Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Revisions to the Series 53 Examination Program, 41289-41291 [E6-11492]
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Federal Register / Vol. 71, No. 139 / Thursday, July 20, 2006 / Notices
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange and, in particular,
with Section 6(b)(5) of the Act,20 which
requires, among other things, that the
rules of a national securities exchange
be designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to, and
perfect the mechanism of, a free and
open market and a national market
system and, in general, to protect
investors and the public interest.21
The new COA functionality will
provide an electronic auction for
eligible complex orders. Under the COA
auction process, Market Makers with an
appointment in the relevant options
class and members acting as agent for
orders resting at the top of the COB in
the relevant options series will be able
to submit RFR Responses. At the
conclusion of the COA auction, the
auctioned order will execute against the
interest available in the EBook, the COB,
and/or RFR Responses submitted during
the COA.22 By providing an electronic
auction for eligible complex orders, the
Commission believes that the COA
process could facilitate the execution of
eligible complex orders and provide
them with an opportunity for price
improvement.
The Commission notes that the
CBOE’s rules provide that a pattern or
practice of submitting orders that cause
a COA to conclude early will be deemed
conduct inconsistent with just and
equitable principles of trade and a
violation of CBOE Rule 4.1,23 and that
the dissemination of information
regarding COA-eligible orders to third
parties will be deemed conduct
inconsistent with just and equitable
principles of trade and a violation of
CBOE Rule 4.1 and other CBOE rules.24
These provisions will require the CBOE
to surveil for, and should help to deter,
potential abuses of the COA process.
In addition, the Commission notes
that the COA system cannot be used to
trade a COA-eligible order against a
20 15
U.S.C. 78f(b)(5).
approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
22 See notes 10–12, supra, and accompanying
text. The Commission notes that, at the same price,
public customer orders in the COB and public
customer RFR Responses will trade against a COAeligible order before non-public customer orders in
the COB and non-public customer RFR Responses.
See CBOE Rule 6.53C(d)(v)(2)–(4).
23 See CBOE Rule 6.53C, Interpretation and Policy
.04.
24 See CBOE Rule 6.53C, Interpretation and Policy
.05.
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facilitated or solicited order. COAeligible orders, like other orders on the
Hybrid System, will be subject to CBOE
Rule 6.45A, Interpretation and Policies
.01 and .02, and CBOE Rule 6.45B,
Interpretation and Policies .01 and .02.
Accordingly, a CBOE member seeking to
trade with its customer’s COA-eligible
order would be required to comply with
Interpretation and Policy .01 of CBOE
Rule 6.45A or 6.45B, as applicable, and
a CBOE member seeking to cross its
customer’s COA-eligible order with a
solicited order would be required to
comply with Interpretation and Policy
.02 of CBOE Rule 6.45A or 6.45B, as
applicable.
The Commission believes that the
changes to the COB should facilitate the
execution of complex orders. In this
regard, the proposal revises CBOE Rule
6.53C(c) to provide that quotes in the
EBook, as well as orders in the EBook,
may execute against a complex order in
the COB, and that market participants,
as defined in CBOE Rule 6.45A or
6.45B, as applicable, may submit quotes,
as well as orders, to trade against orders
in the COB. In addition, the proposal
revises CBOE Rule 6.53C(c) to allow
complex orders routed to or resting in
the COB to be expressed and executed
in one-cent increments, thereby
providing additional price points at
which complex orders could be
executed.25 The proposal also clarifies
the operation of the COB by providing
that complex orders in the COB will be
allocated pursuant to the rules of
trading priority otherwise applicable to
incoming electronic orders in the
individual component legs,26 and that
complex orders will be allocated among
market participants pursuant to CBOE
Rule 6.45A or 6.45B, as applicable.27
The CBOE proposes to revise CBOE
Rule 6.42(3) to allow the legs of a
complex order to be executed in onecent increments, which, according to
the CBOE, will allow members to
execute complex order transactions
more easily. Accordingly, the
Commission believes that this change
could facilitate the execution of
complex orders. The Commission notes
that CBOE Rule 6.42(3) will continue to
require complex orders to be expressed
in multiplies of the minimum increment
to be entitled to priority under CBOE
Rule 6.45.
25 The appropriate CBOE committee will
determine, on a class-by-class basis, whether
complex orders routed to or resting in the COB may
be expressed in a multiple of the minimum
increment or in one-cent increments. See CBOE
Rule 6.53C(c)(ii).
