Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Section 4(c) of Schedule A to the FINRA By-Laws Relating to Qualification Examination Fees, 45701-45706 [2018-19502]
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Agency name
Organization name
Position title
DEPARTMENT OF THE TREASURY.
DEPARTMENT OF TRANSPORTATION.
Office of the Chief of Staff .............
Personal Aide to the Secretary ......
DY170073
04/07/2018
Office of the Secretary ...................
Special Assistant ............................
DT170052
04/14/2018
Special Assistant for Scheduling
and Advance.
Executive Director ..........................
DT170106
04/28/2018
GS170045
04/14/2018
GENERAL SERVICES ADMINISTRATION.
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PRESIDENTS COMMISSION ON
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COMMISSION.
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Office of Personnel Management.
Alexys Stanley,
Regulatory Affairs.
[FR Doc. 2018–19495 Filed 9–7–18; 8:45 am]
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[Release No. 34–84020; File No. SR–FINRA–
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Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Section 4(c) of
Schedule A to the FINRA By-Laws
Relating to Qualification Examination
Fees
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September 4, 2018.
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 August
20, 2018, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
‘‘establishing or changing a due, fee or
other charge’’ under Section
19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
4(f)(2) thereunder,4 which renders the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
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Request No.
45701
Date vacated
Associate Administrator for Strategic Communications.
Senior Advisor for Technology .......
Defense Fellow ...............................
GS170023
04/21/2018
GS170021
DD170125
04/21/2018
04/14/2018
Confidential Assistant .....................
WH170007
04/14/2018
Confidential Assistant .....................
SE140003
04/05/2018
Assistant Administrator for Intergovernmental Affairs.
Legislative Assistant .......................
SB170012
04/12/2018
SB170027
04/14/2018
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.
The text of the proposed rule change
is available on FINRA’s website at
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
FINRA is proposing to amend Section
4(c) of Schedule A to the FINRA ByLaws to: (1) Establish the fee for the
Securities Industry EssentialsTM
(‘‘SIETM’’) examination; (2) revise the
fees for the Investment Company and
Variable Contracts Products
Representative (Series 6), General
Securities Representative (Series 7),
Direct Participation Programs
Representative (Series 22), Securities
Trader (Series 57), Investment Banking
Representative (Series 79), Private
Securities Offerings Representative
(Series 82) and Operations Professional
(Series 99) examinations; (3) revise the
administration and delivery fee for the
Municipal Securities Representative
(Series 52) examination; and (4) remove
the Order Processing Assistant
Representative (Series 11), United
Kingdom Securities Representative
(Series 17), Canada Securities
Representative (Series 37 and Series 38),
Options Representative (Series 42),
Corporate Securities Representative
(Series 62) and Government Securities
Representative (Series 72) examinations
and the associated fees. The proposed
rule change relates to the restructuring
of the FINRA representative-level
qualification examination program. The
proposed rule change also makes certain
non-substantive technical changes to the
table of fees under Section 4(c).
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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
In July 2017, the SEC approved a
proposed rule change to restructure the
FINRA representative-level qualification
examination program.5 The rule change,
which will become effective on October
1, 2018,6 restructures the examination
5 See Securities Exchange Act Release No. 81098
(July 7, 2017), 82 FR 32419 (July 13, 2017) (Order
Approving File No. SR–FINRA–2017–007). For ease
of reference, FINRA revised the titles of some of the
registration categories as part of SR–FINRA–2017–
007. For instance, FINRA changed ‘‘Limited
Representative—Investment Company and Variable
Contracts Products’’ to ‘‘Investment Company and
Variable Contracts Products Representative.’’ This
proposed rule change refers to the titles that were
approved as part of SR–FINRA–2017–007, though
the changes are not yet effective.
6 See Regulatory Notice 17–30 (October 2017).
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program into a new format whereby all
new representative-level applicants will
be required to take a general knowledge
examination (the SIE examination) and
a tailored, specialized knowledge
examination (a revised representativelevel qualification examination) for their
particular registered role. As part of the
restructuring, FINRA developed the SIE
examination and revised nine of the
existing representative-level
examinations.7 FINRA is also
eliminating seven representative-level
examinations that have become
outdated or have limited utility.8 In
January 2018, FINRA filed the content
outline and selection specifications for
the SIE examination with the SEC.9 In
February 2018, FINRA filed the content
outlines and selection specifications for
the revised representative-level
qualification examinations with the
SEC.10
7 The following are the nine representative-level
examinations: Investment Company and Variable
Contracts Products Representative (Series 6);
General Securities Representative (Series 7); Direct
Participation Programs Representative (Series 22);
Securities Trader (Series 57); Investment Banking
Representative (Series 79); Private Securities
Offerings Representative (Series 82); Research
Analyst (Series 86 and Series 87); and Operations
Professional (Series 99). See supra note 5.
8 Specifically, FINRA is eliminating the following
examinations: Order Processing Assistant
Representative (Series 11); United Kingdom
Securities Representative (Series 17); Canada
Securities Representative (Series 37 and Series 38);
Options Representative (Series 42); Corporate
Securities [sic] Representative (Series 62) and
Government Securities Representative (Series 72).
See supra note 5. Individuals maintaining the
eliminated representative-level registrations will be
grandfathered (i.e., they may continue to maintain
their current registrations on or after October 1,
2018, unless their registrations lapse).
9 See Securities Exchange Act Release No. 82578
(January 24, 2018), 83 FR 4375 (January 30, 2018)
(Notice of Filing and Immediate Effectiveness of
File No. SR–FINRA–2018–002) (Proposed Rule
Change Relating to the New Securities Industry
Essentials (SIE) Examination).
10 See Securities Exchange Act Release No. 82750
(February 21, 2018), 83 FR 8526 (February 27, 2018)
(Notice of Filing and Immediate Effectiveness of
File No. SR–FINRA–2018–004) (Proposed Rule
Change to Revise the Investment Banking
Representative (Series 79) Examination); Securities
Exchange Act Release No. 82751 (February 21,
2018), 83 FR 8559 (February 27, 2018) (Notice of
Filing and Immediate Effectiveness of File No. SR–
FINRA–2018–005) (Proposed Rule Change to Revise
the Research Analyst (Series 86 and 87)
Examinations); Securities Exchange Act Release No.
82752 (February 21, 2018), 83 FR 8536 (February
27, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR–FINRA–2018–006)
(Proposed Rule Change to Revise the Operations
Professional (Series 99) Examination); Securities
Exchange Act Release No. 82754 (February 21,
2018), 83 FR 8533 (February 27, 2018) (Notice of
Filing and Immediate Effectiveness of File No. SR–
FINRA–2018–007) (Proposed Rule Change to Revise
the Investment Company and Variable Contracts
Products Representative (Series 6) Examination);
Securities Exchange Act Release No. 82747
(February 21, 2018), 83 FR 8524 (February 27, 2018)
(Notice of Filing and Immediate Effectiveness of
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The restructured program eliminates
duplicative testing of general securities
knowledge on the current
representative-level qualification
examinations by moving such content
into the SIE examination.11 The SIE
examination will test fundamental
securities-related knowledge, including
knowledge of basic products, the
structure and function of the securities
industry, the regulatory agencies and
their functions and regulated and
prohibited practices, whereas the
revised representative-level
qualification examinations will test
knowledge relevant to day-to-day
activities, responsibilities and job
functions of representatives.
