[Federal Register Volume 76, Number 173 (Wednesday, September 7, 2011)]
[Notices]
[Pages 55443-55445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-22765]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65222; File No. SR-FINRA-2011-041]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Adopt the Selection Specifications and Study
Outline for the Operations Professional (``Series 99'') Examination
Program
August 30, 2011.
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 August 22, 2011, 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 and
II below, which Items have been prepared by FINRA. FINRA has designated
the proposed rule change as constituting a ``non-controversial'' rule
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which
renders the proposal effective upon receipt of this filing by the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to adopt the selection specifications and
content outline for the Operations Professional (``Series 99'')
examination program.\4\
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\4\ Based upon instruction from the Commission staff, FINRA is
submitting SR-FINRA-2011-041 for immediate effectiveness pursuant to
Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder, and
is not filing the question bank for Commission 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, dated July 24, 2000. The question
bank is available for Commission review.
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The Series 99 examination program is proposed in connection with
FINRA Rule 1230(b)(6), a new representative registration category and
qualification examination requirement for certain operations personnel.
FINRA is not proposing any textual changes to its By-Laws, Schedules to
the By-Laws or rules.
A description of the Series 99 examination is included in the
attached content outline. Additional information on the examination is
included in the Series 99 selection specifications, which FINRA has
submitted under separate cover with a request for confidential
treatment to the Commission's Secretary pursuant to Rule 24b-2 under
the Act.\5\
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\5\ 17 CFR 240.24b-2.
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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
On June 16, 2011, the Commission approved FINRA Rule 1230(b)(6),
which establishes a registration category and qualification examination
requirement for certain operations personnel--Operations
Professionals.\6\ FINRA is expanding its registration provisions to
require registration of certain individuals (``covered persons'') who
are engaged in, responsible for or supervising certain member
operations functions (``covered functions'') to enhance the regulatory
structure surrounding these areas.\7\ FINRA Rule 1230(b)(6) is
intended, among other things, to increase covered persons' awareness
and knowledge that they are operating in a regulated environment
designed to protect investors' interests and the integrity of the
operations of a broker-dealer.
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\6\ See Securities Exchange Act Release No. 64687 (June 16,
2011), 76 FR 36586 (June 22, 2011) (Order Approving File No. SR-
FINRA-2011-013). In addition to adopting FINRA Rule 1230(b)(6), the
rule change adopted NASD Rule 1120 (Continuing Education
Requirements) as new FINRA Rule 1250 (Continuing Education
Requirements) with certain changes, including expanding the scope of
``covered registered persons'' subject to the Firm Element to
include persons registered as Operations Professionals. See
Regulatory Notice 11-33 (July 2011).
\7\ See Regulatory Notice 11-33 (July 2011) for information
regarding the implementation period for Operations Professionals
subject to FINRA Rule 1230(b)(6).
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Pursuant to Section 15A(g)(3)(B) of the Act,\8\ FINRA is authorized
to prescribe standards of training, experience, and competence for
persons associated with FINRA members. The
[[Page 55444]]
Series 99 examination program has been developed to provide reasonable
assurance that covered persons understand their professional
responsibilities, including key regulatory and control themes, as well
as the importance of identifying and escalating red flags that may harm
a firm, its customers, the integrity of the marketplace or the public.
The examination will test applicants on general securities industry
knowledge and its associated regulations and rules.\9\
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\8\ 15 U.S.C. 78o-3(g)(3)(B).
\9\ FINRA Rule 1230(b)(6)(D) sets forth an exception to the
Operations Professional qualification examination requirement for
persons who currently hold certain registrations (each an ``eligible
registration'') or have held one during the two years immediately
prior to registering as an Operations Professional. The exception
also applies to persons who do not hold an eligible registration,
but prefer an alternative to taking the Operations Professional
examination. Such persons may register in an eligible registration
category (subject to passing the corresponding qualification
examination or obtaining a waiver) and use such registration to
qualify for Operations Professional registration.
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The Series 99 examination consists of 100 multiple-choice
questions.\10\ Candidates will be allowed 150 minutes to complete the
examination. Candidates will receive an informational breakdown of
their performance on each section of the examination, along with their
overall score and pass/fail status at the completion of the testing
session.\11\
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\10\ To ensure that new exam questions meet acceptable testing
standards prior to use, each examination includes 10 additional,
unidentified ``pre-test'' questions that do not contribute towards
the candidate's score. The 10 pre-test questions are randomly
distributed throughout the examination.
\11\ Candidates for the Series 99 examination will be able to
schedule and take the examination starting on October 17, 2011.
Because this is a new examination for a new registration category,
FINRA will be assessing the effectiveness of the examination by in
part, evaluating the candidates' performance during the first 60
days of the administration of the examination. Therefore, candidates
who take the examination within the first 60 days (between October
17, 2011 and December 16, 2011) will not receive their test results
on the day that they take the examination. Instead, such candidates'
firms will be notified of test results (i.e., the candidate's score
and whether the candidate has passed or failed the examination) on
or shortly after December 16, 2011. The test results will be posted
to the Central Registration Depository system (``CRD[supreg]
system'') at that time. Candidates who fail the examination during
the initial 60-day rollout will be provided an opportunity to retake
the examination at no additional cost.
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A content outline has been prepared to assist member firms in
preparing candidates for the Series 99 examination and is available at
http://www.finra.org/brokerqualifications/registeredrep. The content
outline describes the following three topical sections comprising the
examination: (1) Basic Knowledge Associated with the Securities
Industry (32 questions); (2) Basic Knowledge Associated with Broker-
Dealer Operations (48 questions); and (3) Professional Conduct and
Ethical Considerations (20 questions).
The selection specifications for the Series 99 examination, which
FINRA has submitted under separate cover with a request for
confidential treatment to the Commission's Secretary pursuant to Rule
24b-2 under the Act,\12\ describe additional confidential information
regarding the examination.
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\12\ 17 CFR 240.24b-2.
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FINRA has filed the proposed rule change for immediate
effectiveness. The implementation date of the proposed rule change and
corresponding FINRA Rule 1230(b)(6) will be October 17, 2011.
2. Statutory Basis
FINRA believes that the proposed Series 99 examination program is
consistent with Section 15A(b)(6) of the Act,\13\ which requires, among
other things, that FINRA 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 and the
public interest and Section 15A(g)(3) of the Act,\14\ which authorizes
FINRA to prescribe standards of training, experience, and competence
for persons associated with FINRA members. FINRA believes the proposed
rule change to expand FINRA's registration and qualification
requirements to Operations Professionals will help ensure that investor
protection mechanisms are in place in all areas of a member's business
that could harm the member, a customer, the integrity of the
marketplace or the public.
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\13\ 15 U.S.C. 78o-3(b)(6).
\14\ 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 rule change will result in
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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule
19b4(f)(6) thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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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.
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 e-mail to [email protected]. Please include
File Number SR-FINRA-2011-041 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2011-041. This
file number should be included on the subject line if e-mail 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
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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 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; 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-FINRA-2011-041 and should be submitted on or before September 28,
2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Elizabeth M. Murphy,
Secretary.
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\17\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-22765 Filed 9-6-11; 8:45 am]
BILLING CODE 8011-01-P