SEC Approves MA Qualifications

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WASHINGTON — The Securities and Exchange Commission has approved the Municipal Securities Rulemaking Board's proposal to create baseline standards of professional qualification for municipal advisors.

The new standards, which take effect April 27, would establish two classifications of MAs: representative and principal. It would require firms to designate at least one principal to oversee the firm's MA activities and ensure that each MA representative and principal take and pass a qualifications test that the MSRB is currently developing. The new standards will be implemented through amendments to existing MSRB Rules G-2 and G-3 on professional qualifications.

"The MSRB's professional qualification program aims to ensure that regulated municipal market professionals meet certain threshold requirements in order to engage in business activities that have a direct impact on financial decisions made by investors, states and municipalities," said MSRB executive director Lynnette Kelly. "Municipal securities dealers have had to meet competency requirements for many years. The approval of these rule amendments takes us a step closer to putting municipal advisors under a similar regime."

The MSRB last month approved a content outline for the Municipal Advisor Representative Qualification examination, which the board said will be filed with the SEC and made publicly available as a study aid. The MSRB plans to administer a pilot exam later this year, with the final exam expected to be available in 2016. MAs have a one-year grace period to take the MA representative exam while still engaging in municipal advisory activities. There will be no grandfathering of advisors or allowances for those who have already passed dealer-related exams.

Amended Rule G-3 also eliminates the requirement of apprenticeship. Previously, securities representatives were required to apprentice for 90 days before conducting business with the public. MAs will also not have the apprenticeship requirement.

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Law and regulation Washington
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