A previously unregistered individual
who is applying for registration as a
representative,12 for the first time on or
after October 1, 2018, will be required
to pass both the SIE examination and
the appropriate revised representativelevel examination for his or her
particular registered role, or obtain a
waiver of the examinations.13 This
File No. SR–FINRA–2018–008) (Proposed Rule
Change to Revise the General Securities
Representative (Series 7) Examination); Securities
Exchange Act Release No. 82748 (February 21,
2018), 83 FR 8529 (February 27, 2018) (Notice of
Filing and Immediate Effectiveness of File No. SR–
FINRA–2018–009) (Proposed Rule Change to Revise
the Direct Participation Programs Representative
(Series 22) Examination); Securities Exchange Act
Release No. 82772 (February 26, 2018), 83 FR 9039
(March 2, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR–FINRA–2018–010)
(Proposed Rule Change to Revise the Securities
Trader (Series 57) Examination); and Securities
Exchange Act Release No. 82774 (February 26,
2018), 83 FR 9050 (March 2, 2018) (Notice of Filing
and Immediate Effectiveness of File No. SR–
FINRA–2018–011) (Proposed Rule Change to Revise
the Private Securities Offerings Representative
(Series 82) Examination).
11 Each of the current representative-level
examinations covers general securities knowledge,
with the exception of the Research Analyst (Series
86 and 87) examinations.
12 FINRA Rule 1220(b) sets forth each
representative-level registration category and
applicable qualification examination.
13 Individuals who are currently, or were
previously, registered as representatives will be
subject to different qualification requirements
depending on their registration status prior to
October 1, 2018. Specifically, individuals who
registered as representatives prior to October 1,
2018, and who continue to maintain those
registrations on or after October 1, 2018, will not
be subject to any additional qualification
requirements with respect to those registrations,
provided their registrations do not lapse in the
future. With the exception of individuals who were
registered solely as Foreign Associates, individuals
whose registration as a representative was
terminated between October 1, 2016, and
September 30, 2018, also will not be subject to any
additional qualification requirements with respect
to those registrations, provided they re-register as a
representative within two years from the date of
their last registration.
In addition, with the exception of individuals
who were registered solely as Order Processing
Assistant Representatives or Foreign Associates,
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requirement also applies to applicants
who are seeking a representative-level
registration as a prerequisite to a
principal-level registration.
In addition, the SIE examination will
be available to associated persons of
firms who are not required to register as
well as to individuals who are not
associated persons of firms, including
members of the public.14
The proposed rule change amends
Section 4(c) of Schedule A to the FINRA
By-Laws to establish the fee for the SIE
examination, revise the fees for the
representative-level examinations that
FINRA is retaining and remove the
representative-level examinations that
FINRA is eliminating and the associated
fees.
FINRA currently administers
examinations electronically through the
PROCTOR system 15 at testing centers
operated by a vendor under contract
with FINRA. FINRA charges an
examination fee to candidates for
FINRA-sponsored and co-sponsored
examinations to cover the development,
maintenance and delivery of these
examinations. FINRA considers the
following factors when establishing or
revising an examination fee: (1) Number
of test questions; (2) seat time; 16 (3) staff
individuals whose registration as a representative
was terminated between October 1, 2014, and
September 30, 2016, will be considered to have
passed the SIE examination, provided they reregister as a representative within four years from
the date of their last registration. Thus, to re-register
as a representative, such individuals would be
required to pass the appropriate revised
representative-level examination for their particular
registered role, or obtain a waiver of the
examination. Finally, individuals whose
registration as a representative was terminated prior
to October 1, 2014 will be required to pass both the
SIE examination and the appropriate revised
representative-level examination for their particular
registered role, or obtain a waiver of the
examinations, if they want to re-register as a
representative on or after October 1, 2018.
14 While individuals who are not associated
persons are eligible to take the SIE examination,
passing the SIE examination alone will not qualify
them for registration with FINRA. Rather, to be
eligible for registration, an individual must also be
associated with a firm, pass an appropriate
qualification examination(s) for representative or
principal and satisfy the other requirements relating
to the registration process. Further, a passing result
on the SIE examination would only be valid for four
years. Therefore, an individual who passes the SIE
examination and is not an associated person at the
time would have up to four years from the date he
or she passes the SIE examination to become an
associated person of a firm and pass a
representative-level examination, or obtain a waiver
of the examination, and register as a representative
without having to retake the SIE examination.
15 PROCTOR is a computer system that is
specifically designed for the administration and
delivery of computer-based testing and training.
16 FINRA pays its delivery vendor an hourly rate
for seat time at test delivery centers. The seat time,
which varies based on the length of an examination,
includes the session time for an examination as
well as an additional 30 minutes to cover
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effort associated with test development
and delivery; (4) corporate overhead;
and (5) operational and technology costs
associated with maintaining the
PROCTOR system (i.e., item banking,
test authoring and test delivery).
The SIE examination consists of 75
scored questions 17 and has a session
time of one hour and 45 minutes. The
revised representative-level
examinations consist of fewer scored
questions than the current examinations
and have reduced session times, with
the exception of the Research Analyst
(Series 86 and Series 87)
examinations.18 Consistent with its
process for establishing and revising
examination fees, FINRA is proposing to
establish a fee of $60 for the SIE
examination. In addition, FINRA is
proposing to reduce the fee for each
individual revised representative-level
examination, with the exception of the
revised Series 86 and Series 87
examinations.19 Specifically, FINRA is
proposing the following fees for the
revised representative-level
examinations: Series 6 ($40); Series 7
($245); Series 22 ($40); Series 57 ($60);
Series 79 ($245); Series 82 ($40); Series
86 ($185); Series 87 ($130); and Series
99 ($40).
FINRA is creating an enrollment
system separate from the Central
45703
Registration Depository (‘‘CRD®’’)
system to allow individuals who are not
associated persons of a firm, including
members of the public, to enroll and pay
the SIE examination fee. This system
would also be available to associated
persons of firms who are not required to
be registered with FINRA. FINRA is not
proposing any changes, at this time, to
the principal-level examinations or the
associated fees.20
The table below compares the current
and future examination fees, number of
scored questions on each examination
and examination session times
associated with each representative
category that FINRA is retaining.
FINRA REPRESENTATIVE-LEVEL REGISTRATIONS AND RELATED EXAMINATIONS
Registration category
(CRD system
designation)
Investment Company
and Variable Contracts Products
Representative (IR).
General Securities
Representative
(GS).
Direct Participation
Programs Representative (DR).
Securities Trader
(TD).
Current examination(s) fee
[number of scored
questions, session time]
Future examinations fee
[number of scored
questions, session time]
Series 6: $100 [100 questions, two hours and 15 minutes]
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 6: $40 [50 questions, one hour and 30 minutes]; Combined Exam Fee ($100).
Series 7: $305 [250 questions, six hours] ............................
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 7: $245 [125 questions, three hours and 45
minutes]; Combined Exam Fee ($305).
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 22: $40 [50 questions, one hour and 30
minutes]; Combined Exam Fee ($100).
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 57: $60 [50 questions, one hour and 45
minutes]; Combined Exam Fee ($120).
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 79: $245 [75 questions, two hours and 30
minutes]; Combined Exam Fee ($305).
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 82: $40 [50 questions, one hour and 30
minutes]; Combined Exam Fee ($100).
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 86: $185 [100 questions, four hours and 30
minutes] + Revised Series 87: $130 [50 questions, one
hour and 45 minutes]; Combined Exam Fee ($375).21
SIE: $60 [75 questions, one hour and 45 minutes] + Revised Series 99: $40 [50 questions, one hour and 30
minutes]; Combined Exam Fee ($100).
