[Federal Register Volume 70, Number 35 (Wednesday, February 23, 2005)]
[Notices]
[Pages 8863-8864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-736]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51214; File No. SR-NASD-2005-014]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Revisions to the Series 11 Examination Program

February 16, 2005
    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 January 31, 2005, the National Association of Securities Dealers, 
Inc. (``NASD'') 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 NASD. NASD 
filed this proposal 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 Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ U.S.C 78s(b)(1).
    \2\ CFR 240.19b-4.
    \3\ U.S.C 78s(b)(3)(A)(i).
    \4\ CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is filing revisions to the study outline and selection 
specifications for the Assistant Representative--Order Processing 
(Series 11) examination program.\5\ The proposed revisions update the 
material to reflect changes to the laws, rules, and regulations covered 
by the examination. NASD is not proposing any textual changes to the 
By-Laws, Schedules to the By-Laws, or Rules of NASD.
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    \5\ NASD also is proposing corresponding revisions to the Series 
11 question bank, but based upon instruction from the Commission 
staff, NASD is filing SR-NASD-2005-014 for immediate effectiveness, 
and is not filing the question bank for Commission review. See 
letter to Alden S. Adkins, Senior Vice President and General 
Counsel, NASD Regulation, from Belinda Blaine, Associate Director, 
Division of Market Regulation, SEC, dated July 24, 2000. The 
question bank is available for Commission review.
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    The revised study outline is available at NASD and at the 
Commission. However, NASD has omitted the Series 11 selection 
specifications from this filing and has submitted the specifications 
under separate cover to the Commission with a request for confidential 
treatment pursuant to Rule 24b-2 under the Act.\6\
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    \6\ CFR 240.24b-2.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD included statements 
concerning the purpose of and basis for its proposal and discussed any 
comments it received regarding the proposal. The text of these 
statements may be examined at the places specified in item IV below. 
NASD 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
    Pursuant to section 15A(g)(3) of the Act,\7\ which requires NASD to 
prescribe standards of training, experience, and competence for persons 
associated with NASD members, NASD has developed examinations, and 
administers examinations developed by other self-regulatory 
organizations, that are designed to establish that persons associated 
with NASD members have attained specified levels of competence and 
knowledge. NASD periodically reviews the content of the examinations to 
determine whether revisions are necessary or appropriate in view of 
changes pertaining to the subject matter covered by the examinations.
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    \7\ U.S.C 78o-3(g)(3).
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    The Series 11 examination qualifies an individual to function as an 
assistant representative to accept unsolicited securities orders from 
existing customers of a member firm. A Series 11 assistant 
representative may not solicit transactions or new accounts on behalf 
of the member, render investment advice, make recommendations to 
customers regarding the appropriateness of securities transactions, or 
effect transactions in securities markets on behalf of the member. 
Further, a Series 11 assistant representative may not be registered 
concurrently in any other capacity.A committee of industry 
representatives, together with NASD staff, recently undertook a review 
of the Series 11 examination program. As a result of this review, NASD 
is proposing revisions to the examination program to reflect changes to 
the laws, rules, and regulations covered by the examination, to include 
new securities products, such as exchange-traded funds, and to focus 
the examination more on the handling of customer accounts and orders. 
Based on these revisions, the title of Section 2 was changed from 
``Processing Customer Orders; Providing Price Information; and Order 
Processing'' to ``Customer Accounts and Orders.'' NASD is further 
proposing revisions to the study outline to reflect the new SEC short 
sale requirements.\8\ In addition, the number of questions on each 
section of the study outline were modified as follows: Types of 
Securities, decreased from 11 to 10 questions; Customer Accounts and 
Orders, increased from 19 to 24 questions; Securities Markets, 
decreased from 8 to 5 questions; and Securities Industry Regulations, 
decreased from 12 to 11 questions.
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    \8\ Exchange Act Release No. 50103 (July 28, 2004), 69 FR 48008 
(August 6, 2004)(S7-23-2003).
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    NASD is proposing similar changes to the corresponding sections of 
the Series 11 selection specifications and question bank. The number of 
questions on the Series 11 examination will remain at 50, and 
candidates will have one hour to complete the exam. Also, each question 
will continue to count one point, and each candidate must correctly 
answer 70 percent of the questions to receive a passing grade.
2. Statutory Basis
    NASD believes that the proposed revisions to the Series 11 
examination program are consistent with the provisions of sections 
15A(b)(6) \9\ and 15A(g)(3) of the Act,\10\ which authorize NASD to 
prescribe standards of training, experience, and competence for persons 
associated with NASD members.
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    \9\ U.S.C. 78o-3(b)(6).
    \10\ U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD 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.

[[Page 8864]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(i) of the Act \11\ and Rule 19b-4(f)(1) thereunder,\12\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
NASD proposes to implement the Series 11 examination program no later 
than April 29, 2005. NASD will announce the implementation date in a 
Notice to Members to be published no later than 60 days after SEC 
Notice of this filing.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(i).
    \12\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2005-014 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NASD-2005-014. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/ 
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the NASD. 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-NASD-2005-014 and should be submitted on or before March 
16, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-736 Filed 2-22-05; 8:45 am]
BILLING CODE 8010-01-P