MSRB NOTICE 2006-25 (AUGUST 11, 2006)

REVISED SERIES 51 STUDY ONLINE FILED WITH SEC

Today the MSRB filed with the Securities and Exchange Commission (“SEC”) revisions to the study outline for the Municipal Fund Securities Limited Principal Qualification Examination (Series 51) program.[1]  The proposed revisions update the material to reflect changes to the rules and regulations covered in the examination, and to provide more explicit references to these rules and regulations.  The revised Series 51 examination program will be implemented on September 15, 2006.

MSRB Rule G-3(b)(iv) states that the municipal fund securities limited principal has responsibility to oversee the municipal securities activities of a securities firm or bank dealer solely as such activities relate to transactions in municipal fund securities.  In this capacity, the municipal fund securities limited principal manages, directs or supervises one or more of the following activities relating to municipal fund securities: underwriting, trading or selling municipal fund securities; rendering financial advisory or consultant services to issuers of municipal fund securities; research or investment advice, or communications with customers, about any of the activities named heretofore; maintaining records on activities in municipal fund securities; processing, clearing, and (in the case of securities firms) safekeeping of municipal fund securities; and training of principals and representatives.[2]  The only examination that qualifies a municipal fund securities limited principal is the Municipal Fund Securities Limited Principal Qualification Examination.

A committee of industry members and MSRB staff recently completed a review of the study outline for the Series 51 examination program.  As a result of this review, the MSRB is proposing to update the content of the examination to cover certain rules or provisions of rules that were promulgated since the date that the outline was initially published (MSRB Rule G-21 and new Rule G-38, on solicitation of municipal securities business), and to delete coverage of rules or rule provisions that are obsolete (old Rule G-38 on consultants).  Technical changes have been made to correct the citations for the rules that have been amended.  The number of questions on each section of the examination will not change.  The revised examination continues to cover areas of knowledge required for effective supervision of municipal fund securities activities.  A summary of the changes to the study outline is provided below.

Part Two—Product Knowledge

  • A reference to taxes imposed on withdrawals for non-qualified uses relating to 529 college savings plans was added.
  • The description on deductibility of contributions relating to 529 college savings plans was expanded.
  • A reference to the federal sunset provisions relating to 529 college savings plans was removed.

Part Three—General Supervision

  • A reference to any recently enacted MSRB interpretations was added to the reference to any recently enacted rules governing general supervision.

Part Four—Fair Practice and Conflicts of Interest

  • References to old Rule G-38, on consultants, were removed.
  • New Rule G-38, on solicitation of municipal securities business, was added. 
  • A technical change was made to revise the title of Rule G-20.
  • A rule cite was revised to Rule G-21(f).
  • Rule G-21(e) regarding advertisements for municipal fund securities was added.
  • A reference to any recently enacted MSRB interpretations was added to the reference to any recently enacted rules governing fair practice and conflicts of interest.

Part Five—Sales Supervision

  • A reference to any recently enacted MSRB interpretations was added to the reference to any recently enacted rules governing sales supervision.

Part Six—Underwriting and Disclosure Obligations

  • A reference to any recently enacted MSRB interpretations was added to the reference to any recently enacted rules governing underwriting and disclosure obligations.

Part Seven—Operations

  • A reference to any recently enacted MSRB interpretations was added to the reference to any recently enacted rules governing operations.

            The examination will continue to consist of 60 multiple-choice questions assigned to the seven areas of the examination as follows:

 

                        Regulatory Structure                                           5%

                        Product Knowledge                                            20%

                        General Supervision                                          20%

                        Fair Practice and Conflicts of Interest                  15%

                        Sales Supervision                                              20%

                        Underwriting and Disclosure Obligations               10%

                        Operations                                                        10%

 

Candidates will continue to be allowed one and one-half hours for each testing session.  Each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions in order to receive a passing grade.  Also, each candidate must have previously or concurrently qualified as a general securities principal or investment company/variable contracts limited principal in addition to passing the Series 51 Examination in order to gain qualification as a municipal fund securities limited principal. 

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Questions about this notice may be directed to Loretta Jones, Director, Professional Qualifications. 

August 11, 2006

 

CLICK HERE TO VIEW THE REVISED SERIES 51 STUDY OUTLINE


[1] File No. SR-MSRB-2006-06.  Comments on this filing should be submitted to the SEC and should reference the file number.    

[2] A municipal securities principal (Series 53) is also qualified to bear these responsibilities.