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  • 1030. Registration of Representatives



    Cross References–

    IM-2420-2, Continuing Commissions Policy
    Rule 8311, Effect of Suspension, Revocation or Bar

    • 1031. Registration Requirements

      SR-FINRA-2017-007 has been approved by the SEC. Effective October 1, 2018, this rule will no longer be applicable. Please consult the appropriate FINRA rule.

      (a) All Representatives Must Be Registered
      All persons engaged or to be engaged in the investment banking or securities business of a member who are to function as representatives shall be registered as such with NASD in the category of registration appropriate to the function to be performed as specified in Rule 1032. Before their registration can become effective, they shall pass a Qualification Examination for Representatives appropriate to the category of registration as specified by the Board of Governors. A member shall not maintain a representative registration with NASD for any person (1) who is no longer active in the member's investment banking or securities business, (2) who is no longer functioning as a representative, or (3) where the sole purpose is to avoid the examination requirement prescribed in paragraph (c). A member shall not make application for the registration of any person as representative where there is no intent to employ such person in the member's investment banking or securities business. A member may, however, maintain or make application for the registration as a representative of a person who performs legal, compliance, internal audit, back-office operations, or similar responsibilities for the member, or a person who performs administrative support functions for registered personnel, or a person engaged in the investment banking or securities business of a foreign securities affiliate or subsidiary of the member.
      (b) Definition of Representative
      Persons associated with a member, including assistant officers other than principals, who are engaged in the investment banking or securities business for the member including the functions of supervision, solicitation or conduct of business in securities or who are engaged in the training of persons associated with a member for any of these functions are designated as representatives.
      (c) Requirement for Examination on Lapse of Registration
      Any person whose registration has been revoked pursuant to Rule 8310 or whose most recent registration as a representative or principal has been terminated for a period of two (2) or more years immediately preceding the date of receipt by the Association of a new application shall be required to pass a Qualification Examination for Representatives appropriate to the category of registration as specified in Rule 1032.

      Cross Reference–

      Rule 8311, Effect of Suspension, Revocation, or Bar

      Amended by SR-NASD-2003-24 eff. March 3, 2003.
      Amended by SR-NASD-89-53 eff. Aug. 28, 1990.
      Amended by SR-NASD-89-15 eff. June 8, 1989.
      Amended by SR-NASD-80-01 eff. June 26, 1980.

    • 1032. Categories of Representative Registration

      SR-FINRA-2017-007 has been approved by the SEC. Effective October 1, 2018, this rule will no longer be applicable. Please consult the appropriate FINRA rule.

