Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Revise the Series 6 Examination Program, 64566-64569 [2013-25443]

Download as PDF 64566 Federal Register / Vol. 78, No. 209 / Tuesday, October 29, 2013 / Notices because the shift from an expiration date of the Saturday following the third Friday to the third Friday is anticipated to be adopted industry-wide and will apply to multiple listed classes. The proposed changes in turn will allow BX to continue to compete with other exchanges making similar rule changes. For the reasons above, the Exchange does not believe that the proposed rule change would impose a burden on competition. 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. The Exchange notes, however, that a favorable comment was submitted to the OCC filing. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act 15 and Rule 19b–4(f)(6) 16 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments mstockstill on DSK4VPTVN1PROD with NOTICES 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: 15 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 16 17 VerDate Mar<15>2010 18:15 Oct 28, 2013 Jkt 232001 Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BX–2013–055 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–BX–2013–055. 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 (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 Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. 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 publicly available. All submissions should refer to File Number SR–BX– 2013–055 and should be submitted on or before November 19, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–25445 Filed 10–28–13; 8:45 am] BILLING CODE 8011–01–P 17 17 PO 00000 CFR 200.30–3(a)(12). Frm 00100 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70744; File No. SR–FINRA– 2013–045] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Revise the Series 6 Examination Program October 23, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘SEA’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 16, 2013, 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 ‘‘constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule’’ under Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b–4(f)(1) 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is filing revisions to the content outline and selection specifications for the Investment Company and Variable Contracts Products Representative (Series 6) examination program.5 The proposed revisions update the material to reflect changes to the laws, rules and regulations covered by the examination and to incorporate the functions and associated tasks currently performed by an Investment Company and Variable Contracts Products Representative. In addition, FINRA is proposing to make 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b–4(f)(1). 5 FINRA also is proposing corresponding revisions to the Series 6 question bank. Based on instruction from SEC staff, FINRA is submitting this filing for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(1) thereunder, and is not filing the question bank for review. See Letter to Alden S. Adkins, Senior Vice President and General Counsel, NASD Regulation, from Belinda Blaine, Associate Director, Division of Market Regulation, SEC, dated July 24, 2000. The question bank is available for SEC review. 2 17 E:\FR\FM\29OCN1.SGM 29OCN1 Federal Register / Vol. 78, No. 209 / Tuesday, October 29, 2013 / Notices changes to the format of the content outline. FINRA is not proposing any textual changes to the By-Laws, Schedules to the By-Laws or Rules of FINRA. The revised content outline is attached.6 The Series 6 selection specifications have been submitted to the Commission under separate cover with a request for confidential treatment pursuant to SEA Rule 24b–2.7 The text of the proposed rule change is available on FINRA’s Web site at http://www.finra.org, at the principal office of FINRA and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 mstockstill on DSK4VPTVN1PROD with NOTICES 1. Purpose Section 15A(g)(3) of the Act 8 authorizes FINRA to prescribe standards of training, experience, and competence for persons associated with FINRA members. In accordance with that provision, FINRA has developed examinations that are designed to establish that persons associated with FINRA members have attained specified levels of competence and knowledge, consistent with applicable registration requirements under FINRA rules. FINRA 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. Pursuant to NASD Rule 1032(b) 9 (Limited Representative—Investment 6 The Commission notes that the revised content outline is attached to the filing as Exhibit 3a, not to this Notice. 7 17 CFR 240.24b–2. 8 15 U.S.C. 78o–3(g)(3). 