FINRA is asking the SEC to approve a streamlined testing process that would eliminate duplication and barriers.
The Financial Industry Regulatory Authority (FINRA) reports that it has filed a proposal with the SEC to “streamline competency exams and facilitate opportunities for professionals seeking to enter or re-enter the securities industry.”
Currently, “individuals who work for a FINRA-regulated firm in various capacities” are required by FINRA rules to pass specific exams. “These individuals must be associated with a FINRA-regulated firm to be eligible to take FINRA qualification exams,” according to FINRA.
Last year, FINRA reported that it had more than 90,000 representative-level exam candidates.
The new FINRA proposal is intended to “eliminate duplicative testing and barriers to demonstrating and maintaining qualifications,” the authority says, and would “make it easier for an individual with no prior securities industry experience whether an investor, a recent college graduate or a professional seeking a second career – to take a general knowledge exam … as an important first step to entering the industry.”
That general knowledge exam is called the “securities industry essentials” test, or SIE, FINRA notes, adding that those who “wish to enter the industry are also required to pass a second more specialized knowledge exam, and must be associated with and sponsored by a firm.”
Additionally, persons who “transfer to a financial services affiliate of a firm may qualify for a waiver that allows their credentials to be reinstated, should they return to the industry within a seven-year period and meet the requirements of this waiver program.”
The FINRA proposal’s specific requirements include the following:
- Registrants will take the SIE and then choose “tailored, specialized knowledge exams for their desired registered role,” thereby eliminating “duplicative testing of general securities knowledge on exams;”
- Persons not employed by a FINRA-regulated firm, “including members of the general public, may take the SIE. This change will provide individuals the flexibility to demonstrate their knowledge of the securities industry and its regulatory requirements before joining a FINRA-regulated firm, as is currently required;”
- Persons who are in “good standing who transfer to a financial services affiliate of a firm can return within seven years without re-taking their qualification exams, provided they complete securities industry continuing education and have no disclosable adverse events. Currently, if an individual is registered and transfers to a financial services affiliate for two or more years, the individual’s qualification expires and the individual must re-take an exam to be re-qualified.”
- Any person associated with a firm may “obtain and maintain any qualification and registration permitted by the firm. This change will allow registered personnel to demonstrate proficiency for new roles in a firm and help firms better manage unanticipated needs for registered personnel by allowing them to maintain a roster of registered employees available to meet those needs.”
FINRA officials point out that SEC staff will review its proposal and “may request changes or amendments to the proposal. The SEC then publishes the proposal for comment in the Federal Register.” In general, the comment period lasts for about three weeks after publication.
“This new approach would give individuals seeking to enter the securities industry the opportunity to demonstrate a fundamental knowledge of regulatory requirements prior to joining a firm, potentially providing firms a larger pool of qualified candidates,” FINRA President and CEO Robert W. Cook says in a statement. “It would also provide enhanced flexibility and efficiency in our qualifications programs, while maintaining important standards and investor protections.”
FTF News contacted the commission for a comment about FINRA’s proposal, asking, “For it? Against it?”
“Decline comment, thanks” was the succinct reply.
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