[Federal Register Volume 83, Number 195 (Tuesday, October 9, 2018)]
[Notices]
[Pages 50708-50713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21782]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84341; File No. SR-MSRB-2018-07]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing of a Proposed Rule Change To Amend MSRB Rule G-
3, on Professional Qualification Requirements, To Require Municipal 
Advisor Principals To Become Appropriately Qualified by Passing the 
Municipal Advisor Principal Qualification Examination

October 2, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on September 19, 2018 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 to amend 
Rule G-3, on professional qualification requirements, to (i) require 
persons who meet the definition of a municipal advisor principal, as 
defined under Rule G-3(e)(i), to pass the Municipal Advisor Principal 
Qualification Examination (``Series 54 examination'') in order to 
become appropriately qualified as a municipal advisor principal; (ii) 
specify that such persons who cease to be associated with a municipal 
advisor for two or more years at any time after having qualified as a 
municipal advisor principal must requalify by examination unless a 
waiver is granted; (iii) add the Series 54 examination to the list of 
qualification examinations for which a waiver can be sought; (iv) 
provide that municipal advisor representatives may function as a 
principal for 120 calendar days without being qualified with the Series 
54 examination; and (v) make a technical amendment to Rule G-3(e) to 
clarify that a municipal advisor principal must pass the Municipal 
Advisor Representative Qualification Examination (``Series 50 
examination'') as a prerequisite to becoming qualified

[[Page 50709]]

