MSRB NOTICE 2008-35 (AUGUST 18, 2008)

REVISED SERIES 51 STUDY OUTLINE AND SELECTION SPECIFICATIONS FILED WITH SEC

Today the Municipal Securities Rulemaking Board filed with the Securities and Exchange Commission revisions to the study outline and selection specifications for the Municipal Fund Securities Limited Principal Qualification Examination (Series 51) program.[1]  The proposed revisions consolidate certain job responsibilities (such as the recordkeeping functions) and regroup others in order to allow more detailed testing of particular rule requirements.   The revised Series 51 examination program will be implemented on November 1, 2008. 

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 (the Series 51 Committee) recently undertook a review of the Series 51 examination program.  As a result of this review, the MSRB is proposing to make revisions to the study outline to consolidate certain job responsibilities (such as the recordkeeping functions) and regroup others in order to allow more detailed testing of particular rule requirements.  In addition, the detail on some existing topics is being expanded to include specific cites to rules that had been amended since the last update of the outline.  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 content outline for the Series 51 examination, detailed by major topic heading, is provided below. 

Part Three—General Supervision

  • The topic “Restrictions on apprentices” was moved to this major heading from the major heading Sales Supervision (Part Five) to be grouped with the qualification requirements for apprentices.
  • A reference to “Supervisory Controls” under Rule G-27 was added.
  • Technical changes to rule citations were made to reflect amendments to Rule G-27. 

Part Five—Sales Supervision

  • Reference to “Restrictions on apprentices” was moved to Part Three to be grouped with the qualification requirements for apprentices.
  • Technical changes to rule citations were made to reflect amendments to Rule G-27. 
  • “Records of agency transactions” was moved to Part Seven to be grouped with similar requirements for the maintenance of books and records.
  • The topic “Books and records maintained by transfer agents” was moved to Part Seven to be grouped with similar requirements for the maintenance of books and records.

Part Six—Underwriting and Disclosure Obligations

  • The sub-heading “Obligations of Municipal Underwriters under SEC Rules” was changed to “Obligations of Municipal Underwriters” in order to include relevant MSRB rules under the sub-heading.

Part Seven—Operations

  • The topic “Records of agency transactions” was moved under this major heading from Part Five to be grouped with similar requirements for the maintenance of books and records.
  • The topic “Books and records maintained by transfer agents” was moved under this major heading from Part Five to be grouped with similar topics on the maintenance of books and records.

The MSRB is proposing similar changes to the Series 51 selection specifications and question bank.  The examination will continue to consist of 60 multiple choice-questions assigned to the seven areas of the examination as shown below.  The percentages given for each section are rounded to an even number.

                        Regulatory Structure                                        5%

                        Product Knowledge                                          27%

                        General Supervision                                        17%

                        Fair Practice and Conflicts of Interest                17%

                        Sales Supervision                                           18%

                        Underwriting and Disclosure Obligations           6%

                        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. 

A candidate for the Series 51 must also pass the General Securities Principal Examination (Series 24) or the Investment Company Products/Variable Contracts Limited Principal Examination (Series 26). 

*  *  *  *  *

Questions about the Series 51 examination program may be directed to Loretta Jones, Director, Professional Qualifications, or Andrew Strait, Professional Qualifications Analyst. 

August 18, 2008

CLICK HERE TO VIEW THE REVISED SERIES 51 STUDY OUTLINE  


[1] File No. SR-MSRB-2008-06.  Comments on the filing should be submitted to the SEC and should reference this file number. 

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