Compliance Registered Options Principal (CROP)
The CROP could also act as the Senior Registered Options Principal (SROP), another position formerly required by FINRA. To become a CROP, a person had to pass the Series 4 exam in the United States and the Options Supervisors Course in Canada. The Compliance Registered Options Principal (CROP) was a supervisory and compliance employee position that the Financial Industry Regulatory Authority (FINRA) required of options trading firms. A firm was required to employ a Compliance Registered Options Principal as a firm’s officer or general partner and had the responsibility for ensuring regulatory compliance for its options trading activities for clients' accounts. Compliance Registered Options Principal (CROP) was a supervisory and compliance employee position that FINRA required of options trading firms.
What Is the Compliance Registered Options Principal (CROP)?
The Compliance Registered Options Principal (CROP) was a supervisory and compliance employee position that the Financial Industry Regulatory Authority (FINRA) required of options trading firms. This requirement was eventually eliminated in June 2008.
Understanding the Compliance Registered Options Principal (CROP)
A firm was required to employ a Compliance Registered Options Principal as a firm’s officer or general partner and had the responsibility for ensuring regulatory compliance for its options trading activities for clients' accounts. The person also oversaw interactions with the public, such as advertising and marketing. The CROP could also act as the Senior Registered Options Principal (SROP), another position formerly required by FINRA. The SROP was an officer or general also responsible for supervising options exposure and trading activity in clients' accounts.
Although trading options can be an investment tool used to reduce risk, they are also very dangerous in the hands of the wrong people; thus, the need for regulation.
To become a CROP, a person had to pass the Series 4 exam in the United States and the Options Supervisors Course in Canada.
The End of CROP
FINRA finally eliminated the CROP position because other financial designations could manage the responsibilities formerly required of CROPs. So, it decided that if firms continued to fulfill their supervisory and compliance requirements, they weren’t needed. That’s the same reason FINRA did away with the SROP position.
The changes did not eliminate the requirement for firms to appoint a Registered Options and Security Futures Principal (ROSFP) to oversee the firm's public activities, such as the content of advertisements, educational materials, and sales literature. The changes also made the ROSFP responsible for ensuring that customers could handle the risks of options trading and understand the transactions proposed for their discretionary accounts.
Related terms:
Financial Industry Regulatory Authority (FINRA)
The Financial Industry Regulatory Authority (FINRA) is a nongovernmental organization that writes and enforces rules for brokers and broker-dealers. read more
Options Contract
An options contract gives the holder the right to buy or sell an underlying security at a predetermined price, known as the strike price. read more
Registered Principal
A registered principal is a licensed securities dealer who is also empowered to oversee operational, compliance, trading, and sales personnel. read more
Registered Representative (RR)
A registered representative (RR) is a financial professional who works with clients who are trading investments such as stocks and bonds. read more
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. read more
Series 23
Series 23 is an exam offered by the Financial Industry Regulatory Authority (FINRA). read more