as a municipal advisor principal (collectively the ``proposed rule 
change''). The MSRB requests that the proposed rule change become 
effective 30 days from the date of SEC approval.
    The text of the proposed rule change is available on the MSRB's 
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2018-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 MSRB is charged with setting professional qualification 
standards for municipal advisors. Section 15B(b)(2)(A) of the Act 
authorizes the MSRB to prescribe ``standards of training, experience, 
competence, and such other qualifications as the Board finds necessary 
or appropriate in the public interest or for the protection of 
investors and municipal entities or obligated persons.'' \3\ 
Additionally, Sections 15B(b)(2)(A)(i) \4\ and 15B(b)(2)(A)(iii) \5\ of 
the Act also provide that the Board may appropriately classify 
associated persons of dealers and municipal advisors and require 
persons in any such class to pass tests prescribed by the Board. The 
examinations are intended to determine whether an individual meets the 
MSRB's qualification standards for a particular qualification category. 
More specifically, the MSRB's professional qualification examinations 
measure a candidate's knowledge of the business activities, as well as 
the regulatory requirements, including MSRB rules and federal laws.
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    \3\ See 15 U.S.C. 78o-4(b)(2)(A).
    \4\ See 15 U.S.C. 78o-4(b)(2)(A)(i).
    \5\ See 15 U.S.C. 78o-4(b)(2)(A)(iii).
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Background
    In connection with its statutory mandate, beginning Spring 2014, 
the MSRB set out on a multi-year effort to establish professional 
qualification requirements for municipal advisor professionals. The 
MSRB published Notice 2014-08 \6\ seeking comment on a proposal to, 
among other things, establish qualification classifications for 
municipal advisor professionals; and to require that municipal advisor 
professionals engaging in municipal advisory activities and those 
engaging in the management, direction or supervision of a firm's 
municipal advisory activities pass the Municipal Advisor Representative 
Qualification Examination (``Series 50 examination'') to be qualified 
in accordance with MSRB rules. The MSRB stated at that time, at a later 
date, it would consider a qualification examination for municipal 
advisor principals.\7\ Also, the MSRB noted, ``[i]f such an examination 
is proposed, it is expected that each municipal advisor principal 
would, as a prerequisite, be required to pass the municipal advisor 
representative qualification examination before taking the municipal 
advisor principal qualification examination.'' \8\ On February 26, 
2015, among other things, the SEC approved amendments to Rule G-2 to 
require that no municipal advisor shall engage in municipal advisory 
activities unless such municipal advisor is qualified in accordance 
with MSRB rules; and approved Rules G-3(d)(i) and (e)(i) to create two 
new qualification classifications for municipal advisors: Municipal 
advisor representative \9\ and municipal advisor principal \10\ and to 
require persons meeting the definition of a municipal advisor 
representative and/or municipal advisor principal to pass the Series 50 
examination.\11\ In addition, as amended, each municipal advisor would 
be required to designate at least one individual as a municipal advisor 
principal who would be responsible for supervising the municipal 
advisory activities of the municipal advisor and its associated 
persons.\12\
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    \6\ See MSRB Notice 2014-08 (Request for Comment on Establishing 
Professional Qualification Requirements for Municipal Advisors) 
(March 17, 2014).
    \7\ Id.
    \8\ Id.
    \9\ Under Rule G-3(d) a ``municipal advisor representative'' is 
defined as ``a natural person associated with a municipal advisor 
who engages in municipal advisory activities on the municipal 
advisor's behalf, other than a person performing only clerical, 
administrative support or similar functions.''
    \10\ Under Rule G-3(e) a ``municipal advisor principal'' is 
defined as ``a natural person associated with a municipal advisor 
who is qualified as a municipal advisor representative and is 
directly engaged in the management, direction or supervision of the 
municipal advisory activities of the municipal advisor and its 
associated persons.''
    \11\ See Exchange Act Release No. 74384 (February 26, 2015), 80 
FR 11706 (March 4, 2015) (SR-MSRB-2014-08) (Notice of Filing of 
Amendment No. 1 and Amendment No. 2 and Order Granting Accelerated 
Approval).
    \12\ Rule G-44 sets forth the obligation of municipal advisor 
principals to supervise the municipal advisory activities of the 
municipal advisor and its associated persons to ensure compliance 
with applicable securities laws and regulations, including 
applicable Board rules.
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    In the 2014 filing,\13\ the MSRB addressed the development of a 
principal-level examination in response to a commenter's recommendation 
\14\ that the MSRB should make a supervisor examination available 
before, or simultaneously with the representative examination and 
eliminate the need for a supervisor to take both examinations. The MSRB 
articulated that it was ``important that the representative examination 
be introduced prior to any principal examination because the 
[representative] examination would determine the basic competency of 
those individuals who are engaged in municipal advisory activity.'' 
\15\ More importantly, the MSRB noted, and has continued to communicate 
to municipal advisor professionals that the MSRB would consider an 
examination for principals at a later date.
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    \13\ See Exchange Act Release No. 73708 (December 1, 2014), 79 
FR 72225 (December 5, 2014) (SR-MSRB-2014-08) (Notice of Filing of a 
Proposed Rule Change).
    \14\ On March 17, 2014, the MSRB published a request for public 
comment on establishing professional qualification requirements for 
municipal advisors. See supra note 6. In response, the MSRB received 
thirty-five comment letters. One commenter recommended the MSRB make 
available a principal-level examination before the representative-
level examination. See Letter from Linda Fan, Managing Partner, Yuba 
Group to Ronald Smith, Corporate Secretary, Municipal Securities 
Rulemaking Board (April 28, 2014).
    \15\ See supra note 13.
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    Now that the MSRB has concluded the launch of the Series 50 
examination and the one-year grace period has ended \16\ for municipal 
advisor representatives and municipal advisor principals to pass the 
Series 50 examination while continuing to engage in municipal advisory 
activities and the supervision of municipal advisory activities, the 
MSRB is in the process of

[[Page 50710]]

