Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish an Administration and Delivery Fee for the Municipal Advisor Principal Examination, 55025-55028 [2021-21746]
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Federal Register / Vol. 86, No. 190 / Tuesday, October 5, 2021 / Notices
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(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Regulation R, Rule 701 (17 CFR 247.701)
under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
Regulation R, Rule 701 requires a
broker or dealer (as part of a written
agreement between the bank and the
broker or dealer) to notify the bank if the
broker or dealer makes certain
determinations regarding the financial
status of the customer, a bank
employee’s statutory disqualification
status, and compliance with suitability
or sophistication standards.
The Commission estimates there are
3,560 registered brokers or dealers that
would, on average, notify 1,000 banks
approximately two times annually about
a determination regarding a customer’s
high net worth or institutional status or
suitability or sophistication standing as
well as a bank employee’s statutory
disqualification status. Based on these
estimates, the Commission anticipates
that Regulation R, Rule 701 would result
in brokers or dealers making
approximately 2,000 notifications to
banks per year. The Commission further
estimates (based on the level of
difficulty and complexity of the
applicable activities) that a broker or
dealer would spend approximately 15
minutes per notice to a bank. Therefore,
the estimated total annual third party
disclosure burden for the requirements
in Regulation R, Rule 701 is 500 1 hours
for brokers or dealers.
The retention period for the
recordkeeping requirement under Rule
17Ad–2(c), (d), and (h) is not less than
two years following the date the notice
is submitted. The recordkeeping
requirement under this rule is
mandatory to assist the Commission in
monitoring transfer agents who fail to
meet the minimum performance
standards set by the Commission rule.
This rule does not involve the collection
of confidential information. Please note
that a transfer agent is not required to
file under the rule unless it does not
meet the minimum performance
standards for turnaround, processing or
forwarding items received for transfer
during a month.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function.
Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to (i) www.reginfo.gov/public/do/
PRAMain and (ii) David Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission,
c/o Cynthia Roscoe, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: PRA_Mailbox@sec.gov.
Dated: September 29, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–21585 Filed 10–4–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93206; File No. SR–FINRA–
2021–025]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Establish an
Administration and Delivery Fee for the
Municipal Advisor Principal
Examination
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 27, 2021, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
‘‘establishing or changing a due, fee or
other charge’’ under Section
19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
4(f)(2) thereunder,4 which renders the
proposal effective upon receipt of this
filing by the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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 ByLaws to establish an administration and
delivery fee for the new Municipal
Advisor Principal Examination (‘‘Series
54 examination’’).
Below is the text of the proposed rule
change. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
Schedule A to the By-Laws of the
Corporation
*
*
*
*
*
Section 4—Fees 5
(a) through (b) No Change.
(c) The following fees shall be assessed to
each individual who takes an examination as
described below. These fees are in addition
to the registration fee described in paragraph
(b) and any other fees that the owner of an
examination that FINRA administers may
assess.
September 30, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
Examination No.
Examination name
N/A .........................
Series 4 ..................
Series 6 ..................
Series 7 ..................
Series 9 ..................
Series 10 ................
Securities Industry Essentials (SIE) Examination ....................................................................................
Registered Options Principal Examination ...............................................................................................
Investment Company Products and Variable Contracts Representative Examination ............................
General Securities Representative Examination ......................................................................................
General Securities Sales Supervisor Examination—Options Module ......................................................
General Securities Sales Supervisor Examination—General Module .....................................................
1 1,000 banks × 2 notices = 2,000 notices; (2,000
notices × 15 minutes) = 30,000 minutes/60 minutes
= 500 hours.
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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3 15
Examination fee
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
5 Amendments to some Examination Fees in
Section 4 of Schedule A to the FINRA By-Laws
were approved in SR–FINRA–2020–032 and
4 17
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$60
105
40
245
80
125
become effective on January 1, 2022. See Securities
Exchange Act Release No. 90176 (October 14, 2020),
85 FR 66592 (October 20, 2020) (Notice of Filing
and Immediate Effectiveness of File No. SR–
FINRA–2020–032).