9 The current FINRA rulebook consists of (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (‘‘Incorporated NYSE Rules’’) (together, the NASD Rules and Incorporated NYSE Rules are referred to as the ‘‘Transitional Rulebook’’). While the NASD Rules generally apply VerDate Mar<15>2010 18:15 Oct 28, 2013 Jkt 232001 Company and Variable Contracts Products), if a representative’s activities are limited solely to redeemable securities of companies registered under the Investment Company Act of 1940 (‘‘Investment Company Act’’), securities of closed-end companies registered under the Investment Company Act during the period of original distribution, and variable contracts and insurance premium funding programs and other contracts issued by an insurance company (except contracts that are exempt securities pursuant to Section 3(a)(8) of the Securities Act of 1933), the representative may register and qualify as an Investment Company and Variable Contracts Products Representative instead of registering and qualifying as a General Securities Representative (Series 7) pursuant to NASD Rule 1032(a) (General Securities Representative).10 The Series 6 examination qualifies an individual to function as an Investment Company and Variable Contracts Products Representative. In consultation with a committee of industry representatives, FINRA recently undertook a review of the Series 6 examination program. As a result of this review, FINRA is proposing to make revisions to the content outline to reflect changes to the laws, rules and regulations covered by the examination and to incorporate the functions and associated tasks currently performed by an Investment Company and Variable Contracts Products Representative. FINRA also is proposing to make changes to the format of the content outline. Current Outline The current content outline is divided into six sections. The following are the six sections and the number of questions associated with each of the sections, denoted Section 1 through Section 6: 1. Securities Markets, Investment Securities and Economic Factors, 8 questions; 2. Securities and Tax Regulation, 23 questions; 3. Marketing, Prospecting and Sales Presentation, 18 questions; 4. Evaluation of Customers, 13 questions; to all FINRA members, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE (‘‘Dual Members’’). The FINRA Rules apply to all FINRA members, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see Information Notice, March 12, 2008 (Rulebook Consolidation Process). 10 See also Incorporated NYSE Rule 345.15(3) and Incorporated NYSE Rule Interpretation 345.15/02. PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 64567 5. Product Information; Investment Company Securities and Variable Contracts, 26 questions; and 6. Opening and Servicing Customer Accounts, 12 questions. Each section also includes the applicable laws, rules and regulations associated with that section. The current outline also includes a preface (addressing, among other things, the purpose, administration and scoring of the examination), sample questions and reference materials. Proposed Revisions FINRA is proposing to divide the content outline into four major job functions that are performed by an Investment Company and Variable Contracts Products Representative. The following are the four major job functions, denoted Function 1 through Function 4, with the associated number of questions: Function 1: Regulatory fundamentals and business development, 22 questions; Function 2: Evaluates customers’ financial information, identifies investment objectives, provides information on investment products, and makes suitable recommendations, 47 questions; Function 3: Opens, maintains, transfers and closes accounts and retains appropriate account records, 21 questions; and Function 4: Obtains, verifies, and confirms customer purchase and sale instructions, 10 questions. Each function also includes specific tasks describing activities associated with performing that function. There are four tasks (1.1–1.4) associated with Function 1; four tasks (2.1–2.4) associated with Function 2; three tasks (3.1–3.3) associated with Function 3; and two tasks (4.1–4.2) associated with Function 4.11 By way of example, one such task (Task 2.1) is to gather customers’ financial and non-financial information to identify, analyze, and assess risk tolerance, investment experience and sophistication level.12 Further, the outline lists the knowledge required to perform each function and associated tasks (e.g., account authorizations and legal documents).13 In addition, where applicable, the outline lists the laws, rules and regulations a candidate is expected to know to perform each function and associated tasks. These include the applicable FINRA Rules (e.g., FINRA Rule 1250), NASD Rules (e.g., NASD 11 See Exhibit 3a, Outline Pages 6–18. Exhibit 3a, Outline Page 10. 13 See Exhibit 3a, Outline Page 15. 