formalizing the development of a principal-level examination.
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    \16\ The MSRB proposed a one-year grace period for municipal 
advisor representatives and municipal advisor principals to satisfy 
the qualification requirements pursuant to Rule G-3 in order to 
provide an orderly transition to the new qualification requirements. 
See supra note 13.
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Proposed Amendments
    The MSRB is proposing to adopt Rule G-3(e)(ii)(A) to establish 
additional qualification requirements for municipal advisor principals. 
Specifically, the proposed amendments would require those who meet the 
definition of a municipal advisor principal, as defined under Rule G-
3(e)(i), (i.e., persons engaged in the management, direction or 
supervision of the municipal advisory activities of the municipal 
advisor and its associated persons) to pass both the Series 50 
examination and Series 54 examination prior to becoming qualified as a 
municipal advisor principal. Additionally, the proposed amendments to 
Rule G-3(e)(ii) would also prescribe that the passing score shall be 
determined by the Board. The establishment of qualification 
requirements for municipal advisor principals would assist in ensuring 
that such persons have a specified level of competency that is 
appropriate in the public interest and for the protection of investors, 
and municipal entities and obligated persons. Additionally, the 
establishment of the Series 54 examination is consistent with the 
intent of the establishment of the Series 50 examination ``to mitigate 
problems associated with advice provided by those individuals without 
adequate training or qualifications,'' in that municipal advisor 
principals should be appropriately qualified to supervise such 
activities of municipal advisor representatives.\17\
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    \17\ See supra note 13.
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    Proposed Rule G-3(e)(ii)(B) would require any person qualified as a 
municipal advisor principal who ceases to be associated with a 
municipal advisor for two or more years at any time after having 
qualified as a municipal advisor principal to requalify by examination 
by passing both the Series 50 examination and Series 54 examination 
prior to becoming qualified as a municipal advisor principal, unless a 
waiver is granted pursuant to Rule G-3(h)(ii), on waiver of 
qualification requirements.\18\ Accordingly, the MSRB is proposing to 
amend Rule G-3(h)(ii) and Supplementary Material .02 to provide that 
the MSRB will consider waiving the qualification requirements of a 
municipal advisor principal in extraordinary cases where the applicant 
was previously qualified as a municipal advisor principal by passing 
both the Series 50 examination and Series 54 examination and the 
person's qualification lapsed. Proposed Rule G-3(e)(ii)(C) would allow 
a municipal advisor principal to be designated a municipal advisor 
principal and to function in that capacity for a period of 120 calendar 
days without having passed the Series 54 examination.\19\
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    \18\ The Board will review waiver requests on their individual 
merits, taking into consideration relevant facts presented by an 
applicant.
    \19\ On June 8, 2018, the MSRB filed a proposed rule change with 
the SEC for immediate effectiveness, which, in part, extends the 
period from 90 calendar days to 120 calendar days for municipal 
securities representatives to function in a principal capacity 
without passing a principal examination as long as the municipal 
securities representative has at least 18 months of experience 
within the five-year period immediately preceding the designation as 
a principal. The MSRB is not extending this experience requirement 
to a municipal advisor representative in order to function as a 
municipal advisor principal for 120 calendar days because, given the 
typical size of a municipal advisor firm, coupled with the newness 
