
[Federal Register Volume 80, Number 59 (Friday, March 27, 2015)]
[Notices]
[Pages 16485-16487]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-06990]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74561; File No. SR-MSRB-2015-01]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change Consisting of Amendments to MSRB Rule A-16, on Examination Fees

March 23, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 17, 2015, the Municipal Securities Rulemaking Board (the 
``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (the ``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the MSRB. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The MSRB filed with the Commission a proposed rule change 
consisting of amendments to MSRB Rule A-16, on examination fees 
(``proposed rule change''). The MSRB 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) \4\ 
thereunder, which renders the proposal effective upon filing with the 
Commission. The implementation date of the proposed rule change is 
April 1, 2015.
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    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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    The text of the proposed rule change is available on the MSRB's Web 
site at http://www.msrb.org/Rules-and-Interpretations/SEC-Filings/2015-Filings.aspx, at the MSRB's principal office, and at the Commission's 
Public Reference Room.

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

    In its filing with the Commission, the MSRB 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 MSRB 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
    The purpose of the proposed rule change is to establish a test 
development fee for the MSRB's new municipal advisor representative 
qualification examination (``Series 50 examination'') and to better 
align the MSRB's existing test development fees (which have not been 
adjusted since 2009) with the costs of developing, implementing and 
maintaining the tests (hereinafter, the ``program costs''). Under the 
proposed rule change, the MSRB will institute a test development fee of 
$150 for the Series 50 examination and change the test development fee 
for each of the three existing MSRB-owned examinations from $60 to 
$150. The development fee of $150 will, on April 1, 2015, be assessed 
on brokers, dealers and municipal securities dealers (``dealers'') and 
municipal advisors based on the number of their associated persons that 
take an MSRB-owned professional qualification examination.
    Any person associated with a dealer who is engaged in or supervises 
municipal securities activities and any person associated with a 
municipal advisor who is engaged in or supervises municipal advisory 
activities must be qualified in accordance with MSRB Rule G-3.\5\ As a 
prerequisite to qualification, each individual must pass the applicable 
examination to demonstrate a basic competence in the subject matter 
related to the professional qualification classification. The

[[Page 16486]]

