
[Federal Register Volume 84, Number 35 (Thursday, February 21, 2019)]
[Notices]
[Pages 5513-5515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02894]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85135; File No. SR-MSRB-2019-02]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Amend Rule A-16, on Examination Fees, To Establish a Test 
Development Fee for the Series 54 Examination

February 14, 2019.
    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 February 11, 2019 the Municipal Securities Rulemaking Board 
(``MSRB'') 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 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 A-16, on examination fees, to establish a test development fee for 
the Municipal Advisor Principal Qualification Examination (``Series 54 
examination'') (the ``proposed rule change''). The MSRB has designated 
the proposed rule change for immediate effectiveness pursuant to 
Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) \4\ 
thereunder.
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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 
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2019-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 of $150 for the new Series 54 examination to align with 
the MSRB's current test development fee of $150 for each of its four 
existing professional qualification examinations.\5\ Section 15B 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'' 
\6\ and requires persons in any such class to pass tests prescribed by 
the

[[Page 5514]]

Board.\7\ Section 15B(b)(2)(L)(iii) of the Act further requires the 
MSRB to establish professional standards for municipal advisors.\8\ A 
professional qualification examination is intended to determine whether 
an individual meets the MSRB's required qualification standards. On 
November 20, 2018, the SEC approved the MSRB's proposed rule change to, 
among other things, amend Rule G-3, on professional qualification 
requirements, to require persons who meet the definition of a municipal 
advisor principal \9\ to pass the Series 54 examination in order to 
become appropriately qualified as a municipal advisor principal.\10\ 
The Series 54 examination is designed to measure an individual's 
ability to apply the applicable federal securities laws and MSRB rules 
to the municipal advisory activities of the municipal advisor. The 
establishment of qualification requirements for municipal advisor 
principals ensures 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.
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    \5\ The four MSRB-owned examinations are the: Municipal Advisor 
Representative Qualification Examination; Municipal Fund Securities 
Limited Principal Qualification Examination; Municipal Securities 
Representative Qualification Examination; and the Municipal 
Securities Principal Qualification Examination and are all 
developed, implemented and maintained by the MSRB. In 2015, the MSRB 
filed amendments to A-16 to institute a test development fee for the 
Series 50 examination and to change the test development fee for 
each of the MSRB-owned examinations from $60 to $150 to address the 
growing disproportion between the examination fees collected and the 
program costs. See Exchange Act Release No. 74561 (March 23, 2015), 
80 FR 16485 (March 27, 2015) (File No. SR-MSRB-2015-01).
    \6\ 15 U.S.C. 78o-4(b)(2)(A).
    \7\ 15 U.S.C. 78o-4(b)(2)(A)(iii).
    \8\ 15 U.S.C. 78o-4(b)(2)(L)(iii).
    \9\ 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.''
    \10\ See Exchange Act Release No. 84630 (November 20, 2018), 83 
FR 60927 (November 27, 2018) (File No. SR-MSRB-2018-07).
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    The Series 54 examination, as with all MSRB-owned professional 
qualification examinations, has been developed by the MSRB in 
consultation with the MSRB's Professional Qualification Advisory 
Committee (PQAC) and its retained psychometrician,\11\ and in 
accordance with The Standards for Educational and Psychological 
Testing.\12\ The MSRB adhered to recognized test development practices 
by performing a job study to determine the appropriate topics to be 
covered on the Series 54 examination and the weighting of such 
topics.\13\
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    \11\ A psychometrician is an expert in a field of study devoted 
to testing, measurement, and assessment.
    \12\ See American Educational Research Association, American 
Psychological Association and National Council on Measurement in 
Education, ``The Standards for Educational and Psychological 
Testing'' (2d ed. 2014).
    \13\ The MSRB conducted a job study of municipal advisor 
principals via a web-based survey. The job study was sent to over 
500 municipal advisors with the MSRB receiving 212 responses to the 
job study. 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.
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    The proposed test development fee to be assessed under Rule A-16 is 
intended to partially offset the overall program costs to the MSRB. As 
the MSRB has previously noted, the examination fee for each of its 
examinations has not previously been, and is not intended to fully 
offset the MSRB's program costs, but is intended 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 ongoing maintenance of the examinations through a 
review of the content and questions.\14\ The MSRB believes the test 
development fee of $150 for the Series 54 examination is appropriate 
and consistent with the fee assessed for other MSRB-owned examinations.
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    \14\ See supra note 5.
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    Municipal advisors who enroll an associated person to take the 
Series 54 examination, as with all MSRB-owned examinations, will also 
pay an administration and delivery fee to the Financial Industry 
Regulatory Authority (``FINRA''), which provides the online portal for 
examination enrollment and coordinates with the testing vendor for the 
delivery of the MSRB's professional qualification examinations. The 
additional fee is assessed by FINRA at the time a municipal advisor 
enrolls an individual to take an examination.\15\
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    \15\ The total cost to take the Series 54 examination, inclusive 
of FINRA's administration and test delivery fee would be $265.00. 
This cost is comparable to the total fee charged to take FINRA-
administered professional qualification examinations.
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2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with 
Section 15B(b)(2)(J) of the Act \16\ which provides that:
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    \16\ 15 U.S.C. 78o-4(b)(2)(J).