Series 22: $100 [100 questions, two hours and 30 minutes]
Series 57: $120 [125 questions, three hours and 45 minutes].
Investment Banking
Series 79: $305 [175 questions, five hours] .........................
Representative (IB).
Private Securities Offerings Representative (PR).
Research Analyst
(RS).
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Operations Professional (OS).
Series 82: $95 [100 questions, two hours and 30 minutes];
Series 7: $305 [250 questions, six hours] + Series 86:
$185 [100 questions, four hours and 30 minutes] + Series 87: $130 [50 questions, one hour and 45 minutes];
Combined Exam Fee ($620).
Series 99: $130 [100 questions, two hours and 30 minutes]
As the table illustrates, the proposed
examination fees for representative
registrations will remain the same or be
lower than the current examination fees
for representative registrations, with the
exception of registration as a Private
Securities Offerings Representative. As
noted in the table, the overall
examination fee for registration as a
Private Securities Offerings
Representative will increase by $5.
FINRA also administers and delivers
examinations sponsored (i.e.,
developed) by other entities, including
the Municipal Securities Rulemaking
Board (‘‘MSRB’’). For qualification
examinations sponsored by a FINRA
client and administered by FINRA,
FINRA charges an administration and
delivery fee that represents either a
portion of or the entire examination fee
for the examination. The administration
and delivery fee represents a portion of
the entire examination fee when a
FINRA client has established an
additional fee for an examination that it
sponsors. For example, the fee to take
the Municipal Securities Representative
(Series 52) examination is currently
$280. Of this amount, $130 is the FINRA
administration and delivery fee, and
administrative procedures relating to the
examination process.
17 The SIE examination and each of the revised
representative-level examinations also include five
to ten unscored pretest questions. Pretest questions
are designed to ensure that new examination items
meet acceptable testing standards prior to use.
18 The revised Series 86 and Series 87
examinations have the same number of scored
questions and session times as the current Series 86
and Series 87 examinations.
19 FINRA is not proposing any changes to the fees
for the Series 86 and Series 87 examinations as the
test lengths for these examinations are not
changing.
20 FINRA is currently evaluating whether the
principal-level examinations could be restructured
in a manner similar to the representative-level
examinations.
21 Beginning on October 1, 2018, individuals
registering as Research Analysts will no longer be
required to pass the General Securities
Representative (Series 7) examination.
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$150 is the development fee determined
by the FINRA client, the MSRB.22
In conjunction with FINRA’s rule
change to restructure its representativelevel qualification examination
program, the MSRB filed a proposed
rule change to, among other things,
restructure the Series 52 examination
program.23 Specifically, under the
MSRB’s proposed rule change,
individuals registering as Municipal
Securities Representatives would be
required to take and pass the SIE
examination in addition to a revised
Series 52 examination. In addition, the
MSRB filed a proposed rule change to
reduce the number of scored questions
on the Series 52 examination (from 115
questions to 75 questions) and the
session time for the examination (from
three hours and 30 minutes to two hours
and 30 minutes),24 which would reduce
the overall seat time for the examination
and, in turn, reduce FINRA’s
administration and delivery fee for the
examination by $20. Accordingly,
FINRA is proposing to amend Section
4(c) of Schedule A to the FINRA ByLaws to reduce the administration and
delivery fee for the Series 52
examination from $130 to $110.
Finally, FINRA is proposing to make
certain non-substantive technical
changes to the table of fees under
Section 4(c) of Schedule A to the FINRA
By-Laws, such as adding headings to the
table.
FINRA has filed the proposed rule
change for immediate effectiveness. The
implementation date will be October 1,
2018, to coincide with the
implementation of the restructured
representative-level examination
program. FINRA will also announce the
implementation date of the proposed
rule change in a Regulatory Notice.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(5) of the Act,25 which
requires, among other things, that
FINRA rules provide for the equitable
allocation of reasonable dues, fees and
other charges among members and
issuers and other persons using any
22 See
MSRB Rule A–16 (Examination Fees).
Securities Exchange Act Release No. 83483
(June 20, 2018), 83 FR 29855 (June 26, 2018) (Notice
of Filing and Immediate Effectiveness of File No.
SR–MSRB–2018–04). The proposed rule change
will become effective on October 1, 2018, which
coincides with the effective date of FINRA’s rule
change.
24 See Securities Exchange Act Release No. 83572
(June 29, 2018), 83 FR 31580 (July 6, 2018) (Notice
of Filing and Immediate Effectiveness of File No.
SR–MSRB–2018–05). This proposed rule change
will also become effective on October 1, 2018.
25 15 U.S.C. 78o–3(b)(5).
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23 See
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facility or system that FINRA operates
or controls.
FINRA believes that the proposed rule
change constitutes an equitable
allocation of fees as the examination
fees will be used to cover FINRA’s costs
in developing, maintaining and
delivering the SIE examination and the
revised representative-level
examinations. FINRA further believes
that the proposed examination fees are
reasonable because they correspond to
the costs associated with each
examination and are, for the most part,
the same or lower than the current
examination fees for representative
registrations. Accordingly, FINRA
believes that the proposed examination
fees are equitably allocated and
reasonable. In addition, FINRA believes
that the proposed rule change
constitutes an equitable allocation of
fees with respect to FINRA’s portion of
the fee for the revised Series 52
examination, which represents FINRA’s
reduced costs for administering and
delivering the revised examination.
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.
Economic Impact Assessment
FINRA has undertaken an economic
impact assessment, as set forth below, to
further analyze the regulatory need for
the proposed rule change, the economic
baseline of analysis, the economic
impact and the alternatives considered.
Regulatory Need
FINRA has restructured the
representative-level qualification
examination program by creating the
SIE examination, revising some of the
representative-level qualification
examinations and eliminating others.
The proposed rule change amends
Section 4(c) of Schedule A to the FINRA
By-Laws to establish the fee for the SIE
examination, revise the fees for the
representative-level qualification
examinations that FINRA is retaining
and remove the fees for the
representative-level qualification
examinations that FINRA is eliminating.
The proposed fees cover the
development, maintenance and delivery
of the SIE examination and the revised
representative-level examinations with
minimum impact on the examination
costs for representatives.
Further, as a result of the MSRB’s
restructuring of the Series 52
examination program, the proposed rule
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Sfmt 4703
change amends Section 4(c) of Schedule
A to the FINRA By-Laws to reduce
FINRA’s administration and delivery fee
for the revised Series 52 examination.
Economic Baseline
The economic baseline for the
proposed rule change is the current
FINRA representative-level
examinations, and the fees for these
examinations. The current
representative-level examination
program consists of 16 examinations
(Series 6, 7, 11, 17, 22, 37, 38, 42, 57,
62, 72, 79, 82, 86, 87 and 99). In 2017,
there were approximately 102,000
representative-level registrations
requested. The Series 7, Series 6 and
Series 79 are the top three examinations
in terms of candidate volume,
constituting approximately 92% of the
total representative-level registration
volume. Current fees range between $95
and $305 per examination, and the fee
schedule reflects the length of the
examination, which is also correlated
with the effort necessary to prepare and
evaluate the examinations. As noted
above, FINRA is eliminating a limited
number of representative-level
examinations that represent a small
percentage of candidate volume. The
current and proposed fees for the
retained representative-level
examinations are provided above.
