The MSRB has filed with the SEC an amendment to its previously
filed rule change providing a temporary alternative method for
qualification of municipal securities principals in connection
with municipal fund securities.
On July 5, 2001, the Municipal Securities Rulemaking Board (the “MSRB”)
filed with the Securities and Exchange Commission (the “SEC”)
a rule change relating to rule G-3, on professional qualifications.
[1] The rule change provides a temporary alternative method for
qualification of municipal securities principals in connection
with municipal fund securities. Under the rule change, until
July 31, 2002, a broker, dealer or municipal securities dealer
(“dealer”) may designate an investment company/variable contracts
limited principal to act as a municipal fund securities limited
principal. A designated municipal fund securities limited principal
will have all of the powers and responsibilities of a municipal
securities principal under MSRB rules with respect to transactions
in municipal fund securities and, under certain circumstances,
may be counted toward the dealer’s numerical requirement with
regard to municipal securities principals.
The MSRB adopted the temporary
alternative qualification provision to provide relief and a
period of transition for small dealers seeking to enter the
market for so-called Section 529 college savings plans. [2] The MSRB understood that many of these
small firms have previously limited their securities activities
to sales of investment company securities and therefore have
associated persons qualified solely as investment company/variable
contracts limited representatives and investment company/variable
contracts limited principals. Since filing the rule change,
however, the MSRB has learned that some firms in fact use general
securities principals to supervise their investment company
and annuity product activities. The MSRB has determined, therefore,
that it would be appropriate to permit general securities principals
also to be designated as municipal fund securities limited principals
and has filed this amendment with the SEC accordingly.
July 11, 2001
Text of Amendment[3]
Rule G-3 – Classification of
Principals and Representatives; Numerical Requirements; Testing;
Continuing Education Requirements
(a) No change .
(b) Municipal Securities
Principal .
(i)-(iii) No change .
(iv) No additional changes .
(A) notwithstanding the
provisions of paragraph (b)(ii), the broker, dealer or municipal
securities dealer may designate any person who has taken and
passed the General Securities Principal Qualification Examination
or Investment Company and Annuity Principal Qualification
Examination as a municipal fund securities limited principal.
(B)-(C) No additional changes.
(c)-(h) No change.
[1]
File No. SR-MSRB-2001-05. See “Municipal Fund Securities
– Qualification of Municipal Securities Principals and Application
of MSRB Rules to Fees, Disclosure and Other Market Practices”
dated July 5, 2001 posted on the MSRB’s web site at http://www.msrb.org/msrb1/whatsnew/MFS-NoticeforComment-6-01.htm.
[2]
Section 529 college savings plans are higher education savings
plan trusts established by states under section 529(b) of
the Internal Revenue Code as "qualified state tuition programs"
through which individuals make investments for the purpose
of accumulating savings for qualifying higher education costs
of beneficiaries .
[3]
Underlining indicates addition to original rule change.