each municipal securities broker, municipal securities dealer, and 
municipal advisor shall pay to the Board such reasonable fees and 
charges as may be necessary or appropriate to defray the costs and 
expenses of operating and administering the Board. Such rules shall 
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specify the amount of such fees and charges . . . .

    The MSRB believes the proposed rule change appropriately aligns 
with the requirements under Section 15B(b)(2)(J) in that it provides 
for reasonable dues, fees and other charges for municipal advisors and 
seeks to partially offset program costs associated with staff's effort 
to develop and deliver such examinations and represents an equitable 
allocation of fees for all MSRB-owned examinations.\17\
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    \17\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 15B(b)(2)(C) of the Act \18\ requires that MSRB rules not 
be designed to impose any burden on competition not necessary or 
appropriate in furtherance of the purpose of the Act. The MSRB believes 
the proposed rule change is necessary and appropriate to ensure that 
municipal advisors contribute to defraying the expenses associated with 
the overall program costs for administering the MSRB's professional 
qualification examinations, which was established, as authorized by the 
Act, to prescribe ``standards of training, experience, competence, and 
such other qualifications as the Board finds necessary . . . .'' \19\ 
As the MSRB has previously noted, revenue from the examination fee 
falls well-short of actual program costs.\20\ Additionally, the 
proposed rule change would align with the existing test development 
fees, which are equitable to each dealer and municipal advisor without 
regard to the nature of that regulated entity's business and are 
assessed only as to those individuals associated with a regulated 
entity that are engaging in activities that require such individuals to 
become appropriately qualified.
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    \18\ 15 U.S.C. 78o-4(b)(2)(C).
    \19\ 15 U.S.C. 78o-4(b)(2)(A).
    \20\ See supra note 5.
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    In addition, Section 15B(b)(2)(L)(iv) of the Act \21\ 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.'' The MSRB believes that its professional qualification 
examinations, including the Series 54 examination, promote compliance 
with applicable laws and regulations and are necessary for the 
protection of investors, municipal entities and obligated persons. The 
MSRB does not believe that the proposed rule change will result in any 
burden on competition that is not necessary or appropriate in 
furtherance of these provisions and their purposes under the Act. The 
fee for a professional qualification examination is a one-time fee for 
individuals who pass the examination and such fee is equitably applied 
across all municipal advisors. On net, the total examination fees to be

[[Page 5515]]

assessed under Rule A-16 will correlate to the number of individuals 
associated with a municipal advisor that is required, pursuant to Rule 
G-3, to take the Series 54 examination, which likely would be less for 
smaller municipal advisors.
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    \21\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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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 on the 
proposed rule change.

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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \22\ and Rule 19b-4(f)(2) \23\ 
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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    \22\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \23\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MSRB-2019-02 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-2019-02. 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-2019-02 and should be submitted on 
or before March 14, 2019.
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    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, pursuant to delegated authority.\24\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02894 Filed 2-20-19; 8:45 am]
BILLING CODE 8011-01-P


