[Federal Register Volume 84, Number 35 (Thursday, February 21, 2019)]
[Notices]
[Pages 5513-5515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02894]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85135; File No. SR-MSRB-2019-02]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend Rule A-16, on Examination Fees, To Establish a Test
Development Fee for the Series 54 Examination
February 14, 2019.
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 February 11, 2019 the Municipal Securities Rulemaking Board
(``MSRB'') 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 the MSRB. 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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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB filed with the Commission a proposed rule change to amend
Rule A-16, on examination fees, to establish a test development fee for
the Municipal Advisor Principal Qualification Examination (``Series 54
examination'') (the ``proposed rule change''). The MSRB has designated
the proposed rule change for immediate effectiveness pursuant to
Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) \4\
thereunder.
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\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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The text of the proposed rule change is available on the MSRB's
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2019-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
The purpose of the proposed rule change is to establish a test
development fee of $150 for the new Series 54 examination to align with
the MSRB's current test development fee of $150 for each of its four
existing professional qualification examinations.\5\ Section 15B of the
Act 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 and municipal entities or obligated persons''
\6\ and requires persons in any such class to pass tests prescribed by
the
[[Page 5514]]
Board.\7\ Section 15B(b)(2)(L)(iii) of the Act further requires the
MSRB to establish professional standards for municipal advisors.\8\ A
professional qualification examination is intended to determine whether
an individual meets the MSRB's required qualification standards. On
November 20, 2018, the SEC approved the MSRB's proposed rule change to,
among other things, amend Rule G-3, on professional qualification
requirements, to require persons who meet the definition of a municipal
advisor principal \9\ to pass the Series 54 examination in order to
become appropriately qualified as a municipal advisor principal.\10\
The Series 54 examination is designed to measure an individual's
ability to apply the applicable federal securities laws and MSRB rules
to the municipal advisory activities of the municipal advisor. The
establishment of qualification requirements for municipal advisor
principals ensures that such persons have a specified level of
competency that is appropriate in the public interest and for the
protection of investors, and municipal entities and obligated persons.
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\5\ The four MSRB-owned examinations are the: Municipal Advisor
Representative Qualification Examination; Municipal Fund Securities
Limited Principal Qualification Examination; Municipal Securities
Representative Qualification Examination; and the Municipal
Securities Principal Qualification Examination and are all
developed, implemented and maintained by the MSRB. In 2015, the MSRB
filed amendments to A-16 to institute a test development fee for the
Series 50 examination and to change the test development fee for
each of the MSRB-owned examinations from $60 to $150 to address the
growing disproportion between the examination fees collected and the
program costs. See Exchange Act Release No. 74561 (March 23, 2015),
80 FR 16485 (March 27, 2015) (File No. SR-MSRB-2015-01).
\6\ 15 U.S.C. 78o-4(b)(2)(A).
\7\ 15 U.S.C. 78o-4(b)(2)(A)(iii).
\8\ 15 U.S.C. 78o-4(b)(2)(L)(iii).
\9\ Under Rule G-3(e), a ``municipal advisor principal'' is
defined as ``a natural person associated with a municipal advisor
who is qualified as a municipal advisor representative and is
directly engaged in the management, direction or supervision of the
municipal advisory activities of the municipal advisor and its
associated persons.''
\10\ See Exchange Act Release No. 84630 (November 20, 2018), 83
FR 60927 (November 27, 2018) (File No. SR-MSRB-2018-07).
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The Series 54 examination, as with all MSRB-owned professional
qualification examinations, has been developed by the MSRB in
consultation with the MSRB's Professional Qualification Advisory
Committee (PQAC) and its retained psychometrician,\11\ and in
accordance with The Standards for Educational and Psychological
Testing.\12\ The MSRB adhered to recognized test development practices
by performing a job study to determine the appropriate topics to be
covered on the Series 54 examination and the weighting of such
topics.\13\
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\11\ A psychometrician is an expert in a field of study devoted
to testing, measurement, and assessment.
\12\ See American Educational Research Association, American
Psychological Association and National Council on Measurement in
Education, ``The Standards for Educational and Psychological
Testing'' (2d ed. 2014).
\13\ The MSRB conducted a job study of municipal advisor
principals via a web-based survey. The job study was sent to over
500 municipal advisors with the MSRB receiving 212 responses to the
job study. A job study is an assessment of the essential skills that
are required to complete a particular function and is used as a
basis for defining relevant or suitable content for exam questions.
