News and updates are listed by order of date. If you require more clarification on updates, please call us on +44 (0)20 7379 0504 or email us at ask@wallacect.co.uk, please remember to include your name, number and course details:

New Series 99 Examination – Operations Professionals - Oct 2011

Series 79 – Limited Representative–Investment Banking - Dec 2009

NASD and the NYSE have merged their regulatory units - July 2007

FINRA has created a new category of registration - Operations Professionals - that will require Covered Persons to (a) pass a Qualification Examination and (b) satisfy the Regulatory Element and Firm Element requirements of Continuing Education. Operations Professionals are persons with decision-making authority and/or oversight responsibilities over operations functions.

FINRA has published the content outline for the Operations Professionals Regulatory Examination—Series 99. The examination consists of 100 questions. Students are allowed 2 hours and 30 minutes to answer those 100 questions, with 10 additional ungraded questions. Passing score is to be determined. The Number of Questions by Major Content Areas is as follows:

Section 1- Basic Knowledge Associated with the Securities Industry - 32 Questions
Section 2- Basic Knowledge Associated with Broker-Dealer Operations - 48 Questions Section 3- Professional Conduct and Ethical Considerations - 20 Questions

As noted in previous FINRA Releases, the examination will be offered starting October 17.

Covered Person
There are three levels of Covered Persons.

Level 1.
Senior management with responsibility over the covered functions (discussed next)

Level 2.
Supervisors, managers, or other persons responsible for approving work involving the covered function

Level 3.
Persons with the authority to commit the firm’s capital to carry out covered functions (e.g. committing the firm to a contract involving securities lending or borrowing activities)

Examples of the Covered Functions
Managing trade confirmations, account settlements, trade settlements, and margin, as well as overseeing stock loan/securities lending, prime brokerage, and/or financial regulatory reporting.

Not Covered
Persons who perform a covered function, but whose responsibilities are below Levels 1 to3, those in a role viewed as supportive or advisory, such as audit, legal, or compliance, and persons who are engaged solely in clerical or administrative activities in any of the covered functions. At this time, these persons would be exempt from registration.

Exemptions
Persons who hold the following principal-level registrations, or who have held such registrations within the two years immediately prior to registering as an Operations Professional, would be qualified to register without passing the Qualification Examination: Series 4, 9/10, 14, 16, 23, 24, 26, 27, 28, 51, and 53. Persons holding representative-level registration in Series 6, 7, 17, and Series 37 or 38 would also be qualified without passing the Exam.

FINRA has announced that the Series 79 Outline and Regulatory Notice are now available on the FINRA Web site www.finra.org (click here for further information - Series 79 Outline.pdf and Series 79 Notice.pdf). This new regulatory exam has been created specifically for investment banking professionals.

FINRA began administering the Examination on 2nd November 2009. As with all other FINRA Examinations, there is little or no guidance as to how topics are being tested other than the outline.

WCT’s Series 79 Training Manual and Practice Examinations will be available in December. The Manual will be in a printed format. The Practice Examinations will be available in an online format. We will be offering virtual classes starting in January, which will give you the opportunity to complete your reading before classes begin.

We strongly recommend the Virtual class, particularly if you have no prior experience with FINRA Examinations. We would also like to remind you of the opt-in provisions FINRA offers with the Series 79 Examination.
If you hold any one of the following registrations-Series 7, 17, 24, 37, 38, or 62, you do not need to sit for the Series 79 Examination provided you file the appropriate opt-in forms with FINRA.
You have until May 2 to take advantage of the opt-in provision. We offer training for all registrations. Please contact your compliance department or legal counsel for proper registration and the procedure for opting in.

Who May Be Subject To FINRA Requirements For Passing The Exam?
The rule requires all persons involved in investment banking or the securities business, who function as representatives of a member firm, to be registered in a category appropriate to the function they perform. Professionals engaged solely in investment banking and mergers and acquisitions have long questioned the requirement to pass the Series 7 General Securities Representative (or equivalent) Examination since it tests such areas as options, margin, variable annuities, and investment companies—topics considered irrelevant to the functions they perform.

According to FINRA, the new category “provides a more targeted assessment of the job functions” of investment banking activities. The rule defines investment banking activities as work performed by those “on the equity and debt capital markets and syndicate desks. More specifically, the proposed registration category would encompass those associated persons whose activities primarily involve:

1. 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

2. 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.”

The rule does “not cover individuals whose investment banking work is limited to public (municipal) finance offerings or direct participation program offerings. The proposed registration category further would not cover individuals whose investment banking work is limited to effecting private securities offerings.”

Grandfather Clause Anyone holding Series 7, 17 (Limited Registered Representative), 37/38 (Canada Module of the Series 7), or 62 (Corporate Securities Limited Representative) registration and engaged in investment banking activities will be grandfathered and, therefore, not required to pass the new qualification examination, provided they are designated and registered as investment banking professionals.

Now that the FINRA proposal has been approved by the SEC, those eligible will have until May 2, 2010 to “opt in to Limited Representative–Investment Banking registration.”
After that date, the examination is required. A qualified principal, i.e., Series 24 registered, who now supervises investment banking activities, also must opt in during the six-month period, or take the new IB Examination.
Two Important Provisions In order for candidates to take the new IB Examination, they must be “engaged in investment banking activities covered by the proposed rule change,” described previously in this brief. Also, associated persons of FINRA member firms are not eligible for the opt-in provision unless the member’s Form BD indicates that the firm engages in investment banking activities.

A person new to the securities industry, who is hired solely to perform IB functions, would be required only to pass the Limited Representative–Investment Banking examination.
However, if later that person’s responsibilities expand outside that area, another regulatory examination, e.g., Series 7, might be required. Correspondingly, a person who is Series 7 registered and moves into investment banking after the opt-in period, would be required to pass the IB examination.

Those who rotate through different business lines of a securities firm, for example investment banking, while undergoing training, may have a limited exemption from registration. Compliance or  your legal department will need to be consulted to determine what registration, if any, is required.

Effective July 30, 2007, the NASD and the NYSE have merged their regulatory units. The new name is the Financial Industry Regulatory Authority (FINRA). Click here for more details:

- As of the merger, an NASD member firm will become a FINRA member firm.

- As of the merger, a firm that is a member of both the NASD and NYSE will become a dually registered firm.

- There are no changes to the names or numbers of any of the licensing examinations.

- The NASD rules and Web site will be called the FINRA rules and Web site, but this will not have any impact on the exams or study materials.

- The NYSE rules will still exist, although there will be changes in the future.

- Dually registered firms will be subject to both rules.

Presently, all that has changed is the name. When the rulebooks are consolidated, or the study outlines change, WCT will change its study materials.

NASD and the NYSE have merged their regulatory units - July 30 2007