Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of Proposed Rule Change Regarding Professional Qualifications and Information Concerning Associated Persons, 70207-70209 [2011-29104]
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Federal Register / Vol. 76, No. 218 / Thursday, November 10, 2011 / Notices
proposed in this submission for the
proprietary accounts. However, in order
to obtain portfolio margining treatment
for customers, ICC was required to file
the separate Customer-related Portfolio
Margining Request. Although the SEC
has not published ICC’s Customerrelated Portfolio Margining Request for
public comment, the SEC is interested
in receiving comments from the public.
ICC believes that the proposed rule
change will facilitate the prompt and
accurate settlement of security-based
swaps and contribute to the
safeguarding of securities and funds
associated with security-based swap
transactions. As discussed above, ICC
does not believe that the portfolio
margining-related proposed changes
raise an issue of unfair discrimination in
the use of ICC’s clearing services by
similarly situated participants.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
ICC does not believe the proposed
rule change would have any impact, or
impose any burden, on competition.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received from
Members, Participants or Others
Written comments relating to the
proposed rule change have not been
solicited or received. ICC will notify the
Commission of any written comments
received by ICC.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the proposed rule change or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
jlentini on DSK4TPTVN1PROD with NOTICES
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:
rules/sro.shtml) or Send an email to
rule-comments@sec.gov. Please include
File Number SR–ICC–2011–03 on the
subject line.
Paper Comments
Send paper comments in triplicate to
Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–ICC–2011–03. 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 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 Web site viewing and
printing in the Commission’s Public
Reference Section, 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 filings
will also be available for inspection and
copying at the principal office of ICC
and on ICC’s Web site at https://www.
theice.com/publicdocs/regulatory_
filings/ICEClearCredit_110411.pdf.
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–ICC–2011–03 and should
be submitted on or before December 1,
2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–29163 Filed 11–9–11; 8:45 am]
BILLING CODE P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
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70207
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65679, File No. SR–MSRB–
2011–17]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Order Granting Approval of
Proposed Rule Change Regarding
Professional Qualifications and
Information Concerning Associated
Persons
November 3, 2011.
I. Introduction
On September 13, 2011, the
Municipal Securities Rulemaking Board
(‘‘MSRB’’ or ‘‘Board’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Exchange Act’’),1 and Rule
19b–4 thereunder,2 a proposed rule
change consisting of amendments to
Rule G–3, on professional qualifications,
and Rule G–7, on information
concerning associated persons. The
proposed rule change was published for
comment in the Federal Register on
September 30, 2011.3 The Commission
received one comment letter regarding
the proposed rule change and the
MSRB’s response to that comment
letter.4
This order approves the proposed rule
change.
II. Background and Description of
Proposal
MSRB Rule G–3(a)(i) defines a
municipal securities representative as a
natural person associated with a broker,
dealer or municipal securities dealer
(‘‘dealer’’), other than a person whose
functions are solely clerical or
ministerial, whose activities include one
or more of the following:
1. Underwriting, trading or sales of
municipal securities;
2. Financial advisory or consultant
services for issuers in connection with
the issuance of municipal securities;
3. Research or investment advice with
respect to municipal securities; or
4. Any other activities that involve
communication, directly or indirectly,
with public investors in municipal
securities provided, however, that the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 65393
(September 26, 2011), 76 FR 60953 (the
‘‘Commission’s Notice’’).
4 See letter from Marian H. Desilets, President,
Association of Registration Management, Inc., dated
October 7, 2011, and letter from Margaret C. Henry,
General Counsel, Market Regulation, MSRB, dated
October 28, 2011.
2 17
E:\FR\FM\10NON1.SGM
10NON1
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70208
Federal Register / Vol. 76, No. 218 / Thursday, November 10, 2011 / Notices
activities enumerated in 3 and 4 above
are limited to such activities as they
relate to the activities enumerated in 1
and 2 above.
An individual seeking to become
qualified as a municipal securities
representative must pass either of two
qualification examinations—the
Municipal Securities Representative
Qualification Examination (Series 52) or
the General Securities Registered
Representative Examination (Series 7).
