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Regulation and Compliance > Federal Regulation > FINRA

FINRA proposes new rules for advisors' "back office" staff

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FINRA issued a Regulatory Notice Wednesday soliciting comments on a proposal to expand registration and continuing education requirements to broker-dealers’ support staff.

Currently, registration requirements apply only to advisors working directly with clients, or traders and their supervisors. The proposal seeks to include, among others, personnel responsible for customer account data and document maintenance; employees who manage trade confirmations, account statements, trade settlement and margin; and, employees responsible for financial regulatory reporting.” According to the Notice, these employees “play an integral role in the business of the firm, and their activities often have a meaningful connection to client funds, accounts and transactions.”

The proposal suggests a new qualification exam be established to ensure affected employees “understand their professional responsibilities,” and are able to identify red flags within their firm. This exam is not intended to test competency, but to test for general knowledge to “alert such persons that they are functioning in a heavily regulated industry.” FINRA identified three themes that would be part of the exam: professional conduct and ethical considerations; essential product and market knowledge; and knowledge associated with operations activities.

The proposal allows an exception for people with certain registrations, or who have held a registration within two years of registering as an “operations professional.” Advisors with a Series 6 or Series 7 license would be exempt. Series 65 license holders are not exempt under the proposal.

Comments can be sent to [email protected] or mailed to Marcia E. Asquith, Office of the Corporate Secretary, FINRA, 1735 K Street NW, Washington, D.C. 20006-1506. Comments must be received by July 12.


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