Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Revise the Research Analyst (Series 86/87) Examination, 16289-16291 [2023-05335]
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Federal Register / Vol. 88, No. 51 / Thursday, March 16, 2023 / Notices
information is required on occasion. We
estimate that approximately 327 issuers
will file Securities Act Rule 477
submissions annually at an estimated
one hour per response for a total annual
burden of approximately 327 hours. We
estimate that 100% of the reporting
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number.
The public may view background
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collection at the following website:
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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 by April 17, 2023 to (i)
www.reginfo.gov/public/do/PRAMain
and (ii) David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549, or by sending an email to:
PRA_Mailbox@sec.gov.
Dated: March 9, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–05377 Filed 3–15–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97104; File No. SR–FINRA–
2023–004]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Revise the Research
Analyst (Series 86/87) Examination
ddrumheller on DSK120RN23PROD with NOTICES1
March 10, 2023.
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 February
28, 2023, 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 ‘‘constituting a stated policy,
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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practice, or interpretation with respect
to the meaning, administration, or
enforcement of an existing rule’’ under
Section 19(b)(3)(A)(i) of the Act 3 and
Rule 19b–4(f)(1) thereunder,4 which
renders the proposal effective upon
receipt of this filing by the Commission.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing revisions to the
content outline and selection
specifications for the Research Analyst
(Series 86/87) exam program, including
a reduction of the number of scored
questions on the Series 86 exam. The
proposed revisions update the material
to incorporate the functions and
associated tasks currently performed by
a Research Analyst and to reflect the
laws, rules, and regulations most
relevant to these functions and
associated tasks. FINRA is also
proposing to make changes to the format
of the content outline to reflect these
revisions. FINRA is not proposing any
textual changes to the By-Laws,
Schedules to the By-Laws, or Rules of
FINRA.
The revised content outline appears
in Exhibit 3a. The Series 86/87 exam
selection specifications have been
submitted to the Commission under
separate cover with a request for
confidential treatment pursuant to
Exchange Act Rule 24b–2.5
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
3 15
U.S.C. 78s(b)(3)(A)(i).
CFR 240.19b–4(f)(1).
5 17 CFR 240.24b–2; FINRA also is proposing
corresponding revisions to the Series 86/87
question bank. Based on instruction from the
Commission, FINRA is submitting this filing for
immediate effectiveness pursuant to Section
19(b)(3)(A) of the Act and Rule 19b–4(f)(1)
thereunder, and FINRA is not filing the question
bank for review. See Letter from Belinda Blaine,
Associate Director, Division of Market Regulation,
SEC, to Alden S. Adkins, Senior Vice President and
General Counsel, NASD Regulation Inc., dated July
24, 2000. The question bank is available for the
Commission’s review.
4 17
PO 00000
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16289
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Section 15A(g)(3) of the Exchange
Act 6 authorizes FINRA to prescribe
standards of training, experience, and
competence for persons associated with
FINRA members. In accordance with
this provision, FINRA has developed
exams that are designed to establish that
persons associated with FINRA
members have attained specified levels
of competence and knowledge,
consistent with applicable registration
requirements under FINRA rules.
FINRA periodically reviews the content
of the exams to determine whether
revisions are necessary or appropriate in
view of changes pertaining to the
subject matter covered by the exams.
FINRA Rule 1220(b)(6) (‘‘Research
Analyst’’) requires an associated person
whose primary job function is to
provide investment research and who is
primarily responsible for the
preparation of the substance of an
equity research report,7 or whose name
appears on an equity research report, to
be registered and qualified as a Research
Analyst.8 An associated person
registering as Research Analyst after
October 1, 2018, shall, prior to or
concurrent with such registration, pass
the general knowledge co-requisite
Securities Industry Essentials (SIE)
Exam and the Series 86/87 exam, or
obtain a waiver.9 Rather than pass both
the Series 86 and Series 87 exams, an
associated person may obtain a waiver
from the analytical portion (Series 86
exam) upon written request (pursuant to
the FINRA Rule 9600 Series) and
verification that the applicant has
passed:
(i) Levels I and II of the CFA
Examination; or
(ii) if the applicant functions as a
research analyst who prepares only
technical research reports as defined in
paragraph (b)(6) of Rule 1220, Levels I
and II of the Chartered Market
Technician (‘‘CMT’’) Examination; and
(iii) has either functioned as a
research analyst continuously since
having passed the Level II CFA or CMT
6 15
U.S.C. 78o–3(g)(3).