The economic baseline for the
proposed rule change relating to the
Series 52 examination is the current fee
associated with FINRA’s administration
and delivery of the examination. In
2017, there were approximately 830
Municipal Securities Representative
registrations requested. FINRA’s fee for
administering and delivering the Series
52 examination is currently $130.
Economic Impact
For purposes of this discussion,
FINRA has identified the potentially
material impacts of the proposed fees.
The cumulative examination fees for
a given registration as a representative
under FINRA’s proposed structure are
the same as those under the current
structure, with the exception of the
categories of Private Securities Offerings
Representative, Research Analyst and
Operations Professional. For example,
the current examination fee for
registration as a General Securities
Representative is $305 (the fee for the
current Series 7 examination). Under
the proposed fee structure, the
cumulative examination fee to register
as a General Securities Representative
would remain $305 ($60 for the SIE
examination and $245 for the revised
Series 7 examination). There will be
some economic impacts associated with
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the proposed changes for specific
categories of registration. First, the total
examination fee for registration as a
Private Securities Offerings
Representative will increase by $5. The
current examination fee for registration
as a Private Securities Offerings
Representative is $95.26 Under the
restructured program, the total
examination fee for registration as
Private Securities Offerings
Representative will be $100 ($60 for the
SIE examination and $40 for the revised
Series 82 examination). The proposed
$40 fee for the revised Series 82
examination is consistent with the fees
of other comparable revised
examinations (i.e., the revised Series 6,
Series 22 and Series 99 examinations)
all of which have similar development,
maintenance and delivery costs.
Second, the examination fees for
registration as a Research Analyst or an
Operations Professional will be
reduced.27 Third, for the eliminated
categories and related examinations,
individuals conducting the activities
covered by the eliminated examinations
may seek registration in one of the
remaining categories, such as a General
Securities Representative, which have
higher cumulative examination fees.28
However, as noted, this represents a
small group.
The lifetime examination costs will
also vary depending on the number of
examination attempts by individual test
takers. For instance, if an individual
requires two attempts to pass the
current Series 7 examination, the total
cost of the examinations today would be
$610 ($305 × 2). If the same individual
passed the SIE examination on the first
attempt, but still required two attempts
to pass the revised Series 7 examination,
the total cost of the examinations would
be $550 ($60 for the SIE examination
plus $245 × 2 for the revised Series 7
examination). If, alternatively, the
individual required two attempts at the
SIE examination but passed the revised
26 While FINRA has maintained a $95 fee for the
current Series 82 examination, the cost of
developing, maintaining and delivering the current
Series 82 examination most closely correlates to the
cost of developing, maintaining and delivering the
current Series 22 examination, which has a cost of
$100.
27 The cumulative examination fee for registration
as a Research Analyst will be reduced by $245
because, under the restructured program,
individuals registering as such will no longer be
required to take the Series 7 examination. The total
examination fee for registration as an Operations
Professional will also be reduced by $30.
28 For example, the examination fee for the
eliminated Corporate Securities Representative
(Series 62) category is $95 while the new
cumulative examination fee for registration as a
General Securities Representative is proposed to be
$305.
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Series 7 examination on the first
attempt, the total cost would be $365
($60 × 2 for the SIE examination plus
$245 for the revised Series 7
examination). In both of these scenarios,
because the person could take advantage
of passing one of the requirements in
the first attempt, the aggregate
examination costs under the proposed
fee structure would be less than today.
Further, as noted above, in some cases,
the aggregate examination costs are
anticipated to be lower or higher,
depending on the category in which the
individual is seeking to register.
Registered representatives seeking an
additional or alternative representative
registration category would also
experience a net decrease in
examination fees because they would
have already satisfied the SIE
examination requirement, thus only
incurring the fees associated with the
revised representative-level
examination. However, based on
historical data, these individuals
represent a relatively small percentage
of individuals seeking registrations.
With respect to FINRA’s fee for
administering and delivering the revised
Series 52 examination, the fee will be
reduced by $20 (from $130 to $110) to
reflect FINRA’s adjusted costs for its
portion of the fee for the examination.
Impact on Firms
FINRA believes that the restructured
program is likely to decrease the total
examination fees that firms pay. In
aggregate, based on FINRA’s review of a
representative sample of firms, it
projects a reduction in total examination
fees annually. As stated above, the
examination fees paid to become
registered will typically be lower in
circumstances where multiple
examination attempts are needed to
pass. Under these circumstances, firms
will experience a decrease in
examination fees, to the extent that
firms cover these costs for individuals.
Under the restructured program, at least
some of the costs associated with
qualification will likely transfer to the
individuals interested in becoming
registered representatives. Members
may require job applicants to pass the
SIE examination before they can be
considered for a position, and may
require that the individuals pay the SIE
examination fee. Further, FINRA
understands that some firms today seek
repayment from representatives for fees
associated with representative-level
examinations. The extent of the
economic transfer between firm and
representative depends upon, among
other things, the competition between
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Sfmt 4703
45705
firms for the pool of qualified
representatives and the size of that pool.
In addition, broker-dealers and other
regulated entities that seek to register
Municipal Securities Representatives
would see a reduction in FINRA’s
portion of the fee for the revised Series
52 examination.
Impact on Individuals
As described above, firms may require
potential registrants to pass the SIE
examination before they can be
considered for a position, in which case
the SIE examination fee may be incurred
by the individual and the associated
impact may be a shifting of some of the
costs associated with qualification from
the firm to the individual. In such a
scenario, based on its own experience
and in consultation with industry
experts, FINRA believes the $60 fee for
the SIE examination would not create a
significant barrier to prospective
registered representatives.
The restructured program will likely
change the total test taking time for
individuals registering as
representatives. For example, the total
examination session times for
registration as a Research Analyst
decreases by four hours and fifteen
minutes. The total session times may
increase or decrease depending on the
registration. To the extent that the
changed session times lead to a change
in test taking time by individuals, they
may experience an increase or decrease
in the opportunity cost of their time.
Finally, some individuals who will
not be pursuing registration as a
representative may still take the SIE
examination. These individuals include
associated persons of firms who are not
required to register as well as
individuals who are not associated
persons of firms, such as college
students, individuals working in related
financial service industries or who have
personal interest in establishing
proficiency in the subject matter. FINRA
believes that the $60 fee for the SIE
examination may encourage such
individuals to take the examination, and
in turn increase the pool of prospective
registered representatives.
Alternatives Considered
FINRA considered a range of potential
fee models in developing the proposed
rule change, including different (dollar
levels of) fees for the SIE examination,
the representative-level examinations
and the SIE examination in combination
with the representative-level
examinations. FINRA believes that the
proposed fee structure strikes the
appropriate balance between the
operating costs associated with the
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Federal Register / Vol. 83, No. 175 / Monday, September 10, 2018 / Notices
examinations and the impact to
individuals and the industry.
