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08-61 Proposed Amendments to Qualification Examination Fees in Section 4(c) of Schedule A to the FINRA By-Laws; Proposed Implementation Date: January 2, 2009

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Examination Fees

Regulatory Notice
Notice Type

Guidance
Referenced Rules & Notices

Schedule A of FINRA By-Laws
Suggested Routing

Legal & Compliance
Registration
Senior Management
Key Topic(s)

Qualification Examinations
Qualification Examination Fees
Registration

Proposed Implementation Date: January 2, 20091

Executive Summary

FINRA has filed with the SEC a rule change proposing to increase certain qualification examination fees to reflect the rising costs of developing, administering and delivering such examinations.2 Pending SEC approval of the amendments to Section 4(c) of Schedule A to the FINRA By-Laws, the new fees will become effective on January 2, 2009. FINRA is issuing this Notice to alert member firms about this proposed fee change to assist in firms' budget planning processes. The text of Section 4(c) of Schedule A to the FINRA By-Laws,3 as amended, is set forth in Attachment A of this Notice.

Questions concerning this Notice should be directed to John C. Kalohn, Associate Vice President, Testing and Continuing Education Department, at (240) 386-5800.

Background & Discussion

Any person associated with a member firm who is engaged in the securities business of the firm must register with FINRA. As part of the registration process, securities professionals must pass a qualification examination to demonstrate competence in each area in which they intend to work. These mandatory qualification examinations cover a broad range of subjects on the markets, products, a person's responsibilities in a given position, securities industry rules and the regulatory structure. Some qualification examinations are sponsored (i.e., developed) solely by FINRA while others are sponsored by the Municipal Securities Rulemaking Board (MSRB), the North American Securities Administrators Association (NASAA), the National Futures Association (NFA), the Federal Deposit Insurance Corporation (FDIC), other self-regulatory organizations (SROs) or jointly among these entities.4

FINRA administers qualification examinations via computer through the PROCTOR® system5 at test centers operated by vendors under contract with FINRA. FINRA charges an examination fee to candidates for FINRA-sponsored and co-sponsored examinations. For qualification examinations sponsored by a FINRA client and administered/delivered by FINRA, FINRA charges a delivery fee that represents either a portion of or the entire examination fee for a particular examination.6

Each year, FINRA conducts a comprehensive review of the examination fee structure, including an analysis of the costs of developing, administering and delivering qualification examinations. FINRA's 2008 review revealed that certain operational costs have increased and will continue to increase over the next few years. In particular, these costs consist of: (1) the cost of providing the extensive network of test delivery centers; and (2) technology costs required to maintain the PROCTOR® system. As a result of these rising costs, FINRA has proposed to increase certain qualification examination fees, effective January 2, 2009 (pending SEC approval), with no single examination increasing more than $20.

Specifically, examination fees would be increased as follows:

Series Examination Title Current Fee Proposed Fee
Series 4 Registered Options Principal (Sponsored jointly by NYSE Alternext, CBOE, FINRA, NYSE Arca and Phlx) $80 $90
Series 6 Investment Company Products/Variable Contracts Representative $75 $85
Series 7 General Securities Representative $250 $265
Series 9 General Securities Sales Supervisor—Options Module (Sponsored jointly by NYSE Alternext, CBOE, FINRA, MSRB, NYSE Arca and Phlx) $60 $70
Series 10 General Securities Sales Supervisor—General Module (Sponsored jointly by NYSE Alternext, CBOE, FINRA, MSRB, NYSE Arca and Phlx) $100 $110
Series 11 Assistant Representative—Order Processing $60 $70
Series 14 Compliance Official $300 $320
Series 16 Supervisory Analyst $200 $210
Series 17 Limited Registered Representative $65 $70
Series 22 Direct Participation Programs Representative $75 $85
Series 23 General Securities Principal Sales Supervisor Module $75 $85
Series 24 General Securities Principal $95 $105
Series 26 Investment Company Products/Variable Contracts Principal $75 $85
Series 27 Financial and Operations Principal $95 $105
Series 28 Introducing Broker-Dealer Financial and Operations Principal $75 $85
Series 37 Canada Module of S7 (Options Required) $150 $160
Series 38 Canada Module of S7 (No Options Required) $150 $160
Series 39 Direct Participation Programs Principal $75 $80
Series 42 Registered Options Representative $60 $65
Series 55 Limited Representative-Equity Trader $85 $95
Series 62 Corporate Securities Limited Representative $75 $80
Series 72 Government Securities Representative $85 $95
Series 82 Limited Representative—Private Securities Offering $75 $80
Series 86 Research Analyst—Analysis $150 $160
Series 87 Research Analyst—Regulatory $105 $115

The new fees would apply to persons who register for one of these examinations beginning on January 2, 2009. Specifically, the fees would apply for "120-day examination windows" opened in the CRD® on or after January 2, 2009.