Rule 2241(a)(11).
8 See Rule 1220(b)(6).
9 See Rule 1220(b)(6)(B) (‘‘Qualifications’’).
7 See
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Federal Register / Vol. 88, No. 51 / Thursday, March 16, 2023 / Notices
Examination or applied for registration
as a Research Analyst within two years
of having passed the Level II CFA or
CMT Examination.10
FINRA has created Qualification
Exam Content Committees to advise
FINRA’s Testing and Continuing
Education Department regarding the
content of all qualification exams.
Committee members are drawn from the
industry and self-regulatory
organization staff.11 In consultation
with the appropriate committee of
industry representatives, FINRA
recently reviewed the Series 86/87 exam
program. As a result of this review,
FINRA is proposing to revise the
content outline to incorporate the
functions and associated tasks currently
performed by a Research Analyst and to
reflect the laws, rules, and regulations
most relevant to these functions and
associated tasks. FINRA is also
proposing to make changes to the format
of the content outline to reflect these
revisions.
ddrumheller on DSK120RN23PROD with NOTICES1
Current Outline
The current content outline is divided
into two parts, with each part divided
further into major functions performed
by a Research Analyst. The following
reflects the two parts, total number of
questions associated with each part, and
major job functions, including the
allocation of questions among the major
job functions:
Part I. Series 86 (100 questions):
Function 1: Information and Data
Collection (10 questions); and
Function 2: Analysis, Modeling and
Valuation (90 questions).
Part II. Series 87 (50 questions):
Function 3: Preparation of Research
Reports (32 questions); and
Function 4: Dissemination of
Information (18 questions).
The current outline describes each
function, including specific tasks and
activities associated with performing
that function. The current outline also
includes a preface addressing the
purpose, structure, administration and
scoring of the exams.
Proposed Revisions
FINRA is proposing to divide the
Series 86 exam into three major job
functions and to reduce the length of the
Series 86 exam from 100 questions to 85
questions. The Series 87 exam will
remain divided into two functions with
50 questions total, though the number of
questions will be reallocated between
10 See
Rule 1220(b)(6)(B) (‘‘Qualifications’’).
information about the Qualification Exam
Content Committees can be found on FINRA’s
website at https://www.finra.org/about/governance/
ad-hoc-committees.
11 More
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the two functions of the Series 87 exam.
The following reflects the proposed
revisions:
Part I. Series 86 (85 questions):
Function 1: Information and Data
Collection (18 questions);
Function 2: Data Verification and
Analysis (28 questions); and
Function 3: Valuation and Forecasting
(39 questions).
Part II. Series 87 (50 questions):
Function 4: Preparation of Research
Reports (36 questions); and
Function 5: Dissemination and
Marketing of Information (14 questions).
Each function includes specific tasks
describing activities associated with
performing that function. There are two
tasks (1.1–1.2) associated with Function
1; one task (2.1) associated with
Function 2; three tasks (3.1–3.3)
associated with Function 3; two tasks
(4.1–4.2) associated with Function 4;
and two tasks (5.1–5.2) associated with
Function 5.12 For example, one such
task (3.3) is ‘‘forecast the future
valuation of the company and determine
any recommendation by identifying key
catalysts that may alter the price of a
stock and identifying patterns or events
(macro, political, or company-specific)
that move stock prices and create
investment opportunities.’’ 13 Further,
the content outline lists the knowledge
required to perform each function and
associated tasks (e.g., characteristics of
markets, factors that could impact the
perceived risk of an investment,
technical analysis, large shareholder
exposure, activist investors, valuation
considerations).14 Additionally, where
applicable, the content outline lists the
laws, rules and regulations a candidate
is expected to know to perform each
function and associated tasks. These
include the applicable FINRA rules
(e.g., FINRA Rule 2241) and SEC rules
and regulations (e.g., Regulation AC
under the Exchange Act).15 FINRA
conducted a job analysis study of
Research Analysts,16 which included
the use of a survey, to develop each
function and associated tasks and
update the required knowledge set forth
in the revised content outline. These
functions and associated tasks reflect
12 See
Exhibit 3a, Outline Pages 3–9.