12 See E:\FR\FM\29OCN1.SGM 29OCN1 64568 Federal Register / Vol. 78, No. 209 / Tuesday, October 29, 2013 / Notices Rule 1070) and SEC rules (e.g., SEA Rule 17f-2).14 FINRA conducted a job analysis study of Investment Company and Variable Contracts Products Representatives, which included the use of a survey, in developing each function and associated tasks and updating the required knowledge set forth in the revised outline. The functions and associated tasks, which appear in the revised outline for the first time, reflect the day-to-day activities of an Investment Company and Variable Contracts Products Representative. As noted above, FINRA also is proposing to revise the content outline to reflect changes to the laws, rules and regulations covered by the examination. Among other revisions, FINRA is proposing to revise the content outline to reflect the adoption of rules in the consolidated FINRA rulebook (e.g., NASD Rule 2310 (Recommendations to Customers (Suitability)) and NASD Rule 3110 (Books and Records) were adopted as FINRA Rule 2111 (Suitability) and FINRA Rule 4510 Series (Books and Records), respectively).15 FINRA is proposing similar changes to the Series 6 selection specifications and question bank. Finally, FINRA is proposing to make changes to the format of the content outline, including the preface, sample questions and reference materials. Among other changes, FINRA is proposing to: (1) Add a table of contents; 16 (2) provide more details regarding the purpose of the examination; 17 (3) provide more details on the application procedures; 18 (4) provide more details on the development and maintenance of the content outline and examination; 19 (5) explain that the passing scores are established by FINRA staff, in consultation with a committee of industry representatives, using a standard setting procedure and that the scores are an absolute standard independent of the performance of candidates taking the examination; 20 and (6) note that each candidate will receive a score report at the end of the test session, which will indicate a pass or fail status and include a score profile listing the candidate’s performance on each major content area covered on the examination.21 mstockstill on DSK4VPTVN1PROD with NOTICES 14 See Exhibit 3a, Outline Pages 6–7. Rule Conversion Chart, available at http://www.finra.org/Industry/Regulation/ FINRARules/p085560. 16 See Exhibit 3a, Outline Page 2. 17 See Exhibit 3a, Outline Page 3. 18 See Exhibit 3a, Outline Page 3. 19 See Exhibit 3a, Outline Page 4. 20 See Exhibit 3a, Outline Page 5. 21 See Exhibit 3a, Outline Page 5. 15 See VerDate Mar<15>2010 18:15 Oct 28, 2013 Jkt 232001 The number of questions on the Series 6 examination will remain at 100 multiple-choice questions,22 and candidates will continue to have 135 minutes to complete the examination. Currently, a score of 70 percent is required to pass the examination. The passing score will remain the same. Availability of Content Outlines The current Series 6 content outline is available on FINRA’s Web site, at www.finra.org/brokerqualifications/ exams. The revised Series 6 content outline will replace the current content outline on FINRA’s Web site. FINRA is filing the proposed rule change for immediate effectiveness. FINRA proposes to implement the revised Series 6 examination program on December 16, 2013. FINRA will announce the proposed rule change and the implementation date in a Regulatory Notice. 2. Statutory Basis FINRA believes that the proposed revisions to the Series 6 examination program are consistent with the provisions of Section 15A(b)(6) of the Act,23 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest, and Section 15A(g)(3) of the Act,24 which authorizes FINRA to prescribe standards of training, experience, and competence for persons associated with FINRA members. FINRA believes that the proposed revisions will further these purposes by updating the examination program to reflect changes to the laws, rules and regulations covered by the examination and to incorporate the functions and associated tasks currently performed by an Investment Company and Variable Contracts Products 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 22 Consistent with FINRA’s practice of including ‘‘pre-test’’ questions on certain qualification examinations, which is designed to ensure that new examination questions meet acceptable testing standards prior to use for scoring purposes, the examination includes five additional, unidentified pre-test questions that do not contribute towards the candidate’s score. Therefore, the examination actually consists of 105 questions, 100 of which are scored. The five pre-test questions are randomly distributed throughout the examination. 23 15 U.S.C. 78o–3(b)(6). 24 15 U.S.C. 78o–3(g)(3). PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 necessary or appropriate in furtherance of the purposes of the Act. The updated examination aligns with the functions and associated tasks currently performed by an Investment Company and Variable Contracts Products Representative and tests knowledge of the most current laws, rules, regulations and skills relevant to those functions and associated tasks. As such, the proposed revisions would make the examination more efficient and effective. 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)(1) 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 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. 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 rule-comments@ sec.gov. Please include File Number SR– FINRA–2013–045 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–FINRA–2013–045. This file 25 15 26 17 E:\FR\FM\29OCN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(1). 