An approved person is someone approved to perform a ‘controlled function’ for an ‘authorised firm’ or an ‘appointed representative firm’.
To become approved you must;
- satisfy the FCA that you can meet, and maintain, the fit and proper test, (FIT)
- perform your controlled function in accordance with a set of standards – the Statements of Principle and Code of Practice for Approved Persons (APER)
A ‘Controlled Function’ role is that which has a particular regulatory significance for an FCA regulated business. You can see the list of all controlled functions, including brief explanation, at the FCA Hand-book.
To become ‘Authorised’ an ‘Appointed Representative’ firm needs to apply on your behalf for you to gain approval. This can lead to a bit of a chicken and egg situation as most City firms will require your FCA Approval before offering you a job, unless it is a trainee or in un-regulated position, however you can only get FCA Approval via a regulated firm applying your behalf.
Thus to become approved you will need to be performing a ‘controlled function’ for an ‘Authorised firm’ or an ‘Appointed Representative firm’. The firm can then make an application on your behalf by providing information stating that you are correctly performing a ‘controlled function’, and have meeting the Fit and Proper test, (FIT), requirements.
The burden is on the applicant firm to satisfy the FCA that the individual candidate is fit and proper to perform the controlled function applied for.
The FCA will have regard to a number of factors when assessing the fitness and propriety of an individual to perform a particular controlled function. The most important are concerned with the individual’s:
- honesty, integrity and reputation (the FCA must be satisfied that the individual will be open and honest in his dealings and is able to comply with the requirements imposed on him);
- competence and capability (the individual must have the necessary skills to carry on the function he is to perform); and
- financial soundness.
It is also worth remembering that when considering these factors, the FCA does not limit itself to only considering issues that arose in a financial services context.
When determining fitness and propriety, the FCA will take into account the particular controlled function which the individual is to perform and the activities of the firm itself. So make sure you are joining a reputable firm in the first place. Many individuals have ruined their future career in the financial markets by working for firms who have been shown to be dis-honest and subsequently fined / closed down by the regulator. Be particularly weary of vacancies abroad, promising lots of wealth, but which involve selling un-regulated products to the UK marketplace. If you end up working for a ‘Boiler Room’, the FCA will presume it is your own fault and do not accept ignorance as an excuse.
If there have been any incidents in your past which may affect your FIT application, the policy of the FCA is not to speculate on the outcome of an application prior to receipt of the application form, the following ‘matters of common relevance’ generally apply to all applications;
- whether the candidate has been open and honest with the regulator and disclosed all relevant matters;
- the seriousness of the issue and the relevance to the specific role applied for;
- the passage of time since the incident occurred;
- whether the issue relates to an isolated incident or whether there is a pattern of adverse behaviour.
Currently Junior-Broker.com is focused on those entering or working in the United Kingdom. As such, individuals will need to adhere to the guidelines, and be approved by, the Financial Conduct Authority, (FCA). There are certain minimum qualifications and requirements required to sell or trade in Stocks, (Equities), Bonds, Derivatives and other Financial Products / Instruments.
There are a few main institutions providing the relevant qualifications, with numerous approved Training / Course Providers, most of whom have detailed and comprehensive websites discussing all avenues of gaining the relevant qualifications for your chosen career path. Sometimes this wealth of information can be a little over-whelming and confusing, especially when applying for vacancies. The person who is hiring may be looking for certain ‘units’, or historic qualifications, (the requirements are in constant development…), whilst the institutions and training companies are offering certain ‘Certificate Levels’.
Whilst we cannot provide information on every course and eventuality, for those looking to work in the financial markets the following minimum qualifications are a good place to start.
FSA Financial Regulation (Unit 1)
FSA Principles of Financial Regulation (Unit 6)
Investment Operations Certificate (IOC) / Investment Administration Qualification (IAQTM)
IMC – Investment Management Certificate (CFA Society)
Alongside the information provided from the FCA and Institutions you can find further information from the wide range of courses provided under the Training and Qualification section of this website.
Gaining the required qualifications to work within the regulated financial markets can be achieved in a variety of ways. Many prospective candidates and those who are already enjoying a fruitful career decide to study the relevant documentation at home via a distance learning program, booking exams with the associated qualifiers when they feel ready to successfully pass the exam.