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The proposed test development fee to be assessed under Rule A-16 is
intended to partially offset the overall program costs to the MSRB. As
the MSRB has previously noted, the examination fee for each of its
examinations has not previously been, and is not intended to fully
offset the MSRB's program costs, but is intended to help defray a
portion of the cost of developing and implementing the examinations, as
well as the costs associated with monitoring the examinations for
effectiveness and ongoing maintenance of the examinations through a
review of the content and questions.\14\ The MSRB believes the test
development fee of $150 for the Series 54 examination is appropriate
and consistent with the fee assessed for other MSRB-owned examinations.
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\14\ See supra note 5.
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Municipal advisors who enroll an associated person to take the
Series 54 examination, as with all MSRB-owned examinations, will also
pay an administration and delivery fee to the Financial Industry
Regulatory Authority (``FINRA''), which provides the online portal for
examination enrollment and coordinates with the testing vendor for the
delivery of the MSRB's professional qualification examinations. The
additional fee is assessed by FINRA at the time a municipal advisor
enrolls an individual to take an examination.\15\
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\15\ The total cost to take the Series 54 examination, inclusive
of FINRA's administration and test delivery fee would be $265.00.
This cost is comparable to the total fee charged to take FINRA-
administered professional qualification examinations.
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2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(J) of the Act \16\ which provides that:
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\16\ 15 U.S.C. 78o-4(b)(2)(J).
each municipal securities broker, municipal securities dealer, and
municipal advisor shall pay to the Board such reasonable fees and
charges as may be necessary or appropriate to defray the costs and
expenses of operating and administering the Board. Such rules shall
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specify the amount of such fees and charges . . . .
The MSRB believes the proposed rule change appropriately aligns
with the requirements under Section 15B(b)(2)(J) in that it provides
for reasonable dues, fees and other charges for municipal advisors and
seeks to partially offset program costs associated with staff's effort
to develop and deliver such examinations and represents an equitable
allocation of fees for all MSRB-owned examinations.\17\
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\17\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
Section 15B(b)(2)(C) of the Act \18\ requires that MSRB rules not
be designed to impose any burden on competition not necessary or
appropriate in furtherance of the purpose of the Act. The MSRB believes
the proposed rule change is necessary and appropriate to ensure that
municipal advisors contribute to defraying the expenses associated with
the overall program costs for administering the MSRB's professional
qualification examinations, which was established, as authorized by the
Act, to prescribe ``standards of training, experience, competence, and
such other qualifications as the Board finds necessary . . . .'' \19\
As the MSRB has previously noted, revenue from the examination fee
falls well-short of actual program costs.\20\ Additionally, the
proposed rule change would align with the existing test development
fees, which are equitable to each dealer and municipal advisor without
regard to the nature of that regulated entity's business and are
assessed only as to those individuals associated with a regulated
entity that are engaging in activities that require such individuals to
become appropriately qualified.
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\18\ 15 U.S.C. 78o-4(b)(2)(C).
\19\ 15 U.S.C. 78o-4(b)(2)(A).
\20\ See supra note 5.
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In addition, Section 15B(b)(2)(L)(iv) of the Act \21\ provides that
MSRB rules may ``not impose a regulatory burden on small municipal
advisors that is not necessary or appropriate in the public interest
and for the protection of investors, municipal entities, and obligated
persons, provided that there is robust protection of investors against
fraud.'' The MSRB believes that its professional qualification
examinations, including the Series 54 examination, promote compliance
with applicable laws and regulations and are necessary for the
protection of investors, municipal entities and obligated persons. 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 these provisions and their purposes under the Act. The
fee for a professional qualification examination is a one-time fee for
individuals who pass the examination and such fee is equitably applied
across all municipal advisors. On net, the total examination fees to be
[[Page 5515]]
assessed under Rule A-16 will correlate to the number of individuals
associated with a municipal advisor that is required, pursuant to Rule
G-3, to take the Series 54 examination, which likely would be less for
smaller municipal advisors.
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\21\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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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 foregoing proposed rule change has become effective pursuant to
Section 19(b)(3)(A)(ii) of the Act \22\ and Rule 19b-4(f)(2) \23\
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 Act.
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\22\ 15 U.S.C. 78s(b)(3)(A)(ii).
\23\ 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 [email protected]. Please include
File Number SR-MSRB-2019-02 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2019-02. 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 the filing also will be available for inspection
and copying at the principal office of the MSRB. 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-MSRB-2019-02 and should be submitted on
or before March 14, 2019.
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\24\ 17 CFR 200.30-3(a)(12).
For the Commission, pursuant to delegated authority.\24\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02894 Filed 2-20-19; 8:45 am]
BILLING CODE 8011-01-P