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Federal Register / Vol. 86, No. 190 / Tuesday, October 5, 2021 / Notices
Examination No.
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
Series
14
16
22
23
24
26
27
28
39
50
51
52
53
54
57
79
82
86
87
99
Examination name
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
................
Compliance Official Examination ..............................................................................................................
Supervisory Analyst Examination .............................................................................................................
Direct Participation Programs Representative Examination .....................................................................
General Securities Principal Examination—Sales Supervisor Module ....................................................
General Securities Principal Examination ................................................................................................
Investment Company Products and Variable Contracts Principal Examination ......................................
Financial and Operations Principal Examination ......................................................................................
Introducing Broker-Dealer Financial and Operations Principal Examination ...........................................
Direct Participation Programs Principal Examination ...............................................................................
Municipal Advisor Representative Examination .......................................................................................
Municipal Fund Securities Limited Principal Examination ........................................................................
Municipal Securities Representative Examination ....................................................................................
Municipal Securities Principal Examination ..............................................................................................
Municipal Advisor Principal Examination ..................................................................................................
Securities Trader Examination ..................................................................................................................
Investment Banking Representative Examination ....................................................................................
Private Securities Offering Representative Examination ..........................................................................
Research Analyst Examination—Analysis ................................................................................................
Research Analyst Examination—Regulatory ............................................................................................
Operations Professional Examination .......................................................................................................
(1) through (4) No Change.
(d) through (i) No Change.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
FINRA is proposing amendments to
Schedule A to the FINRA By-Laws to
establish an administration and delivery
fee for the Series 54 examination. The
Municipal Securities Rulemaking Board
(‘‘MSRB’’) has established qualification
classifications for municipal advisor
professionals. The Commission
approved amendments to MSRB Rule
G–3 that established two new
registration classifications for municipal
advisors: 6 (1) Municipal advisor
6 The term ‘‘municipal advisor’’ is defined to
mean a person that: (i) Provides advice to or on
behalf of a municipal entity or obligated person
with respect to municipal financial products or the
issuance of municipal securities, including advice
with respect to the structure, timing, terms, and
other similar matters concerning such financial
products or issues; or (ii) undertakes a solicitation
of a municipal entity. The definition includes
financial advisors, guaranteed investment contract
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representatives (i.e., those individuals
who engage in municipal advisory
activities); and (2) municipal advisor
principals (i.e., those individuals who
engage in the management, direction or
supervision of the municipal advisory
activities of the municipal advisor or its
associated persons).7 Both municipal
advisor representatives and municipal
advisor principals are required to pass
the Municipal Advisor Representative
Examination (‘‘Series 50 examination’’)
to be qualified in accordance with
MSRB rules.8
MSRB Rule G–3(e)(ii)(A) was
amended to establish additional
qualification requirements for
municipal advisor principals, including
the requirement to pass the Series 54
examination.9 Under the amended rule,
municipal advisor principals are
required to pass both the Series 50
examination and the Series 54
examination prior to becoming qualified
as a municipal advisor principal.10
To provide persons who function as
municipal advisor principals with
sufficient time to satisfy the requirement
to pass the new Series 54 examination,
brokers, third-party marketers, placement agents,
solicitors, finders, and swap advisors that are
engaged in municipal advisory activities, unless
they are statutorily excluded. The definition does
not include a municipal entity or an employee of
a municipal entity. See 15 U.S.C. 78o–4(e)(4).
7 See Securities Exchange Act Release No. 74384
(February 26, 2015), 80 FR 11706 (March 4, 2015)
(Notice of Filing of Amendment Nos. 1 & 2 and
Order Granting Accelerated Approval of File No.
SR–MSRB–2014–08).
8 See Securities Exchange Act Release No. 75865
(September 9, 2015), 80 FR 55407 (September 15,
2015) (Notice of Filing and Immediate Effectiveness
of File No. SR–FINRA–2015–031).
9 See Securities Exchange Act Release No. 84630
(November 20, 2018), 83 FR 60927 (November 27,
2018) (Order Approving File No. SR–MSRB–2018–
07).
