MSRB NOTICE 2002-18 (MAY 13, 2002)

SEC APPROVAL OF MUNICIPAL FUND SECURITIES LIMITED PRINCIPAL PROFESSIONAL QUALIFICATION CATEGORY AND RELATED AMENDMENTS TO MSRB RULE G-3

The Securities and Exchange Commission (“SEC”) has approved an amendment to MSRB Rule G-3, on professional qualifications.[1]  The amendment establishes a new permanent category of principals, known as municipal fund securities limited principals, to supervise the activities of brokers, dealers and municipal securities dealers (“dealers”) with respect to municipal fund securities.[2]  Qualification as a municipal fund securities limited principal will be by examination scheduled to become available on or about October 1, 2002.[3]  Individuals taking the new examination are required to have previously or concurrently passed the general securities principal qualification examination (Series 24) or investment company and annuity principal qualification examination (Series 26).

The amendment also simplifies and extends to December 31, 2002 an existing temporary transition provision that permits Series 24 or Series 26 principals to supervise municipal fund securities activities.  Series 24 or Series 26 principals may count toward a dealer’s numerical requirement for principals during the transition period, regardless of the size of the firm.  However, beginning on January 1, 2003, all principals supervising municipal fund securities activities must be qualified either as a municipal fund securities limited principal who has taken and passed the new qualification examination or as a Series 53 municipal securities principal.  Municipal securities sales principals (Series 8 or Series 9/10) may continue to supervise sales activities with respect to municipal fund securities.[4]  Finally, the amendment effects certain changes regarding the prerequisite for taking the Series 53 examination and waivers of qualification requirements.

For a more detailed description of the amendments and the text of the rule change, see “Municipal Fund Securities – Notice of Filing of Proposed Rule Change Relating to Professional Qualification of Municipal Fund Securities Limited Principals,” March 21, 2002.

May 13, 2002


[1] Exchange Act Release No. 45882 (May 6, 2002).

[2] Municipal securities principals (Series 53) will continue to be qualified to supervise dealer activities with respect to municipal fund securities.

[3] MSRB staff is currently in the process of developing the qualification examination and will file the study outline and specifications with the SEC at a later date.

[4] Municipal securities sales principals may undertake only limited supervisory functions relating to sales activities under MSRB rules.  Many supervisory responsibilities under MSRB rules must be undertaken by municipal securities principals or, in the case of municipal fund securities activities, by municipal fund securities limited principals.