Registered Options Principal (ROP)

A Registered Options Principal (ROP) at a brokerage firm supervises options exposure and the trading activities on options within client accounts. The ROP acts between the client making the order and the exchange member who executes the order. A Registered Options Principal is an individual who has passed the Series 4 Exam, also known as the Registered Options Principal Qualification Examination (OP), which is administered by the Financial Industry Regulatory Authority (FINRA).

According to FINRA, a Registered Options Principal is an individual who has been trained to know the various "rules and statutory provisions applicable to the supervisory management of a firm’s options personnel, accounts and trading, as well as exchange rules and regulations applicable to the trading of options contracts." A Registered Options Principal's responsibilities include market making, underwriting and regulatory compliance, as well as the advertising of the following:

• Equity options
• Foreign currency options
• Interest rate options
• Index options
• Options of government and mortgage-backed securities

In a brokerage firm there will often be more than one Registered Options Principal acting in supervisor roles. In some cases, one is the designated ROP, while another is the alternate ROP. The alternate ROP acts as a subordinate to the designated ROP. Both positions are often taken by senior employees, more specifically either a partner, officer, or director of the firm.

In the United States, an individual wishing to become a ROP must take and pass the Series 4 securities license course. ROP candidates must also have passed one of the following prerequisite exams to hold the registration: Series 7; Series 17; Series 37; Series 38; or Series 62 (with the Series 42).

The exam consists of 125 multiple-choice questions (and also 10 unscored pre-test questions) covering the following topics:

• Supervision of the Opening of New Accounts (21 questions)
• Supervision of Options Account Activities (25 questions)
• Supervision of General Options Trading (30 questions)
• Supervision of Options Communications (9 questions)
• Implementation of Practices and Adhere to Regulatory Requirements (12 questions)
• Supervision of Associated Persons and Personnel Management Activities (28 questions)

The test is administered via computer. Candidates aren't allowed any reference material, but are given scratch paper and basic electronic calculators (some of the exam's questions may involve calculations). For more on the exam, visit FINRA's Series 4 Exam information page. In Canada, a ROP candidate must pass the Options Supervisors Course (OPSC) provided by the Canadian Securities Institute.