While not every job on Wall Street requires a license, many of the positions do have a licensing requirement.
There are many different licenses offered but it's most important to know that an individual cannot apply for a license like they would a driver's license. In fact, you must first be employed by a securities firm that is a member of FINRA (Financial Industry Regulatory Authority, Inc.), be employed in a job that requires a license and qualify for testing to obtain that license.
The registration application requires information about the individual's prior employment and disciplinary history. FINRA prescribes two levels of qualification and registration:
- Registered representatives, generally sales personnel; and
- Principals, generally officers of the firm and other management personnel involved in the day-to-day operation of the firm's investment banking or securities business.
As part of the registration process, securities professionals must pass an examination administered by FINRA to demonstrate competence in the areas in which they will work. These mandatory qualification examinations cover a broad range of subjects on the markets, as well as the securities industry and its regulatory structure, ensuring a minimum level of understanding and expertise. The areas in which candidates are tested include federal securities laws; Securities and Exchange Commission and FINRA rules and regulations; securities products; the operation and interrelation of financial markets; economic theory and kinds of risk; corporate financing, accounting, and balance sheet analysis; portfolio theory and analysis; fair sales practices, including solicitation and presentation; types of customer accounts; and tax treatment of various investments.
FINRA also administers examinations for the securities industry regulators and the states to individuals seeking registration with securities firms.
Click here for more information about FINRA licensing requirements.
Continuing Education
On February 8, 1995 the Securities and Exchange Commission (SEC) approved rules that established a formal, two-part, industry-wide Continuing Education Program. The program became effective July 1, 1995, and is comprised of two components: Regulatory Element and Firm Element.
The Regulatory Element requires registered persons to complete a computer-based training program, which includes topics related to sales practices, customer communications, compliance, ethics, and other subjects pertinent to conducting a securities business.
The Firm Element requires the firms to provide ongoing training, tailored specifically to the products and services they provide. Such training must be reviewed and updated at least annually, and must also focus on supervisory training needs. Compliance with Regulatory Element and Firm Element requirements is evaluated as part of the on-site examinations that are conducted by SROs (self-regulatory organizations).
Click here to visit the Securities Industry Regulatory Council on Continuing Education (CE Council) for more information about continuing education in the securities industry.
If you are an established securities industry professional and are interested in learning more about your continuing education requirements, please visit your firm's training or compliance department to determine the continuing education you are required to obtain.
