RCA - Fall 2002 - Security Futures Firm Element Continuing Education Requirement
The Commodity Futures Modernization Act of 2000 (CFMA) lifted the ban on the trading of security futures, i.e., single stock and narrow-based stock index futures ("security futures"). Because they are subject to regulation both as securities and as futures contracts, security futures must be traded on trading facilities and through intermediaries that are registered with both the SEC and the CFTC.
In lieu of additional testing requirements for certain existing registrants, NASD has established a Firm Element continuing education requirement. Persons who are currently registered as a General Securities Representative (Series 7), Registered Options Representative (Series 42), General Securities Sales Supervisor (Series 9/10), and Registered Options Principal (Series 4) who want to engage in a security futures business must complete a Firm Element continuing education requirement addressing security futures before engaging in any security futures business. Persons registered in other categories will not be permitted to engage in or supervise security futures business.
NASD and the National Futures Association (NFA), in partnership with the Institute for Financial Markets (IFM), have developed a Web-based continuing education program focusing on essential information that persons offering and selling security futures, and those who supervise such persons, should know in order to comply with the applicable federal and self-regulatory organization (SRO) requirements. This training material is divided into five modules; a brief description of each module follows this introduction. The chart below indicates which modules of the training program would be required to be completed in order for a registered representative or registered principal to engage in security futures activities.
|Current Registration Category and Continuing Education Requirements|
|Series 7 or Series 42 ONLY||Series 7 or
Series 42 AND Series 3 or Series 33
|Series 9/10 or Series 4|
Stocks and Stock Options
|firm will determine if applicable||firm will determine if applicable||firm will determine if applicable|
|X||firm will determine if applicable||X|
Regulatory Requirements for Security Futures
Supervision of the Offer and Sale of Security Futures
Use of the NASD/NFA Web-based continuing education program is not compulsory. Firms may develop their own Firm Element training programs following the approved content outline. Firms also may engage other providers to deliver the continuing education, again, so long as the training provided covers all of the subjects in the approved content outline.
NASD will capture electronically information concerning persons who complete this Web-based training program. Before beginning the training program, candidates will be asked to provide their Firm CRD and Individual CRD numbers. These numbers must be entered correctly in order for candidates to receive credit for completing this training session. Upon completion of this program NASD will be so notified and this information will become part of the candidate's individual CRD record. Please note, however, that the electronic link between the training program and Web CRD will not be fully operational until early 2003. The CRD records for candidates who complete their training requirement prior to this implementation will be updated to reflect this information shortly after this date. Prior to this date, NASD will provide firms, upon request, information concerning which of their associated persons have completed the NASD/NFA Web-based continuing education program. Requests should be made by email.
To access this online training program, and view other related information, visit the NASD Security Futures Web page.
Questions about this article may be directed to Carole Hartzog, NASD Member Regulation, (240) 386-4678.