The Financial Industry Regulatory Authority, Inc.
(FINRA) has proposed a new limited representative
registration category for investment banking professionals doing
business in the United States. The rule (NASD Rule 1032(i)) also
prescribes the registration requirements for those who supervise
investment banking activities.
FINRA believes the creation of this new customized limited
registration category will result in enhanced investor protection
and member compliance. The proposed rule is also intended to allow
FINRA members to allocate their training resources more
Current Rule and Proposed New Category
Currently investment bankers who are registered representatives
of FINRA members must pass the broad General Securities
Representative (Series 7) Examination (or certain designated
equivalent examinations) unless the person's activities fall
within a more limited category of registration for which a more
targeted examination is prescribed.
The proposed rule creates the new representative registration
category of Limited Representative-Investment Banking
which applies to persons who carry out investment banking
activities, including those who work on equity and debt capital
markets and syndicate desks.
The proposed new category of registration includes persons whose
activities primarily involve advising on or facilitating:
debt or equity securities offerings through private placement
or public offering (including, but not limited to, origination,
underwriting, marketing, structuring, syndication, and pricing of
such securities and managing the allocation and stabilization of
such offerings); and
mergers and acquisitions, tender offers, financial
restructurings, asset sales, divestitures or other corporate
reorganizations or business combination transactions.
A specialized qualification exam will be developed by FINRA for
those individuals who perform only these activities and will
replace the Series 7 examination currently required.
The proposed registration category does not cover individuals
whose investment banking work is limited to public (municipal)
finance offerings, direct participation program offerings, or
effecting private securities offerings, as these activities are
included under other categories of registration.
SIX-MONTH OPT-IN PERIOD
Existing investment bankers who are already registered under the
current requirements (Series 7 registrants, or those who have
passed United Kingdom (Series 17) or Canada (Series 37/38) Modules
of the Series 7 examination, or those who hold an LR-Corporate
Securities (Series 62) registration) will not be required to write
the new examination, provided they "opt in" to the new
registration category within six months of the rule's effective
date. If they opt in, they will also continue to retain their
current registration. If a registrant does not opt in within the
six-month period and wishes to engage in the specified investment
banking activities described above, he or she must pass the new
Individuals who wish to act as a general principal for the
investment activities described above will be required to obtain
the Limited Representative-Investment Banking registration
(either by opting in as described above, or by passing the new
qualification examination) and must also pass the General
Securities, Principal Examination. Those wishing to act as general
principal for broader securities-related activities will still be
required to pass the relevant qualification examination.
A copy of the proposed rule can be accessed here. The changes will be implemented 90 days
following the effective date of a future proposed rule which will
establish the qualification examination for the new registration
About Ogilvy Renault
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