10 Supra note 9.
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240
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115
105
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60
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40
the MSRB initially included a one-year
grace period from the effective date of
the Series 54 examination, during which
a person functioning as a municipal
advisor principal would be permitted to
continue to engage in the management,
direction or supervision of the
municipal advisory activities of the
municipal advisor and its associated
persons so long as such person is
qualified with the Series 50
examination.11
The date by which individuals are
required to become qualified with the
Series 54 examination has been
extended three times due to impacts
related to the pandemic. In April 2020,
the MSRB extended the date by which
individuals were required to become
qualified with the Series 54 examination
from November 12, 2020 to March 31,
2021.12 In December 2020, the MSRB
further extended the time period from
March 31, 2021 to November 12, 2021.13
In September 2021, the MSRB further
extended the time period from
November 12, 2021 to November 30,
2021.14
FINRA develops, maintains, and
delivers all FINRA qualification
examinations for individuals who are
registered or seeking registration with
FINRA. FINRA also administers and
delivers examinations developed by the
11 Supra
note 9.
Securities Exchange Act Release No. 88694
(April 20, 2020), 85 FR 23088 (April 24, 2020)
(Notice of Filing and Immediate Effectiveness of
File No. SR–MSRB–2020–01).
13 See Securities Exchange Act Release No. 90621
(December 9, 2020), 85 FR 81254 (December 15,
2020) (Notice of Filing and Immediate Effectiveness
of File No. SR–MSRB–2020–09).
14 See Securities Exchange Act Release No. 92938
(September 10, 2020), 86 FR 51696 (September 16,
2021) (Notice of Filing and Immediate Effectiveness
of File No. SR–MSRB–2021–05).
12 See
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MSRB and other self-regulatory
organizations.15 The SEC has designated
FINRA to administer and deliver the
Series 54 examination for municipal
advisors.16
FINRA currently administers
examinations electronically through the
PROCTOR® system 17 at testing centers
operated by vendors under contract
with FINRA.18 For qualification
examinations sponsored by a FINRA
client and administered by FINRA,
FINRA charges an administration and
delivery fee that represents either a
portion of or the entire examination fee.
Consistent with this practice, FINRA
charges an administration and delivery
fee of $115 for the Series 50
examination.19
The proposed administration and
delivery fee for the Series 54 exam is
also $115.20 The proposed
administration and delivery fee will
offset FINRA’s costs associated with the
administration and delivery of the
Series 54 examination and, as discussed
15 In this regard, the Exchange Act provides that
a registered securities association shall administer
required qualification examinations for municipal
securities brokers and municipal securities dealers
who are members of the association. See 15 U.S.C.
78o–4(c)(7)(A)(i).
16 See Securities Exchange Act Release No. 75714
(August 17, 2015) 80 FR 50883 (August 21, 2015)
(Designation of the Financial Industry Regulatory
Authority to Administer Professional Qualification
Tests for Associated Persons of Registered
Municipal Advisors). Section 15B(c)(7)(A)(iii) of the
Exchange Act requires that the SEC or its designee
administer qualification examinations for
municipal advisors. The SEC previously designated
FINRA to examine FINRA members’ activities as
registered municipal advisors and evaluate
compliance by such members with federal
securities laws, SEC rules and regulations, and
MSRB rules applicable to municipal advisors. See
Securities Exchange Act Release No. 70462
(September 20, 2013), 78 FR 67468 (November 12,
2013) (S7–45–10) (Registration of Municipal
Advisors).
17 PROCTOR is a computer system that is
specifically designed for the administration and
delivery of computer-based testing and training.
18 The MSRB has temporarily allowed the Series
54 examination to be taken online as an interim
accommodation for individuals who need to
become appropriately qualified as a municipal
advisor principal before the compliance date. See
supra note 14.
19 The administration and delivery fee represents
a portion of the entire examination fee when a
FINRA client has established an additional fee for
an examination that it sponsors. The fee to take the
Series 50 examination is $265. Of this amount, $115
is the FINRA administration and delivery fee, and
$150 is the development fee determined by the
FINRA client, the MSRB. See MSRB Rule A–16. See
also supra note 8.
