[Federal Register Volume 86, Number 190 (Tuesday, October 5, 2021)]
[Notices]
[Pages 55025-55028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21746]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93206; File No. SR-FINRA-2021-025]
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 Principal Examination
September 30, 2021.
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 27, 2021, the 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.
FINRA has designated the proposed rule change as ``establishing or
changing a due, fee or other charge'' under Section 19(b)(3)(A)(ii) of
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the
proposal effective upon receipt of this filing by the Commission. 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)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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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 Principal Examination (``Series 54 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 \5\
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\5\ Amendments to some Examination Fees in Section 4 of Schedule
A to the FINRA By-Laws were approved in SR-FINRA-2020-032 and become
effective on January 1, 2022. See Securities Exchange Act Release
No. 90176 (October 14, 2020), 85 FR 66592 (October 20, 2020) (Notice
of Filing and Immediate Effectiveness of File No. SR-FINRA-2020-
032).
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(a) through (b) No Change.
(c) The following fees shall be assessed to each individual who
takes 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.
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Examination No. Examination name Examination fee
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N/A......................... Securities Industry $60
Essentials (SIE)
Examination.
Series 4.................... Registered Options 105
Principal Examination.
Series 6.................... Investment Company 40
Products and Variable
Contracts
Representative
Examination.
Series 7.................... General Securities 245
Representative
Examination.
Series 9.................... General Securities 80
Sales Supervisor
Examination--Options
Module.
Series 10................... General Securities 125
Sales Supervisor
Examination--General
Module.
[[Page 55026]]
Series 14................... Compliance Official 350
Examination.
Series 16................... Supervisory Analyst 240
Examination.
Series 22................... Direct Participation 40
Programs
Representative
Examination.
Series 23................... General Securities 100
Principal Examination--
Sales Supervisor
Module.
Series 24................... General Securities 120
Principal Examination.
Series 26................... Investment Company 100
Products and Variable
Contracts Principal
Examination.
Series 27................... Financial and 120
Operations Principal
Examination.
Series 28................... Introducing Broker- 100
Dealer Financial and
Operations Principal
Examination.
Series 39................... Direct Participation 95
Programs Principal
Examination.
Series 50................... Municipal Advisor 115
Representative
Examination.
Series 51................... Municipal Fund 105
Securities Limited
Principal Examination.
Series 52................... Municipal Securities 110
Representative
Examination.
Series 53................... Municipal Securities 115
Principal Examination.
Series 54................... Municipal Advisor 115
Principal Examination.
Series 57................... Securities Trader 60
Examination.
Series 79................... Investment Banking 245
Representative
Examination.
Series 82................... Private Securities 40
Offering
Representative
Examination.
Series 86................... Research Analyst 185
Examination--Analysis.
Series 87................... Research Analyst 130
Examination--Regulator
y.
Series 99................... Operations Professional 40
Examination.
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(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 54
examination. The Municipal Securities Rulemaking Board (``MSRB'') has
established qualification classifications for municipal advisor
professionals. The Commission approved amendments to MSRB Rule G-3 that
established two new registration classifications for municipal
advisors: \6\ (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).\7\ Both
municipal advisor representatives and municipal advisor principals are
required to pass the Municipal Advisor Representative Examination
(``Series 50 examination'') to be qualified in accordance with MSRB
rules.\8\
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\6\ 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).
\7\ See Securities Exchange Act Release No. 74384 (February 26,
2015), 80 FR 11706 (March 4, 2015) (Notice of Filing of Amendment
Nos. 1 & 2 and Order Granting Accelerated Approval of File No. SR-
MSRB-2014-08).
\8\ See Securities Exchange Act Release No. 75865 (September 9,
2015), 80 FR 55407 (September 15, 2015) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2015-031).
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MSRB Rule G-3(e)(ii)(A) was amended to establish additional
qualification requirements for municipal advisor principals, including
the requirement to pass the Series 54 examination.\9\ Under the amended
rule, municipal advisor principals are required to pass both the Series
50 examination and the Series 54 examination prior to becoming
qualified as a municipal advisor principal.\10\
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\9\ See Securities Exchange Act Release No. 84630 (November 20,
2018), 83 FR 60927 (November 27, 2018) (Order Approving File No. SR-
MSRB-2018-07).
\10\ Supra note 9.
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To provide persons who function as municipal advisor principals
with sufficient time to satisfy the requirement to pass the new Series
54 examination, the MSRB initially included a one-year grace period
from the effective date of the Series 54 examination, during which a
person functioning as a municipal advisor principal would be permitted
to continue to engage in the management, direction or supervision of
the municipal advisory activities of the municipal advisor and its
associated persons so long as such person is qualified with the Series
50 examination.\11\
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\11\ Supra note 9.
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The date by which individuals are required to become qualified with
the Series 54 examination has been extended three times due to impacts
related to the pandemic. In April 2020, the MSRB extended the date by
which individuals were required to become qualified with the Series 54
examination from November 12, 2020 to March 31, 2021.\12\ In December
2020, the MSRB further extended the time period from March 31, 2021 to
November 12, 2021.\13\ In September 2021, the MSRB further extended the
time period from November 12, 2021 to November 30, 2021.\14\
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\12\ See Securities Exchange Act Release No. 88694 (April 20,
2020), 85 FR 23088 (April 24, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-MSRB-2020-01).
