Ensure supervisory personnel understand supervised activities
Take reasonable steps to ensure Supervisors and Executives are sufficiently proficient and understand the products traded or advised on and services provided by the personnel they supervise, to the degree necessary for proper supervision.
Understanding the obligation
Rule 3905(5) requires the dealer to take reasonable steps to ensure its Supervisors and Executives are sufficiently proficient to supervise the work assigned to them. This includes understanding the products that supervised employees and Approved Persons trade or advise on, as well as the services those personnel provide.
The required understanding is tied to the degree necessary for proper supervision. It is not a blanket requirement that every Supervisor be an expert in every product offered anywhere in the firm. The focus is whether the assigned supervisor can meaningfully oversee the particular products, services and activities within their remit.
Requirements
- Take reasonable steps to ensure Supervisors and Executives are fully proficient for their supervisory functions.
- Ensure they understand the products traded or advised on by personnel they supervise.
- Ensure they understand the services provided by supervised personnel to the degree necessary for proper supervision.
Practical considerations Illustrative
Implementation examples, rather than additional express requirements.
- Match supervisory assignments to demonstrated experience and product knowledge.
- Reassess competence when introducing new products, services or trading strategies.
- Provide targeted education or specialist support where a supervisory remit expands.
Potential evidence Illustrative
Examples of evidence; the cited provisions may not mandate these records.
- Supervisor qualifications and experience records
- Product or service training materials and attendance
- Supervisory assignment records
- Assessments or approvals associated with new product coverage