New Executive Regulatory Titles for FinOps

Effective October 1, 2018 the new FINRA licensing program will go into effect. As part of the program, FINRA will be changing the executive title designations for those industry professionals who previously served as the Financial and Operations Principal (FINOP). Each member firm will be required to designate the following titles:

  • Principal Financial Officer (PFO) with primary responsibility for financial filings and the related books and records
  • Principal Operations Officer (POO) with primary responsibility for the day-to-day operations of the business, including overseeing the receipt and delivery of securities and funds, safeguarding customer and firm assets, calculation and collection of margin from customers and processing dividend receivables and payables and reorganization redemptions and those books and records related to such activities

Both the Principal Financial Officer and Principal Operations Officer must qualify and register as an Operations Professional (Series 99) and must hold the Financial and Operations Principal (FINOP) Series 27/28 exam, as applicable.

Introducing firms, who operate in a non-clearing capacity, will be permitted to allow one person to hold both the PFO and POO designations, due to the reduced likelihood of operational issues associated with the activities of these firms.

Clearing or self-clearing firms, who take possession of customer funds and are responsible for the safeguarding of customer cash and securities, will be required to appoint two distinctly separate individuals to these two positions, each requiring the respective Series 99 and Series 27 licenses.

Although this rule may appear on the surface to only be a cosmetic change, particularly for non-clearing broker dealers, it will be interesting to see how FINRA reviews the change of these roles in upcoming cycle examinations. FinOps need to be mindful of the added responsibilities of these roles and should be evaluating the impact to their respective firms with their Chief Compliance Officers. Firms may also need to update their Written Supervisory Procedures (WSPs) accordingly.