On September 7, 2011, FINRA filed
with the Commission a proposed rule
change to restructure the Series 7
examination to focus on a broader range
of securities products available for sale
by registered representatives. The effect
of these changes would be a deemphasis on non-sales aspects of the
activities of securities professionals. In
focusing on general principles
applicable to the buying and selling of
a broad range of securities, rather than
specific products, the restructured
Series 7 examination would reduce the
number of questions that test for
specific knowledge of municipal
securities and the rules of the MSRB.
Given the shift in emphasis of the Series
7 examination and the reduced number
of municipal questions, in the view of
the MSRB, passage of the Series 7
examination would no longer represent
a useful gauge of whether a securities
professional was qualified to perform
municipal securities activities other
than sales to, and purchases from,
customers 5 of municipal securities
(‘‘sales activities’’).
As a result of this restructured Series
7 examination, the MSRB filed the
proposed rule change consisting of
amendments to MSRB Rule G–3, on
professional qualifications. The
proposed rule change would provide
that the Series 7 examination would no
longer qualify individuals as
‘‘municipal securities representatives,’’
unless they were engaged solely in sales
activities or they passed the Series 7
examination prior to the effective date
of the proposed rule change. Instead,
passage of the Series 52 examination
would be required for any municipal
securities activities other than sales
activities.
The proposed rule change would
create a sub-category of municipal
securities representative referred to as a
‘‘municipal securities sales limited
representative’’ and would apply to
individuals whose activities with
respect to municipal securities are
limited exclusively to sales activities.
The proposed rule change would
provide that an individual could qualify
as a municipal securities sales limited
representative by passage of the Series
7 examination. Other individuals would
be required to pass the Series 52
examination in order to qualify as full
municipal securities representatives,
unless they had passed the Series 7
examination prior to the effective date
of the proposed rule change and had
maintained this registration.
The proposed rule change would also
require a municipal securities limited
representative who wished to become a
municipal securities principal to pass
the Series 52 examination prior to
taking the Series 53 municipal securities
principal examination. Otherwise, the
proposed amendments to Rule G–3
would not distinguish between
‘‘municipal securities sales limited
representatives’’ and other ‘‘municipal
securities representatives.’’
The MSRB also filed proposed
amendments to MSRB Rule G–7, on
information concerning associated
persons. Rule G–7 requires brokers,
dealers and municipal securities dealers
(‘‘dealers’’) to keep records concerning
their associated persons, including the
category of function they perform
‘‘whether municipal securities
principal, municipal securities sales
principal, municipal securities
representative or financial and
operations principal.’’ The proposed
rule change would add ‘‘municipal
securities sales limited representative’’
to that list.6 Additionally, the proposed
rule change would streamline Rule G–
7(b) by simply requiring that dealers
obtain either Form U4 (in the case of
non-bank dealers) or Form MSD–4 (in
the case of bank dealers), rather than
repeating the categories of information
required by those forms.
5 ‘‘Customer’’ is defined in MSRB Rule D–9 as
‘‘any person other than a broker, dealer or
municipal securities dealer acting in its capacity as
such or an issuer in transactions involving the sale
by the issuer of a new issue of its securities.’’
6 The proposed rule change would also add
‘‘municipal fund securities limited principal’’ to
this list to reflect the previous creation of this
separate category.
7 See supra note 4.
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16:38 Nov 09, 2011
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III. Discussion of Comments and
MSRB’s Response
The Commission received one
comment letter from the Association of
Registration Management, Inc. and a
response from the MSRB to the
comment letter.7
The commenter expressed concern
about the number of individual product
and regulation specific examinations
proposed, introduced or reintroduced
within the past 18 months, and stated
that these have caused considerable
burden on the industry to effectively
implement standards within firms to
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
comply with ongoing registration
requirements. The commenter further
stated that this protocol of individual
exams is making it difficult for
registered persons to fully and easily
understand what is required at all times
to ensure and remain compliant.
The MSRB responded that the
commenter’s letter mistakenly states
that the MSRB’s Series 52 and 53
examinations were among those new
examinations and that comments of that
nature are more appropriately addressed
to the Commission or FINRA. The
MSRB stated that it only took action
with respect to the Series 7 qualification
because of FINRA’s decision to change
the focus of the exam.
