Resources/ Updates


SEC Approves FINRA Proposal to Slim Down Broker-Dealer Rep Testing

On July 7, 2017, the SEC approved a FINRA rule proposing amendments to the qualification and registration requirements for associated persons to broker-dealers. Once in effect, FINRA Rule 1210 will “streamline competency exams” and make it easier for professionals to enter or re-enter the securities industry.

Key Changes to the Qualification Exam Program

When FINRA Rule 1210 becomes effective, it will restructure the representation-level qualification examination program by:

  • Expanding the pool of applicants:
    • Individuals not affiliated with a broker-dealer and with no prior securities industry experience (the general public) will be eligible to register via a beginner exam.
    • All new registrants will take a new general knowledge examination, the Securities Industry Essentials (SIE).
    • But to be associated with a FINRA member firm, new registrants must also take a higher level qualification exam associated with a specialized function and be sponsored by that firm.
    • An SIE qualifying exam will be valid for 4 years without a firm affiliation.
    • Representative/principal level exams will still expire in 2 years.
  • Shrinking exams and levels:
    • The preliminary knowledge tested under the SIE will no longer be included in the higher level exams.  And FINRA will consolidate and eliminate certain specialized exams.
  • Simplifying permissive registration:
    • Rule 1210 will enable any employee of a FINRA member firm to take any registration and specialty exams and thus become licensed in any capacity.
  • Revising the continuing education (“CE”) requirements:
    • “FINRA states that individuals who have passed the SIE but not a representative- or principal-level exam and do not hold a registered position would not be subject to any CE requirements.”
  • Establishing an exam waiver process for persons working for a financial services affiliate:
    • Individuals will be able to return to a broker-dealer within 7 years (not 2 years) without re-testing but only if the Regulatory Element of Continuing Ed is current and other criteria is met.
  • Consolidating certain NASD rules and NYSE rules into the FINRA Rulebook.

What’s Next:

Now that the SEC has approved FINRA’s proposed rule change , FINRA is expected to announce an effective date within 18 months.

Related Documents

SEC Order Approving Proposed Rule to Adopt Consolidated Registration Rules – July 7, 2017

SEC Notice of Filing of a Proposed Rule Change to Adopt Consolidated FINRA Registration Rules ~ April 4, 2017

SDDCO Post: Will FINRA Slim Down Broker-Dealer Qualifying Reqs? – March 18, 2017


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