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Oct 17 2011 - Sep 30 2018Oct 1 2018 onwards

1230. Registration Categories

This version is valid from Oct 17 2011 through Sep 30 2018.
Amendments have been announced but are not yet effective. To view other versions open the versions tab on the right.

(a) Definition of Principal and Principal Registration Categories
(1) through (11) Reserved.
(b) Definition of Representative and Representative Registration Categories
(1) through (5) Reserved.
(6) Operations Professional
(A) Covered Persons
Each of the following persons shall be required to register with FINRA as an Operations Professional:
(i) Senior management with direct responsibility over the covered functions in paragraph (b)(6)(B) of this Rule;
(ii) Any person designated by senior management specified in paragraph (b)(6)(A)(i) of this Rule as a supervisor, manager or other person responsible for approving or authorizing work, including work of other persons, in direct furtherance of each of the covered functions in paragraph (b)(6)(B) of this Rule, as applicable, provided that there is sufficient designation of such persons by senior management to address each of the applicable covered functions; and
(iii) Persons with the authority or discretion materially to commit a member's capital in direct furtherance of the covered functions in paragraph (b)(6)(B) of this Rule or to commit a member to any material contract or agreement (written or oral) in direct furtherance of the covered functions in paragraph (b)(6)(B) of this Rule.
(B) Covered Functions
(i) Client on-boarding (customer account data and document maintenance);
(ii) Collection, maintenance, re-investment (i.e., sweeps) and disbursement of funds;
(iii) Receipt and delivery of securities and funds, account transfers;
(iv) Bank, custody, depository and firm account management and reconciliation;
(v) Settlement, fail control, buy ins, segregation, possession and control;
(vi) Trade confirmation and account statements;
(vii) Margin;
(viii) Stock loan/securities lending;
(ix) Prime brokerage (services to other broker-dealers and financial institutions);
(x) Approval of pricing models used for valuations;
(xi) Financial control, including general ledger and treasury;
(xii) Contributing to the process of preparing and filing financial regulatory reports;
(xiii) Defining and approving business requirements for sales and trading systems and any other systems related to the covered functions, and validation that these systems meet such business requirements;
(xiv) Defining and approving business security requirements and policies for information technology, including, but not limited to, systems and data, in connection with the covered functions;
(xv) Defining and approving information entitlement policies in connection with the covered functions; and
(xvi) Posting entries to a member's books and records in connection with the covered functions to ensure integrity and compliance with the federal securities laws and regulations and FINRA rules.
(C) Qualification Examination
Subject to the exception in paragraph (b)(6)(D) of this Rule, any person who is required to register as an Operations Professional shall pass the Operations Professional qualification examination before such registration may become effective.
(D) Exception
(i) Any person who is registered with FINRA as an Investment Company Products/Variable Contracts Representative, General Securities Representative, United Kingdom Securities Representative or Canada Securities Representative, Registered Options Principal, General Securities Sales Supervisor, Compliance Officer, Supervisory Analyst, General Securities Principal, Investment Company Products/Variable Products Principal, Financial and Operations Principal, Introducing Broker-Dealer Financial and Operations Principal, Municipal Fund Securities Limited Principal or Municipal Securities Principal, and any person who has been registered in one of these categories within the two years immediately prior to registering as an Operations Professional, shall be qualified to register as an Operations Professional without passing the Operations Professional qualification examination, provided that such registration is not revoked pursuant to Rules 8310 or 8320, suspended or otherwise deemed inactive.
(ii) The staff may accept as an alternative to the Operations Professional qualification examination requirement in paragraph (b)(6)(C) of this Rule any domestic or foreign qualification if it determines that acceptance of such alternative qualification is consistent with the purposes of this Rule, the protection of investors, and the public interest.
(E) Implementation
(i) Any person who is required to register as an Operations Professional as of October 17, 2011 shall request registration as an Operations Professional via Form U4 in CRD within 60 days after October 17, 2011. Any person who is required to register as an Operations Professional as of October 17, 2011 and must pass the Operations Professional qualification examination (or an eligible qualification examination listed in paragraph (b)(6)(D) of this Rule) to qualify for Operations Professional registration shall be allowed a period of 12 months beginning on October 17, 2011 to pass such qualifying examination, during which time such person may function as an Operations Professional.
(ii) Any person who is required to register as an Operations Professional from October 18, 2011 through December 16, 2011 shall register as an Operations Professional and, if applicable, pass the Operations Professional qualification examination (or an eligible qualification examination listed in paragraph (b)(6)(D) of this Rule) prior to engaging in any activities that would require such registration; provided, however, any such person who must pass the Operations Professional qualification examination (or an eligible qualification examination listed in paragraph (b)(6)(D) of this Rule) to qualify for Operations Professional registration shall be allowed until April 14, 2012 to pass such qualifying examination, during which time such person may function as an Operations Professional.
(iii) Any person who is required to register as an Operations Professional on or after December 17, 2011 shall register as an Operations Professional and, if applicable, pass the Operations Professional qualification examination (or an eligible qualification examination listed in paragraph (b)(6)(D) of this Rule) prior to engaging in any activities that would require such registration; provided, however, any such person who must pass the Operations Professional qualification examination (or an eligible qualification examination listed in paragraph (b)(6)(D) of this Rule) to qualify for Operations Professional registration shall be allowed a period of 120 days beginning on the date such person requests Operations Professional registration to pass such qualifying examination, during which time such person may function as an Operations Professional.
(7) through (14) Reserved.

• • • Supplementary Material: --------------

.01 through .05 Reserved.

.06 Scope of Operations Professional Requirement. Any person whose activities are limited to performing a function ancillary to a covered function in paragraph (b)(6)(B) of this Rule, or whose function is to serve a role that can be viewed as supportive of or advisory to the performance of a covered function in paragraph (b)(6)(B) of this Rule (e.g., internal audit, legal or compliance personnel who review but do not have primary responsibility for any covered function), or who engages solely in clerical or ministerial activities in a covered function in paragraph (b)(6)(B) of this Rule shall not be required to register as an Operations Professional pursuant to paragraph (b)(6)(A) of this Rule. For the purpose of Rule 1230(b)(6)(A)(iii), the determination as to what constitutes “materially” or “material” is based on a member's pre-established spending guidelines and risk management policies.

An employee of a foreign broker-dealer whose activities, relating to a transaction in foreign securities on behalf of a customer of a member, are limited to facilitating the clearance and settlement of the transaction shall not be required to register as an Operations Professional pursuant to paragraph (b)(6)(A) of this Rule where:

(1) the member sending the order for a transaction in foreign securities on behalf of the customer to the foreign broker-dealer is not a direct participant of the applicable foreign clearing system; and
(2) in executing such order in the foreign market, the foreign broker-dealer accepts the member's customer's instructions to settle the transaction in foreign securities on a DVP/RVP basis through the foreign clearing system and settle directly with a custodian for the customer.

.07 Reserved.

Amended by SR-FINRA-2011-060 eff. Oct. 17, 2011.
Amended by SR-FINRA-2011-040 eff. Oct. 17, 2011.
Adopted by SR-FINRA-2011-013 eff. Oct. 17, 2011.

Selected Notice: 11-33.

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