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 29 and paragraph (f)(2) of Rule
19b–4 thereunder.30 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:
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of FINRA. All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FINRA–
2018–033 and should be submitted on
or before October 1, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–19502 Filed 9–7–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
FINRA–2018–033 on the subject line.
daltland on DSKBBV9HB2PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–FINRA–2018–033. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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
[Release No. 34–84021; File No. SR–OCC–
2018–012]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing of Proposed Rule Change
Related to The Options Clearing
Corporation’s Board of Directors and
Board Committee Charters
September 4, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934,1 and
Rule 19b–4 thereunder,2 notice is
hereby given that on August 24, 2018,
The Options Clearing Corporation
(‘‘OCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared primarily by OCC.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
31 17
29 15
30 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
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17:54 Sep 07, 2018
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I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change by OCC
concerns changes to its (1) Audit
Committee Charter, (2) Compensation
and Performance Committee Charter, (3)
Governance and Nominating Committee
Charter, (4) Risk Committee Charter, (5)
Technology Committee Charter and (6)
Board of Directors Charter in connection
with requirements applicable to OCC
under Rules 17Ad–22(e)(2)
(Governance) and (3) (Framework for
the Comprehensive Management of
Risks).3
The charters are attached as Exhibits
5A through F to the filing [sic]. Material
proposed to be added to the charters as
currently in effect is marked by double
underlining and material proposed to be
deleted is marked by strikethrough text.
The proposed rule change, including
Exhibits 5A through F, is available on
OCC’s website at https://
www.theocc.com/about/publications/
bylaws.jsp. The proposed rule change
does not require any changes to the text
of OCC’s By-Laws or Rules. All terms
with initial capitalization that are not
otherwise defined herein have the same
meaning as set forth in the OCC ByLaws and Rules.4
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
OCC 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. OCC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(1) Purpose
The purpose of the proposed rule
change is to make certain changes to
OCC’s (1) Audit Committee (‘‘AC’’)
Charter (‘‘AC Charter’’), (2)
Compensation and Performance
Committee (‘‘CPC’’) Charter (‘‘CPC
Charter’’), (3) Governance and
Nominating Committee (‘‘GNC’’) Charter
(‘‘GNC Charter’’), (4) Risk Committee
(‘‘RC’’) Charter (‘‘RC Charter’’), (5)
Technology Committee (‘‘TC’’) Charter
3 17
CFR 240.17Ad–22(e)(2) and (3).
By-Laws and Rules can be found on
OCC’s public website: https://optionsclearing.com/
about/publications/bylaws.jsp.
4 OCC’s
E:\FR\FM\10SEN1.SGM
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]]>Agencies
[Federal Register Volume 83, Number 175 (Monday, September 10, 2018)]
[Notices]
[Pages 45701-45706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-19502]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84020; File No. SR-FINRA-2018-033]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Section 4(c) of Schedule A to the FINRA
By-Laws Relating to Qualification Examination Fees
September 4, 2018.
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 August 20, 2018, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as ``establishing or changing a
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon receipt of this filing by the Commission. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend Section 4(c) of Schedule A to the FINRA
By-Laws to: (1) Establish the fee for the Securities Industry
EssentialsTM (``SIETM'') examination; (2) revise
the fees for the Investment Company and Variable Contracts Products
Representative (Series 6), General Securities Representative (Series
7), Direct Participation Programs Representative (Series 22),
Securities Trader (Series 57), Investment Banking Representative
(Series 79), Private Securities Offerings Representative (Series 82)
and Operations Professional (Series 99) examinations; (3) revise the
administration and delivery fee for the Municipal Securities
Representative (Series 52) examination; and (4) remove the Order
Processing Assistant Representative (Series 11), United Kingdom
Securities Representative (Series 17), Canada Securities Representative
(Series 37 and Series 38), Options Representative (Series 42),
Corporate Securities Representative (Series 62) and Government
Securities Representative (Series 72) examinations and the associated
fees. The proposed rule change relates to the restructuring of the
FINRA representative-level qualification examination program. The
proposed rule change also makes certain non-substantive technical
changes to the table of fees under Section 4(c).
The text of the proposed rule change is available on FINRA's
website at https://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
In July 2017, the SEC approved a proposed rule change to
restructure the FINRA representative-level qualification examination
program.\5\ The rule change, which will become effective on October 1,
2018,\6\ restructures the examination
[[Page 45702]]
program into a new format whereby all new representative-level
applicants will be required to take a general knowledge examination
(the SIE examination) and a tailored, specialized knowledge examination
(a revised representative-level qualification examination) for their
particular registered role. As part of the restructuring, FINRA
developed the SIE examination and revised nine of the existing
representative-level examinations.\7\ FINRA is also eliminating seven
representative-level examinations that have become outdated or have
limited utility.\8\ In January 2018, FINRA filed the content outline
and selection specifications for the SIE examination with the SEC.\9\
In February 2018, FINRA filed the content outlines and selection
specifications for the revised representative-level qualification
examinations with the SEC.\10\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 81098 (July 7,
2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR-
FINRA-2017-007). For ease of reference, FINRA revised the titles of
some of the registration categories as part of SR-FINRA-2017-007.
For instance, FINRA changed ``Limited Representative--Investment
Company and Variable Contracts Products'' to ``Investment Company
and Variable Contracts Products Representative.'' This proposed rule
change refers to the titles that were approved as part of SR-FINRA-
2017-007, though the changes are not yet effective.
\6\ See Regulatory Notice 17-30 (October 2017).
\7\ The following are the nine representative-level
examinations: Investment Company and Variable Contracts Products
Representative (Series 6); General Securities Representative (Series
7); Direct Participation Programs Representative (Series 22);
Securities Trader (Series 57); Investment Banking Representative
(Series 79); Private Securities Offerings Representative (Series
82); Research Analyst (Series 86 and Series 87); and Operations
Professional (Series 99). See supra note 5.
\8\ Specifically, FINRA is eliminating the following
examinations: Order Processing Assistant Representative (Series 11);
United Kingdom Securities Representative (Series 17); Canada
Securities Representative (Series 37 and Series 38); Options
Representative (Series 42); Corporate Securities [sic]
Representative (Series 62) and Government Securities Representative
(Series 72). See supra note 5. Individuals maintaining the
eliminated representative-level registrations will be grandfathered
(i.e., they may continue to maintain their current registrations on
or after October 1, 2018, unless their registrations lapse).
\9\ See Securities Exchange Act Release No. 82578 (January 24,
2018), 83 FR 4375 (January 30, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2018-002) (Proposed Rule Change
Relating to the New Securities Industry Essentials (SIE)
Examination).
\10\ See Securities Exchange Act Release No. 82750 (February 21,
2018), 83 FR 8526 (February 27, 2018) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2018-004) (Proposed
Rule Change to Revise the Investment Banking Representative (Series
79) Examination); Securities Exchange Act Release No. 82751
(February 21, 2018), 83 FR 8559 (February 27, 2018) (Notice of
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-005)
(Proposed Rule Change to Revise the Research Analyst (Series 86 and
87) Examinations); Securities Exchange Act Release No. 82752
(February 21, 2018), 83 FR 8536 (February 27, 2018) (Notice of
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-006)
(Proposed Rule Change to Revise the Operations Professional (Series
99) Examination); Securities Exchange Act Release No. 82754
(February 21, 2018), 83 FR 8533 (February 27, 2018) (Notice of
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-007)
(Proposed Rule Change to Revise the Investment Company and Variable
Contracts Products Representative (Series 6) Examination);
Securities Exchange Act Release No. 82747 (February 21, 2018), 83 FR
8524 (February 27, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2018-008) (Proposed Rule Change
to Revise the General Securities Representative (Series 7)
Examination); Securities Exchange Act Release No. 82748 (February
21, 2018), 83 FR 8529 (February 27, 2018) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2018-009) (Proposed
Rule Change to Revise the Direct Participation Programs
Representative (Series 22) Examination); Securities Exchange Act
Release No. 82772 (February 26, 2018), 83 FR 9039 (March 2, 2018)
(Notice of Filing and Immediate Effectiveness of File No. SR-FINRA-
2018-010) (Proposed Rule Change to Revise the Securities Trader
(Series 57) Examination); and Securities Exchange Act Release No.