20 The fee to take the Series 54 examination is
$265. Of this amount, $115 is the FINRA
administration and delivery fee, and $150 is the
development fee determined by the FINRA client,
the MSRB. See MSRB Rule A–16. See also
Securities Exchange Act Release No. 85135
(February 14, 2019), 84 FR 5513, 5514 n.15
(February 21, 2019) (Notice of Filing and Immediate
Effectiveness of File No. SR–MSRB–2019–02).
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below, contribute to supporting FINRA’s
other operations.
FINRA has filed the proposed rule
change for immediate effectiveness. The
effective date and the implementation
date will be the date of filing.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(5) of the Act,21 which
requires, among other things, that
FINRA rules provide for the equitable
allocation of reasonable dues, fees and
other charges among members and
issuers and other persons using any
facility or system that FINRA operates
or controls.
Reasonableness of the Proposed Fee
FINRA believes that the proposed
administration and delivery fee for the
Series 54 examination is reasonable. In
establishing an administration and
delivery fee of $115 for the Series 54
examination, FINRA applied the same
criteria as it does for establishing the
fees for other examinations with similar
characteristics related to test length and
volume. In particular, the Series 54
examination fee is consistent with the
fee charged for the Series 50
examination, which has the same
number of questions (and thus requires
the same testing time).
The proposed administration and
delivery fee will be used to cover
FINRA’s costs associated with the
administration and delivery of the
Series 54 examination, including the
fees that vendors charge FINRA for
delivering qualification examinations
through their test delivery networks and
PROCTOR system maintenance and
enhancement expenses. The proposed
fee also will contribute to supporting
FINRA’s other operations. As FINRA
has explained previously, it is not
feasible to associate a direct affiliated
revenue stream for each of its programs
and thus numerous operations and
services must be funded by other
revenue sources, which include both
general regulatory assessments and usebased fees.22
The Proposed Fee Is Equitable and Not
Unfairly Discriminatory
FINRA believes that the proposed
administration and delivery fee for the
Series 54 examination is equitable and
not unfairly discriminatory. The
proposed fee is a use-based fee and
FINRA will charge the fee each time a
municipal advisor representative
accesses the content. Thus, the exam for
21 15
U.S.C. 78o–3(b)(5).
supra note 5.
22 See
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55027
municipal advisor principals will be
available on the same terms to every
municipal advisor representative.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. FINRA
believes that the establishment of the
administration and delivery fee for the
Series 54 examination will have a
limited economic impact on the
industry.
MSRB rules require every municipal
advisor to have at least one municipal
advisor principal.23 There are
approximately 500 registered municipal
advisors.24 The administration and
delivery fees may be paid by the
individuals taking the examination or
their associated firms.
FINRA administers this examination
as a service provider to the MSRB as
designated by the SEC. In providing this
service, FINRA is not exercising
regulatory discretion and therefore is
not itself imposing burdens on those
individuals who may choose to sit for
the examination. FINRA does exercise
discretion in establishing the
administration and delivery fee.
Regardless of whether individuals pay
the fee or some part of the fee is paid
by firms, FINRA believes that the
proposal is likely to have minimal
effects on firms’ costs or liquidity. The
proposal will therefore have at most
minimal competitive effects.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 25 and paragraph (f)(2) of Rule
19b–4 thereunder.26 At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
23 MSRB
Rule G–3(e)(iii).
MSRB-Registered Municipal Advisor Firms
with Series–50 Qualified Representatives (Sept. 20,
2021, 2:06 p.m.), https://msrb.org/MARegistrants.
25 15 U.S.C. 78s(b)(3)(A).
26 17 CFR 240.19b–4(f)(2).
24 See
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Federal Register / Vol. 86, No. 190 / Tuesday, October 5, 2021 / Notices
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.
[FR Doc. 2021–21746 Filed 10–4–21; 8:45 am]
IV. Solicitation of Comments
BILLING CODE 8011–01–P
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-comments@
sec.gov. Please include File Number SR–
FINRA–2021–025 on the subject line.
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Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–FINRA–2021–025. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of
FINRA. All comments received will be
posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FINRA–
2021–025 and should be submitted on
or before October 26, 2021.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–263, OMB Control No.