examinations seek to measure accurately and reliably the degree to 
which each candidate possesses the knowledge, skills and abilities 
necessary to perform the relevant job function. The examinations 
measure a candidate's knowledge of business activities, as well as the 
regulatory requirements, including MSRB rules, rule interpretations and 
other federal law applicable to a particular classification.
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    \5\ The SEC recently approved MSRB rule amendments, effective 
April 27, 2015, that establish professional qualification standards 
for municipal advisors. The amendments to MSRB Rule G-3 establish 
two professional qualification classifications for municipal 
advisors--municipal advisor representative and municipal advisor 
principal. See Exchange Act Release No. 74384 (Feb. 26, 2015), 80 FR 
11706 (Mar. 4, 2015), File No. SR-MSRB-2014-08 (Nov. 18, 2014).
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    Generally, the MSRB recognizes two types of professional 
qualification examinations: MSRB-owned examinations and examinations 
owned by the Financial Industry Regulatory Authority (``FINRA''). There 
are three existing MSRB-owned examinations and one in development. The 
Municipal Fund Securities Limited Principal Qualification Examination 
(``Series 51 examination''), Municipal Securities Representative 
Qualification Examination (``Series 52 examination''), and Municipal 
Securities Principal Qualification Examination (``Series 53 
examination'') are developed, implemented, maintained, and owned by the 
MSRB. The Series 50 examination, which is under development for 
municipal advisor representatives, is also owned by the MSRB. Each of 
the existing MSRB-owned examinations is administered by FINRA, and it 
is expected that FINRA also will administer the Series 50 examination.
    MSRB-owned professional qualification examinations are developed by 
the MSRB in conjunction with industry-wide advisory committees and 
retained test design experts in accordance with established national 
standards. The test development fee assessed under Rule A-16 is 
intended to partially offset the program costs. Pursuant to the 
proposed rule change, the MSRB will change the test development fee 
from $60 to $150 for the Series 51 examination, Series 52 examination 
and Series 53 examination. This is the first time the MSRB has adjusted 
its examination development fees since 2009 when the fees were first 
established under MSRB Rule A-16.\6\
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    \6\ See Exchange Act Release No. 61023 (Nov. 18, 2009), 74 FR 
61402 (Nov. 24, 2009), File No. SR-MSRB-2009-16 (Nov. 5, 2009).
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    The MSRB is amending Rule A-16 to better align the fees with the 
current program costs because the MSRB's current examination fees, as a 
percentage of the program costs, have decreased significantly since the 
fees were established in 2009. The examination development fees have 
not previously been, and are not intended to fully offset the program 
costs, but to help defray a portion of the cost of developing and 
implementing the examinations, as well as the costs associated with 
monitoring the examinations for effectiveness and updating the 
examinations' content and questions. To address the growing disparity 
between the examination fees collected and the program costs, the MSRB 
is changing the examination fee to $150 for each MSRB-owned 
examination. The MSRB believes this fee adjustment is reasonable and 
appropriate.
    The proposed rule change also amends Rule A-16 to clarify that the 
examination fee is assessed to dealers and municipal advisors, rather 
than their associated persons who take the professional qualification 
tests. In addition to the MSRB's examination fee, FINRA assesses an 
administrative fee for each examination that it administers. These fees 
are assessed by FINRA at the time a broker, dealer, municipal 
securities dealer or municipal advisor enrolls an associated person to 
take an examination and then FINRA remits the aggregate MSRB 
examination fees to the MSRB periodically.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
the requirements of Section 15B(b)(2)(J) of the Act,\7\ which requires, 
in pertinent part, that the MSRB promulgate rules to require dealers 
and municipal advisors to pay such reasonable fees and charges as may 
be necessary or appropriate to defray the costs and expenses of 
operating and administering the MSRB. The proposed rule change provides 
for reasonable fees to partially defray the program costs.
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    \7\ 15 U.S.C. 78o-4(b)(2)(J).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 15B(b)(2)(C) of the Act \8\ requires that MSRB rules not be 
designed to impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act. In addition, 
Section 15B(b)(2)(L)(iv) of the Act requires that MSRB rules not impose 
a regulatory burden on small municipal advisors that is not necessary 
or appropriate in the public interest and for the protection of 
investors, municipal entities, and obligated persons provided that 
there is robust protection of investors against fraud.\9\
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    \8\ 15 U.S.C. 78o-4(b)(2)(C).
    \9\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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    In considering these standards, the MSRB was guided by the Board's 
Policy on the Use of Economic Analysis. The MSRB does not believe that 
the proposed rule change will impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the Act.
    The MSRB considered as alternatives whether to maintain the current 
fee, or to propose an increase that was lower or higher than the 
proposed increase. Since the current examination fees were instituted, 
the costs relating to the development, implementation and maintenance 
of the examinations have increased. The examination fees have, as 
noted, remained unchanged since 2009 and the proposed rule change is 
designed to better align the fees with the current program costs. The 
revenue from such fees will still fall well-short of the actual program 
costs. Finally, the examination fees are equitable to each dealer and 
municipal advisor without regard to the nature of that entity's 
business and are assessed only as to those individuals who are 
associated with the entity who enroll to take an MSRB-owned 
qualification examination.
    To evaluate the impact of the adjustment in the MSRB test 
development fees for the Series 51, 52, and 53 examinations and the 
establishment of a development fee of $150 for the Series 50 
examination, the MSRB considered the fees charged to take other 
professional qualification examinations in the financial services 
field. When including the administrative fee assessed by FINRA, the 
total fee that will be charged to take any MSRB-owned examination is 
comparable to the total fee charged to take other FINRA-administered 
professional qualification examinations, which currently range from 
$70-$335.\10\ As another example, in the financial services field, the 
fee to take the Chartered Financial Analyst Level I examination is 
$630.
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    \10\ See FINRA Administered Qualification Examinations 
www.finra.org/industry/compliance/registration/qualificationsexams/qualifications/p011096. Effective April 1, 2015, the total fee 
charged to take other FINRA-administered professional qualification 
examinations will range from $75-$350. See File No. SR-FINRA-2015-
006.
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    In addition, the MSRB considered the fees charged to take 
professional qualification examinations in other fields. The average 
state bar examination fee as of 2013 was approximately $490.\11\ Note 
that nearly

