Earlier this month, the SEC approved a rule proposed by the Financial Industry Regulatory Authority (FINRA) that will require some operations personnel to register and pass a qualifying exam. FINRA, an independent regulator for securities firms doing business within the U.S., oversees about 4,540 brokerage firms.

The SEC noted that while FINRA's registration requirements historically have focused on front office employees who have direct contact with securities transactions, employees responsible for back office functions like recordkeeping and trade confirmation “also are important to a FINRA member's ability to comply with its responsibilities under the Federal securities laws and regulations.” Given the growing complexity of the securities industries, licensing and registering operations professionals will “help to address regulatory gaps in this area.”

Three types of workers would be subject to the proposed registration, qualification and continuing education requirements for an Operations Professional. They include senior management with direct responsibility for what are termed “covered functions,” as well as employees whom these senior managers designate as supervisors and managers and who have the ability to approve or authorize work to accomplish the covered functions.

Just what are covered functions? The SEC identified 16, such as maintaining customer account data and documents; collecting, maintaining, re-investing and disbursing funds; and confirming trades and account statements.

The proposed rule does exempt some operations employees who currently hold certain registrations, or have held one during the two years immediately before registering as an Operations Professional. It did not identify which registrations would apply.

Once the rule is effective, firms will have 60 days to identify employees who will be considered Operations Professionals. Those employees will have 12 months from the effective date of the rule to pass the qualifying exam.

The SEC approved the proposed rule change on an accelerated basis. However, it is accepting comments on the proposed rule change. They must be submitted on or before July 13, 2011.