of the qualification classifications and development of professional 
qualification requirements for municipal advisor professionals, such 
a requirement could pose an undue burden on a municipal advisor's 
operational needs.
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    The MSRB is also proposing a technical amendment to Rule G-3(e)(i), 
on definitions, to establish as a separate rule provision, and to 
clarify, that qualification as a municipal advisor representative is a 
prerequisite to obtaining qualification as a municipal advisor 
principal. The MSRB is also proposing a technical amendment to renumber 
the rule provisions under Rule G-3(e).
    A more detailed summary of the Series 54 examination under 
development is outlined below.
Development of the Municipal Advisor Principal Qualification 
Examination
    The MSRB believes that professional qualification examinations, 
such as the Series 50 examination and Series 54 examination, are 
established means for determining the competency of individuals in a 
particular qualification classification. The MSRB has, in consultation 
with the MSRB's Professional Qualification Advisory Committee, 
developed the Series 54 examination to ensure that a person seeking to 
qualify as a municipal advisor principal satisfies a specified level of 
competency and knowledge by measuring a candidate's ability to apply 
the applicable federal securities laws, including MSRB rules to the 
municipal advisory activities of a municipal advisor. The MSRB has 
adhered to recognized test development standards by performing a job 
study to determine the appropriate topics to be covered and weighting 
of such topics on the Series 54 examination.\20\ From October 17, 2017 
through November 7, 2017, the MSRB conducted a job study of municipal 
advisor principals via a web-based survey. The job study was sent to 
the primary and optional regulatory contacts at over 500 municipal 
advisors, representing every municipal advisor with at least one person 
qualified with the Series 50 examination. The MSRB received 212 
responses to the job study, representing data from municipal advisor 
principals from different-sized municipal advisors in different areas 
of the country.
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    \20\ A job study is an assessment of the essential skills that 
are required to complete a particular function and is used as a 
basis for defining relevant or suitable content for exam questions 
and in preparing exam specifications, which refer to the emphasis or 
weight given to topic areas within an examination.
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    The MSRB will announce the effective date of the permanent Series 
54 examination at a later date in an MSRB Notice published on 
MSRB.org.\21\ However, in advance of the permanent version of the 
Series 54 examination, the MSRB anticipates conducting a pilot of the 
Series 54 examination, the results of which will be used to determine 
the passing score for the permanent Series 54 examination. Prior to the 
launch of the pilot version of the Series 54 examination, the MSRB will 
file a content outline with the SEC describing: The topics on the 
examination; the percentage of the examination devoted to each topic 
area; and the number of questions that will appear on the examination. 
The content outline will also contain sample examination questions and 
a list of reference materials to assist individuals in preparation for 
the examination. To provide persons who function as municipal advisor 
principals with sufficient time to satisfy the new qualification 
requirement, consistent with the implementation process for the Series 
50 examination, the MSRB proposes a one-year grace period from the 
effective date of the Series 54 examination for such persons to pass 
the examination and become appropriately qualified as municipal advisor 
principals. During this one-year grace period, 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. This one-
year grace period