Study guides & material, revision kits and practice exams can be purchased from a number of sources to facilitate learning. Junior-Broker.com provides links to an extensive range of the required texts and study material from Amazon. These can be found on our main Training and Qualifications homepage.
Junior-Broker.com also lists some of the finest teaching institutions in the world. You can search an extensive list of courses and teaching programs here. These course providers offer a huge variety of courses and teaching methods to cover all requirements. Alongside distance learning programs, they provide options for structured studies, whether day release / evening courses over many weeks, or intensive programs including end of term exams which can massively expedite your career.
If you are already employed within the markets, you may wish to inquire with your current employer about utilising some of the in-house training courses offered by these providers.
The different disciplines and roles available in the Financial Markets all require unique skills and attributes in candidates to be successful. Across the financial industry there are a number of skills which are common place, and expected by all employers.
First and foremost, as to be expected when working in finance, you will need to have an excellent mathematical understanding – especially when involved in selling or trading in the more exotic and complex financial products. In the majority of roles you will need to analyse and understand statistical information and have mental arithmetic skills that enable you to think on your feet in a fast-paced environment.
Whilst being quick with your mathematics will assist in the daily functions of your role, to gain the respect of you clients and truly succeed in the markets, you will be required to think laterally and stand out from the crowd. A good starting place to understanding the dynamics affecting the financial market and the potential effects on your chosen products is to immerse yourself in information. Ideally you will enjoy expanding your understanding on a daily basis already, and it will be part of your personality make-up. Politics, World Affairs, Economics, Trends are all a given. If information is the true power in the markets, in can only be developed from knowledge.
Although your chosen role may be a little separate from clients such as in Analysis or Trading, you will still need to have strong communication skills and the ability to study, understand and pass on your thoughts to those around you, and speak to people in a professional and confident manner. For those in a more customer facing position such as an Advisory Broker or Wealth Manager it is imperative you can convey sometimes complicated issues and product information to a wide range of people. A huge part of these roles can be classed as a sales function, which has been very ably defined as imparting your enthusiasm for something onto a third party. Sales techniques can be taught, but a natural sales ability will stand you in good stead for career progression. It is important to remember that communication is a two-way process, and you will be expected to understand your clients’ needs and perceptions of risk to offer the best services that meet both the expectations of your customer and employer.
In all disciplines you will need to analyse a huge range of financial information, and have the ability to sift through this to garner that which is required to make an informed decision. For example, if you are looking at official documentation provided by corporations, it will nearly always be presented to support the company line, the current Directors future projections, and ultimately give a positive spin to even the most damming of annual figures. Making judgements on this whilst taking into account other economic / market trends, and getting it right, is crucial to the success you achieve for your clients, firm and ultimately yourself. All data you present has to be entirely accurate in whichever capacity you work in the markets.
In a high-pressure environment, keeping a cool head under pressure and maintaining the capability to think clearly and communicate in a professional manner is a must. There are some successful hot-heads, and you will come across strong personalities in any work environment, although there are probably a higher proportion of vocal characters on a busy equities trading floor. Try not to confuse aggression with confidence, as some people do. You will need to be a good decision maker and confident in your reasoning. Been able to impart enthusiasm for your decisions and thoughts are crucial, but unlike in the movies, those who get to the top of the ladder tend to be able to speak to people of all backgrounds and abilities, and be very capable of working in a cohesive team as well as on their own initiative, not purely bully those around them into agreement. Due to the long work hours and the level of commitment usually expected by employers, you will probably have a high level of personal drive and determination to succeed.
Above all these traits you will be expected to be honest and trustworthy in all you do. So much so, that it is laid down by the Regulator that you must be ‘Fit and Proper’ in your conduct before they legally allow you to work in the regulated markets. Honesty and Intelligence breads trust from your colleagues, management and customers.
You may have seen the movies or read the newspapers and decided that a life in the financial markets with all the apparent phenomenal wealth is for you. Most people outside the industry think of Charlie Sheen, (his character ‘Bud Fox’ in the movie Wall Street, not the stand-up comedian), or Michael Douglas as Gordon Gheko, when considering their future career. Although these fictional characters do have some semblance of reality as ‘Brokers’, there are many different roles and job functions within the financial markets. All of these positions require different personality traits and involve very unique functions. Some of the main areas of expertise are listed below, it is crucial you understand the differing roles, and realise which of them you may be best suited too before studying and endeavouring on your chosen career path.