The commenter further stated that the
revised rule could potentially require
larger firms to have many of its
registered representatives obtain an
additional license to ensure continuity
and coverage across all business lines,
and that it is not clear if firms will be
required to apply for ‘‘MR position
codes’’ in order for their associated
persons to be grandfathered. The MSRB
responded that a dealer need take no
action in order for its associated persons
to be grandfathered.
The commenter also inquired whether
the MSRB will permit FINRA to
grandfather additional associated
persons who might have let their Series
7 registrations lapse before November 7,
2011. The MSRB responded that the
proposal would not permit such
additional grandfathering.
The commenter requested that the
effective date of the MSRB proposal be
delayed until late first quarter of 2012
at the earliest to allow firms to be able
to adequately identify and prepare
(budget, staffing, etc.) for compliance as
well as allow member firms to meet
other already announced regulatory
obligations along with year-end renewal
process workloads and annual training
requirements. The commenter further
requested consideration of the fact that
the industry had not been apprised of
the change until nearly 45 days prior to
the proposed implementation, stating
that such timing will cause an
unnecessary hardship.
The MSRB responded that it made the
decision to have the changes to Rule G–
3 take effect at the same time as FINRA’s
changes to the Series 7 examination and
that FINRA’s revised Series 7 will begin
to be implemented on November 7,
2011. The MSRB further stated that at
that time, the number of municipal
questions will be reduced, and those
questions will address only sales
activities. Accordingly, the MSRB stated
that such examination would no longer
assess an associated person’s ability to
E:\FR\FM\10NON1.SGM
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Federal Register / Vol. 76, No. 218 / Thursday, November 10, 2011 / Notices
perform other municipal securities
activities in a competent manner, so no
delay in the effective date of the Rule G–
3 changes is appropriate.
The Commission has carefully
considered the commenter’s concerns
about the MSRB’s proposed changes to
the licensing requirements for
associated persons of brokers, dealers or
municipal securities dealers for
municipal securities activities other
than sales to customers, the scope of the
‘‘grandfather’’ provisions, and the
effective date of the proposed rule
change, and does not believe the
proposed changes are inconsistent with
the Exchange Act.
jlentini on DSK4TPTVN1PROD with NOTICES
IV. Discussion and Commission
Findings
The Commission has carefully
considered the proposed rule change,
the comment letter received, and the
MSRB’s response to the comment letter
and finds that the proposed rule change
is consistent with the requirements of
the Exchange Act and the rules and
regulations thereunder applicable to the
MSRB.8 The Commission believes that
the proposed rule change is consistent
with the provisions of Section
15B(b)(2)(A) of the Exchange Act, 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
and municipal entities or obligated
persons.’’ Section 15B(b)(2)(A) of the
Exchange Act also provides that the
Board may appropriately classify
municipal securities brokers, municipal
securities dealers, and municipal
advisors and persons associated with
municipal securities brokers, municipal
securities dealers, and municipal
advisors and require persons in any
such class to pass tests prescribed by the
Board.
The proposed rule change is also
consistent with the provisions of
Section 15B(b)(2)(A) of the Exchange
Act in that the proposed rule change
will ensure that individuals seeking to
engage in more than sales activities will
be tested on their qualification and
competency to engage in such other
municipal securities activities. These
individuals will be required to pass an
examination that includes questions
both on municipal securities and the
municipal markets and on U.S.
government, Federal agency and other
8 In approving the proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition
and capital formation. 15 U.S.C. 78c (f).
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16:38 Nov 09, 2011
Jkt 226001
financial instruments, economic
activity, government policy, factors
affecting interest rates, and applicable
Federal securities laws and regulations.
The proposed rule change will also
more closely align the information
dealers are required to obtain pursuant
to Rule G–7 with the information
already required by FINRA and the bank
regulators, thereby reducing the
administrative burden on such dealers.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,9
that the proposed rule change (SR–
MSRB–2011–17) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–29104 Filed 11–9–11; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Delegation of Authority: 304–1]
Delegation by the Secretary of State to
the Under Secretary of State for Arms
Control and International Security of
Authority To Submit Certain NonProliferation Reports to Congress
By virtue of the authority vested in
me as the Secretary of State, including
Section 1 of the State Department Basic
Authorities Act, as amended (22 U.S.C.