[[Page 50711]]

is designed to ensure that those persons functioning as a municipal 
advisor principal can prepare for and pass the Series 54 examination 
without causing considerable disruption to the business of the 
municipal advisor. After the one-year grace period, a municipal advisor 
representative would only be permitted to function in the capacity of a 
municipal advisor principal, after being so designated, for a period of 
120 days without being a qualified municipal advisor principal.
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    \21\ The effective date of the Series 54 examination will be the 
date the Series 54 examination becomes permanently available.
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Grandfathering
    Consistent with the requirement that all municipal advisor 
representatives and municipal advisor principals pass the Series 50 
examination, the proposed rule change would require those who meet the 
definition of a municipal advisor principal, as defined under Rule G-
3(e), to pass the Series 54 examination regardless of whether such 
persons have passed other MSRB or MSRB-recognized examinations (such as 
the Series 53 or Series 24). The MSRB does not intend to waive the 
principal-level requirement or grandfather individuals who have passed 
such other examinations or who have experience in functioning in a 
supervisory capacity. The MSRB believes that, as consistent with the 
professional qualification standards for the municipal advisor 
representative-level examination, each municipal advisor principal 
should demonstrate a specified level of competency of the regulatory 
requirements and application thereof to the municipal advisory 
activities of a municipal advisor by passing a principal-level 
examination.
2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(A) of the Act,\22\ which authorizes the MSRB to 
prescribe ``standards of training, experience, competence, and such 
other qualifications as the Board finds necessary or appropriate in the 
public interest or for the protection of investors and municipal 
entities or obligated persons'' and Sections 15B(b)(2)(A)(i) \23\ and 
15B(b)(2)(A)(iii) \24\ of the Act, which provides that the Board may 
appropriately classify associated persons of dealers and municipal 
advisors and require persons in any such class to pass tests prescribed 
by the Board. Professional qualification examinations are an 
established means for demonstrating that municipal advisor 
professionals possess the specified level of competency necessary to 
engage in or supervise municipal advisory activities. The proposed 
amendments to Rule G-3(e) to require municipal advisor principals to 
pass the Series 54 examination, and the requirement to pass the Series 
50 examination as a prerequisite to the Series 54 examination, is in 
furtherance of establishing professional qualification standards. The 
MSRB's professional qualification examinations are designed to measure 
knowledge of the business activities and the regulatory requirements 
under the federal securities laws, including MSRB rules, applicable to 
a particular qualification classification, which is in furtherance of 
this provision of the Act.
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    \22\ 15 U.S.C. 78o-4(b)(2)(A).
    \23\ 15 U.S.C. 78o-4(b)(2)(A)(i).
    \24\ 15 U.S.C. 78o-4(b)(2)(A)(iii).
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    The MSRB also believes the proposed amendments are in accordance 
with Section 15B(b)(2)(C) of the Act,\25\ which requires, among other 
things, that MSRB rules ``be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, . . . and, in general, to protect investors, 
municipal entities, obligated persons, and the public interest . . .'' 
The MSRB notes that requiring municipal advisor principals to pass the 
Series 54 examination will protect investors, municipal entities and 
obligated persons by ensuring municipal advisor principals demonstrate 
a specified level of competency of the regulatory requirements and 
application thereof to the municipal advisor's municipal advisory 
activities by passing a principal qualification examination. 
Additionally, the proposed rule change furthers the stated objective of 
Section 15B(b)(2)(C) of the Act to foster the prevention of fraudulent 
practices by enhancing the overall professional qualification standards 
of municipal advisor principals--recognizing the important role proper 
supervision of a municipal advisor's activities and that of its 
associated persons play in the protection of the municipal securities 
market.
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    \25\ 15 U.S.C. 78o-4(b)(2)(C).
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    Additionally, 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.\26\ The MSRB believes that the proposed rule change is 
consistent with Section 15B(b)(2)(L)(iv) of the Act in that, while the 
proposed rule change would affect all municipal advisors, including 
small municipal advisors, the regulatory burden that results is 
necessary and appropriate in order to establish the specified level of 
competence of those individuals engaged in the management, direction or 
supervision of the municipal advisory activities of a municipal advisor 
and its associated persons. Furthermore, the MSRB believes that 
establishing a specified level of competence is necessary for the 
protection of investors, municipal entities, and obligated persons in 
that such competence promotes compliance with the rules and regulations 
governing the conduct of municipal advisors.
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    \26\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 15B(b)(2)(C) of the Act \27\ 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 determining 
whether this standard has been met, the MSRB has been guided by the 
Board's adopted policy to more formally integrate economic analysis 
into the rulemaking process. In accordance with this policy, the Board 
has evaluated the potential impacts of the proposed rule change, 
including in comparison to reasonable alternative regulatory 
approaches.\28\ The MSRB does not believe that the proposed rule change 
would impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The MSRB currently requires any 
natural person associated with a municipal advisor who intends to 
engage in municipal advisory activities on behalf of the municipal 
advisor and those who supervise the municipal advisory activities of 
the municipal advisor to pass the Series 50 examination prior to being 
qualified as a municipal advisor representative and a municipal advisor 
principal, respectively.
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    \27\ 15 U.S.C. 78o-4(b)(2)(C).
    \28\ Policy on the Use of Economic Analysis in MSRB Rulemaking 
is available at http://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx. In evaluating whether there was a burden on 
competition, the Board was guided by its principles that required 
the Board to consider costs and benefits of a rule change, its 
impact on capital formation and the main reasonable alternative 
regulatory approaches.
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    As previously indicated, once the Series 54 examination is 
permanently available, a municipal advisor principal will be required 
to pass both the Series 50 examination and Series 54 examination prior 
to becoming qualified as a municipal advisor principal. The

[[Page 50712]]

