View Whole SectionText only Print Print Manager Link
Previous Next

Rule 345 Employees — Registration, Approval, Records

(a) REGISTRATION
/01 Exceptions

Registration is not required for personnel performing the mechanical function of recording an order and passing it along the usual communication channels, telephoning reports of executions or reading quotations when the person handling the account is unavailable. This interpretation does not include registered trainees or transfers awaiting Exchange approval. It is restricted to employees who:
•   Are deemed capable and qualified by a member organization or allied member for these responsibilities.
•   Are specifically authorized to accept orders.
•   Are familiar with the normal size of orders in the account.
•   Are closely supervised by the person servicing the account.

(Also see Rule 10/01, page 2910)
/02 "Independent Contractors"

The establishment of "independent contractor" status between a natural person registered with and qualified by the Exchange and a member organization is permitted only if it does not in any way compromise such person's characterization and treatment as an "employee" of their associated member organization for purposes of the Rules of the Exchange. Though not an exhaustive list, the following regulatory requirements must be fulfilled by a member organization that enters into an arrangement with any person asserting independent contractor status:
1. The member organization must directly supervise and control all activities effected on its behalf by independent contractors to the same degree and extent that it is required to regulate the activities of all other persons registered with such member organization, consistent with Rule 342 and all other applicable Exchange rules, for example:
a) The member organization must ensure that any dual employment arrangement involving an independent contractor complies with Exchange Rule 346.
b) The member organization must ensure that: the independent contractor is covered by the organization's fidelity insurance bond; such person is not subject to a "statutory disqualification" (as defined in Section 3(a)(39) of the Securities Exchange Act of 1934); and that he or she is in compliance with applicable state Blue Sky provisions.
c) The member organization must ensure that notification of the initiation and cessation of independent contractor status and other required amendments be appropriately evidenced on Form U4 or Form U5, as applicable.
2. The member organizations must obtain the written concurrence of each individual asserting independent contractor status that he or she will be subject to the direct, detailed supervision, control and discipline of the member organization, and will be bound by the relevant rules, standards and guidelines of the member organization. Further, the prospective independent contractor must attest that he or she will be deemed an employee of the member organization and, as such, will be fully subject to the jurisdiction of the Exchange. The Exchange is a third-party beneficiary of any such attestation. The "Consent to Jurisdiction" form, included below, must be used for this purpose.

"Consent to Jurisdiction" forms executed pursuant to this Interpretation are not required to be submitted to, or approved by, the Exchange. However, all such forms must be maintained together with the corresponding executed independent contractor agreement and must be promptly provided to the Exchange upon request.

This Interpretation does not permit the incorporation of registered representatives nor does it permit the assertion of independent contractor status by any principal executive of a member organization.

CONSENT TO JURISDICTION

In consideration of my application as a "registered person" associated with ______________________________, I agree that:
(a) I am and shall remain subject to the direct, detailed supervision, control and discipline of _____________________ with respect to any and all activities engaged in by me related to the securities business, and any other business engaged in by _____________________, and agree to be bound by the relevant, rules, standards and guidelines of _____________________ regarding duties and responsibilities governing my conduct.
(b) For all purposes of the Rules of New York Stock Exchange LLC (the "Exchange") I shall be deemed to be an employee of ____________________________ . I am and shall remain fully subject to the jurisdiction of the Exchange and to the Rules of the Exchange presently obtaining or as they shall from time to time be amended, including, but not by way of limitation, all penalties, prohibitions or limitations provided for therein, as they apply to an "employee" of a member organization of the Exchange, and I shall at all times conduct myself in accordance with said Rules.
_______________________________

Date

_______________________________

Signature of Employee

_______________________________

Name of Employee

_______________________________

Social Security Number

_________________________

Full Name of Member Organization and Address of Branch Office
/03 Registered Persons Who Volunteer or Are Called to Active Military Duty

The Exchange will grant specific relief to registered employees of member organizations who volunteer or are called into active military duty. Such registered employees will be placed in a specifically designated "inactive" status upon notification to the Exchange of their volunteering or military call-up. However, such employees will remain registered with the Exchange, and, therefore are eligible to receive transaction-based compensation. Since such employees are "inactive," they may not perform any of the duties performed by a registered representative. However, his or her member organization may make arrangements with another registered representative of the member organization to have the accounts of such registered person serviced and to provide for a sharing of the commissions such accounts generate.

Further, member organizations shall be waived from remitting to the Exchange the annual maintenance fees for such registered employees as prescribed in Rule 345.14.

Such registered employees who volunteer or are called into active military duty shall receive a deferment from the Regulatory Element and Firm Element of the Continuing Education Program as prescribed in Exchange Rule 345A. Continuing Education requirements will be reinstated upon the registered person's return from active military duty.