Exhibit 3a, Outline Page 6.
14 See Exhibit 3a, Outline Pages 3–9.
15 See Exhibit 3a, Outline Page 7.
16 FINRA periodically conducts job analysis
studies to help ensure exams test current job
functions and required knowledge of registered
representatives to perform associated tasks. This is
an internal process that may include conducting
focus panels, consulting with the appropriate
committees, or surveying registered representatives
to determine current job functions and associated
tasks of registered representatives so that FINRA
may update exams accordingly.
13 See
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the day-to-day activities of a Research
Analyst.
In reviewing the results of the survey
and the changes to the tasks and
knowledge required to function as a
Research Analyst, FINRA believes an
85-question Series 86 exam can
sufficiently sample the requisite
knowledge domain. FINRA looked at
the impact of shorter test forms on key
psychometric properties of the test,
including decision agreement (the
probability that the 85-item version of
the test and the 100-item version yield
the same pass-fail result for a given
examinee). The results show that the
move to 85-item test forms will have
minimal impact on the effectiveness of
the Series 86 exam in assessing the level
of proficiency required of an entry-level
Research Analyst. Therefore, the 85question Series 86 exam can reliably
assess the level of proficiency required
of an entry-level Research Analyst. The
time given to complete the Series 86
exam will remain at four hours and 30
minutes to continue to ensure candidate
performance is not affected by time
constraints.17
As noted above, FINRA is also
proposing to revise the content outline
to reflect the laws, rules, and regulations
most relevant to the functions and
associated tasks of a Research Analyst,
including incorporating FINRA Rule
5280 (‘‘Trading Ahead of Research
Reports’’) in the content outline.18
Finally, FINRA is proposing
corresponding changes to the Series 86/
87 selection specifications and question
bank.
Availability of Content Outline
The current Series 86/87 exam
content outline is available on FINRA’s
website, at www.finra.org/
brokerqualifications/exams. The revised
Series 86/87 exam content outline will
replace the current content outline on
FINRA’s website.
FINRA is filing the proposed rule
change for immediate effectiveness.
FINRA will announce the
implementation date of the proposed
rule change in a Regulatory Notice to be
published following Commission notice
of the filing of the proposed rule change
for immediate effectiveness.
17 The time given to complete the Series 87 exam
will also remain the same, at one hour and 45
minutes.
18 The proposed revisions to the content outline
will also reflect the removal of FINRA Rule 2220
(‘‘Options Communications’’) from the content
outline because, based on discussions with the
appropriate committee of industry representatives,
this rule is not relevant to the functions and
associated tasks currently performed by Research
Analysts.
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Federal Register / Vol. 88, No. 51 / Thursday, March 16, 2023 / Notices
2. Statutory Basis
FINRA believes that the proposed
revisions to the Series 86/87 exam
program are consistent with the
provisions of Section 15A(b)(6) of the
Exchange Act,19 which requires, among
other things, that FINRA rules must be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest, and
Section 15A(g)(3) of the Exchange Act,20
which authorizes FINRA to prescribe
standards of training, experience, and
competence for persons associated with
FINRA members. FINRA believes that
the proposed revisions will further these
purposes by updating the exam program
to incorporate the functions and
associated tasks currently performed by
a Research Analyst and to reflect the
most relevant laws, rules and
regulations covered by the exams.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed revisions will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Exchange Act.
The updated exam program aligns with
the functions and associated tasks
currently performed by Research
Analysts and tests knowledge of the
most relevant laws, rules, regulations
and skills relevant to those functions
and tasks. As such, the proposed
revisions would make the exams more
efficient and effective.
ddrumheller on DSK120RN23PROD with NOTICES1
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 21 and paragraph (f)(1) of Rule
19b–4 thereunder.22 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
19 15
U.S.C. 78o–3(b)(6).