3235–0275]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 17Ad–13
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17Ad–13 (17 CFR
240.17Ad–13), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17Ad–13 requires certain
registered transfer agents to file
annually with the Commission and the
transfer agent’s appropriate regulatory
authority a report prepared by an
independent accountant on the basis of
a study and evaluation of the transfer
agent’s system of internal accounting
controls for the transfer of record
ownership and the safeguarding of
related securities and funds. If the
independent accountant’s report
specifies any material inadequacy in a
transfer agent’s system, the rule requires
the transfer agent to notify the
Commission and its appropriate
regulatory agency in writing, within
sixty calendar days after the transfer
agent receives the independent
accountant’s report, of any corrective
action taken or proposed to be taken by
the transfer agent. In addition, Rule
17Ad–13 requires that transfer agents
maintain the independent accountant’s
report and any other documents
required by the rule for at least three
years, the first year in an easily
accessible place. These recordkeeping
requirements assist the Commission and
27 17
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other regulatory agencies with
monitoring transfer agents and ensuring
compliance with the rule. Small transfer
agents and transfer agents that service
only their own companies’ securities are
exempt from Rule 17Ad–13.
Approximately 100 professional
independent transfer agents must file
with the Commission one report
prepared by an independent accountant
pursuant to Rule 17Ad–13 each year.
Commission staff estimates that, on
average, the annual internal time burden
for each transfer agent to submit the
independent accountant’s report to the
Commission is minimal or zero. The
time required for an independent
accountant to conduct the study and
evaluation of a transfer agent’s system of
internal accounting controls and
complete the report varies depending on
the size and nature of the transfer
agent’s operations. Commission staff
estimates that, on average, each Rule
17Ad–13 report can be completed by the
independent accountant in 120 hours.
In light of Commission staff’s review of
previously filed Rule 17Ad–13 reports
and Commission staff’s conversations
with transfer agents and accountants,
Commission staff estimates that 120
hours are needed to perform the study
and prepare the report on an annual
basis. Commission staff estimates that
the average hourly rate of an
independent accountant is $260,
resulting in an annual external cost
burden of $31,200 for each of the
approximately 100 professional
independent transfer agents. The
aggregate total annual external cost for
the 100 respondents is approximately
$3,120,000.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have any practical
utility; (b) the accuracy of the
Commission’s estimates of the burden of
the proposed collection of information;
(c) ways to enhance the quality, utility,
and clarity of the information collected;
and (d) ways to minimize the burden of
the collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
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E:\FR\FM\05OCN1.SGM
05OCN1
]]>Agencies
[Federal Register Volume 86, Number 190 (Tuesday, October 5, 2021)]
[Notices]
[Pages 55025-55028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21746]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93206; File No. SR-FINRA-2021-025]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Establish an Administration and Delivery Fee
for the Municipal Advisor Principal Examination
September 30, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 27, 2021, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by FINRA.
FINRA has designated the proposed rule change as ``establishing or
changing a due, fee or other charge'' under Section 19(b)(3)(A)(ii) of
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the
proposal effective upon receipt of this filing by the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend Section 4(c) of Schedule A to the FINRA
By-Laws to establish an administration and delivery fee for the new
Municipal Advisor Principal Examination (``Series 54 examination'').
Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *
Schedule A to the By-Laws of the Corporation
* * * * *
Section 4--Fees \5\
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\5\ Amendments to some Examination Fees in Section 4 of Schedule
A to the FINRA By-Laws were approved in SR-FINRA-2020-032 and become
effective on January 1, 2022. See Securities Exchange Act Release
No. 90176 (October 14, 2020), 85 FR 66592 (October 20, 2020) (Notice
of Filing and Immediate Effectiveness of File No. SR-FINRA-2020-
032).
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(a) through (b) No Change.
(c) The following fees shall be assessed to each individual who
takes an examination as described below. These fees are in addition
to the registration fee described in paragraph (b) and any other
fees that the owner of an examination that FINRA administers may
assess.
------------------------------------------------------------------------
Examination No. Examination name Examination fee
------------------------------------------------------------------------
N/A......................... Securities Industry $60
Essentials (SIE)
Examination.