29OCN1 Federal Register / Vol. 78, No. 209 / Tuesday, October 29, 2013 / Notices 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 (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 Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. 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–FINRA– 2013–045 and should be submitted on or before November 19, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–25443 Filed 10–28–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70748; File No. SR–Phlx– 2013–105] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish for PHLX Orders Managed Data Solution Fees for Non-Display Usage mstockstill on DSK4VPTVN1PROD with NOTICES October 23, 2013. 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 October 16, 2013, NASDAQ OMX PHLX LLC (‘‘PHLX’’ or the ‘‘Exchange’’) filed with 27 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 18:15 Oct 28, 2013 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change PHLX proposes to establish for PHLX orders (‘‘PHLX Orders’’) Managed Data Solution fees for non-display usage (‘‘Non-Display Usage’’), and to establish that Managed Data Solutions containing Top of PHLX Options (also known as ‘‘TOPO’’) are for non-display usage. While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on November 1, 2013. The text of the proposed rule change is available at http:// nasdaqomxphlx.cchwallstreet.com/ nasdaqomxphlx/phlx/, at Phlx’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization 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 those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose PHLX is proposing to create a new data distribution model (a Managed Data Solution for Non-Display Usage) to further the distribution of the PHLX Orders datafeed. PHLX is also proposing to establish that Managed Data Solutions containing Top of PHLX Options are for non-display usage. The proposed Managed Data Solution for non-display usage is similar to data distribution models currently in use and aligns PHLX with other markets in the NASDAQ OMX Group.3 3 See Securities Exchange Act Release Nos. 70269 (August 27, 2013), 78 FR 54336 (September 3, 2013) (SR–NASDAQ–2013–106) (notice of filing and 1 15 VerDate Mar<15>2010 the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. Jkt 232001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 64569 The Managed Data Solution proposal offers a delivery method to firms seeking simplified market data administration. The Managed Data Solution for Non-Display Usage may be offered by Distributors externally distributing data to clients and/or client organizations that are using the PHLX Orders information internally for NonDisplay Usage. This new pricing and administrative option is in response to industry demand, as well as due to changes in the technology used to distribute market data. As such, rather than substantive changes the proposal reflects current data distribution practices in the industry. Distributors offering Managed Data Solutions for Non-Display Usage continue to be fee liable for the applicable distributor fees for the receipt and distribution of PHLX Orders data. This Managed Data Solution for NonDisplay Usage is a delivery option that will assess a new, innovative fee schedule to Distributors of PHLX Orders that provide data feed solutions such as an Application Programming Interface (API) or similar automated delivery solutions to Recipients for Non-Display Usage with only limited entitlement controls (e.g., usernames and/or passwords) (‘‘Managed Data Recipients’’). However, the Distributor must first agree to reformat, redisplay and/or alter the PHLX Orders data prior to retransmission, but not to affect the integrity of the PHLX Orders data and not to render it inaccurate, unfair, uninformative, fictitious, misleading, or discriminatory. A Managed Data Solution for Non-Display Usage is any retransmission data product containing PHLX Orders offered by a Distributor where the Distributor manages and monitors, but does not control, the information. However, the Distributor does maintain contracts with the Managed Data Recipients and is liable for any unauthorized use by the Managed Data Recipients under a Managed Data Solution. The Recipient of a Managed Data Solution may use the information for internal Non-Display purposes only and may not distribute the information outside of their organization. immediate effectiveness of proposed rule change to establish non-display Managed Data Solution for equities on NASDAQ); and 69182 (March 19, 2013), 78 FR 18378 (March 26, 2013) (SR–Phlx–2013–28) (notice of filing and immediate effectiveness of proposed rule change to establish non-display Managed Data Solution for Phlx equities market PSX). See also Securities Exchange Act Release No. 69041 (March 5, 2013), 78 FR 15791 (March 12, 2013) (SR–BX–2013–018) (notice of filing and immediate effectiveness of proposed rule change to establish Managed Data Solution for BX). E:\FR\FM\29OCN1.SGM 29OCN1

