Operations Professional Registration Frequently Asked Questions (FAQ)
General Ledger
1. A person (GL Clerk) who has limited roles that do not meet the criteria under Rule 1220(b)(3)(A)(i)a. or b., is responsible for making journal entries into the member’s general ledger some of which represent material amounts for the firm. The journal entries serve to record the firm’s transactions on its books and records but do not affect the movement of money or securities or otherwise commit the firm’s capital. The GL Clerk is not permitted to commit the member to any contract or agreement (written or oral). Would the GL Clerk be required to register as an Operations Professional pursuant to FINRA Rule 1220(b)(3)(A)(i)c.?
No. Registration as an Operations Professional would not be required in this case. When considering the registration requirements for a person under FINRA Rule 1220(b)(3)(A)(i)c., you must determine whether the person has the authority or discretion materially to commit a member’s capital in direct furtherance of a covered function. Covered functions include “financial control, including general ledger and treasury” and “posting entries to a member’s books and records in connection with the covered functions to ensure integrity and compliance with the federal securities laws and regulations and FINRA rules.”1
Though posting journal entries to a member’s general ledger is considered a covered function, the GL Clerk, in this case, is not posting entries that affect the movement of money or securities or otherwise materially commit the member’s capital. In addition, the GL Clerk is not permitted to commit the member to any material contract or agreement (written or oral). Therefore, the GL Clerk would not be required to register as an Operations Professional pursuant to Rule 1220(b)(3)(A)(i)c. However, the function must be supervised by a supervisor who is registered as an Operations Professional.
2. A person (Treasurer) in the firm’s treasury department does not meet the criteria under Rule 1220(b)(3)(A)(i)a. or b., but does have the authority and ability to direct the movement of funds associated with the journal entries posted by the GL Clerk (in Question 1) from the firm’s bank or other accounts. The firm has not established any limits on the amount of funds that the Treasurer may move or direct to be moved from the firm’s bank or other accounts.
Is the Treasurer required to be registered as an Operations Professional under FINRA Rule 1220(b)(3)(A)(i)c.?
Yes. The Treasurer would be required to register as an Operations Professional. In this case, the Treasurer performs a covered function (financial control). The Treasurer also has the authority to direct or effect the movement of funds from the firm’s bank or other accounts and the firm has not established a materiality limit (based on the firm’s pre-established spending guidelines and risk management policies) on the amount of the firm’s funds the Treasurer may commit.2 Therefore, the Treasurer must register because he/she is a covered person under FINRA Rule 1220(b)(3)(A)(i)c. who has the authority or discretion materially to commit the firm’s capital in direct furtherance of one or more covered functions. Further, the Treasurer must be supervised by a supervisor who is registered as an Operations Professional.