U.S.C. 78o–3(g)(3).
21 15 U.S.C. 78s(b)(3)(A).
22 17 CFR 240.19b–4(f)(1).
20 15
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Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
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–2023–004 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–2023–004. 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–
2023–004 and should be submitted on
or before April 6, 2023.
Frm 00062
Fmt 4703
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023–05335 Filed 3–15–23; 8:45 am]
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:
PO 00000
16291
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97109; File No. SR–BX–
2023–006]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 7,
Section 2 Regarding PRISM Pricing
March 10, 2023.
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 March 1,
2023, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) 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 the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Pricing Schedule at Options 7, Section
2.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/bx/rules, at the principal office
of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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]]>Agencies
[Federal Register Volume 88, Number 51 (Thursday, March 16, 2023)]
[Notices]
[Pages 16289-16291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05335]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97104; File No. SR-FINRA-2023-004]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Revise the Research Analyst (Series 86/87)
Examination
March 10, 2023.
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 February 28, 2023, 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 ``constituting a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule'' under Section
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which
renders the proposal effective upon receipt of this filing by the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(i).
\4\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing revisions to the content outline and selection
specifications for the Research Analyst (Series 86/87) exam program,
including a reduction of the number of scored questions on the Series
86 exam. The proposed revisions update the material to incorporate the
functions and associated tasks currently performed by a Research
Analyst and to reflect the laws, rules, and regulations most relevant
to these functions and associated tasks. FINRA is also proposing to
make changes to the format of the content outline to reflect these
revisions. FINRA is not proposing any textual changes to the By-Laws,
Schedules to the By-Laws, or Rules of FINRA.
The revised content outline appears in Exhibit 3a. The Series 86/87
exam selection specifications have been submitted to the Commission
under separate cover with a request for confidential treatment pursuant
to Exchange Act Rule 24b-2.\5\
---------------------------------------------------------------------------
\5\ 17 CFR 240.24b-2; FINRA also is proposing corresponding
revisions to the Series 86/87 question bank. Based on instruction
from the Commission, FINRA is submitting this filing for immediate
effectiveness pursuant to Section 19(b)(3)(A) of the Act and Rule
19b-4(f)(1) thereunder, and FINRA is not filing the question bank
for review. See Letter from Belinda Blaine, Associate Director,
Division of Market Regulation, SEC, to Alden S. Adkins, Senior Vice
President and General Counsel, NASD Regulation Inc., dated July 24,
2000. The question bank is available for the Commission's review.
---------------------------------------------------------------------------
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
Section 15A(g)(3) of the Exchange Act \6\ authorizes FINRA to
prescribe standards of training, experience, and competence for persons
associated with FINRA members. In accordance with this provision, FINRA
has developed exams that are designed to establish that persons
associated with FINRA members have attained specified levels of
competence and knowledge, consistent with applicable registration
requirements under FINRA rules. FINRA periodically reviews the content
of the exams to determine whether revisions are necessary or
appropriate in view of changes pertaining to the subject matter covered
by the exams.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78o-3(g)(3).
---------------------------------------------------------------------------
FINRA Rule 1220(b)(6) (``Research Analyst'') requires an associated
person whose primary job function is to provide investment research and
who is primarily responsible for the preparation of the substance of an
equity research report,\7\ or whose name appears on an equity research
report, to be registered and qualified as a Research Analyst.\8\ An
associated person registering as Research Analyst after October 1,
2018, shall, prior to or concurrent with such registration, pass the
general knowledge co-requisite Securities Industry Essentials (SIE)
Exam and the Series 86/87 exam, or obtain a waiver.\9\ Rather than pass
both the Series 86 and Series 87 exams, an associated person may obtain
a waiver from the analytical portion (Series 86 exam) upon written
request (pursuant to the FINRA Rule 9600 Series) and verification that
the applicant has passed:
---------------------------------------------------------------------------
\7\ See Rule 2241(a)(11).
\8\ See Rule 1220(b)(6).