\13\ See Securities Exchange Act Release No. 90621 (December 9,
2020), 85 FR 81254 (December 15, 2020) (Notice of Filing and
Immediate Effectiveness of File No. SR-MSRB-2020-09).
\14\ See Securities Exchange Act Release No. 92938 (September
10, 2020), 86 FR 51696 (September 16, 2021) (Notice of Filing and
Immediate Effectiveness of File No. SR-MSRB-2021-05).
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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
[[Page 55027]]
MSRB and other self-regulatory organizations.\15\ The SEC has
designated FINRA to administer and deliver the Series 54 examination
for municipal advisors.\16\
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\15\ 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).
\16\ 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 20, 2013), 78 FR 67468 (November 12, 2013) (S7-45-10)
(Registration of Municipal Advisors).
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FINRA currently administers examinations electronically through the
PROCTOR[supreg] system \17\ at testing centers operated by vendors
under contract with FINRA.\18\ 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
charges an administration and delivery fee of $115 for the Series 50
examination.\19\
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\17\ PROCTOR is a computer system that is specifically designed
for the administration and delivery of computer-based testing and
training.
\18\ The MSRB has temporarily allowed the Series 54 examination
to be taken online as an interim accommodation for individuals who
need to become appropriately qualified as a municipal advisor
principal before the compliance date. See supra note 14.
\19\ 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 is $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. See
also supra note 8.
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The proposed administration and delivery fee for the Series 54 exam
is also $115.\20\ The proposed administration and delivery fee will
offset FINRA's costs associated with the administration and delivery of
the Series 54 examination and, as discussed below, contribute to
supporting FINRA's other operations.
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\20\ The fee to take the Series 54 examination is $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. See also Securities Exchange Act Release No. 85135
(February 14, 2019), 84 FR 5513, 5514 n.15 (February 21, 2019)
(Notice of Filing and Immediate Effectiveness of File No. SR-MSRB-
2019-02).
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FINRA has filed the proposed rule change for immediate
effectiveness. The effective date and the implementation date will be
the date of filing.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\21\ 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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\21\ 15 U.S.C. 78o-3(b)(5).
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Reasonableness of the Proposed Fee
FINRA believes that the proposed administration and delivery fee
for the Series 54 examination is reasonable. In establishing an
administration and delivery fee of $115 for the Series 54 examination,
FINRA applied the same criteria as it does for establishing the fees
for other examinations with similar characteristics related to test
length and volume. In particular, the Series 54 examination fee is
consistent with the fee charged for the Series 50 examination, which
has the same number of questions (and thus requires the same testing
time).
The proposed administration and delivery fee will be used to cover
FINRA's costs associated with the administration and delivery of the
Series 54 examination, including the fees that vendors charge FINRA for
delivering qualification examinations through their test delivery
networks and PROCTOR system maintenance and enhancement expenses. The
proposed fee also will contribute to supporting FINRA's other
operations. As FINRA has explained previously, it is not feasible to
associate a direct affiliated revenue stream for each of its programs
and thus numerous operations and services must be funded by other
revenue sources, which include both general regulatory assessments and
use-based fees.\22\
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\22\ See supra note 5.
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The Proposed Fee Is Equitable and Not Unfairly Discriminatory
FINRA believes that the proposed administration and delivery fee
for the Series 54 examination is equitable and not unfairly
discriminatory. The proposed fee is a use-based fee and FINRA will
charge the fee each time a municipal advisor representative accesses
the content. Thus, the exam for municipal advisor principals will be
available on the same terms to every municipal advisor representative.
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 54
examination will have a limited economic impact on the industry.
MSRB rules require every municipal advisor to have at least one
municipal advisor principal.\23\ There are approximately 500 registered
municipal advisors.\24\ The administration and delivery fees may be
paid by the individuals taking the examination or their associated
firms.
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\23\ MSRB Rule G-3(e)(iii).
\24\ See MSRB-Registered Municipal Advisor Firms with Series-50
Qualified Representatives (Sept. 20, 2021, 2:06 p.m.), https://msrb.org/MARegistrants.
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FINRA administers 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. Regardless of whether individuals pay the fee or some
part of the fee is paid by firms, FINRA believes that the proposal is
likely to have minimal effects on firms' costs or liquidity. The
proposal will therefore have at most minimal competitive effects.
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 \25\ and paragraph (f)(2) of Rule 19b-4
thereunder.\26\ 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
[[Page 55028]]
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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\25\ 15 U.S.C. 78s(b)(3)(A).
\26\ 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-FINRA-2021-025 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2021-025. 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 a.m. and 3
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. 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-
FINRA-2021-025 and should be submitted on or before October 26, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21746 Filed 10-4-21; 8:45 am]
BILLING CODE 8011-01-P