2651a), the authorities enumerated
below, and Executive Order 13346, I
hereby delegate to the Under Secretary
for Arms Control and International
Security, to the extent authorized by
law, the authority to approve
submission of reports to Congress
pursuant to:
(1) Section 1344 of the Foreign
Relations Authorization Act, Fiscal Year
2003, Public Law 207–228;
(2) Section 2809(c)(2) of the Foreign
Affairs Reform and Restructuring Act of
1998, Public Law 105–277;
(3) Section 1343(a) of the Iran Nuclear
Proliferation Prevent Act of 2002
(incorporated in the Foreign Relations
Authorization Act, Fiscal Year 2003),
Public Law 107–228;
(4) Section 204(c) of the International
Emergency Economic Powers Act
(50 U.S.C. 1701 et seq.) and Section
401(c) of the National Emergencies Act
(50 U.S.C. 1601 et seq.);
9 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
10 17
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70209
(5) Section 1308(a) of the Foreign
Relations Authorization Act for FY
2003, Public Law 107–228;
(6) Determination and Congressional
Reporting Requirement Concerning
Israeli Participation in the IAEA
required by the Foreign Operations,
Export Financing, and Related Programs
Appropriations Act, 2006, Title II of
Public Law 109–102; and
(7) Certification consistent with
section 2(7)(C)(i) of the resolution of
advice and consent to ratification of the
Chemical Weapons Convention adopted
by the Senate on April 24, 1997, with
respect to the effectiveness and viability
of the Australia Group.
Any act, executive order, regulation or
procedure subject to, or affected by this
delegation shall be deemed to be such
act, executive order, regulation or
procedure, as amended from time to
time.
Notwithstanding this delegation of
authority, the Secretary, the Deputy
Secretary, or the Deputy Secretary for
Management and Resources may at any
time exercise any authority or function
delegated by this delegation or
authority.
This Delegation of authority
supersedes Delegation of Authority 304,
dated February 16, 2006, and shall be
published in the Federal Register.
Dated: October 28, 2011.
Hillary Rodham Clinton,
Secretary of State.
[FR Doc. 2011–29154 Filed 11–9–11; 8:45 am]
BILLING CODE 4710–27–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
[Docket No. DOT–OST–2011–0129]
Proposed Information Collection
Request; Notice of New Requirements
and Procedures for Grant Payment
Request Submission
Department of Transportation
(DOT).
ACTION: Notice with request for
comments.
AGENCY:
The DOT invites the public
and other Federal agencies to comment
on a proposed information collection
concerning new requirements and
procedures for grant payment request
submission. DOT will submit the
proposed information collection request
to the Office of Management and Budget
(OMB) for review, as required by the
Paperwork Reduction Act of 1995 (PRA)
(44 U.S.C. 3506(c)(2)(A)). This notice
sets forth new requirements and
SUMMARY:
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]]>Agencies
[Federal Register Volume 76, Number 218 (Thursday, November 10, 2011)]
[Notices]
[Pages 70207-70209]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29104]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65679, File No. SR-MSRB-2011-17]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Granting Approval of Proposed Rule Change Regarding
Professional Qualifications and Information Concerning Associated
Persons
November 3, 2011.
I. Introduction
On September 13, 2011, the Municipal Securities Rulemaking Board
(``MSRB'' or ``Board''), filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Exchange Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change consisting of amendments to Rule
G-3, on professional qualifications, and Rule G-7, on information
concerning associated persons. The proposed rule change was published
for comment in the Federal Register on September 30, 2011.\3\ The
Commission received one comment letter regarding the proposed rule
change and the MSRB's response to that comment letter.\4\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 65393 (September 26,
2011), 76 FR 60953 (the ``Commission's Notice'').
\4\ See letter from Marian H. Desilets, President, Association
of Registration Management, Inc., dated October 7, 2011, and letter
from Margaret C. Henry, General Counsel, Market Regulation, MSRB,
dated October 28, 2011.
---------------------------------------------------------------------------
This order approves the proposed rule change.