26 See CBOE Rule 6.53C(c)(ii)(2).
27 See CBOE Rule 6.53C(c)(ii)(3).
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41289
CBOE Rule 6.42(3) currently requires
bids and offers in complex orders in
S&P 500 Index options, other than box
spreads, to be expressed in increments
no smaller than $0.05. The CBOE
proposes to apply this provision to S&P
100 Index options. The Commission
believes that this change is consistent
with the Act because of the similarities
between the S&P 500 Index and the S&P
100 Index.
Finally, the Commission believes that
the proposal to revise CBOE Rules 6.45,
6.45A, 6.45B, 6.9, and 7.4 to include the
complex orders defined in CBOE Rule
6.53C is consistent with the Act because
it should provide consistent treatment
for different types of complex orders
under the CBOE’s rules.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,28 that the
proposed rule change (SR–CBOE–2005–
65), as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.29
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–11491 Filed 7–19–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54141; File No. SR–MSRB–
2006–05]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to Revisions to the
Series 53 Examination Program
July 13, 2006.
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 27,
2006, the Municipal Securities
Rulemaking Board (‘‘MSRB’’ or
‘‘Board’’), filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) the proposed rule change as
described in Items I, II and III below,
which Items have been prepared by the
MSRB. The MSRB has designated the
proposed rule change as constituting a
stated policy, practice, or interpretation
with respect to the meaning,
administration, or enforcement of an
existing rule of the self-regulatory
28 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
29 17
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Federal Register / Vol. 71, No. 139 / Thursday, July 20, 2006 / Notices
organization pursuant to Section
19(b)(3)(A)(i) of the Act,3 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The MSRB is filing with the
Commission revisions to the study
outline and selection specifications for
the Municipal Securities Principal
Qualification Examination (Series 53)
program.5 The proposed revisions
update the material to reflect changes to
the rules and regulations covered in the
examination, as well as modify the
content of the examination program to
track more closely the job
responsibilities of a municipal securities
principal. The MSRB is not proposing
any textual changes to the rules of the
MSRB.
The revised study outline is available
on the MSRB’s Web site (https://
www.msrb.org), at the MSRB’s principal
office, and at the Commission’s Public
Reference Room. The MSRB has omitted
the Series 53 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
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.
3 15
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
5 The MSRB is also proposing corresponding
revisions to the Series 53 question bank, but based
upon instructions from the Commission staff, the
MSRB is submitting SR–MSRB–2006–05 for
immediate effectiveness pursuant to Seciton
19(b)(3)(A)(i) of the Act and Rule 19b–4(f)(1)
thereunder, and is not filing the question bank for
Commission review. See letter to Diane G. Klinke,
General Counsel, MSRB, from Belinda Blaine,
Associate Director, Division of Market Regulation,
SEC, dated July 24, 2000. The question bank is
available for Commission review.
6 17 CFR 240.24b–2.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Section 15B(b)(2)(A) of the Act 7
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. The MSRB has developed
examinations that are designed to
establish that persons associated with
brokers, dealers and municipal
securities dealers that effect transactions
in municipal securities have attained
specified levels of competence and
knowledge. The MSRB 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.
MSRB Rule G–3(b) states that a
municipal securities principal has
responsibility to oversee the municipal
securities activities of a broker, dealer or
municipal securities dealer. In this
capacity, a municipal securities
principal manages, directs or supervises
one or more of the following activities
associated with the conduct of
municipal securities business:
Underwriting; trading; buying or selling
municipal securities to or from
customers; rendering financial advisory
or consultant services to issuers of
municipal securities; communications
to customers about any municipal
securities activities; processing,
clearing, and (in the case of securities
firms) safekeeping of municipal
securities; and training of principals and
representatives. The only examination
that qualifies a municipal securities
principal is the Municipal Securities
Principal Qualification Examination
(Series 53).
A committee of industry members and
MSRB staff recently completed a review
of the job requirements for a municipal
securities principal and the Series 53
examination program. As a result of this
review, the MSRB is updating the
content of the examination to cover
certain rules or provisions of rules that
were promulgated since the last revision
of the outline. Areas added to the study
outline include:
• Definition of municipal fund
security.
• Qualification and numerical
requirements for municipal fund
securities limited principals.
PO 00000
7 15
U.S.C. 78o–4(b)(2)(A).
Frm 00094
Fmt 4703
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• Records concerning compliance
with Rule G–20, on gifts, gratuities and
non-cash compensation.
• SEC requirements for retention of
information on associated persons.
• New Rule G–38, on solicitation of
municipal securities business.