82774 (February 26, 2018), 83 FR 9050 (March 2, 2018) (Notice of
Filing and Immediate Effectiveness of File No. SR-FINRA-2018-011)
(Proposed Rule Change to Revise the Private Securities Offerings
Representative (Series 82) Examination).
---------------------------------------------------------------------------
The restructured program eliminates duplicative testing of general
securities knowledge on the current representative-level qualification
examinations by moving such content into the SIE examination.\11\ The
SIE examination will test fundamental securities-related knowledge,
including knowledge of basic products, the structure and function of
the securities industry, the regulatory agencies and their functions
and regulated and prohibited practices, whereas the revised
representative-level qualification examinations will test knowledge
relevant to day-to-day activities, responsibilities and job functions
of representatives.
---------------------------------------------------------------------------
\11\ Each of the current representative-level examinations
covers general securities knowledge, with the exception of the
Research Analyst (Series 86 and 87) examinations.
---------------------------------------------------------------------------
A previously unregistered individual who is applying for
registration as a representative,\12\ for the first time on or after
October 1, 2018, will be required to pass both the SIE examination and
the appropriate revised representative-level examination for his or her
particular registered role, or obtain a waiver of the examinations.\13\
This requirement also applies to applicants who are seeking a
representative-level registration as a prerequisite to a principal-
level registration.
---------------------------------------------------------------------------
\12\ FINRA Rule 1220(b) sets forth each representative-level
registration category and applicable qualification examination.
\13\ Individuals who are currently, or were previously,
registered as representatives will be subject to different
qualification requirements depending on their registration status
prior to October 1, 2018. Specifically, individuals who registered
as representatives prior to October 1, 2018, and who continue to
maintain those registrations on or after October 1, 2018, will not
be subject to any additional qualification requirements with respect
to those registrations, provided their registrations do not lapse in
the future. With the exception of individuals who were registered
solely as Foreign Associates, individuals whose registration as a
representative was terminated between October 1, 2016, and September
30, 2018, also will not be subject to any additional qualification
requirements with respect to those registrations, provided they re-
register as a representative within two years from the date of their
last registration.
In addition, with the exception of individuals who were
registered solely as Order Processing Assistant Representatives or
Foreign Associates, individuals whose registration as a
representative was terminated between October 1, 2014, and September
30, 2016, will be considered to have passed the SIE examination,
provided they re-register as a representative within four years from
the date of their last registration. Thus, to re-register as a
representative, such individuals would be required to pass the
appropriate revised representative-level examination for their
particular registered role, or obtain a waiver of the examination.
Finally, individuals whose registration as a representative was
terminated prior to October 1, 2014 will be required to pass both
the SIE examination and the appropriate revised representative-level
examination for their particular registered role, or obtain a waiver
of the examinations, if they want to re-register as a representative
on or after October 1, 2018.
---------------------------------------------------------------------------
In addition, the SIE examination will be available to associated
persons of firms who are not required to register as well as to
individuals who are not associated persons of firms, including members
of the public.\14\
---------------------------------------------------------------------------
\14\ While individuals who are not associated persons are
eligible to take the SIE examination, passing the SIE examination
alone will not qualify them for registration with FINRA. Rather, to
be eligible for registration, an individual must also be associated
with a firm, pass an appropriate qualification examination(s) for
representative or principal and satisfy the other requirements
relating to the registration process. Further, a passing result on
the SIE examination would only be valid for four years. Therefore,
an individual who passes the SIE examination and is not an
associated person at the time would have up to four years from the
date he or she passes the SIE examination to become an associated
person of a firm and pass a representative-level examination, or
obtain a waiver of the examination, and register as a representative
without having to retake the SIE examination.
---------------------------------------------------------------------------
The proposed rule change amends Section 4(c) of Schedule A to the
FINRA By-Laws to establish the fee for the SIE examination, revise the
fees for the representative-level examinations that FINRA is retaining
and remove the representative-level examinations that FINRA is
eliminating and the associated fees.
FINRA currently administers examinations electronically through the
PROCTOR system \15\ at testing centers operated by a vendor under
contract with FINRA. FINRA charges an examination fee to candidates for
FINRA-sponsored and co-sponsored examinations to cover the development,
maintenance and delivery of these examinations. FINRA considers the
following factors when establishing or revising an examination fee: (1)
Number of test questions; (2) seat time; \16\ (3) staff
[[Page 45703]]
effort associated with test development and delivery; (4) corporate
overhead; and (5) operational and technology costs associated with
maintaining the PROCTOR system (i.e., item banking, test authoring and
test delivery).
---------------------------------------------------------------------------
\15\ PROCTOR is a computer system that is specifically designed
for the administration and delivery of computer-based testing and
training.
\16\ FINRA pays its delivery vendor an hourly rate for seat time
at test delivery centers. The seat time, which varies based on the
length of an examination, includes the session time for an
examination as well as an additional 30 minutes to cover
administrative procedures relating to the examination process.
---------------------------------------------------------------------------
The SIE examination consists of 75 scored questions \17\ and has a
session time of one hour and 45 minutes. The revised representative-
level examinations consist of fewer scored questions than the current
examinations and have reduced session times, with the exception of the
Research Analyst (Series 86 and Series 87) examinations.\18\ Consistent
with its process for establishing and revising examination fees, FINRA
is proposing to establish a fee of $60 for the SIE examination. In
addition, FINRA is proposing to reduce the fee for each individual
revised representative-level examination, with the exception of the
revised Series 86 and Series 87 examinations.\19\ Specifically, FINRA
is proposing the following fees for the revised representative-level
examinations: Series 6 ($40); Series 7 ($245); Series 22 ($40); Series
57 ($60); Series 79 ($245); Series 82 ($40); Series 86 ($185); Series
87 ($130); and Series 99 ($40).
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\17\ The SIE examination and each of the revised representative-
level examinations also include five to ten unscored pretest
questions. Pretest questions are designed to ensure that new
examination items meet acceptable testing standards prior to use.
\18\ The revised Series 86 and Series 87 examinations have the
same number of scored questions and session times as the current
Series 86 and Series 87 examinations.
\19\ FINRA is not proposing any changes to the fees for the
Series 86 and Series 87 examinations as the test lengths for these
examinations are not changing.
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FINRA is creating an enrollment system separate from the Central
Registration Depository (``CRD[supreg]'') system to allow individuals
who are not associated persons of a firm, including members of the
public, to enroll and pay the SIE examination fee. This system would
also be available to associated persons of firms who are not required
to be registered with FINRA. FINRA is not proposing any changes, at
this time, to the principal-level examinations or the associated
fees.\20\
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\20\ FINRA is currently evaluating whether the principal-level
examinations could be restructured in a manner similar to the
representative-level examinations.
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The table below compares the current and future examination fees,
number of scored questions on each examination and examination session
times associated with each representative category that FINRA is
retaining.
FINRA Representative-Level Registrations and Related Examinations
----------------------------------------------------------------------------------------------------------------
Registration category (CRD system Current examination(s) fee [number of Future examinations fee [number of
designation) scored questions, session time] scored questions, session time]
----------------------------------------------------------------------------------------------------------------
Investment Company and Variable Series 6: $100 [100 questions, two SIE: $60 [75 questions, one hour and
Contracts Products Representative hours and 15 minutes]. 45 minutes] + Revised Series 6: $40
(IR). [50 questions, one hour and 30
minutes]; Combined Exam Fee ($100).