Series 4.................... Registered Options 105
Principal Examination.
Series 6.................... Investment Company 40
Products and Variable
Contracts
Representative
Examination.
Series 7.................... General Securities 245
Representative
Examination.
Series 9.................... General Securities 80
Sales Supervisor
Examination--Options
Module.
Series 10................... General Securities 125
Sales Supervisor
Examination--General
Module.
[[Page 55026]]
Series 14................... Compliance Official 350
Examination.
Series 16................... Supervisory Analyst 240
Examination.
Series 22................... Direct Participation 40
Programs
Representative
Examination.
Series 23................... General Securities 100
Principal Examination--
Sales Supervisor
Module.
Series 24................... General Securities 120
Principal Examination.
Series 26................... Investment Company 100
Products and Variable
Contracts Principal
Examination.
Series 27................... Financial and 120
Operations Principal
Examination.
Series 28................... Introducing Broker- 100
Dealer Financial and
Operations Principal
Examination.
Series 39................... Direct Participation 95
Programs Principal
Examination.
Series 50................... Municipal Advisor 115
Representative
Examination.
Series 51................... Municipal Fund 105
Securities Limited
Principal Examination.
Series 52................... Municipal Securities 110
Representative
Examination.
Series 53................... Municipal Securities 115
Principal Examination.
Series 54................... Municipal Advisor 115
Principal Examination.
Series 57................... Securities Trader 60
Examination.
Series 79................... Investment Banking 245
Representative
Examination.
Series 82................... Private Securities 40
Offering
Representative
Examination.
Series 86................... Research Analyst 185
Examination--Analysis.
Series 87................... Research Analyst 130
Examination--Regulator
y.
Series 99................... Operations Professional 40
Examination.
------------------------------------------------------------------------
(1) through (4) No Change.
(d) through (i) No Change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
FINRA is proposing amendments to Schedule A to the FINRA By-Laws to
establish an administration and delivery fee for the Series 54
examination. The Municipal Securities Rulemaking Board (``MSRB'') has
established qualification classifications for municipal advisor
professionals. The Commission approved amendments to MSRB Rule G-3 that
established two new registration classifications for municipal
advisors: \6\ (1) Municipal advisor representatives (i.e., those
individuals who engage in municipal advisory activities); and (2)
municipal advisor principals (i.e., those individuals who engage in the
management, direction or supervision of the municipal advisory
activities of the municipal advisor or its associated persons).\7\ Both
municipal advisor representatives and municipal advisor principals are
required to pass the Municipal Advisor Representative Examination
(``Series 50 examination'') to be qualified in accordance with MSRB
rules.\8\
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\6\ The term ``municipal advisor'' is defined to mean a person
that: (i) Provides advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial products or the
issuance of municipal securities, including advice with respect to
the structure, timing, terms, and other similar matters concerning
such financial products or issues; or (ii) undertakes a solicitation
of a municipal entity. The definition includes financial advisors,
guaranteed investment contract brokers, third-party marketers,
placement agents, solicitors, finders, and swap advisors that are
engaged in municipal advisory activities, unless they are
statutorily excluded. The definition does not include a municipal
entity or an employee of a municipal entity. See 15 U.S.C. 78o-
4(e)(4).
\7\ See Securities Exchange Act Release No. 74384 (February 26,
2015), 80 FR 11706 (March 4, 2015) (Notice of Filing of Amendment
Nos. 1 & 2 and Order Granting Accelerated Approval of File No. SR-
MSRB-2014-08).
\8\ See Securities Exchange Act Release No. 75865 (September 9,
2015), 80 FR 55407 (September 15, 2015) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2015-031).
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MSRB Rule G-3(e)(ii)(A) was amended to establish additional
qualification requirements for municipal advisor principals, including
the requirement to pass the Series 54 examination.\9\ Under the amended
rule, municipal advisor principals are required to pass both the Series
50 examination and the Series 54 examination prior to becoming
qualified as a municipal advisor principal.\10\
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\9\ See Securities Exchange Act Release No. 84630 (November 20,
2018), 83 FR 60927 (November 27, 2018) (Order Approving File No. SR-
MSRB-2018-07).
