[Federal Register Volume 76, Number 187 (Tuesday, September 27, 2011)]
[Notices]
[Pages 59757-59759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24733]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65375; File No. SR-FINRA-2011-048]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Revise the Series 38 Examination Program
September 21, 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 September 7, 2011, Financial Industry Regulatory Authority, Inc.
(``FINRA'') (f/k/a National Association of Securities Dealers, Inc.
(``NASD'')) 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.
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\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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is filing revisions to the content outline and selection
specifications for the Canada Securities Representative (Series 38)
examination program.\5\ The proposed revisions update the material to
reflect changes to the laws, rules and regulations covered by the
examination and to better reflect the functions and associated tasks
performed by a Canada Securities Representative and the relationships
between the different components of the outline. FINRA is not proposing
any textual changes to the By-Laws, Schedules to the By-Laws, or Rules
of FINRA.
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\5\ FINRA also is proposing corresponding revisions to the
Series 38 question bank, but based upon instruction from the
Commission staff, FINRA is submitting SR-FINRA-2011-048 for
immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act
and Rule 19b-4(f)(1) thereunder, and is not filing the question bank
for Commission review. See Letter to Alden S. Adkins, Senior Vice
President and General Counsel, NASD Regulation, from Belinda Blaine,
Associate Director, Division of Market Regulation, SEC, dated July
24, 2000. The question bank is available for Commission review.
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The revised content outline is attached.\6\ The Series 38 selection
specifications have been submitted to the Commission under separate
cover with a request for confidential treatment pursuant to SEA Rule
24b-2.\7\
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\6\ The Commission notes that the content outline is attached to
the filing, not to this Notice.
\7\ 17 CFR 240.24b-2.
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The text of the proposed rule change is available on FINRA's Web
site at http://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, Proposed Rule Change
1. Purpose
Section 15A(g)(3) of the Act \8\ authorizes FINRA to prescribe
standards of training, experience, and competence for persons
associated with FINRA members. In accordance with that provision, FINRA
has developed examinations 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 examinations to determine whether revisions are necessary or
appropriate in view of changes pertaining to the subject matter covered
by the examinations.
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\8\ 15 U.S.C. 78o-3(g)(3).
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NASD Rules and the rules incorporated from NYSE \9\ require that a
``representative,'' as defined in the respective rules,\10\ register
and qualify as a General Securities Representative,\11\ subject to
certain exceptions. For those representatives who are not engaged in
municipal securities activities, the NASD and NYSE Rules provide that
registration and qualification as a Canada Securities Representative is
equivalent to registration and qualification as a General Securities
Representative.\12\
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\9\ The current FINRA rulebook consists of (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members, unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see Information Notice, March 12, 2008 (Rulebook
Consolidation Process). For convenience, the Incorporated NYSE Rules
are referred to as the NYSE Rules.
\10\ See NASD Rule 1031(b) and NYSE Rule 10.
\11\ See NASD Rules 1031(a) and 1032(a); NYSE Rules 345.10 and
345.15(2); and NYSE Rule Interpretation 345.15/02.
\12\ See NASD Rule 1032(a)(2)(C) and NYSE Information Memorandum
96-06 (March 1996). FINRA is filing proposed revisions to the Series
7 examination program in conjunction with this filing. See SR-FINRA-
2011-045.
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The Series 38 examination is a FINRA examination that qualifies an
individual to function as a Canada Securities Representative.\13\
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\13\ Both the Series 37 examination and the Series 38
examination are FINRA examinations that qualify an individual to
function as a Canada Securities Representative. In either case,
candidates must also satisfy certain prerequisite training and
competence requirements of the Canadian regulators and be registered
and in good standing with the appropriate Canadian regulator.
However, candidates for the Series 38 examination are subject to the
following additional Canadian prerequisite. They must complete
either: (1) The Options Licensing Course and the Derivatives
Fundamental Course; or (2) the Canadian Options Course. More
information regarding the prerequisite requirements is available on
FINRA's Web site at: http://www.finra.org/Industry/Compliance/Registration/QualificationsExams/RegisteredReps/Qualifications/P121265. FINRA is filing proposed revisions to the Series 37
examination program in conjunction with this filing. See SR-FINRA-
2011-047.