Agencies

[Federal Register Volume 78, Number 209 (Tuesday, October 29, 2013)]
[Notices]
[Pages 64566-64569]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-25443]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70744; File No. SR-FINRA-2013-045]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Revise the Series 6 Examination Program

October 23, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``SEA'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on October 16, 2013, 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 
``constituting a stated policy, practice, or interpretation with 
respect to the meaning, administration, or enforcement of an existing 
rule'' under Section 19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) 
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.
---------------------------------------------------------------------------

    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is filing revisions to the content outline and selection 
specifications for the Investment Company and Variable Contracts 
Products Representative (Series 6) examination program.\5\ The proposed 
revisions update the material to reflect changes to the laws, rules and 
regulations covered by the examination and to incorporate the functions 
and associated tasks currently performed by an Investment Company and 
Variable Contracts Products Representative. In addition, FINRA is 
proposing to make

[[Page 64567]]

changes to the format of the content outline. FINRA is not proposing 
any textual changes to the By-Laws, Schedules to the By-Laws or Rules 
of FINRA.
---------------------------------------------------------------------------

    \5\ FINRA also is proposing corresponding revisions to the 
Series 6 question bank. Based on instruction from SEC staff, FINRA 
is submitting this filing for immediate effectiveness pursuant to 
Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(1) thereunder, and 
is not filing the question bank for review. See Letter to Alden S. 
Adkins, Senior Vice President and General Counsel, NASD Regulation, 
from Belinda Blaine, Associate Director, Division of Market 
Regulation, SEC, dated July 24, 2000. The question bank is available 
for SEC review.
---------------------------------------------------------------------------

    The revised content outline is attached.\6\ The Series 6 selection 
specifications have been submitted to the Commission under separate 
cover with a request for confidential treatment pursuant to SEA Rule 
24b-2.\7\
---------------------------------------------------------------------------

    \6\ The Commission notes that the revised content outline is 
attached to the filing as Exhibit 3a, not to this Notice.
    \7\ 17 CFR 240.24b-2.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on FINRA's Web 
site at http://www.finra.org, at the principal office of FINRA and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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
    Section 15A(g)(3) of the Act \8\ authorizes FINRA to prescribe 
standards of training, experience, and competence for persons 
associated with FINRA members. In accordance with that provision, FINRA 
has developed examinations that are designed to establish that persons 
associated with FINRA members have attained specified levels of 
competence and knowledge, consistent with applicable registration 
requirements under FINRA rules. FINRA 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3(g)(3).
---------------------------------------------------------------------------

    Pursuant to NASD Rule 1032(b) \9\ (Limited Representative--
Investment Company and Variable Contracts Products), if a 
representative's activities are limited solely to redeemable securities 
of companies registered under the Investment Company Act of 1940 
(``Investment Company Act''), securities of closed-end companies 
registered under the Investment Company Act during the period of 
original distribution, and variable contracts and insurance premium 
funding programs and other contracts issued by an insurance company 
(except contracts that are exempt securities pursuant to Section 
3(a)(8) of the Securities Act of 1933), the representative may register 
and qualify as an Investment Company and Variable Contracts Products 
Representative instead of registering and qualifying as a General 
Securities Representative (Series 7) pursuant to NASD Rule 1032(a) 
(General Securities Representative).\10\ The Series 6 examination 
qualifies an individual to function as an Investment Company and 
Variable Contracts Products Representative.
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    \9\ The current FINRA rulebook consists of (1) FINRA Rules; (2) 
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated 
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules 
are referred to as the ``Transitional Rulebook''). While the NASD 
Rules generally apply to all FINRA members, the Incorporated NYSE 
Rules apply only to those members of FINRA that are also members of 
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA 
members, unless such rules have a more limited application by their 
terms. For more information about the rulebook consolidation 
process, see Information Notice, March 12, 2008 (Rulebook 
Consolidation Process).
    \10\ See also Incorporated NYSE Rule 345.15(3) and Incorporated 
NYSE Rule Interpretation 345.15/02.
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    In consultation with a committee of industry representatives, FINRA 
recently undertook a review of the Series 6 examination program. As a 
result of this review, FINRA is proposing to make revisions to the 
content outline to reflect changes to the laws, rules and regulations 
covered by the examination and to incorporate the functions and 
associated tasks currently performed by an Investment Company and 
Variable Contracts Products Representative. FINRA also is proposing to 
make changes to the format of the content outline.