II. Background and Description of Proposal
MSRB Rule G-3(a)(i) defines a municipal securities representative
as a natural person associated with a broker, dealer or municipal
securities dealer (``dealer''), other than a person whose functions are
solely clerical or ministerial, whose activities include one or more of
the following:
1. Underwriting, trading or sales of municipal securities;
2. Financial advisory or consultant services for issuers in
connection with the issuance of municipal securities;
3. Research or investment advice with respect to municipal
securities; or
4. Any other activities that involve communication, directly or
indirectly, with public investors in municipal securities provided,
however, that the
[[Page 70208]]
activities enumerated in 3 and 4 above are limited to such activities
as they relate to the activities enumerated in 1 and 2 above.
An individual seeking to become qualified as a municipal securities
representative must pass either of two qualification examinations--the
Municipal Securities Representative Qualification Examination (Series
52) or the General Securities Registered Representative Examination
(Series 7).
On September 7, 2011, FINRA filed with the Commission a proposed
rule change to restructure the Series 7 examination to focus on a
broader range of securities products available for sale by registered
representatives. The effect of these changes would be a de-emphasis on
non-sales aspects of the activities of securities professionals. In
focusing on general principles applicable to the buying and selling of
a broad range of securities, rather than specific products, the
restructured Series 7 examination would reduce the number of questions
that test for specific knowledge of municipal securities and the rules
of the MSRB. Given the shift in emphasis of the Series 7 examination
and the reduced number of municipal questions, in the view of the MSRB,
passage of the Series 7 examination would no longer represent a useful
gauge of whether a securities professional was qualified to perform
municipal securities activities other than sales to, and purchases
from, customers \5\ of municipal securities (``sales activities'').
---------------------------------------------------------------------------
\5\ ``Customer'' is defined in MSRB Rule D-9 as ``any person
other than a broker, dealer or municipal securities dealer acting in
its capacity as such or an issuer in transactions involving the sale
by the issuer of a new issue of its securities.''
---------------------------------------------------------------------------
As a result of this restructured Series 7 examination, the MSRB
filed the proposed rule change consisting of amendments to MSRB Rule G-
3, on professional qualifications. The proposed rule change would
provide that the Series 7 examination would no longer qualify
individuals as ``municipal securities representatives,'' unless they
were engaged solely in sales activities or they passed the Series 7
examination prior to the effective date of the proposed rule change.
Instead, passage of the Series 52 examination would be required for any
municipal securities activities other than sales activities.
The proposed rule change would create a sub-category of municipal
securities representative referred to as a ``municipal securities sales
limited representative'' and would apply to individuals whose
activities with respect to municipal securities are limited exclusively
to sales activities. The proposed rule change would provide that an
individual could qualify as a municipal securities sales limited
representative by passage of the Series 7 examination. Other
individuals would be required to pass the Series 52 examination in
order to qualify as full municipal securities representatives, unless
they had passed the Series 7 examination prior to the effective date of
the proposed rule change and had maintained this registration.
The proposed rule change would also require a municipal securities
limited representative who wished to become a municipal securities
principal to pass the Series 52 examination prior to taking the Series
53 municipal securities principal examination. Otherwise, the proposed
amendments to Rule G-3 would not distinguish between ``municipal
securities sales limited representatives'' and other ``municipal
securities representatives.''
The MSRB also filed proposed amendments to MSRB Rule G-7, on
information concerning associated persons. Rule G-7 requires brokers,
dealers and municipal securities dealers (``dealers'') to keep records
concerning their associated persons, including the category of function
they perform ``whether municipal securities principal, municipal
securities sales principal, municipal securities representative or
financial and operations principal.'' The proposed rule change would
add ``municipal securities sales limited representative'' to that
list.\6\ Additionally, the proposed rule change would streamline Rule
G-7(b) by simply requiring that dealers obtain either Form U4 (in the
case of non-bank dealers) or Form MSD-4 (in the case of bank dealers),
rather than repeating the categories of information required by those
forms.
---------------------------------------------------------------------------
\6\ The proposed rule change would also add ``municipal fund
securities limited principal'' to this list to reflect the previous
creation of this separate category.
---------------------------------------------------------------------------
III. Discussion of Comments and MSRB's Response
The Commission received one comment letter from the Association of
Registration Management, Inc. and a response from the MSRB to the
comment letter.\7\
---------------------------------------------------------------------------
\7\ See supra note 4.
