Investor's wiki
en English
Navigation
Home Glossary
InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
Disclaimer Terms of Use Privacy Policy Cookie Policy
Navigation
Home Glossary
InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
Disclaimer Terms of Use Privacy Policy Cookie Policy

Registered Principal

Registered Principal
InvestingBrokers

What Is a Registered Principal?

The term registered principal alludes to a licensed securities dealer enabled to manage operational, compliance, trading, and sales staff. Put basically, a registered principal is somebody who holds a position in management in a securities or investment company. A registered principal must hold a principal license and since they likewise function in securities dealing, they must likewise have probably the most essential securities licenses. These individuals are legally liable for any issues that happen in their firms and, thusly, must be registered with regulators at the state or potentially federal levels.

Grasping Registered Principals

Registered principals are management experts who work in securities, investment, and other financial companies including brokerages. Firms are required to have something like two registered principals except if they are classified as sole partnerships. These individuals have a series of obligations that incorporate overseeing sales, operational, and trading groups while guaranteeing that their firms consent to every one of the fundamental regulatory requirements. Registered principals ensure:

  • administrative work presented by their firms to regulators is accurate and documented on time
  • employees and other key staff are appropriately licensed
  • the firm keeps up with least capital requirements
  • compulsory fees are paid on an opportune premise

Registered principals at brokerage firms direct the sales and trading functions, manage an investment firms' regulatory compliance or their overall operations. Permitted activities incorporate trading, market-making, underwriting, and advertising — sales and advertising writing must be approved by a principal prior to utilize. Individuals associated with investment banking may likewise be required to be registered principals.

The privileges extended to registered principals accompany huge obligation — even to the point of legal liability. Since compliance is a big part of their duties, they are held responsible for any slip-ups or issues that emerge at their firm. So on the off chance that a trader isn't as expected licensed or there's an error in a portion of the required filings presented by the company, the registered principal is the individual who must response to state or federal specialists.

The Financial Industry Regulatory Authority (FINRA) — as well as other regulatory bodies — expects individuals to breeze through the Series 24 exam before they can turn into a registered principal. An individual who finishes this exam can conduct supervisory and compliance duties, as well as underwriting, trading, and marketing activities. This is notwithstanding the typical exams that are required for broker-dealers, like the Series 7 exam. The people who wish to be registered options principals (ROPs) — experts who need to manage options trading at financial companies — need to pass the FINRA Series 4 Exam.

You must pass the Financial Industry Regulatory Authority's Series 24 exam to turn into a registered principal.

Special Considerations

As verified above, breezing through FINRA's Series 24 exam — otherwise called the General Securities Principal Qualification Exam — is required to turn into a registered principal. The exam comprises of 160 inquiries — 10 of which are unscored and haphazardly positioned all through the test. Candidates are given three hours and 45 minutes to complete the exam. A score of 70% is required to pass. The exam covers five fundamental job functions:

  • Function 1: Supervision of registration of broker-dealer and faculty management activities. This section comprises of nine inquiries.
  • Function 2: Supervision of general broker-dealer activities. There are 45 inquiries in this section.
  • Function 3: Supervision of retail and institutional client related activities. In this portion, candidates are required to address 32 inquiries.
  • Function 4: Supervision of trading and market-production activities. This portion has 32 inquiries.
  • Function 5: Supervision of investment banking and research, which comprises of 32 inquiries.

Registered principal candidates must pass the Securities Industry Essentials (SIE) Exam and undoubtedly another exam to take the Series 24. These incorporate the:

  • Series 7 exam — General Securities Representative Exam
  • Series 57 exam — Security Trader Representative Exam
  • Series 79 exam — Investment Banking Representative Exam
  • Series 82 exam — Private Securities Offerings Representative Exam
  • Series 86/87 — Research Analyst Exam

At the point when an individual breezes through the Series 57 exam, the candidate gets the assignment of trader principal instead of that of an overall principal after passing the Series 24.

Features

  • Registered principals must hold principal licenses as well as probably the most fundamental securities licenses.
  • These individuals are legally liable for any issues that happen in their firms since they are responsible for licensing and compliance issues at their firms.
  • A registered principal is a licensed securities dealer enabled to manage operational, compliance, trading, and sales work force.