Current Outline

    The current content outline is divided into six sections. The 
following are the six sections and the number of questions associated 
with each of the sections, denoted Section 1 through Section 6:
    1. Securities Markets, Investment Securities and Economic Factors, 
8 questions;
    2. Securities and Tax Regulation, 23 questions;
    3. Marketing, Prospecting and Sales Presentation, 18 questions;
    4. Evaluation of Customers, 13 questions;
    5. Product Information; Investment Company Securities and Variable 
Contracts, 26 questions; and
    6. Opening and Servicing Customer Accounts, 12 questions.
    Each section also includes the applicable laws, rules and 
regulations associated with that section. The current outline also 
includes a preface (addressing, among other things, the purpose, 
administration and scoring of the examination), sample questions and 
reference materials.

Proposed Revisions

    FINRA is proposing to divide the content outline into four major 
job functions that are performed by an Investment Company and Variable 
Contracts Products Representative. The following are the four major job 
functions, denoted Function 1 through Function 4, with the associated 
number of questions:
    Function 1: Regulatory fundamentals and business development, 22 
questions;
    Function 2: Evaluates customers' financial information, identifies 
investment objectives, provides information on investment products, and 
makes suitable recommendations, 47 questions;
    Function 3: Opens, maintains, transfers and closes accounts and 
retains appropriate account records, 21 questions; and
    Function 4: Obtains, verifies, and confirms customer purchase and 
sale instructions, 10 questions.
    Each function also includes specific tasks describing activities 
associated with performing that function. There are four tasks (1.1-
1.4) associated with Function 1; four tasks (2.1-2.4) associated with 
Function 2; three tasks (3.1-3.3) associated with Function 3; and two 
tasks (4.1-4.2) associated with Function 4.\11\ By way of example, one 
such task (Task 2.1) is to gather customers' financial and non-
financial information to identify, analyze, and assess risk tolerance, 
investment experience and sophistication level.\12\ Further, the 
outline lists the knowledge required to perform each function and 
associated tasks (e.g., account authorizations and legal 
documents).\13\ In addition, where applicable, the outline lists the 
laws, rules and regulations a candidate is expected to know to perform 
each function and associated tasks. These include the applicable FINRA 
Rules (e.g., FINRA Rule 1250), NASD Rules (e.g., NASD

[[Page 64568]]