• Requirements regarding municipal
fund securities advertisements.
• Remarketing activities under Rule
G–23, on activities of financial advisors.
• Definitions regarding the Real-Time
Transaction Reporting System.
• Minimum denominations.
• Forwarding official
communications.
The MSRB has deleted from the study
outline rules or rule provisions that are
obsolete or do not have direct impact on
the daily work of a municipal securities
principal. These deletions include:
• Rule G–35, on arbitration.
• Requirements regarding the retaking
of qualification examinations and the
waiver of qualification requirements.
• Old Rule G–38, on consultants.
• References to the scope and notice
of Rule G–12(a).
• SEC requirements regarding lost
and stolen securities.
Technical changes have been made to
correct the citations for various rules
that have been amended. In addition, as
part of an ongoing effort to align the
examination more closely to the
supervisory duties of a municipal
securities principal, the MSRB is
modifying the content of the
examination to track the functional
workflow of a municipal securities
principal.
As a result of the revisions noted
above, the MSRB is modifying the
number of questions on each section of
the Series 53 study outline as follows:
Part One—Federal Regulations, four
questions; Part Two—General
Supervision, 21 questions; Part Three—
Sales Supervision, 29 questions; Part
Four—Origination and Syndication, 22
questions; and Part Six—Operations, 16
questions. Coverage on Part Five—
Trading remains unchanged with eight
questions. The revised examination
continues to cover areas of knowledge
required for effective supervision of
municipal securities activities.
The MSRB is proposing these changes
to the entire content of the Series 53
examination, including the selection
specifications and question bank. The
number of questions on the Series 53
examination will remain at 100, and
candidates will continue to be allowed
three and one-half hours for each testing
session. Also, each question will
continue to count one point, and each
candidate must correctly answer 70
percent of the questions in order to
receive a passing grade.
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Federal Register / Vol. 71, No. 139 / Thursday, July 20, 2006 / Notices
2. Statutory Basis
The MSRB believes that the proposed
revisions to the Series 53 examination
program are consistent with the
provisions of Section 15B(b)(2)(A) of the
Act,8 which 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. 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The MSRB does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
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.
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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 9 and Rule 19b–
4(f)(1) thereunder,10 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. MSRB proposes to
implement the revised Series 53
examination program on August 1,
2006. 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.11
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
8 15
U.S.C. 78o–4(b)(2)(A).
U.S.C. 78s(b)(3)(A)(i).
10 17 CFR 240.19b–4(f)(1).
11 See Section 19(b)(3)(C) of the Act, 15 U.S.C.
78s(b)(3)(C).
9 15
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41291
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:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change
and Amendment No. 1 Thereto and
Notice of Filing and Order Granting
Accelerated Approval to Amendment
Nos. 2 and 3 Thereto Relating to the
Nasdaq Market Center
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–MSRB–2006–05 on the
subject line.
[Release No. 34–54155; File No. SR–
NASDAQ–2006–001]
July 14, 2006.
Paper Comments
I. Introduction
On February 7, 2006, The NASDAQ
• Send paper comments in triplicate
Stock Market LLC (‘‘Nasdaq’’ or
to Nancy M. Morris, Secretary,
‘‘Exchange’’) filed with the Securities
Securities and Exchange Commission,
and Exchange Commission
Station Place, 100 F Street, NE.,
(‘‘Commission’’), pursuant to Section
Washington, DC 20549–1090.
19(b)(1) of the Securities Exchange Act
All submissions should refer to File
of 1934 (‘‘Act’’),1 and Rule 19b–4
Number SR–MSRB–2006–05. This file
thereunder,2 a proposed rule change to
number should be included on the
integrate the operations of the existing
subject line if e-mail is used. To help the Nasdaq Market Center, along with
Commission process and review your
Nasdaq’s Brut and INET facilities. On
comments more efficiently, please use
March 29, 2006, Nasdaq submitted
only one method. The Commission will Amendment No. 1 to the proposed rule
post all comments on the Commission’s change (‘‘Amendment No. 1’’). The
Internet Web site (https://www.sec.gov/
proposed rule change, as amended by
rules/sro.shtml). Copies of the
Amendment No. 1, was published for
submission, all subsequent
comment in the Federal Register on
amendments, all written statements
April 14, 2006.3 The Commission
with respect to the proposed rule
received twelve comments regarding the
change that are filed with the
proposal.4
Commission, and all written
1 15 U.S.C. 78s(b)(1).
