FINRA Now Requires Programmers to Register as Securities Traders

Sig said:
A member firm is defined as "Member Firm – A member firm is a brokerage firm that has been admitted to membership in FINRA, whether or not the membership has been terminated or cancelled. A brokerage firm may be a partnership, corporation or other legal entity." https://www.finra.org/arbitration-and-mediation/dispute-resolution-glossary A list of member firms can be found at https://www.finra.org/about/firms-we-regulate If you don't work for one of these companies, you're not an associated person of a member firm.

Additionally the "Exchange Act definition of "associated person" of a broker-dealer: Section 3(a)(18)The term "person associated with a broker or dealer" or "associated person of a broker or dealer" means any partner, officer, director, or branch manager of such broker or dealer (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with such broker or dealer, or any employee of such broker or dealer, except that any person associated with a broker or dealer whose functions are solely clerical or ministerial shall not be included in the meaning of such term for purposes of section 15(b) (other than paragraph (6) thereof)." https://www.sec.gov/divisions/marketreg/mrfreqreq.shtml

Again, this rule very clearly (as clear as you can put in a regulation) does not impact retail traders.
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1. So any janitor who works for one of these companies is an associated person?
2.This is not about traders but program developers who might never trade in their lives & get paid fixed salaries.
 
Sig said:
Are you an associated person of a member firm? If not this doesn't apply to you. If you're a retail trader it clearly doesn't apply if you read the linked document.
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Just to know, when does a firm need to register to FINRA as a member firm? Does it apply to foreign entities?
 
gkishot said:
1. So any janitor who works for one of these companies is an associated person?
2.This is not about traders but program developers who might never trade in their lives & get paid fixed salaries.
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Read the link to the original circular, it's very specific about who in the firm needs to register. In fact, just to save you the effort of actually clicking that link, I've pasted a relevant section below. In case you're worried about the janitor, "except that any person associated with a broker or dealer whose functions are solely clerical or ministerial" seems to pretty clearly exclude him or her. I don't see the word ministerial in every day use but presume it would encompass janitors.


The registration requirement applies to an associated person if such person is (i) primarily
responsible for the design, development or significant modification
of an algorithmic trading strategy relating to equity, preferred or convertible debt securities; or (ii)responsible for the day-to-day supervision or direction of such activities.
FINRA understands that workflows, structures and roles vary across firms. However, in
identifying persons required to register as Securities Traders under the amendments to
NASD Rule 1032(f), firms should keep in mind that, in adopting this requirement, FINRA’s
goal is to ensure that firms identify and register one or more associated persons who
possess knowledge of, and responsibility for, both the design of the intended trading
strategy (e.g., the arbitrage strategy) and the technological implementation of such
strategy (e.g., coding), sufficient to evaluate whether the resultant product is designed
not only to achieve business objectives, but also regulatory compliance.
FINRA does not intend that the registration requirement apply to every associated person
who touches or otherwise is involved in the design or development of a trading algorithm.
However, each associated person who is primarily responsible for the design, development,
or significant modification of an algorithmic trading strategy or the day-to-day supervision
or direction of these activities must register. For example, if a sole associated person
determines the design of the trading strategy employed by an algorithm, writes the code to
effectuate such strategy, and executes or directs the significant modification of such code
going forward, then that person alone would be required to register as a Securities Trader
under the rule with respect to that algorithm.
 
Sig said:
Read the link to the original circular, it's very specific about who in the firm needs to register. In fact, just to save you the effort of actually clicking that link, I've pasted a relevant section below. In case you're worried about the janitor, "except that any person associated with a broker or dealer whose functions are solely clerical or ministerial" seems to pretty clearly exclude him or her. I don't see the word ministerial in every day use but presume it would encompass janitors.


The registration requirement applies to an associated person if such person is (i) primarily
responsible for the design, development or significant modification
of an algorithmic trading strategy relating to equity, preferred or convertible debt securities; or (ii)responsible for the day-to-day supervision or direction of such activities.
FINRA understands that workflows, structures and roles vary across firms. However, in
identifying persons required to register as Securities Traders under the amendments to
NASD Rule 1032(f), firms should keep in mind that, in adopting this requirement, FINRA’s
goal is to ensure that firms identify and register one or more associated persons who
possess knowledge of, and responsibility for, both the design of the intended trading
strategy (e.g., the arbitrage strategy) and the technological implementation of such
strategy (e.g., coding), sufficient to evaluate whether the resultant product is designed
not only to achieve business objectives, but also regulatory compliance.
FINRA does not intend that the registration requirement apply to every associated person
who touches or otherwise is involved in the design or development of a trading algorithm.
However, each associated person who is primarily responsible for the design, development,
or significant modification of an algorithmic trading strategy or the day-to-day supervision
or direction of these activities must register. For example, if a sole associated person
determines the design of the trading strategy employed by an algorithm, writes the code to
effectuate such strategy, and executes or directs the significant modification of such code
going forward, then that person alone would be required to register as a Securities Trader
under the rule with respect to that algorithm.
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As I can see this is up to the firm to identify people who they think need to be registered with FINRA. I understand that. Usually this won't be the programmers b/c any programmer with a knowledge of the programming language can maintain the code. Once the programmer leaves the firm the code which is usually owned by the firm is passed to a new hire.
 
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