1 Pending approval by the Securities and Exchange Commission (SEC).

2 See SR-FINRA-2008-053.

3 Schedule A sets forth examination fees for those examinations that are sponsored or co-sponsored by FINRA and/or that may be required by FINRA for its members.

4 For example, FINRA administers and delivers the Series 6, 24 and 27 examinations, which are sponsored by FINRA. FINRA also administers and delivers client-sponsored examinations, such as the Series 9 and 10, which are sponsored jointly by several SROs (NYSE Alternext US LLC (NYSE Alternext) (formerly American Stock Exchange), Chicago Board Options Exchange (CBOE), MSRB, FINRA, NYSE Arca, Inc. (NYSE Arca) (formerly Pacific Stock Exchange, Inc.) and NASDAQ OMX PHLX, Inc. (Phlx) (formerly Philadelphia Stock Exchange)).

5 PROCTOR® is a technology system that supports computer-based testing and training.

6 FINRA administers and delivers examinations sponsored by NASAA, MSRB, NYSE Alternext, NFA and NYSE Arca that, while not required by FINRA rules, are taken by persons associated with FINRA members to obtain certain licenses. Fees for the following examinations developed by these sponsors will also be adjusted effective January 2, 2009, as follows:

•  MSRB—Series 51 (Municipal Fund Securities Limited Principal), from $75 to $85; Series 52 (Municipal Securities Representative), from $80 to $95; Series 53 (Municipal Securities Principal), from $80 to $95.
•  NASAA—Series 63 (Uniform Securities Agent State Law Exam), from $82 to $96; Series 65 (Uniform Combined State Law Exam), from $120 to $135; Series 66 (Investment Advisors Law Exam), from $113 to $128.
•  NFA—Series 3 (National Commodities Futures), from $95 to $105; Series 30 (Branch Managers Examination—Futures), from $60 to $70; Series 31 (Futures Managed Funds Exam), from $60 to $70; Series 32 (Limited Futures Exam—Regulations), from $60 to $70.
•  NYSE Alternext—Series 5 (Interest Rate Options), from $60 to $65.
•  NYSE Arca—Series 44 (Market Maker Authorized Traders Examination), from $88 to $100; Series 45 (Pacific Exchange Floor Broker/Market Maker), from $105 to $115.

Attachment A

Below is the text of the proposed rule change. Proposed new language is underlined; proposed deletions are in brackets.

* * * * *

Schedule A to the By-Laws of the Corporation

* * * * *

Section 4—Fees

(a) and (b) No change
(c) The following fees shall be assessed to each individual who registers to take an examination as described below. These fees are in addition to the registration fee described in paragraph (b).

Series 4 Registered Options Principal [$80] $90
Series 6 Investment Company Products/Variable Contracts Representative [$75] $85
Series 7 General Securities Representative [$250] $265
Series 9 General Securities Sales Supervisor—Options Module [$60] $70
Series 10 General Securities Sales Supervisor—General Module [$100] $110
Series 11 Assistant Representative—Order Processing [$60] $70
Series 14 Compliance Official [$300] $320
Series 16 Supervisory Analyst [$200] $210
Series 17 Limited Registered Representative [$65] $70
Series 22 Direct Participation Programs Representative [$75] $85
Series 23 General Securities Principal Sales Supervisor Module [$75] $85
Series 24 General Securities Principal [$95] $105
Series 26 Investment Company Products/Variable Contracts Principal [$75] $85
Series 27 Financial and Operations Principal [$95] $105
Series 28 Introducing Broker[/]-Dealer Financial and Operations Principal [$75] $85
Series 37 Canada Module of S7 (Options Required) [$150] $160
Series 38 Canada Module of S7 (No Options Required) [$150] $160
Series 39 Direct Participation Programs Principal [$75] $80
Series 42 Registered Options Representative [$60] $65
Series 55 Limited Representative—Equity Trader [$85] $95
Series 62 Corporate Securities Limited Representative [$75] $80
Series 72 Government Securities Representative [$85] $95
Series 82 Limited Representative—Private Securities Offering [$75] $80
Series 86 Research Analyst—Analysis [$150] $160
Series 87 Research Analyst—Regulatory [$105] $115
(1) through (3) No change
(d) through (h) No change

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