communications relating to the
2 17 CFR 240.19b–4.
proposed rule change between the
3 See Securities Exchange Act Release No. 53583
Commission and any person, other than
(March 31, 2006), 71 FR 19573 (‘‘Single Book
those that may be withheld from the
Proposal’’).
public in accordance with the
4 See letter from Kim Bang, Chief Executive
provisions of 5 U.S.C. 552, will be
Officer, Bloomberg Tradebook LLC (‘‘Bloomberg’’)
(‘‘Kim Bang’’) to Brian G. Cartwright, General
available for inspection and copying in
Counsel, Commission, dated March 6, 2006
the Commission’s Public Reference
(‘‘Bloomberg Comment Letter I’’); letter from Kim
Room. Copies of such filing also will be Bang, David Cummings, Chief Executive Officer,
available for inspection and copying at
BATS Trading, Inc. (‘‘BATS’’) (‘‘David Cummings’’),
Ronald Pasternak, President, Direct Edge ECN LLC,
the principal office of the MSRB. All
and Martin Kaye, Chief Executive Officer, Track
comments received will be posted
ECN (‘‘Track’’) (‘‘Martin Kaye’’) to Robert L.D.
without change; the Commission does
Colby, Acting Director, Division of Market
not edit personal identifying
Regulation (‘‘Davision’’), Commission, dated March
21, 2006 (‘‘ECN Comment Letter’’); letter from Kim
information from submissions. You
Bang to Jonathan G. Katz, Secretary, Commission
should submit only information that
(‘‘Jonathan Katz’’), dated May 5, 2006 (‘‘Bloomberg
you wish to make available publicly. All Comment Letter II’’); letter from David Cummings
submissions should refer to File
to Christopher Cox, Chairman, Commission
Number SR–MSRB–2006–05 and should (‘‘Chairman Cox’’), dated May 5, 2006 (‘‘BATS
Comment Letter’’); letter from Martin Kaye to
be submitted on or before August 10,
Chairman Cox, dated May 5, 2006 (‘‘Track
2006.
Comment Letter I’’); letter from Leonard J. Amoruso,
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–11492 Filed 7–19–06; 8:45 am]
BILLING CODE 8010–01–P
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12 17
Senior Managing Director and Chief Compliance
Officer, Knight Capital Group, Inc. (‘‘Knight’’) to
Nancy M. Morris, Secretary, Commission (‘‘Nancy
Morris’’); dated May 5, 2006 (‘‘Knight Comment
Letter’’); letter from C. Thomas Richardson,
Managing Director, Citigroup Global Markets Inc.
(‘‘Citigroup’’) to Nancy Morris, dated May 17, 2006
(‘‘Citigroup Comment Letter’’); letter from Kim Bang
to Nancy Morris, dated May 30, 2006 (‘‘Bloomberg
Comment Letter II’’); letter from David C. Chavern,
Vice President, Capital Markets Program, U.S.
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 71, Number 139 (Thursday, July 20, 2006)]
[Notices]
[Pages 41289-41291]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-11492]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54141; File No. SR-MSRB-2006-05]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Relating to Revisions to the Series 53 Examination Program
July 13, 2006.
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 27, 2006, the Municipal Securities Rulemaking Board (``MSRB''
or ``Board''), filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the MSRB.
The MSRB has designated the proposed rule change as constituting a
stated policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of the self-
regulatory
[[Page 41290]]
organization pursuant to Section 19(b)(3)(A)(i) of the Act,\3\ 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(i).
\4\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB is filing with the Commission revisions to the study
outline and selection specifications for the Municipal Securities
Principal Qualification Examination (Series 53) program.\5\ The
proposed revisions update the material to reflect changes to the rules
and regulations covered in the examination, as well as modify the
content of the examination program to track more closely the job
responsibilities of a municipal securities principal. The MSRB is not
proposing any textual changes to the rules of the MSRB.
---------------------------------------------------------------------------
\5\ The MSRB is also proposing corresponding revisions to the
Series 53 question bank, but based upon instructions from the
Commission staff, the MSRB is submitting SR-MSRB-2006-05 for
immediate effectiveness pursuant to Seciton 19(b)(3)(A)(i) of the
Act and Rule 19b-4(f)(1) thereunder, and is not filing the question
bank for Commission review. See letter to Diane G. Klinke, General
Counsel, MSRB, from Belinda Blaine, Associate Director, Division of
Market Regulation, SEC, dated July 24, 2000. The question bank is
available for Commission review.
