-35)
The test specifications allocate exam questions among the various
topics. The test specifications have been revised to provide for
greater emphasis under the topic areas of Economic Activity, Government
Policy and Factors Affecting Interest Rates and Federal Legal
Considerations. The examination will remain a three-hour 100 question
examination administered by NASD Regulation, Inc. using the PROCTOR
system.
2. Statutory Basis
The Board believes the proposed rule change is consistent with
Section 15B(b)(2)(A) \7\ of the Act, which requires the Board to
propose and adopt rules that ensure that no municipal securities broker
or dealer effects transactions in municipal securities without meeting
the standards of training, experience, competence, and other
qualifications determined by the Board to be 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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\7\ 15 U.S.C. 78o-4(b)(2)(A).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Board does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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 will become effective upon filing pursuant
to Section 19(b)(3)(A) \8\ of the Act, and Rule 19b-4(f)(6) \9\
thereunder, in that it: (i) Does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; (iii) was provided to the
Commission for its review at least five days prior to the filing date;
and (iv) does not become operative for thirty (30) days from the date
of its filing on June 23, 1999. In particular, the Commission believes
the proposed rule change qualifies as a non-controversial filing
because the proposed standards do not significantly affect the
protection of investors or the public interest and do not impose any
significant burden on competition. At any time within sixty 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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6).
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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. Persons making written submission
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
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 the filing will also be
available for inspection and copying at the Board's principal offices.
All submissions should refer to the File No. SR-MSRB-99-6 and should be
submitted by August 4, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-17886 Filed 7-13-99; 8:45 am]
BILLING CODE 8010-01-M