The Securities and Exchange Commission has approved the Financial Industry Regulatory Authority rules that (1) consolidate the National Association of Securities Dealers (NASD) and Incorporated New York Stock Exchange registration rules, as well as existing FINRA rules; (2) restructure the representative-level qualification examination requirements; and (3) amend continuing education requirements. The rules will become effective October 1, 2018.
While the new registration rules are similar to the NASD and Incorporated NYSE rules that they replace, there are a few substantive differences. For example, the new registration rules expand the ability for member firms to submit permissive registrations to FINRA such that any associated person of a member firm (including individuals working solely in clerical or ministerial capacities) may be permissibly registered. Individuals that are permissibly registered will be subject to all FINRA rules to the extent relevant to their activities. The new registration rules also establish a new program to waive requalification requirements for individuals who terminate their registrations as representatives or principals to go to work for a foreign or domestic financial services industry affiliate of a member firm (subject to certain conditions).
Furthermore, the new rules also require all member firms (including those currently exempt from the requirement of having a financial and operations principal or an introducing broker-dealer financial and operations principal) to designate a principal financial officer and a principal operations officer. Finally the new registration rules create three new principal registration categories (chief compliance officer, investment banking principal and private securities offerings principal) and eliminates several others (order processing assistant representative, UK securities representative, Canada securities representative, options representative, corporative securities representative, government securities representative and foreign associate).
FINRA has restructured representative-level examination requirements such that all applicants will be required to take both a general knowledge examination (called the Securities Industry Essentials or “SIE” exam) and a tailored, specialized knowledge examination related to their particular registered role. The restructuring seeks to eliminate duplicative testing.
FINRA’s Regulatory Notice can be found here.