\10\ Supra note 9.
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To provide persons who function as municipal advisor principals
with sufficient time to satisfy the requirement to pass the new Series
54 examination, the MSRB initially included a one-year grace period
from the effective date of the Series 54 examination, during which a
person functioning as a municipal advisor principal would be permitted
to continue to engage in the management, direction or supervision of
the municipal advisory activities of the municipal advisor and its
associated persons so long as such person is qualified with the Series
50 examination.\11\
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\11\ Supra note 9.
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The date by which individuals are required to become qualified with
the Series 54 examination has been extended three times due to impacts
related to the pandemic. In April 2020, the MSRB extended the date by
which individuals were required to become qualified with the Series 54
examination from November 12, 2020 to March 31, 2021.\12\ In December
2020, the MSRB further extended the time period from March 31, 2021 to
November 12, 2021.\13\ In September 2021, the MSRB further extended the
time period from November 12, 2021 to November 30, 2021.\14\
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\12\ See Securities Exchange Act Release No. 88694 (April 20,
2020), 85 FR 23088 (April 24, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-MSRB-2020-01).
\13\ See Securities Exchange Act Release No. 90621 (December 9,
2020), 85 FR 81254 (December 15, 2020) (Notice of Filing and
Immediate Effectiveness of File No. SR-MSRB-2020-09).
\14\ See Securities Exchange Act Release No. 92938 (September
10, 2020), 86 FR 51696 (September 16, 2021) (Notice of Filing and
Immediate Effectiveness of File No. SR-MSRB-2021-05).
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FINRA develops, maintains, and delivers all FINRA qualification
examinations for individuals who are registered or seeking registration
with FINRA. FINRA also administers and delivers examinations developed
by the
[[Page 55027]]
MSRB and other self-regulatory organizations.\15\ The SEC has
designated FINRA to administer and deliver the Series 54 examination
for municipal advisors.\16\
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\15\ In this regard, the Exchange Act provides that a registered
securities association shall administer required qualification
examinations for municipal securities brokers and municipal
securities dealers who are members of the association. See 15 U.S.C.
78o-4(c)(7)(A)(i).
\16\ See Securities Exchange Act Release No. 75714 (August 17,
2015) 80 FR 50883 (August 21, 2015) (Designation of the Financial
Industry Regulatory Authority to Administer Professional
Qualification Tests for Associated Persons of Registered Municipal
Advisors). Section 15B(c)(7)(A)(iii) of the Exchange Act requires
that the SEC or its designee administer qualification examinations
for municipal advisors. The SEC previously designated FINRA to
examine FINRA members' activities as registered municipal advisors
and evaluate compliance by such members with federal securities
laws, SEC rules and regulations, and MSRB rules applicable to
municipal advisors. See Securities Exchange Act Release No. 70462
(September 20, 2013), 78 FR 67468 (November 12, 2013) (S7-45-10)
(Registration of Municipal Advisors).
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FINRA currently administers examinations electronically through the
PROCTOR[supreg] system \17\ at testing centers operated by vendors
under contract with FINRA.\18\ For qualification examinations sponsored
by a FINRA client and administered by FINRA, FINRA charges an
administration and delivery fee that represents either a portion of or
the entire examination fee. Consistent with this practice, FINRA
charges an administration and delivery fee of $115 for the Series 50
examination.\19\
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\17\ PROCTOR is a computer system that is specifically designed
for the administration and delivery of computer-based testing and
training.
\18\ The MSRB has temporarily allowed the Series 54 examination
to be taken online as an interim accommodation for individuals who
need to become appropriately qualified as a municipal advisor
principal before the compliance date. See supra note 14.
\19\ The administration and delivery fee represents a portion of
the entire examination fee when a FINRA client has established an
additional fee for an examination that it sponsors. The fee to take
the Series 50 examination is $265. Of this amount, $115 is the FINRA
administration and delivery fee, and $150 is the development fee
determined by the FINRA client, the MSRB. See MSRB Rule A-16. See
also supra note 8.