      (a) General Securities Representative
      (1) Each person associated with a member who is included within the definition of a Representative in Rule 1031, shall be required to register with the Association as a General Securities Representative and shall pass an appropriate Qualification Examination before such registration may become effective unless his activities are so limited as to qualify him for one or more of the limited categories of representative registration specified hereafter. A person whose activities in the investment banking or securities business are so limited is not, however, precluded from attempting to become qualified for registration as a General Securities Representative, and if qualified, may become so registered.
      (2) Except as provided in Rule 1031(c):
      (A) A person who is registered with the Association as a General Securities Representative, or who becomes registered as a General Securities Representative, must complete a firm-element continuing education program that addresses security futures products before such person can act as a General Securities Representative with regard to security futures products.
      (B) A person who is authorized or approved to conduct business in accordance with the requirements of The Financial Services Authority and having passed the Modified General Securities Representative Qualification Examination shall be qualified to be registered as a General Securities Representative except that such person's activities in the investment banking or securities business may not involve the solicitation, purchase and/or sale of municipal securities as defined in Section 3(a)(29) of the Act.
      (C) A person presently registered and in good standing as a representative with any Canada stock exchange, or with a securities regulator of any Canadian Province or Territory, or with the Investment Dealers Association of Canada, and who has completed the training course of the Canadian Securities Institute, and who has passed the Canada Module of the General Securities Registered Representative Examination, shall be qualified to be registered as a General Securities Representative except that such person's activities may not involve the solicitation, purchase and/or sale of municipal securities as defined in Section 3(a)(29) of the Act.
      (D) A person presently registered and in good standing as a representative with any Japan stock exchange, or with any Japan Securities Dealers Association, and who has passed the Japan Module of the General Securities Registered Representative Examination, shall be qualified to be registered as a General Securities Representative except that such person's activities may not involve the solicitation, purchase and/or sale of municipal securities as defined in Section 3(a)(29) of the Act.
      (3) A person registered as a General Securities Representative shall not be qualified to function as a Registered Options and Security Futures Representative unless he or she is also qualified and registered as such pursuant to the provisions of paragraph (d).
      (b) Limited Representative—Investment Company and Variable Contracts Products
      (1) Each person associated with a member who is included within the definition of a representative in Rule 1031 may register with the Association as a Limited Representative—Investment Company and Variable Contracts Products if:
      (A) his activities in the investment banking or securities business are limited solely to those activities enumerated in Rule 1022(d)(1), and
      (B) he passes an appropriate Qualification Examination for Limited Representative—Investment Company and Variable Contracts Products.
      (2) A person qualified solely as a Limited Representative—Investment Company and Variable Contracts Products shall not be qualified to function as a representative in any area not described in paragraph (b)(1)(A) hereof.
      (c) Limited Representative—Direct Participation Programs
      (1) Each person associated with a member who is included within the definition of a representative in Rule 1031 may register with the Association as a Limited Representative—Direct Participation Programs if:
      (A) his activities in the investment banking or securities business are limited solely to the solicitation, purchase and/or sale of equity interests in or debt of direct participation programs as defined in Rule 1022(e)(2), and
      (B) he passes an appropriate Qualification Examination for Limited Representative—Direct Participation Programs.
      (2) A person qualified solely as a Limited Representative—Direct Participation Programs shall not be qualified to function in any area not described in subparagraph (1) hereof.
      (d) Limited Representative—Options and Security Futures
      (1) Each person associated with a member who is included within the definition of a representative as defined in Rule 1031 may register with the Association as a Limited Representative—Options and Security Futures if:
      (A) such person's activities in the investment banking or securities business of the member involve the solicitation or sale of option or security futures contracts, including option contracts on government securities as that term is defined in Section 3(a)(42)(D) of the Act, for the account of a broker, dealer or public customer; and
      (B) such person passes an appropriate qualification examination for Limited Representative—Options and Security Futures.
      (2) Each person seeking to register and qualify as a Limited Representative—Options and Security Futures must, concurrent with or before such registration may become effective, become registered pursuant to the Rule 1032 Series, either as a Limited Representative—Corporate Securities or Limited Representative—Government Securities.
      (3) A person registered as a Limited Representative—Options and Security Futures shall not be qualified to function in any area not described in subparagraph (1)(A) hereof.
      (4) Any person who is registered with the Association as a Limited Representative—Options and Security Futures, or who becomes registered as a Limited Representative—Options and Security Futures, must complete a firm-element continuing education program that addresses security futures before such person can act as a Limited Representative—Options and Security Futures with regard to security futures products.
      (e) Limited Representative—Corporate Securities
      (1) Each person associated with a member who is included within the definition of a representative in Rule 1031 may register with the Association as a Limited Representative—Corporate Securities if:
      (A) Such person's activities in the investment banking or securities business involve the solicitation, purchase, and/or sale of a "security," as that term is defined in Section 3(a)(10) of the Act, and do not include such activities with respect to the following securities unless such person is separately qualified and registered in the category or categories of registration related to these securities:
      (i) Municipal securities as defined in Section 3(a)(29) of the Act;
      (ii) Option securities as defined in Rule 2860;
      (iii) Redeemable securities of companies registered pursuant to the Investment Company Act of 1940, except for money market funds;
      (iv) Variable contracts of insurance companies registered pursuant to the Securities Act of 1933; and/or
      (v) Direct Participation Programs as defined in Rule 1022(e)(1)(A).
      (B) Such person passes an appropriate qualification examination for Limited Representative—Corporate Securities.
      (2) A person qualified solely as a Limited Representative—Corporate Securities shall not be qualified to function in any area not prescribed by subparagraph (1) hereof.
      (f) Securities Trader
      (1) Each person associated with a member must register with the Association as a Securities Trader if such person is:
