MAs Look Ahead to New Exam

The Bond Buyer - - Front Page - By Kyle Glazier

WASH­ING­TON – Market News In­ter­na­tional Mu­nic­i­pal ad­vi­sor prin­ci­pals will soon need to take and pass a new exam un­der de­vel­op­ment by the Mu­nic­i­pal Se­cu­ri­ties Rule­mak­ing Board.

The Se­cu­ri­ties and Ex­change Com­mis­sion ap­proved the MSRB’s pro­posal to amend its Rule G-3 on pro­fes­sional qual­i­fi­ca­tion re­quire­ments to re­quire that MA prin­ci­pals pass the new Se­ries 54 test on top of the ex­ist­ing Se­ries 50 test that all muni ad­vi­sors have to pass.

The abil­ity of muni ad­vi­sors to qual­ify as prin­ci­pals is im­por­tant be­cause the MSRB’s su­per­vi­sion rule re­quires that at least one per­son at a firm be des­ig­nated a prin­ci­pal and be re­spon­si­ble for su­per­vis­ing the firm’s other pro­fes­sion­als.

The rule change be­comes ef­fec­tive on Dec. 20 fol­low­ing the SEC’s Nov. 20 ap­proval. The MSRB will have a pi­lot Se­ries 54 exam from Fe­bru­ary

2019 through June 2019, from which the board will es­tab­lish a pass­ing score for the test. Any MA prin­ci­pal may take the pi­lot exam dur­ing the pi­lot pe­riod. Those who achieve the pass­ing score or bet­ter will be con­sid­ered qual­i­fied as a prin­ci­pal when the MSRB per­ma­nently es­tab­lishes the Se­ries 54 in the fall of 2019.

At that time, other MA prin­ci­pals will have a one-year grace pe­riod to take and pass the ex­am­i­na­tion.

The rule al­lows an MA to func­tion as a prin­ci­pal for 120 cal­en­dar days with­out be­ing qual­i­fied with the Se­ries 54 ex­am­i­na­tion.

The MSRB said in a no­tice that “in the com­ing weeks” it will file for SEC ap­proval of a con­tent out­line for the test. The out­line will de­scribe the top­ics on the ex­am­i­na­tion, the per­cent­age of the exam de­voted to each topic area, and the num­ber of ques­tions that will ap­pear on the test.

Larry Klee­man, an at­tor­ney and muni ad­vi­sor at Ran­son Fi­nan­cial Group in Wi­chita, Kan., said he was con­fi­dent his firm would have two in­di­vid­u­als qual­ify but that a one-year grace pe­riod was good to have. Klee­man said he fur­ther ap­pre­ci­ated that the pi­lot exam is es­sen­tially a free run and that fail­ing it wouldn’t count against a firm.

“We’re look­ing for­ward to see­ing the con­tent out­line in the com­ing weeks,” Klee­man said. “How­ever, if it’s any­thing like the Se­ries 50 pi­lot process, I’m ex­pect­ing the out­line to be very gen­eral in na­ture and no sub­sti­tute for a thor­ough study guide that will even­tu­ally be de­vel­oped by third par­ties.”

The MSRB is not grand­fa­ther­ing in­di­vid­u­als who have pre­vi­ously served as prin­ci­pals or passed other pro­fes­sional ex­ams to earn cer­ti­fi­ca­tions such as Char­tered Fi­nan­cial An­a­lyst or Cer­ti­fied Fi­nan­cial Plan­ner.

Those who achieve a pass­ing score or bet­ter will be con­sid­ered qual­i­fied as a prin­ci­pal when the MSRB per­ma­nently es­tab­lishes the Se­ries 54.

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