Series 54 examination is intended to determine whether a municipal 
advisor principal meets a specified level of competency. The main 
benefit of the Series 54 examination is to ensure protection of 
municipal entities and obligated persons who employ municipal advisors 
to engage in municipal advisory activities on their behalf--the 
benefits which should accumulate over time. The establishment of the 
Series 54 examination as a professional qualification requirement for 
municipal advisor principals is in furtherance of the mandate to 
protect municipal entities and obligated persons by requiring that 
individuals engaged in the management, direction or supervision of the 
municipal advisory activities of a municipal advisor and its associated 
persons demonstrate a specified level of competence of the rules and 
regulations governing such municipal advisory activities. The 
establishment of professional qualification standards effectively will 
serve to benefit municipal advisors as such standards for municipal 
advisor principals are designed to ensure that any person that 
supervises, manages or directs the municipal advisory activities of a 
municipal advisor and its associated persons understands the 
application of the federal securities laws to a municipal advisor's 
municipal advisory activities in order to safeguard the municipal 
advisor from conduct that would violate the federal securities laws.
    The MSRB recognizes that municipal advisors would incur 
programmatic costs associated with the proposed Series 54 examination 
requirement, including costs to meet standards of training, experience 
and competence.\29\ Currently, the number of municipal advisor 
professionals who have passed the Series 50 examination and are 
associated persons of municipal advisors is about 3,360. Based on the 
number of registered municipal advisors and associated persons 
currently qualified with the Series 50 examination to act in the 
capacity of a municipal advisor principal, the MSRB estimates that 650 
persons will likely take the Series 54 examination. The MSRB also 
estimates the total costs incurred for taking the examination should be 
no more than $715 per each municipal advisor principal.\30\ Therefore, 
the estimated total costs to the industry to implement the proposed 
Series 54 examination would be around $465,000.
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    \29\ As with the Series 50 examination, the costs of preparing 
for and taking the proposed Series 54 examination would be incurred 
only once for each municipal advisor principal, assuming the 
principal passed the examination on the first occasion.
    \30\ This total estimated amount includes $265 to take the 
examination and $450 to obtain study materials to prepare for the 
examination. Based on MSRB's research, the study material/package 
prices for the Series 50 examination currently range from $90 to 
$450, depending on the vendors. To be conservative, the MSRB chose 
the highest amount for the cost estimate to prepare for and take the 
proposed Series 54 examination.
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    The Act provides that MSRB rules may 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.\31\ The MSRB is sensitive to the 
potential impact the regulatory requirements contained in the proposed 
rule change may have on small municipal advisors and recognizes that 
the cost of complying with the requirements of the proposed rule change 
may be proportionally higher for certain small firms as the incremental 
cost associated with the qualification examination requirement may 
represent a greater percentage of annual revenues for a small firm. To 
avoid potential disruption to a municipal advisor's business 
activities, which could impact revenue, the proposed rule change would 
provide a one-year grace period for persons to prepare for and pass the 
Series 54 examination, thus allowing small municipal advisors the 
flexibility to plan around existing and ongoing business engagements. 
Furthermore, the cost for a small municipal advisor of having an 
associated person prepare for and take the Series 54 examination would 
be incurred only once for each municipal advisor principal, assuming 
such person(s) passed the examination on the first occasion. 
Accordingly, the MSRB believes that the proposed rule change is 
consistent with the Act.
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    \31\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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    The MSRB has considered whether it is possible that the costs 
associated with preparing for and taking the municipal advisor 
principal-level qualification examination, could possibly affect the 
competitive landscape by leading some municipal advisory firms and 
principals to exit the market, curtail their activities or consolidate 
with other firms.\32\ However, the market for municipal advisory 
services is likely to remain competitive despite the potential exit of 
some municipal advisors (including small entity municipal advisors), 
consolidation of municipal advisors, or deterrence of new entrants into 
the market. A recent study by Bergstresser and Luby (July 2018) on the 
landscape of the municipal advisory services in the post Dodd-Frank Act 
era found that while the number and types of municipal advisors have 
changed over the last few years, the number of municipal advisor 
professionals has remained steady.\33\ It appears that municipal 
entities and obligated persons are still being serviced by a similar-
sized universe of active municipal advisory professionals even as the 
name and location of the firms that they have worked at may have 
changed.
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    \32\ For example, some municipal advisors may determine to 
consolidate with other municipal advisors in order to benefit from 
economies of scale rather than to incur separately the costs 
associated with the proposed rule change. Others may exit the 
market, rather than incurring the cost of preparing for and taking a 
qualification examination.
    \33\ https://www.brookings.edu/wp-content/uploads/2018/04/Berg-Luby-2018-20180716.pdf.
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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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period of up to 90 days (i) as 
the Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MSRB-2018-07 on the subject line.

Paper Comments

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


[[Page 50713]]


All submissions should refer to File Number SR-MSRB-2018-07. 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 (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of 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. 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-MSRB-2018-07 and should be submitted on 
or before October 30, 2018.

    For the Commission, pursuant to delegated authority.\34\
Eduardo A. Aleman,
Assistant Secretary.
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    \34\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2018-21782 Filed 10-5-18; 8:45 am]
 BILLING CODE 8011-01-P