      (A) included within the definition of representative, as defined in Rule 1031 and, with respect to transactions in equity, preferred or convertible debt securities effected otherwise than on a securities exchange, such person is engaged in proprietary trading, the execution of transactions on an agency basis, or the direct supervision of such activities, other than any person associated with a member whose trading activities are conducted principally on behalf of an investment company that is registered with the Commission pursuant to the Investment Company Act of 1940 and that controls, is controlled by or is under common control, with the member; or
      (B) (i) primarily responsible for the design, development or significant modification of an algorithmic trading strategy relating to equity, preferred or convertible debt securities; or (ii) responsible for the day-to-day supervision or direction of such activities. An "algorithmic trading strategy" is an automated system that generates or routes orders (or order-related messages) but shall not include an automated system that solely routes orders received in their entirety to a market center.
      (2) Before registration as a Securities Trader as defined in subparagraph (1) hereof may become effective, an applicant must . . . pass the Securities Trader qualification examination.
      (3) A person registered as a Securities Trader shall not be qualified to function in any other registration category, unless he or she is also qualified and registered in such other registration category.
      (g) Limited Representative—Government Securities
      (1) Each person associated with a member who is included within the definition of a representative as defined in Rule 1031 may register with the Association as a Limited Representative—Government Securities if:
      (A) such person's activities in the investment banking or securities business involve the solicitation, purchase or sale of "government securities," as that term is defined in Section 3(a)(42)(A) through (C) of the Act, for the account of a broker, dealer or public customer, and
      (B) such person passes an appropriate qualification examination for Limited Representative—Government Securities.
      (2) A person registered solely as a Limited Representative—Government Securities shall not be qualified to function in any area not described in subparagraph (1)(A) hereof.
      (h) Limited Representative—Private Securities Offerings
      (1) Each person associated with a member who is included within the definition of a representative as defined in Rule 1031 may register with the Association as a Limited Representative—Private Securities Offerings if:
      (A) such person's activities in the investment banking and securities business involve effecting sales as part of a primary offering of securities not involving a public offering, pursuant to Section 3(b), 4(2) or 4(6) of the Securities Act of 1933 and the rules and regulations thereunder, provided, however, that such person shall not effect sales of municipal or government securities, or equity interests in or the debt of direct participation programs as defined in Rule 1022(e)(2); and
      (B) subject to subparagraph (2) hereof, such person passes an appropriate qualification examination for Limited Representative—Private Securities Offerings.
      (2) The Association shall, upon such evidence as the Association determines to be appropriate, deem any person who while employed by a bank, engaged in effecting sales of private securities offerings as described in subparagraph (1)(A) hereof, during the period from May 12, 1999 to November 12, 1999, as qualified to register as a Limited Representative—Private Securities Offerings without the need to pass the qualification examination required by subparagraph (1)(B) hereof.
      (3) A person registered as a Limited Representative—Private Securities Offerings shall not be qualified to function in any area not described in subparagraph (1)(A) hereof.
      (i) Limited Representative—Investment Banking
      (1) Each person associated with a member who is included within the definition of a representative as defined in NASD Rule 1031 shall be required to register with FINRA as a Limited Representative—Investment Banking and pass a qualification examination as specified by the Board of Governors if such person's activities involve:
      (A) advising on or facilitating debt or equity securities offerings through a private placement or a public offering, including but not limited to origination, underwriting, marketing, structuring, syndication, and pricing of such securities and managing the allocation and stabilization activities of such offerings, or
      (B) advising on or facilitating mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions, including but not limited to rendering a fairness, solvency or similar opinion.
      (2) Notwithstanding the foregoing, an associated person shall not be required to register as a Limited Representative—Investment Banking if such person's activities described in paragraph (i)(1) are limited to:
      (A) advising on or facilitating the placement of direct participation program securities as defined in NASD Rule 1022(e)(2);
      (B) effecting private securities offerings as defined in paragraph (h)(1)(A); or
      (C) retail or institutional sales and trading activities.
      (3) An associated person who participates in a new employee training program conducted by a member shall not be required to register as a Limited Representative—Investment Banking for a period of up to six months from the time the associated person first engages within the program in activities described in paragraphs (i)(1)(A) or (B), but in no event more than two years after commencing participation in the training program. This exception is conditioned upon the member maintaining records that:
      (A) evidence the existence and details of the training program, including but not limited to its scope, length, eligible participants and administrator; and
      (B) identify those participants whose activities otherwise would require registration as a Limited Representative—Investment Banking and the date on which each participant commenced such activities.
      (4) Any person qualified solely as a Limited Representative—Investment Banking shall not be qualified to function in any area not described in paragraph (i)(1) hereof, unless such person is separately qualified and registered in the appropriate category or categories of registration.
      (5) Any person who was registered with FINRA as a Limited Representative—Corporate Securities or General Securities Representative (including persons who passed the UK (Series 17) or Canada (Series 37/38) Modules of the Series 7) prior to November 2, 2009, shall be qualified to be registered as a Limited Representative—Investment Banking without first passing the qualification examination set forth in paragraph (i)(1), provided that such person requests registration as a Limited Representative—Investment Banking within the time period prescribed by FINRA.
      Amended by SR-FINRA-2016-007 eff. Jan. 30, 2017.
      Amended by SR-FINRA-2015-017 eff. Jan. 4, 2016.
      Amended by SR-FINRA-2015-052 eff. Dec. 31, 2015.
      Amended by SR-FINRA-2012-055 eff. Dec. 31, 2012.
      Amended by SR-FINRA-2009-092 eff. Dec. 31, 2009.
      Amended by SR-FINRA-2009-006 eff. Nov. 2, 2009.
      Amended by SR-NASD-2006-118 eff. Nov. 15, 2006.
      Amended by SR-NASD-2003-24 eff. March 3, 2003.
      Amended by SR-NASD-2002-40 eff. Oct. 15, 2002.
      Amended by SR-NASD-2000-69 eff. May 12, 2001.
      Amended by SR-NASD-2000-25 eff. April 26, 2000.
      Amended by SR-NASD-98-43 eff. June 12, 1998.
      Amended by SR-NASD-97-23 eff. April 1, 1998.
      Amended by SR-NASD-97-21 eff. April 1, 1998.
      Amended by SR-NASD-96-13 eff. Apr. 12, 1996.
      Amended by SR-NASD-96-04 eff. Feb. 9, 1996.
      Amended by SR-NASD-91-65 eff. Mar. 4, 1992.
      Amended by SR-NASD-90-46 eff. Aug. 28, 1990.
      Amended by SR-NASD-88-27 eff. Aug. 25, 1988.
      Amended by SR-NASD-80-01 eff. June 26, 1980.

      Selected Notices: 87-76, 88-38, 88-49, 88-50, 89-49, 89-78, 90-69, 92-20, 96-26, 00-27, 01-39, 03-20, 06-63, 09-41, 15-45, 16-21.