---------------------------------------------------------------------------
The commenter expressed concern about the number of individual
product and regulation specific examinations proposed, introduced or
reintroduced within the past 18 months, and stated that these have
caused considerable burden on the industry to effectively implement
standards within firms to comply with ongoing registration
requirements. The commenter further stated that this protocol of
individual exams is making it difficult for registered persons to fully
and easily understand what is required at all times to ensure and
remain compliant.
The MSRB responded that the commenter's letter mistakenly states
that the MSRB's Series 52 and 53 examinations were among those new
examinations and that comments of that nature are more appropriately
addressed to the Commission or FINRA. The MSRB stated that it only took
action with respect to the Series 7 qualification because of FINRA's
decision to change the focus of the exam.
The commenter further stated that the revised rule could
potentially require larger firms to have many of its registered
representatives obtain an additional license to ensure continuity and
coverage across all business lines, and that it is not clear if firms
will be required to apply for ``MR position codes'' in order for their
associated persons to be grandfathered. The MSRB responded that a
dealer need take no action in order for its associated persons to be
grandfathered.
The commenter also inquired whether the MSRB will permit FINRA to
grandfather additional associated persons who might have let their
Series 7 registrations lapse before November 7, 2011. The MSRB
responded that the proposal would not permit such additional
grandfathering.
The commenter requested that the effective date of the MSRB
proposal be delayed until late first quarter of 2012 at the earliest to
allow firms to be able to adequately identify and prepare (budget,
staffing, etc.) for compliance as well as allow member firms to meet
other already announced regulatory obligations along with year-end
renewal process workloads and annual training requirements. The
commenter further requested consideration of the fact that the industry
had not been apprised of the change until nearly 45 days prior to the
proposed implementation, stating that such timing will cause an
unnecessary hardship.
The MSRB responded that it made the decision to have the changes to
Rule G-3 take effect at the same time as FINRA's changes to the Series
7 examination and that FINRA's revised Series 7 will begin to be
implemented on November 7, 2011. The MSRB further stated that at that
time, the number of municipal questions will be reduced, and those
questions will address only sales activities. Accordingly, the MSRB
stated that such examination would no longer assess an associated
person's ability to
[[Page 70209]]
perform other municipal securities activities in a competent manner, so
no delay in the effective date of the Rule G-3 changes is appropriate.
The Commission has carefully considered the commenter's concerns
about the MSRB's proposed changes to the licensing requirements for
associated persons of brokers, dealers or municipal securities dealers
for municipal securities activities other than sales to customers, the
scope of the ``grandfather'' provisions, and the effective date of the
proposed rule change, and does not believe the proposed changes are
inconsistent with the Exchange Act.
IV. Discussion and Commission Findings
The Commission has carefully considered the proposed rule change,
the comment letter received, and the MSRB's response to the comment
letter and finds that the proposed rule change is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to the MSRB.\8\ The Commission believes that the
proposed rule change is consistent with the provisions of Section
15B(b)(2)(A) of the Exchange Act, 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 and municipal
entities or obligated persons.'' Section 15B(b)(2)(A) of the Exchange
Act also provides that the Board may appropriately classify municipal
securities brokers, municipal securities dealers, and municipal
advisors and persons associated with municipal securities brokers,
municipal securities dealers, and municipal advisors and require
persons in any such class to pass tests prescribed by the Board.
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\8\ In approving the proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition and capital formation. 15 U.S.C. 78c (f).
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The proposed rule change is also consistent with the provisions of
Section 15B(b)(2)(A) of the Exchange Act in that the proposed rule
change will ensure that individuals seeking to engage in more than
sales activities will be tested on their qualification and competency
to engage in such other municipal securities activities. These
individuals will be required to pass an examination that includes
questions both on municipal securities and the municipal markets and on
U.S. government, Federal agency and other financial instruments,
economic activity, government policy, factors affecting interest rates,
and applicable Federal securities laws and regulations. The proposed
rule change will also more closely align the information dealers are
required to obtain pursuant to Rule G-7 with the information already
required by FINRA and the bank regulators, thereby reducing the
administrative burden on such dealers.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\9\ that the proposed rule change (SR-MSRB-2011-17) be,
and it hereby is, approved.
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\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-29104 Filed 11-9-11; 8:45 am]
BILLING CODE 8011-01-P
