Muni advisor principals will have to take new test

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WASHINGTON – The Municipal Securities Rulemaking Board is asking the Securities and Exchange Commission to approve a rule change to require municipal advisor principals to pass a new qualification exam that is currently under development.

The board said Wednesday that it has filed for permission with the SEC 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 board expects to have a pilot test available from February 2019 through June 2019.

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

“The establishment of a principal-level examination for municipal advisor professionals by the MSRB ensures that individuals who engage in the management, direction or supervision of the municipal advisory activities of a municipal advisor firm and its associated persons demonstrate a specified level of competence in order to promote compliance with the rules and regulations governing such activities,” the MSRB said in a notice.

Any municipal advisor principal will be able to take the pilot exam during the pilot period, the MSRB said. When permanent version of the Series 54 becomes available, all municipal advisor principals will have one year to take and pass it. The pilot program helps the MSRB to establish the passing score for the permanent exam.

The one-year grace period is “designed to provide sufficient time for municipal advisor principals to prepare for and pass the Series 54 examination without considerable disruption to the business of the municipal advisor,” according to the MSRB.

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