MSRB NOTICE 2005-54 (OCTOBER 13, 2005)

REVISED SERIES 9/10 EXAMINATION

On October 13, 2005, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) revisions to the study outline and selection specifications for the Limited Principal—General Securities Sales Supervisor (Test Series 9/10) examination program.[1]  The proposed revisions update the material to reflect changes to the law, rules and regulations covered by the examination, as well as modify the content of the examination program to track more closely the functional workflow of a Series 9/10 limited principal.  The revised Series 9/10 examination will be implemented no later than November 30, 2005.

MUNICIPAL SECURITIES SALES SUPERVISOR

MSRB Rule G-3(c) states that the Municipal Securities Sales Supervisor may only supervise those activities and functions relating directly to customer sales and purchases of municipal securities.  The activities over which a Municipal Securities Sales Principal may have responsibility include: approving transactions with customers; approving the opening of customer accounts; approving discretionary accounts and related transactions; reviewing all customer accounts regularly and frequently; supervising the handling of written customer complaints; and reviewing correspondence with customers in the solicitation or execution of municipal securities transactions.  The supervision of activities such as trading, underwriting, research, and providing financial advice and counseling to issuers cannot be the responsibility of the Municipal Securities Sales Principal; such activities must be supervised by a person qualified as a Municipal Securities Principal.  MSRB rules do not specify that a broker, dealer or municipal securities dealer must maintain any Municipal Securities Sales Principals on its staff. 

SERIES 9/10 EXAMINATION

The only examination that qualifies a Municipal Securities Sales Principal is the General Securities Sales Supervisor Qualification Examination (Series 9/10).  The Series 9/10 examination is an industry-wide examination and tests a candidate’s knowledge of securities industry rules and regulations and certain statutory provisions pertinent to the supervision of sales activities.

The Series 9/10 examination program is shared by the MSRB and the following self-regulatory organizations (“SROs”): the American Stock Exchange LLC (“AMEX”); the Chicago Board Options Exhange, Incorporated (“CBOE”); the National Association of Securities Dealers, Inc. (“NASD”); the New York Stock Exchange, Inc. (“NYSE”); the Pacific Stock Exchange, Inc. (“PCX”); and the Philadelphia Stock Exchange, Inc. (“PHLX”).[2]

A committee of industry representatives, together with the staff of the MSRB and the SROs, recently undertook a periodic review of the Series 9/10 examination program.  As a result of this review, the MSRB is proposing to update the content of the examination to cover Regulation S-P;[3] MSRB Rules G-37 and G-38; SRO research analyst and anti-money laundering rules; municipal fund securities (e.g., 529 college savings plans); and exchange traded funds.  MSRB is further proposing revisions to the study outline to reflect the SEC short sale requirements.  In addition, as part of an ongoing effort to align the examination more closely to the supervisory duties of a Series 9/10 limited principal, MSRB is proposing to modify the content of the examination to track the functional workflow of a Series 9/10 limited principal.  Also, MSRB is proposing to include questions related to parallel rules of the MSRB, the options exchanges, NASD, and the NYSE in the same section of the examination.

As a result of the revisions, MSRB is proposing to modify the main section headings and the number of questions on each section of the Series 9/10 study outline as follows: Section 1—Hiring, Qualifications, and Continuing Education, 9 questions; Section 2—Supervision of Accounts and Sales Activities, 94 questions; Section 3—Conduct of Associated Persons, 14 questions; Section 4—Recordkeeping Requirements, 8 questions; Municipal Securities Regulation, 20 questions; and Section 6—Options Regulation, 55 questions.  Section 6, which covers options, constitutes the Series 9 portion of the examination.  Series 10 covers general securities and municipal securities.  The revised examination continues to cover the areas of knowledge required for the supervision of sales activities.

The MSRB is proposing these changes to the entire content of the Series 9/10 examination, including the selection specifications and question bank.  The number of questions on the Series 9/10 examination will remain at 200, and candidates will continue to have four hours to complete the Series 10 portion and one and one-half hours to complete the Series 9 portion.  Also, each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions on each series, 9 and 10, to receive a passing grade.

Questions about the Series 9/10 examination may be directed to Loretta Jones, Director of Professional Qualifications.

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You may view the revised Series 9/10 examination study outline by clicking the link below.

SERIES 9/10 EXAMINATION STUDY OUTLINE

October 13, 2005

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