General Securities Representative Series 7: $305 [250 questions, six SIE: $60 [75 questions, one hour and
(GS). hours]. 45 minutes] + Revised Series 7:
$245 [125 questions, three hours
and 45 minutes]; Combined Exam Fee
($305).
Direct Participation Programs Series 22: $100 [100 questions, two SIE: $60 [75 questions, one hour and
Representative (DR). hours and 30 minutes]. 45 minutes] + Revised Series 22:
$40 [50 questions, one hour and 30
minutes]; Combined Exam Fee ($100).
Securities Trader (TD)............. Series 57: $120 [125 questions, three SIE: $60 [75 questions, one hour and
hours and 45 minutes]. 45 minutes] + Revised Series 57:
$60 [50 questions, one hour and 45
minutes]; Combined Exam Fee ($120).
Investment Banking Representative Series 79: $305 [175 questions, five SIE: $60 [75 questions, one hour and
(IB). hours]. 45 minutes] + Revised Series 79:
$245 [75 questions, two hours and
30 minutes]; Combined Exam Fee
($305).
Private Securities Offerings Series 82: $95 [100 questions, two SIE: $60 [75 questions, one hour and
Representative (PR). hours and 30 minutes];. 45 minutes] + Revised Series 82:
$40 [50 questions, one hour and 30
minutes]; Combined Exam Fee ($100).
Research Analyst (RS).............. Series 7: $305 [250 questions, six SIE: $60 [75 questions, one hour and
hours] + Series 86: $185 [100 45 minutes] + Revised Series 86:
questions, four hours and 30 $185 [100 questions, four hours and
minutes] + Series 87: $130 [50 30 minutes] + Revised Series 87:
questions, one hour and 45 minutes]; $130 [50 questions, one hour and 45
Combined Exam Fee ($620). minutes]; Combined Exam Fee
($375).\21\
Operations Professional (OS)....... Series 99: $130 [100 questions, two SIE: $60 [75 questions, one hour and
hours and 30 minutes]. 45 minutes] + Revised Series 99:
$40 [50 questions, one hour and 30
minutes]; Combined Exam Fee ($100).
----------------------------------------------------------------------------------------------------------------
As the table illustrates, the proposed examination fees for
representative registrations will remain the same or be lower than the
current examination fees for representative registrations, with the
exception of registration as a Private Securities Offerings
Representative. As noted in the table, the overall examination fee for
registration as a Private Securities Offerings Representative will
increase by $5.
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\21\ Beginning on October 1, 2018, individuals registering as
Research Analysts will no longer be required to pass the General
Securities Representative (Series 7) examination.
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FINRA also administers and delivers examinations sponsored (i.e.,
developed) by other entities, including the Municipal Securities
Rulemaking Board (``MSRB''). For qualification examinations sponsored
by a FINRA client and administered by FINRA, FINRA charges an
administration and delivery fee that represents either a portion of or
the entire examination fee for the examination. The administration and
delivery fee represents a portion of the entire examination fee when a
FINRA client has established an additional fee for an examination that
it sponsors. For example, the fee to take the Municipal Securities
Representative (Series 52) examination is currently $280. Of this
amount, $130 is the FINRA administration and delivery fee, and
[[Page 45704]]
$150 is the development fee determined by the FINRA client, the
MSRB.\22\
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\22\ See MSRB Rule A-16 (Examination Fees).
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In conjunction with FINRA's rule change to restructure its
representative-level qualification examination program, the MSRB filed
a proposed rule change to, among other things, restructure the Series
52 examination program.\23\ Specifically, under the MSRB's proposed
rule change, individuals registering as Municipal Securities
Representatives would be required to take and pass the SIE examination
in addition to a revised Series 52 examination. In addition, the MSRB
filed a proposed rule change to reduce the number of scored questions
on the Series 52 examination (from 115 questions to 75 questions) and
the session time for the examination (from three hours and 30 minutes
to two hours and 30 minutes),\24\ which would reduce the overall seat
time for the examination and, in turn, reduce FINRA's administration
and delivery fee for the examination by $20. Accordingly, FINRA is
proposing to amend Section 4(c) of Schedule A to the FINRA By-Laws to
reduce the administration and delivery fee for the Series 52
examination from $130 to $110.
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\23\ See Securities Exchange Act Release No. 83483 (June 20,
2018), 83 FR 29855 (June 26, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR-MSRB-2018-04). The proposed rule change
will become effective on October 1, 2018, which coincides with the
effective date of FINRA's rule change.
\24\ See Securities Exchange Act Release No. 83572 (June 29,
2018), 83 FR 31580 (July 6, 2018) (Notice of Filing and Immediate
Effectiveness of File No. SR-MSRB-2018-05). This proposed rule
change will also become effective on October 1, 2018.
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Finally, FINRA is proposing to make certain non-substantive
technical changes to the table of fees under Section 4(c) of Schedule A
to the FINRA By-Laws, such as adding headings to the table.
FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date will be October 1, 2018, to
coincide with the implementation of the restructured representative-
level examination program. FINRA will also announce the implementation
date of the proposed rule change in a Regulatory Notice.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\25\ which requires, among
other things, that FINRA rules provide for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system that FINRA operates or
controls.
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\25\ 15 U.S.C. 78o-3(b)(5).
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FINRA believes that the proposed rule change constitutes an
equitable allocation of fees as the examination fees will be used to
cover FINRA's costs in developing, maintaining and delivering the SIE
examination and the revised representative-level examinations. FINRA
further believes that the proposed examination fees are reasonable
because they correspond to the costs associated with each examination
and are, for the most part, the same or lower than the current
examination fees for representative registrations. Accordingly, FINRA
believes that the proposed examination fees are equitably allocated and
reasonable. In addition, FINRA believes that the proposed rule change
constitutes an equitable allocation of fees with respect to FINRA's
portion of the fee for the revised Series 52 examination, which
represents FINRA's reduced costs for administering and delivering the
revised examination.
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.
Economic Impact Assessment
FINRA has undertaken an economic impact assessment, as set forth
below, to further analyze the regulatory need for the proposed rule
change, the economic baseline of analysis, the economic impact and the
alternatives considered.
Regulatory Need
FINRA has restructured the representative-level qualification
examination program by creating the SIE examination, revising some of
the representative-level qualification examinations and eliminating
others. The proposed rule change amends Section 4(c) of Schedule A to
the FINRA By-Laws to establish the fee for the SIE examination, revise
the fees for the representative-level qualification examinations that
FINRA is retaining and remove the fees for the representative-level
qualification examinations that FINRA is eliminating. The proposed fees
cover the development, maintenance and delivery of the SIE examination
and the revised representative-level examinations with minimum impact
on the examination costs for representatives.
Further, as a result of the MSRB's restructuring of the Series 52
examination program, the proposed rule change amends Section 4(c) of
Schedule A to the FINRA By-Laws to reduce FINRA's administration and
delivery fee for the revised Series 52 examination.