Dual member organizations of the NYSE and NASD should notify the NASD of their registered employees who volunteer or are called into active military duty by mailing or faxing to the CRD/Public Disclosure Department of the NASD a letter (on firm letterhead) identifying the name and CRD number of the registered person called into active duty, the name and CRD number of the firm, or firms, with whom such person is associated, and a copy of the official call-up notification.

NYSE-only member organizations should notify the Exchange of their registered employees who volunteer or are called into active duty by mailing or faxing to the Exchange's Qualifications and Registrations Department, a letter (on firm letterhead) identifying the name and CRD number of person(s) who volunteer or are called into active duty, the name and CRD number of the firm, or firms, with whom such person is associated, and a copy of the official call-up notification.
(b) OFFICERS
/01 Application

All persons having titles that imply authority and responsibility over sales personnel must be qualified as supervisory persons. See Rule 342.13/01.
/02 Officers of Division within Member Organizations

See Rule 311(h)/02
/03 Officers of Partnerships

The Exchange does not object to member partnerships designating certain employees as officers, provided the title makes clear the employee's status by defining the specific area of responsibility, e.g., Vice President, Research Department.
/04 Persons Previously Approved in Other Capacities

Applicants applying for officer status (See also Rule 345(b)) who are currently registered with the Exchange through the Central Registration Depository ("CRD") in another capacity, will be required to file only page 1 of Form U4 by checking the "officer" box under the "Registration Category" section of the form. The CRD will process this information and post it to the CRD record.
.11 Reserved.
.12 APPLICATIONS
/01 Updating Form U4

Information contained on Form U4 must be kept current. Instructions on Form U4 require that a registered person ensure that the information contained in Form U4 is updated and amended as necessary. In this regard, member organizations have an obligation to ensure that amended forms are submitted to the Exchange in a timely manner.
.15 QUALIFICATIONS
/01 Examination Waivers

Where good cause is shown, the examination requirement for a candidate for registration may be waived at the discretion of the Exchange. The Exchange will review requests for waivers in light of several factors including length and type of previous employment and the requirements of other self- regulatory organizations.

In addition, registered representative candidates who meet one of the following conditions may request a waiver of the examination requirements.
•   A former NYSE registered representative who terminated his or her association as such within the last two years, from the date of termination.
•   A former NYSE registered representative who within the last ten years has been continuously employed full-time in a general securities business.
/02 Categories of Registration

Registered representative candidates may sit for the Series 7 exam at the first available examination session after they have become employed. Member organizations are reminded that trainees may not perform the functions of a registered representative until approved by the Exchange. (Also see Rule 345(a)/01, page 3450.)

Limited registration candidates are those whose activities are limited solely to the solicitation or handling of the sale or purchase of instruments such as investment company securities and variable contracts, insurance premium funding programs, direct participation programs and municipal securities. Limited purpose registered representative candidates must qualify by passing a qualification examination acceptable to the Exchange.

Limited registration for floor members and floor clerks would permit floor members and floor clerks who have successfully completed the Series 7A examination module to conduct a public business which is limited to accepting orders directly from professional customers for execution on the trading floor. The Floor Member ("Series 15") Examination and the Trading Assistant ("Series 25") Examination are prerequisites for the Series 7A Examination for floor members and floor clerks, respectively.

A professional customer includes a bank, trust company, insurance company, investment trust, state or political subdivision thereof, charitable or nonprofit educational institution regulated under the laws of the United States, or any state, or pension or profit sharing plan subject to ERISA or of an agency of the United States or of a state or political subdivision thereof or any person who has a net worth of at least $45 million of which $40 million are financial assets.

For purposes of the definition of professional customer, the term "person" shall mean the same as that term is defined in Rule 2, except that it shall not include natural persons.

Registered options representative: Each registered representative who transacts any business with the public in options contracts shall qualify as a "Registered Options Representative" by passing the Series 7 examination.

Securities lending representatives and their direct supervisors are not subject to training or examination requirements. Securities lending representatives and their direct supervisors must, however, file a Form U4 and sign a code of ethics agreement (addendum to Form U4).

See Rule 345.10 for definitions of the term "securities lending representative."
.18 FILING WITH AGENT
/01 Properly Authorized Agent

The "Properly Authorized Agent" is the Central Registration Depository ("CRD") until otherwise noted. Required filings under this Rule 345, where appropriate, may be made with the properly authorized agent.


Amendments.
Amended by SR-FINRA-2014-037 eff. Aug. 24, 2015.
Amended by SR-FINRA-2014-038 eff. July 1, 2015.
Amended by SR-FINRA-2008-036 eff. Nov. 11, 2008.

Selected Notices: 08-64, 15-07.

Previous Next