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[[Page 59758]]
A committee of industry representatives, together with FINRA staff,
recently undertook a review of the Series 38 examination program. As a
result of this review, FINRA is proposing to make revisions to the
content outline to reflect changes to the laws, rules and regulations
covered by the examination and to better reflect the functions and
associated tasks performed by a Canada Securities Representative and
the relationship between the different components of the content
outline.
Current Outline
The current Series 38 content outline is divided into six topics.
The following are the number of questions associated with each of the
six topics, denoted I through VI:
I: 16 questions.
II: 10 questions.
III: 4 questions.
IV: 5 questions.
V: 4 questions.
VI: 6 questions.
The topics include: Federal and State Laws and Industry
Regulations; Investments; Margin; Retirement Plans; Variable Annuities;
and Taxation.\14\
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\14\ Unlike the Series 37 examination, the Series 38 examination
does not include test questions that assess knowledge of options
since individuals wishing to sit for the Series 38 examination are
already subject to the Canadian options prerequisite noted above.
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Proposed Revisions
FINRA is proposing to divide the Series 38 content outline into
five major job functions performed by a Canada Securities
Representative. The following are the five major job functions, denoted
F1 through F5, and the number of questions associated with each of the
five functions:
F1: Seeks Business for the Broker-Dealer through Customers and
Potential Customers, 7 questions;
F2: Evaluates Customers' Other Security Holdings, Financial
Situation and Needs, Financial Status, Tax Status, and Investment
Objectives, 7 questions;
F3: Opens Accounts, Transfers Assets, and Maintains Appropriate
Account Records, 12 questions;
F4: Provides Customers with Information on Investments and Makes
Suitable Recommendations, 10 questions; and
F5: Obtains and Verifies Customer's Purchase and Sales
Instructions, Enters Orders, and Follows Up, 9 questions.
Additionally, each job function includes certain tasks describing
activities associated with performing that function. FINRA is proposing
to revise the outline to better reflect the functions and associated
tasks performed by a Canada Securities Representative.
The revised content outline also includes a knowledge section
describing the underlying knowledge required to perform the major job
functions and associated tasks and a rule section listing the laws,
rules and regulations related to the job functions, associated tasks
and knowledge statements. There are cross-references within each
section to the other applicable sections.
As noted above, FINRA also is proposing to revise the content
outline to reflect changes to the laws, rules and regulations covered
by the examination. Among other revisions, FINRA is proposing to revise
the content outline to reflect the adoption of rules in the
consolidated FINRA rulebook (e.g., FINRA Rule 3240 (Borrowing From or
Lending to Customers)).
FINRA is proposing similar changes to the Series 38 selection
specifications and question bank. The number of questions on the Series
38 examination will remain at 45 multiple-choice questions, and
candidates will continue to have 75 minutes to complete the
examination.
Currently, a score of 70 percent is required to pass the
examination. A score of 72 percent will be required to pass the revised
examination.
Availability of Content Outlines
The revised Series 38 content outline will be available on FINRA's
Web site, at http://www.finra.org/brokerqualifications/exams.
FINRA is filing the proposed rule change for immediate
effectiveness. FINRA proposes to implement the revised Series 38
examination program on November 7, 2011. FINRA will announce the
proposed rule change and the implementation date in a Regulatory
Notice.
2. Statutory Basis
FINRA believes that the proposed revisions to the Series 38
examination program are consistent with the provisions of Section
15A(b)(6) of the Act,\15\ 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 Act,\16\ 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 examination
program to reflect changes to the laws, rules and regulations covered
by the examination and to better reflect the functions and associated
tasks performed by a Canada Securities Representative.
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\15\ 15 U.S.C. 78o-3(b)(6).
\16\ 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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \17\ and paragraph (f)(1) of Rule 19b-4
thereunder.\18\ FINRA proposes to implement the revised Series 38
examination program on November 7, 2011. FINRA will announce the
implementation date in a Regulatory Notice.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(1).
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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:
[[Page 59759]]
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-2011-048 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.
All submissions should refer to File Number SR-FINRA-2011-048. 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 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-2011-048
and should be submitted on or before October 18, 2011.
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\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-24733 Filed 9-26-11; 8:45 am]
BILLING CODE 8011-01-P