The U.S. Financial Industry Regulatory Authority is proposing to impose registration requirements on back-office personnel.

FINRA issued a regulatory notice Wednesday soliciting comments on a rule proposal designed to enhance oversight of broker-dealers’ back-office operations by expanding registration to individuals engaging in, or supervising, activities related to sales and trading support, and handling of customer assets.

Traditionally, registration requirements have applied to individuals who provide advice and execute transactions, such as brokers and traders. The new proposal would extend registration, testing and continuing education requirements beyond the frontline sales force to certain operations staff who support broker-dealers’ businesses.

The sorts of brokerage employees who may be required to register under the new proposal include individuals responsible for the development and approval of valuation models; employees who manage trade confirmations, account statements, trade settlement and margin; or employees who oversee stock loan/securities lending, prime brokerage, receipt and delivery of securities, and/or financial regulatory reporting.

FINRA says that the U.S. Securities and Exchange Commission, which must approve the change, has previously indicated support for establishing a qualification exam for back-office staff. The proposed exam for the new registration category would be composed of three segments: professional conduct and ethics, essential product and market knowledge, and knowledge associated with operational activities. It would test for general securities industry knowledge and awareness of the fact that the securities industry is heavily regulated.

The continuing education components of the new registration category would provide competency training specific to the work performed by operations staff.

IE