Rule 1070) and SEC rules (e.g., SEA Rule 17f-2).\14\ FINRA conducted a 
job analysis study of Investment Company and Variable Contracts 
Products Representatives, which included the use of a survey, in 
developing each function and associated tasks and updating the required 
knowledge set forth in the revised outline. The functions and 
associated tasks, which appear in the revised outline for the first 
time, reflect the day-to-day activities of an Investment Company and 
Variable Contracts Products Representative.
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    \11\ See Exhibit 3a, Outline Pages 6-18.
    \12\ See Exhibit 3a, Outline Page 10.
    \13\ See Exhibit 3a, Outline Page 15.
    \14\ See Exhibit 3a, Outline Pages 6-7.
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    As noted above, FINRA also is proposing to revise the content 
outline to reflect changes to the laws, rules and regulations covered 
by the examination. Among other revisions, FINRA is proposing to revise 
the content outline to reflect the adoption of rules in the 
consolidated FINRA rulebook (e.g., NASD Rule 2310 (Recommendations to 
Customers (Suitability)) and NASD Rule 3110 (Books and Records) were 
adopted as FINRA Rule 2111 (Suitability) and FINRA Rule 4510 Series 
(Books and Records), respectively).\15\
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    \15\ See Rule Conversion Chart, available at http://www.finra.org/Industry/Regulation/FINRARules/p085560.
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    FINRA is proposing similar changes to the Series 6 selection 
specifications and question bank.
    Finally, FINRA is proposing to make changes to the format of the 
content outline, including the preface, sample questions and reference 
materials. Among other changes, FINRA is proposing to: (1) Add a table 
of contents; \16\ (2) provide more details regarding the purpose of the 
examination; \17\ (3) provide more details on the application 
procedures; \18\ (4) provide more details on the development and 
maintenance of the content outline and examination; \19\ (5) explain 
that the passing scores are established by FINRA staff, in consultation 
with a committee of industry representatives, using a standard setting 
procedure and that the scores are an absolute standard independent of 
the performance of candidates taking the examination; \20\ and (6) note 
that each candidate will receive a score report at the end of the test 
session, which will indicate a pass or fail status and include a score 
profile listing the candidate's performance on each major content area 
covered on the examination.\21\
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    \16\ See Exhibit 3a, Outline Page 2.
    \17\ See Exhibit 3a, Outline Page 3.
    \18\ See Exhibit 3a, Outline Page 3.
    \19\ See Exhibit 3a, Outline Page 4.
    \20\ See Exhibit 3a, Outline Page 5.
    \21\ See Exhibit 3a, Outline Page 5.
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    The number of questions on the Series 6 examination will remain at 
100 multiple-choice questions,\22\ and candidates will continue to have 
135 minutes to complete the examination. Currently, a score of 70 
percent is required to pass the examination. The passing score will 
remain the same.
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    \22\ Consistent with FINRA's practice of including ``pre-test'' 
questions on certain qualification examinations, which is designed 
to ensure that new examination questions meet acceptable testing 
standards prior to use for scoring purposes, the examination 
includes five additional, unidentified pre-test questions that do 
not contribute towards the candidate's score. Therefore, the 
examination actually consists of 105 questions, 100 of which are 
scored. The five pre-test questions are randomly distributed 
throughout the examination.
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Availability of Content Outlines

    The current Series 6 content outline is available on FINRA's Web 
site, at www.finra.org/brokerqualifications/exams. The revised Series 6 
content outline will replace the current content outline on FINRA's Web 
site.
    FINRA is filing the proposed rule change for immediate 
effectiveness. FINRA proposes to implement the revised Series 6 
examination program on December 16, 2013. FINRA will announce the 
proposed rule change and the implementation date in a Regulatory 
Notice.
2. Statutory Basis
    FINRA believes that the proposed revisions to the Series 6 
examination program are consistent with the provisions of Section 
15A(b)(6) of the Act,\23\ which requires, among other things, that 
FINRA rules must be designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
and, in general, to protect investors and the public interest, and 
Section 15A(g)(3) of the Act,\24\ which authorizes FINRA to prescribe 
standards of training, experience, and competence for persons 
associated with FINRA members. FINRA believes that the proposed 
revisions will further these purposes by updating the examination 
program to reflect changes to the laws, rules and regulations covered 
by the examination and to incorporate the functions and associated 
tasks currently performed by an Investment Company and Variable 
Contracts Products Representative.
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    \23\ 15 U.S.C. 78o-3(b)(6).
    \24\ 15 U.S.C. 78o-3(g)(3).
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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. The updated examination aligns 
with the functions and associated tasks currently performed by an 
Investment Company and Variable Contracts Products Representative and 
tests knowledge of the most current laws, rules, regulations and skills 
relevant to those functions and associated tasks. As such, the proposed 
revisions would make the examination more efficient and effective.

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)(1) 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 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)(1).
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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 rule-comments@sec.gov. Please include 
File Number SR-FINRA-2013-045 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-FINRA-2013-045. This 
file

[[Page 64569]]

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 (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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of FINRA. 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-FINRA-2013-045 and should be 
submitted on or before November 19, 2013.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-25443 Filed 10-28-13; 8:45 am]
BILLING CODE 8011-01-P