A member firm’s public customer option business must be supervised by the firm in accordance with the supervision of its overall public customer business. Registered option and security futures principals (ROSFP) designated by the firm’s written supervisory procedures may supervise the member firm’s option business. The ROSFP is not required to complete the security futures firm element continuing education requirement and being designated as a ROSFP does not permit the ROSFP to supervise the member’s security futures business without satisfying the security futures firm element continuing education program.

Duties of the ROSFP

The registered option and security futures principal or ROSFP’s duties mainly focus on the supervision of the member firm’s option business. The ROSFP must supervise all of the member firm’s option transactions with customers and is additionally responsible for:

  • Developing the firm’s written supervisory procedures relating to option business
  • Developing the firm’s training program for option business
  • Reviewing discretionary account acceptance by branch managers and other ROSFPs
  •  Working with and assisting branch managers in supervising customer accounts

The ROSFP must also design and administer supervision programs to review selected option accounts to ensure proper supervision. The ROSFP may delegate most review and supervision duties to employees (usually ROSFPs) under their direct control but remains responsible for all of the areas of supervision.

Additional Duties of the ROSFP

The registered option and security future principal is also responsible for ensuring that the member firm’s option business complies with all laws and industry regulations relating to option business. The ROSFP must:

  • Establish the firm’s record keeping procedures relating to options
  • Review selected option accounts frequently
  • Establish guidelines and requirements for the firm’s option advertising
  • Approve all option advertising and sales literature prior to first use
  • Supervise account approval procedures
  • Supervise the creation of account approval forms
  • Develop the firm’s option training program
  • Review option discretionary accounts more frequently
  • Supervise the firm’s procedures for allocating assignment notices
  • Audit the firm’s option compliance program
OPTION ACCOUNT COMPLIANCE

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