---------------------------------------------------------------------------
The revised study outline is available on the MSRB's Web site
(https://www.msrb.org), at the MSRB's principal office, and at the
Commission's Public Reference Room. The MSRB has omitted the Series 53
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\
---------------------------------------------------------------------------
\6\ 17 CFR 240.24b-2.
---------------------------------------------------------------------------
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
Section 15B(b)(2)(A) of the Act \7\ 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. The MSRB has
developed examinations that are designed to establish that persons
associated with brokers, dealers and municipal securities dealers that
effect transactions in municipal securities have attained specified
levels of competence and knowledge. The MSRB 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78o-4(b)(2)(A).
---------------------------------------------------------------------------
MSRB Rule G-3(b) states that a municipal securities principal has
responsibility to oversee the municipal securities activities of a
broker, dealer or municipal securities dealer. In this capacity, a
municipal securities principal manages, directs or supervises one or
more of the following activities associated with the conduct of
municipal securities business: Underwriting; trading; buying or selling
municipal securities to or from customers; rendering financial advisory
or consultant services to issuers of municipal securities;
communications to customers about any municipal securities activities;
processing, clearing, and (in the case of securities firms) safekeeping
of municipal securities; and training of principals and
representatives. The only examination that qualifies a municipal
securities principal is the Municipal Securities Principal
Qualification Examination (Series 53).
A committee of industry members and MSRB staff recently completed a
review of the job requirements for a municipal securities principal and
the Series 53 examination program. As a result of this review, the MSRB
is updating the content of the examination to cover certain rules or
provisions of rules that were promulgated since the last revision of
the outline. Areas added to the study outline include:
Definition of municipal fund security.
Qualification and numerical requirements for municipal
fund securities limited principals.
Records concerning compliance with Rule G-20, on gifts,
gratuities and non-cash compensation.
SEC requirements for retention of information on
associated persons.
New Rule G-38, on solicitation of municipal securities
business.
Requirements regarding municipal fund securities
advertisements.
Remarketing activities under Rule G-23, on activities of
financial advisors.
Definitions regarding the Real-Time Transaction Reporting
System.
Minimum denominations.
Forwarding official communications.
The MSRB has deleted from the study outline rules or rule
provisions that are obsolete or do not have direct impact on the daily
work of a municipal securities principal. These deletions include:
Rule G-35, on arbitration.
Requirements regarding the retaking of qualification
examinations and the waiver of qualification requirements.
Old Rule G-38, on consultants.
References to the scope and notice of Rule G-12(a).
SEC requirements regarding lost and stolen securities.
Technical changes have been made to correct the citations for
various rules that have been amended. In addition, as part of an
ongoing effort to align the examination more closely to the supervisory
duties of a municipal securities principal, the MSRB is modifying the
content of the examination to track the functional workflow of a
municipal securities principal.
As a result of the revisions noted above, the MSRB is modifying the
number of questions on each section of the Series 53 study outline as
follows: Part One--Federal Regulations, four questions; Part Two--
General Supervision, 21 questions; Part Three--Sales Supervision, 29
questions; Part Four--Origination and Syndication, 22 questions; and
Part Six--Operations, 16 questions. Coverage on Part Five--Trading
remains unchanged with eight questions. The revised examination
continues to cover areas of knowledge required for effective
supervision of municipal securities activities.
The MSRB is proposing these changes to the entire content of the
Series 53 examination, including the selection specifications and
question bank. The number of questions on the Series 53 examination
will remain at 100, and candidates will continue to be allowed three
and one-half hours for each testing session. Also, each question will
continue to count one point, and each candidate must correctly answer
70 percent of the questions in order to receive a passing grade.
[[Page 41291]]
2. Statutory Basis
The MSRB believes that the proposed revisions to the Series 53
examination program are consistent with the provisions of Section
15B(b)(2)(A) of the Act,\8\ which 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. 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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\8\ 15 U.S.C. 78o-4(b)(2)(A).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
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 \9\ and Rule 19b-4(f)(1) thereunder,\10\ 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.
MSRB proposes to implement the revised Series 53 examination program on
August 1, 2006. 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.\11\
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\9\ 15 U.S.C. 78s(b)(3)(A)(i).
\10\ 17 CFR 240.19b-4(f)(1).
\11\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-MSRB-2006-05 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-MSRB-2006-05. 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 (https://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 MSRB. 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-MSRB-2006-05 and should be submitted on or before August
10, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-11492 Filed 7-19-06; 8:45 am]
BILLING CODE 8010-01-P