\9\ See Rule 1220(b)(6)(B) (``Qualifications'').
---------------------------------------------------------------------------
(i) Levels I and II of the CFA Examination; or
(ii) if the applicant functions as a research analyst who prepares
only technical research reports as defined in paragraph (b)(6) of Rule
1220, Levels I and II of the Chartered Market Technician (``CMT'')
Examination; and
(iii) has either functioned as a research analyst continuously
since having passed the Level II CFA or CMT
[[Page 16290]]
Examination or applied for registration as a Research Analyst within
two years of having passed the Level II CFA or CMT Examination.\10\
---------------------------------------------------------------------------
\10\ See Rule 1220(b)(6)(B) (``Qualifications'').
---------------------------------------------------------------------------
FINRA has created Qualification Exam Content Committees to advise
FINRA's Testing and Continuing Education Department regarding the
content of all qualification exams. Committee members are drawn from
the industry and self-regulatory organization staff.\11\ In
consultation with the appropriate committee of industry
representatives, FINRA recently reviewed the Series 86/87 exam program.
As a result of this review, FINRA is proposing to revise the content
outline to incorporate the functions and associated tasks currently
performed by a Research Analyst and to reflect the laws, rules, and
regulations most relevant to these functions and associated tasks.
FINRA is also proposing to make changes to the format of the content
outline to reflect these revisions.
---------------------------------------------------------------------------
\11\ More information about the Qualification Exam Content
Committees can be found on FINRA's website at https://www.finra.org/about/governance/ad-hoc-committees.
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Current Outline
The current content outline is divided into two parts, with each
part divided further into major functions performed by a Research
Analyst. The following reflects the two parts, total number of
questions associated with each part, and major job functions, including
the allocation of questions among the major job functions:
Part I. Series 86 (100 questions):
Function 1: Information and Data Collection (10 questions); and
Function 2: Analysis, Modeling and Valuation (90 questions).
Part II. Series 87 (50 questions):
Function 3: Preparation of Research Reports (32 questions); and
Function 4: Dissemination of Information (18 questions).
The current outline describes each function, including specific
tasks and activities associated with performing that function. The
current outline also includes a preface addressing the purpose,
structure, administration and scoring of the exams.
Proposed Revisions
FINRA is proposing to divide the Series 86 exam into three major
job functions and to reduce the length of the Series 86 exam from 100
questions to 85 questions. The Series 87 exam will remain divided into
two functions with 50 questions total, though the number of questions
will be reallocated between the two functions of the Series 87 exam.
The following reflects the proposed revisions:
Part I. Series 86 (85 questions):
Function 1: Information and Data Collection (18 questions);
Function 2: Data Verification and Analysis (28 questions); and
Function 3: Valuation and Forecasting (39 questions).
Part II. Series 87 (50 questions):
Function 4: Preparation of Research Reports (36 questions); and
Function 5: Dissemination and Marketing of Information (14
questions).
Each function includes specific tasks describing activities
associated with performing that function. There are two tasks (1.1-1.2)
associated with Function 1; one task (2.1) associated with Function 2;
three tasks (3.1-3.3) associated with Function 3; two tasks (4.1-4.2)
associated with Function 4; and two tasks (5.1-5.2) associated with
Function 5.\12\ For example, one such task (3.3) is ``forecast the
future valuation of the company and determine any recommendation by
identifying key catalysts that may alter the price of a stock and
identifying patterns or events (macro, political, or company-specific)
that move stock prices and create investment opportunities.'' \13\
Further, the content outline lists the knowledge required to perform
each function and associated tasks (e.g., characteristics of markets,
factors that could impact the perceived risk of an investment,
technical analysis, large shareholder exposure, activist investors,
valuation considerations).\14\ Additionally, where applicable, the
content outline lists the laws, rules and regulations a candidate is
expected to know to perform each function and associated tasks. These
include the applicable FINRA rules (e.g., FINRA Rule 2241) and SEC
rules and regulations (e.g., Regulation AC under the Exchange Act).\15\
FINRA conducted a job analysis study of Research Analysts,\16\ which
included the use of a survey, to develop each function and associated
tasks and update the required knowledge set forth in the revised
content outline. These functions and associated tasks reflect the day-
to-day activities of a Research Analyst.
