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A. If the rules exceed standards in those states, please explain why and specify the costs and benefits arising out of
the deviation.
Proposed amendments to R 451.4.9 and new R 451.4.30 would be consistent with the model rules published by
NASAA, and would create a voluntary program for individuals to participate in should they wish to extend the
validity of their qualifications examinations.
3. Identify any laws, rules, and other legal requirements that may duplicate, overlap, or conflict with the proposed
rules.
Proposed amendments to R 451.4.9 and new R 451.4.30 would not duplicate, overlap, or conflict with other rules, but
would complement FINRA’s MQP program for broker-dealer agents, and allow for investment adviser representatives
to have similar opportunities to extend examination validity should they choose to do so.
A. Explain how the rules have been coordinated, to the extent practicable, with other federal, state, and local laws
applicable to the same activity or subject matter. This section should include a discussion of the efforts undertaken
by the agency to avoid or minimize duplication.
The proposed rules are based on NASAA Model Rules and are designed to work in conjunction with FINRA’s MQP
program. Extensive coordination in the NASAA rule drafting process was undertaken to ensure the model rules
complemented rather than duplicated other requirements.
Purpose and Objectives of the Rule(s)
4. Identify the behavior and frequency of behavior that the proposed rules are designed to alter.
Proposed amendments to R 451.4.9 and new R 451.4.30 are intended to create a voluntary path for broker-dealer
agents and investment adviser representatives to extend the validity of their qualification examinations beyond the
current two-year limit, up to five years. Currently, if an agent or an investment adviser representative is not employed
by or associated with a broker-dealer firm (for agents) or an investment adviser firm (for investment adviser
representatives), then their examination expires after two years of being unemployed. In that case, the individual
would need to re-take the relevant qualification examination. Under the proposed rules, these individuals could
voluntarily enroll in an examination validity extension program and take continuing education courses relevant to the
appropriate registration category (or categories) and extend the validity of the examination for up to five years.
A. Estimate the change in the frequency of the targeted behavior expected from the proposed rules.
The NASAA model rules created for states to implement the examination validity extension programs are new, so it is
difficult to estimate the frequency with which individuals will elect to enroll in an examination validity extension
program. However, FINRA noted in an October 3, 2023 News Release that nearly 20,000 individuals nationwide had
enrolled in its MQP program that proposed amendments to R 451.4.9 would complement. Staff believes that the
examination validity extension programs would be widely used by agents and investment adviser representatives in
Michigan as well.
B. Describe the difference between current behavior/practice and desired behavior/practice.
Under current rules, qualification examinations expire two years after an individual leaves employment with a broker-
dealer or investment adviser firm. Under the proposed rules, individuals will be encouraged to maintain their
knowledge and skills in the securities industry while not employed by completing hours of continuing education. By
completing their continuing education and maintaining knowledge of the industry, they give themselves the option of
extending the validity of their qualification examination for up to five years after leaving employment with a firm.
C. What is the desired outcome?
The desired outcome of the proposed rules is to create an incentive for agents and investment adviser representatives to
maintain their knowledge and competency in the securities industry while not employed by a broker-dealer or
investment adviser firm. Doing so will ensure that when these individuals come back into the industry that they are
competent to provide their services to investors in Michigan. Extending validity of examinations also removes a barrier
to becoming employed when these individuals return to the industry, as they would not be required to retake
examinations they previously passed.
5. Identify the harm resulting from the behavior that the proposed rules are designed to alter and the likelihood
that the harm will occur in the absence of the rule.
MCL 24.245(3)