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