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The proposed administration and delivery fee for the Series 54 exam
is also $115.\20\ The proposed administration and delivery fee will
offset FINRA's costs associated with the administration and delivery of
the Series 54 examination and, as discussed below, contribute to
supporting FINRA's other operations.
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\20\ The fee to take the Series 54 examination is $265. Of this
amount, $115 is the FINRA administration and delivery fee, and $150
is the development fee determined by the FINRA client, the MSRB. See
MSRB Rule A-16. See also Securities Exchange Act Release No. 85135
(February 14, 2019), 84 FR 5513, 5514 n.15 (February 21, 2019)
(Notice of Filing and Immediate Effectiveness of File No. SR-MSRB-
2019-02).
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FINRA has filed the proposed rule change for immediate
effectiveness. The effective date and the implementation date will be
the date of filing.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\21\ which requires, among
other things, that FINRA rules provide for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system that FINRA operates or
controls.
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\21\ 15 U.S.C. 78o-3(b)(5).
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Reasonableness of the Proposed Fee
FINRA believes that the proposed administration and delivery fee
for the Series 54 examination is reasonable. In establishing an
administration and delivery fee of $115 for the Series 54 examination,
FINRA applied the same criteria as it does for establishing the fees
for other examinations with similar characteristics related to test
length and volume. In particular, the Series 54 examination fee is
consistent with the fee charged for the Series 50 examination, which
has the same number of questions (and thus requires the same testing
time).
The proposed administration and delivery fee will be used to cover
FINRA's costs associated with the administration and delivery of the
Series 54 examination, including the fees that vendors charge FINRA for
delivering qualification examinations through their test delivery
networks and PROCTOR system maintenance and enhancement expenses. The
proposed fee also will contribute to supporting FINRA's other
operations. As FINRA has explained previously, it is not feasible to
associate a direct affiliated revenue stream for each of its programs
and thus numerous operations and services must be funded by other
revenue sources, which include both general regulatory assessments and
use-based fees.\22\
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\22\ See supra note 5.
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The Proposed Fee Is Equitable and Not Unfairly Discriminatory
FINRA believes that the proposed administration and delivery fee
for the Series 54 examination is equitable and not unfairly
discriminatory. The proposed fee is a use-based fee and FINRA will
charge the fee each time a municipal advisor representative accesses
the content. Thus, the exam for municipal advisor principals will be
available on the same terms to every municipal advisor representative.
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. FINRA believes that the
establishment of the administration and delivery fee for the Series 54
examination will have a limited economic impact on the industry.
MSRB rules require every municipal advisor to have at least one
municipal advisor principal.\23\ There are approximately 500 registered
municipal advisors.\24\ The administration and delivery fees may be
paid by the individuals taking the examination or their associated
firms.
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\23\ MSRB Rule G-3(e)(iii).
\24\ See MSRB-Registered Municipal Advisor Firms with Series-50
Qualified Representatives (Sept. 20, 2021, 2:06 p.m.), https://msrb.org/MARegistrants.
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FINRA administers this examination as a service provider to the
MSRB as designated by the SEC. In providing this service, FINRA is not
exercising regulatory discretion and therefore is not itself imposing
burdens on those individuals who may choose to sit for the examination.
FINRA does exercise discretion in establishing the administration and
delivery fee. Regardless of whether individuals pay the fee or some
part of the fee is paid by firms, FINRA believes that the proposal is
likely to have minimal effects on firms' costs or liquidity. The
proposal will therefore have at most minimal competitive effects.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \25\ and paragraph (f)(2) of Rule 19b-4
thereunder.\26\ At any time within 60 days of the filing of the
proposed rule change, the Commission summarily may temporarily suspend
such rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of
[[Page 55028]]
the purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\25\ 15 U.S.C. 78s(b)(3)(A).
\26\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-FINRA-2021-025 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2021-025. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of FINRA. All comments received will be
posted without change. Persons submitting comments are cautioned that
we do not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
FINRA-2021-025 and should be submitted on or before October 26, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21746 Filed 10-4-21; 8:45 am]
BILLING CODE 8011-01-P