Economic Baseline
The economic baseline for the proposed rule change is the current
FINRA representative-level examinations, and the fees for these
examinations. The current representative-level examination program
consists of 16 examinations (Series 6, 7, 11, 17, 22, 37, 38, 42, 57,
62, 72, 79, 82, 86, 87 and 99). In 2017, there were approximately
102,000 representative-level registrations requested. The Series 7,
Series 6 and Series 79 are the top three examinations in terms of
candidate volume, constituting approximately 92% of the total
representative-level registration volume. Current fees range between
$95 and $305 per examination, and the fee schedule reflects the length
of the examination, which is also correlated with the effort necessary
to prepare and evaluate the examinations. As noted above, FINRA is
eliminating a limited number of representative-level examinations that
represent a small percentage of candidate volume. The current and
proposed fees for the retained representative-level examinations are
provided above.
The economic baseline for the proposed rule change relating to the
Series 52 examination is the current fee associated with FINRA's
administration and delivery of the examination. In 2017, there were
approximately 830 Municipal Securities Representative registrations
requested. FINRA's fee for administering and delivering the Series 52
examination is currently $130.
Economic Impact
For purposes of this discussion, FINRA has identified the
potentially material impacts of the proposed fees.
The cumulative examination fees for a given registration as a
representative under FINRA's proposed structure are the same as those
under the current structure, with the exception of the categories of
Private Securities Offerings Representative, Research Analyst and
Operations Professional. For example, the current examination fee for
registration as a General Securities Representative is $305 (the fee
for the current Series 7 examination). Under the proposed fee
structure, the cumulative examination fee to register as a General
Securities Representative would remain $305 ($60 for the SIE
examination and $245 for the revised Series 7 examination). There will
be some economic impacts associated with
[[Page 45705]]
the proposed changes for specific categories of registration. First,
the total examination fee for registration as a Private Securities
Offerings Representative will increase by $5. The current examination
fee for registration as a Private Securities Offerings Representative
is $95.\26\ Under the restructured program, the total examination fee
for registration as Private Securities Offerings Representative will be
$100 ($60 for the SIE examination and $40 for the revised Series 82
examination). The proposed $40 fee for the revised Series 82
examination is consistent with the fees of other comparable revised
examinations (i.e., the revised Series 6, Series 22 and Series 99
examinations) all of which have similar development, maintenance and
delivery costs. Second, the examination fees for registration as a
Research Analyst or an Operations Professional will be reduced.\27\
Third, for the eliminated categories and related examinations,
individuals conducting the activities covered by the eliminated
examinations may seek registration in one of the remaining categories,
such as a General Securities Representative, which have higher
cumulative examination fees.\28\ However, as noted, this represents a
small group.
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\26\ While FINRA has maintained a $95 fee for the current Series
82 examination, the cost of developing, maintaining and delivering
the current Series 82 examination most closely correlates to the
cost of developing, maintaining and delivering the current Series 22
examination, which has a cost of $100.
\27\ The cumulative examination fee for registration as a
Research Analyst will be reduced by $245 because, under the
restructured program, individuals registering as such will no longer
be required to take the Series 7 examination. The total examination
fee for registration as an Operations Professional will also be
reduced by $30.
\28\ For example, the examination fee for the eliminated
Corporate Securities Representative (Series 62) category is $95
while the new cumulative examination fee for registration as a
General Securities Representative is proposed to be $305.
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The lifetime examination costs will also vary depending on the
number of examination attempts by individual test takers. For instance,
if an individual requires two attempts to pass the current Series 7
examination, the total cost of the examinations today would be $610
($305 x 2). If the same individual passed the SIE examination on the
first attempt, but still required two attempts to pass the revised
Series 7 examination, the total cost of the examinations would be $550
($60 for the SIE examination plus $245 x 2 for the revised Series 7
examination). If, alternatively, the individual required two attempts
at the SIE examination but passed the revised Series 7 examination on
the first attempt, the total cost would be $365 ($60 x 2 for the SIE
examination plus $245 for the revised Series 7 examination). In both of
these scenarios, because the person could take advantage of passing one
of the requirements in the first attempt, the aggregate examination
costs under the proposed fee structure would be less than today.
Further, as noted above, in some cases, the aggregate examination costs
are anticipated to be lower or higher, depending on the category in
which the individual is seeking to register.
Registered representatives seeking an additional or alternative
representative registration category would also experience a net
decrease in examination fees because they would have already satisfied
the SIE examination requirement, thus only incurring the fees
associated with the revised representative-level examination. However,
based on historical data, these individuals represent a relatively
small percentage of individuals seeking registrations.
With respect to FINRA's fee for administering and delivering the
revised Series 52 examination, the fee will be reduced by $20 (from
$130 to $110) to reflect FINRA's adjusted costs for its portion of the
fee for the examination.
Impact on Firms
FINRA believes that the restructured program is likely to decrease
the total examination fees that firms pay. In aggregate, based on
FINRA's review of a representative sample of firms, it projects a
reduction in total examination fees annually. As stated above, the
examination fees paid to become registered will typically be lower in
circumstances where multiple examination attempts are needed to pass.
Under these circumstances, firms will experience a decrease in
examination fees, to the extent that firms cover these costs for
individuals. Under the restructured program, at least some of the costs
associated with qualification will likely transfer to the individuals
interested in becoming registered representatives. Members may require
job applicants to pass the SIE examination before they can be
considered for a position, and may require that the individuals pay the
SIE examination fee. Further, FINRA understands that some firms today
seek repayment from representatives for fees associated with
representative-level examinations. The extent of the economic transfer
between firm and representative depends upon, among other things, the
competition between firms for the pool of qualified representatives and
the size of that pool.
In addition, broker-dealers and other regulated entities that seek
to register Municipal Securities Representatives would see a reduction
in FINRA's portion of the fee for the revised Series 52 examination.
Impact on Individuals
As described above, firms may require potential registrants to pass
the SIE examination before they can be considered for a position, in
which case the SIE examination fee may be incurred by the individual
and the associated impact may be a shifting of some of the costs
associated with qualification from the firm to the individual. In such
a scenario, based on its own experience and in consultation with
industry experts, FINRA believes the $60 fee for the SIE examination
would not create a significant barrier to prospective registered
representatives.
The restructured program will likely change the total test taking
time for individuals registering as representatives. For example, the
total examination session times for registration as a Research Analyst
decreases by four hours and fifteen minutes. The total session times
may increase or decrease depending on the registration. To the extent
that the changed session times lead to a change in test taking time by
individuals, they may experience an increase or decrease in the
opportunity cost of their time.
Finally, some individuals who will not be pursuing registration as
a representative may still take the SIE examination. These individuals
include associated persons of firms who are not required to register as
well as individuals who are not associated persons of firms, such as
college students, individuals working in related financial service
industries or who have personal interest in establishing proficiency in
the subject matter. FINRA believes that the $60 fee for the SIE
examination may encourage such individuals to take the examination, and
in turn increase the pool of prospective registered representatives.
Alternatives Considered
FINRA considered a range of potential fee models in developing the
proposed rule change, including different (dollar levels of) fees for
the SIE examination, the representative-level examinations and the SIE
examination in combination with the representative-level examinations.
FINRA believes that the proposed fee structure strikes the appropriate
balance between the operating costs associated with the
[[Page 45706]]
examinations and the impact to individuals and the industry.
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 \29\ and paragraph (f)(2) of Rule 19b-4
thereunder.\30\ 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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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comment[email protected]. Please include
File Number SR-FINRA-2018-033 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2018-033. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of FINRA. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-FINRA-2018-033 and should be submitted
on or before October 1, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-19502 Filed 9-7-18; 8:45 am]
BILLING CODE 8011-01-P
