[Federal Register Volume 78, Number 136 (Tuesday, July 16, 2013)]
[Notices]
[Pages 42581-42583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-17014]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69966; File No. SR-FINRA-2013-028]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Revise the Series 55 Examination Program
July 11, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``SEA'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on June 27, 2013, 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, 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 Equity Trader (Series 55) examination
program.\5\ The proposed revisions update the material to reflect
changes to the laws, rules and regulations covered by the examination
and to reflect the functions currently performed by an Equity Trader.
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 55 question bank. Based on instruction from SEC staff, FINRA
is submitting this filing 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 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 SEC review.
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The revised content outline is attached.\6\ The Series 55 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 and that the content outline, in
effect, constitutes the text of the proposed rule change.
\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, the 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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Pursuant to NASD Rule 1032(f) (Limited Representative--Equity
Trader), each associated person of a member who is included within the
definition of representative in NASD Rule 1031(b) (Definition of
Representative) is required to register with FINRA as an Equity Trader
if, with respect to transactions in equity, preferred or convertible
debt securities effected otherwise than on a securities exchange, such
person is engaged in proprietary trading, the execution of transactions
on an agency basis or the direct supervision of such activities. There
is an exception from the Equity Trader requirement for any associated
person of a member whose trading activities are conducted principally
on behalf of an investment company that is registered with the
Commission pursuant to the Investment Company Act of 1940 and that
controls, is controlled by, or is under common control with the member.
The Series 55 examination qualifies an individual to function as an
Equity Trader. Before registration as an Equity Trader may become
effective, the individual must be registered as either a General
Securities Representative (Series 7) or Corporate Securities
Representative (Series 62).
In concert with a committee of industry representatives, FINRA
recently undertook a review of the Series 55 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 reflect the functions currently
performed by an Equity Trader.
Current Outline
The current content outline is divided into four critical sections.
The following are the four sections and the number of questions
associated with each of the sections, denoted 1 through 4:
1: NASDAQ and Over-The-Counter Markets, 42 questions;
2: Display, Execution and Trading Systems, 12 questions;
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3: Trade Reporting Requirements, 22 questions; and
4: General Industry Standards, 24 questions.
Each section also includes the applicable laws, rules and
regulations associated with that section.
Proposed Revisions
FINRA is proposing to divide the content outline into three major
job functions that are performed by an Equity Trader. The following are
the three major job functions, denoted Function 1 through Function 3,
and the number of questions associated with each of the functions:
Function 1: Trading, 45 questions;
Function 2: Order Handling, 36 questions; and
Function 3: Record Keeping and Regulatory Reporting, 19 questions.
Each function contains sections that describe the areas of
knowledge required to perform that function, and each of these areas of
knowledge contains subsections that list the laws, rules and
regulations related to that particular area of knowledge.
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., NASD IM-2110-2 (Trading Ahead of
Customer Limit Order) and NASD Rule 2111 (Trading Ahead of Customer
Market Orders) were consolidated as FINRA Rule 5320 (Prohibition
Against Trading Ahead of Customer Orders)).\9\
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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). See also Rule Conversion Chart, available at
http://www.finra.org/Industry/Regulation/FINRARules/p085560.
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FINRA is proposing similar changes to the Series 55 selection
specifications and question bank. The number of questions on the Series
55 examination will remain at 100 multiple-choice questions,\10\ and
candidates will continue to have three hours to complete the
examination. Currently, a score of 70 percent is required to pass the
examination. A score of 67 percent will be required to pass the revised
examination.
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\10\ Consistent with FINRA's practice of including ``pre-test''
questions on certain qualification examinations, which is designed
to ensure that new examination questions meet acceptable testing
standards prior to use for scoring purposes, the examination
includes 10 additional, unidentified pre-test questions that do not
contribute towards the candidate's score. Therefore, the examination
actually consists of 110 questions, 100 of which are scored. The 10
pre-test questions are randomly distributed throughout the
examination.
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Availability of Content Outlines
The current Series 55 content outline is available on FINRA's Web
site, at www.finra.org/brokerqualifications/exams. The revised Series
55 content outline will replace the current content outline on FINRA's
Web site.
FINRA is filing the proposed rule change for immediate
effectiveness. FINRA proposes to implement the revised Series 55
examination program on August 12, 2013. 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 55
examination program are consistent with the provisions of Section
15A(b)(6) of the Act,\11\ 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,\12\ 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 reflect the functions currently performed by
an Equity Trader.
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\11\ 15 U.S.C. 78o-3(b)(6).
\12\ 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. The updated examination will be
more topical by focusing on the functions currently performed by Equity
Traders, and the knowledge--including the most recent related laws,
rules and regulations--required to perform the functions. Therefore,
the proposed revisions potentially would reduce the training and
compliance burden on firms that employ Equity Traders.
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 \13\ and paragraph (f)(1) of Rule 19b-4
thereunder.\14\ 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.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(1).
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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 [email protected]. Please include
File No. SR-FINRA-2013-028 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 No. SR-FINRA-2013-028. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies
of the submission, all subsequent amendments, all written
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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 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 No. SR-FINRA-2013-028 and should be submitted on
or before August 6, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-17014 Filed 7-15-13; 8:45 am]
BILLING CODE 8011-01-P