Resources/ Updates


Will FINRA Slim Down Broker-Dealer Qualifying Reqs?

FINRA recently filed a proposal with the SEC to “streamline competency exams” and rules to make it easier for professionals to enter or re-enter the securities industry.

Per FINRA rules, individuals who work for a FINRA-regulated firm (member broker-dealers) in identified capacities must demonstrate their qualifications by passing specific “series” exams. To sit for a FINRA exam, individuals must be associated with a FINRA-regulated firm. “In 2016, FINRA had more than 90,000 representative-level exam candidates.”

Ironically, though FINRA’s goal is to slim down its exam requirements in the securities industry, its proposal to do so is 619 pages fat.

Main Proposal Goal

The overarching goal of Proposed FINRA Rule 1210 is to eliminate repetitious testing steps and other barriers toward obtaining and maintaining representative qualifications.

The proposal generally seeks to:

Let Licensed Reps Back in Longer: by establishing a waiver program for transitioning representatives in good FINRA standing who transfer to a financial services affiliate, then wish to return. Individuals could return to a broker-dealer  within 7 years instead of 2 years without resitting for a particular FINRA exam if continuing ed is kept up and other criteria of the waiver program is met.

Let More People into the Industry: by easing entry for non industry people—individuals with no prior securities industry experience (the general public)—via a new general knowledge exam, named the Securities Industry Essentials  or SIE.  Such persons would also be required to (a) pass a second more specialized knowledge exam, and (b) associate with and get sponsorship from a FINRA broker-dealer.

From the FINRA President

According to Robert W. Cook, FINRA president and CEO since August of 2016, “This new approach would give individuals seeking to enter the securities industry the opportunity to demonstrate a fundamental knowledge of regulatory requirements prior to joining a firm, potentially providing firms a larger pool of qualified candidates.

What’s Next?

The SEC staff will:

  • Review proposal for consistency with the Securities Exchange Act of 1934
  • Request changes or amendments to the proposal
  • Publish the proposal in the Federal Register with a 21-day comment period

Related Documents

FINRA Proposes Streamlining Competency Exams ~ Press Release ~ Mar 8, 2017

Proposed FINRA Rule Change Text:  to Adopt Consolidated FINRA Registration Rules, Restructure the Representative-level Qualification Examination program and Amend the Continuing Ed Reqs ~ Mar 8, 2017

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