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\12\ See Exhibit 3a, Outline Pages 3-9.
\13\ See Exhibit 3a, Outline Page 6.
\14\ See Exhibit 3a, Outline Pages 3-9.
\15\ See Exhibit 3a, Outline Page 7.
\16\ FINRA periodically conducts job analysis studies to help
ensure exams test current job functions and required knowledge of
registered representatives to perform associated tasks. This is an
internal process that may include conducting focus panels,
consulting with the appropriate committees, or surveying registered
representatives to determine current job functions and associated
tasks of registered representatives so that FINRA may update exams
accordingly.
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In reviewing the results of the survey and the changes to the tasks
and knowledge required to function as a Research Analyst, FINRA
believes an 85-question Series 86 exam can sufficiently sample the
requisite knowledge domain. FINRA looked at the impact of shorter test
forms on key psychometric properties of the test, including decision
agreement (the probability that the 85-item version of the test and the
100-item version yield the same pass-fail result for a given examinee).
The results show that the move to 85-item test forms will have minimal
impact on the effectiveness of the Series 86 exam in assessing the
level of proficiency required of an entry-level Research Analyst.
Therefore, the 85-question Series 86 exam can reliably assess the level
of proficiency required of an entry-level Research Analyst. The time
given to complete the Series 86 exam will remain at four hours and 30
minutes to continue to ensure candidate performance is not affected by
time constraints.\17\
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\17\ The time given to complete the Series 87 exam will also
remain the same, at one hour and 45 minutes.
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As noted above, FINRA is also proposing to revise the content
outline to reflect the laws, rules, and regulations most relevant to
the functions and associated tasks of a Research Analyst, including
incorporating FINRA Rule 5280 (``Trading Ahead of Research Reports'')
in the content outline.\18\
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\18\ The proposed revisions to the content outline will also
reflect the removal of FINRA Rule 2220 (``Options Communications'')
from the content outline because, based on discussions with the
appropriate committee of industry representatives, this rule is not
relevant to the functions and associated tasks currently performed
by Research Analysts.
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Finally, FINRA is proposing corresponding changes to the Series 86/
87 selection specifications and question bank.
Availability of Content Outline
The current Series 86/87 exam content outline is available on
FINRA's website, at www.finra.org/brokerqualifications/exams. The
revised Series 86/87 exam content outline will replace the current
content outline on FINRA's website.
FINRA is filing the proposed rule change for immediate
effectiveness. FINRA will announce the implementation date of the
proposed rule change in a Regulatory Notice to be published following
Commission notice of the filing of the proposed rule change for
immediate effectiveness.
[[Page 16291]]
2. Statutory Basis
FINRA believes that the proposed revisions to the Series 86/87 exam
program are consistent with the provisions of Section 15A(b)(6) of the
Exchange Act,\19\ which requires, among other things, that FINRA rules
must be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and, in
general, to protect investors and the public interest, and Section
15A(g)(3) of the Exchange Act,\20\ which authorizes FINRA to prescribe
standards of training, experience, and competence for persons
associated with FINRA members. FINRA believes that the proposed
revisions will further these purposes by updating the exam program to
incorporate the functions and associated tasks currently performed by a
Research Analyst and to reflect the most relevant laws, rules and
regulations covered by the exams.
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\19\ 15 U.S.C. 78o-3(b)(6).
\20\ 15 U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed revisions will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Exchange Act. The updated exam
program aligns with the functions and associated tasks currently
performed by Research Analysts and tests knowledge of the most relevant
laws, rules, regulations and skills relevant to those functions and
tasks. As such, the proposed revisions would make the exams more
efficient and effective.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \21\ and paragraph (f)(1) of Rule 19b-4
thereunder.\22\ 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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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(1).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-FINRA-2023-004 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-2023-004. 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-2023-004 and should be submitted on or before April 6, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-05335 Filed 3-15-23; 8:45 am]
BILLING CODE 8011-01-P