[[Page 16487]]

50 percent of the attorneys who were in private practice that year, 
were sole practitioners and an additional 14 percent work in firms made 
up of five or fewer attorneys.\12\ As another example, the Project 
Management Professional examination fee is $250. The MSRB is not aware 
of evidence that the fees associated with other examinations represent 
a significant burden on smaller firms or that they negatively impact 
the competitiveness of the associated professional services markets.
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    \11\ See American Bar Association Bar Exam Directory, 
www.americanbar.org/publications/student_lawyer/2012-13/nov/2012_2013_bar_exam_directory.html. The cost of examinations varies 
substantially from state to state, as does whether the fee includes 
other professional certification costs (e.g., moral character 
reviews).
    \12\ See American Bar Association Bar Lawyer Demographics, 
http://www.americanbar.org/content/dam/aba/administrative/market_research/lawyer_demographics_2013.authcheckdam.pdf.
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    While the MSRB recognizes that examination fees do represent an 
initial barrier to entry in markets where they are required, the MSRB 
also recognizes that professionals wishing to engage in municipal 
securities activities and/or municipal advisory activities face other 
costs associated with complying with applicable laws and regulations. 
The fees for professional qualification examinations, which are one-
time fees for those who pass, typically represent a relatively small 
share of all legal and compliance costs associated with a government-
regulated activity. The MSRB anticipates that potential market entrants 
that are actually deterred by a professional examination fee would find 
it difficult to bear the costs to fully comply with the other 
regulatory and legal requirements associated with the market in which 
they wish to offer services.
    With regard to the impact on small municipal advisors, the MSRB 
notes that because the total fee assessed to a firm is based on the 
number of individuals associated with that firm who enroll to take an 
MSRB-owned qualification examination, the total costs assessed will 
bear a reasonable relationship to the size of the firm, with smaller 
firms likely to be assessed lower fee totals. Nonetheless, larger, more 
diversified firms may have a larger overall revenue base than smaller 
firms and may be more able to pass expenses on to clients than smaller 
firms. On net, the MSRB believes that the burdens associated with the 
proposed rule change on small municipal advisors are limited and that, 
as the SEC concluded in its final rule on the permanent registration of 
municipal advisors, the market would be likely to remain competitive 
despite the potential exit of some municipal advisors (including small 
entity municipal advisors), consolidation of municipal advisors, or 
lack of new entrants into the market.\13\ The MSRB also believes that 
its professional qualification examinations promote compliance with 
applicable laws and regulations are necessary for the protection of 
investors, municipal entities, and obligated persons.
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    \13\See Registration of Municipal Advisors, Exchange Act Release 
No. 70462 (Sept. 20, 2013), 78 FR 67467 (Nov. 12, 2013).
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    Therefore, the MSRB believes the proposed rule change does not 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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 on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The forgoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \14\ and paragraph (f) of Rule 19b-4 \15\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml; or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2015-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549.

All submissions should refer to File Number SR-MSRB-2015-01. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the MSRB. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MSRB-2015-01 and should be 
submitted on or before April 17, 2015.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, pursuant to delegated authority.\16\
Brent J. Fields,
Secretary.
[FR Doc. 2015-06990 Filed 3-26-15; 8:45 am]
 BILLING CODE 8011-01-P