Although termed a ‘stockbroker’, alongside stocks people who follow this career path may not actually be selling stocks or equities. As a broker you could end up selling or dealing in different financial products and instruments such as derivatives, bonds, guilts or foreign exchange. Dealing in foreign exchange, (FX), can be a good route into the markets, as unlike equities one can gain experience and sell currency without full FCA approval in certain circumstances.
Financial Products / Instruments can be bought and sold on the world’s stock exchanges, (these are the regulated markets). The majority of people are aware that the prices for equities, company debt, and market indices such as the FTSE 100 or Dow Jones are printed in daily papers and detailed in national news broadcasts. Brokers work with the real time prices through-out the working day utilising services such as Bloomberg or Reuters to keep up-to date with the latest market information.
As a stockbroker or equities / bonds / derivatives dealer you may work in a few key capacities. An ‘execution only’ basis means that the role entails simply implementing a client’s instructions to buy or sell particular security. As an ‘Advisory’ broker you will advise your clients on sectors or specific securities to invest in or sell, but ultimately leave the final decision up to the client. Working in a ‘Discretionary’ manner means that the client will instruct you or your firm to meet certain investment objectives, and you will buy or sell investments to best meet these pre-determined objectives.
For those new to the sector, it can be quite common to confuse the roles of Stockbroker or Equity Dealer and Trader, although they are vastly different roles. A brokering role tends to be more sales focused, where you are expected to sell your services / investments to potential or existing customers. Traders can be self-employed, and technically do not need to be regulated or approved if working for themselves. Many people make a successful living simply trading their own capital via a range of investments. This band of people include those involved in ‘Day-Trading’ which can be can be a stressful and speedy route to extreme wealth or poverty, but which does have a number of similar attributes to professional gambling. As an employed trader, you will buy and sell financial instruments traded in the financial markets to make profits for your employer, and ultimately personal commission and bonuses.
The main function of a financial analyst is to study and formulate reports on which to base structured investment decisions. Information is resourced from a huge variety of sources including official company data, marketing information, industry reports, government statistics and current economic trends. The role of a Financial Analyst is intrinsic in the success of Financial Institutions and corporates. Whist you may be employed by an investment bank, Analysts are also employed in-house by companies of all sizes to gain an understanding of where they are in the marketplace and formulate future strategies for growth and expansion. Analysts are also readily employed by mutual and pension funds, hedge funds, insurance companies, and other businesses, assisting companies or their clients to make profitable investment decisions
In the brokerage or investment capacity, often working in teams, Analysts utilise Fundamental analysis principles and the latest technology and methods to provide evaluation and assessment of specific securities and other instruments. This ultimately results in a recommended investment action, such as buy, sell, or hold. Senior analysts may actually be the ones responsible for managing the assets and making the decision on whether to acquire or dispose of the chosen asset.
As a Financial Analyst, your role can also be involved in supporting other functions and departments such as Compliance, whereby the material produced by your firm in recommending a particular investment strategy is complaint with the current Regulatory requirements and best practices. There are also opportunities to work with the Ratings Agencies or large Consultancy firms in this respect.
With many cross-over attributes to other the other positions detailed here, an Investment Consultant / Wealth Manager / Private Banker tends to cover an Analyst role and function as an Advisory or Discretionary Broker on behalf of clients. It can be said that in some respects they act as a private Trader on behalf of their clients, working primarily with High Net-Worth Individuals, (HNWI’s), business owners and family trusts who require the assistance of a professional financial advisor in day-to-day investment and financial planning decisions. If you are considering a role in this area it is highly advised you review the material provided by the CFA Society, and study towards an IMC – Investment Management Certificate.
The Fund Management / Portfolio Manager role is similar to Investment Consultant position above, but very much more geared towards corporate and institutional clients. A Portfolio / Fund manager again assists clients in investing their capital, whether via equities, bonds, derivatives, other financial instruments or assets such as currency or property. Institutional fund managers, and their firms, work on behalf of organisations such as multinationals, pension funds or insurance companies, where the sums of money invested can be vast. Along with the role of the Wealth Manager above, there is a lot of cross-over with other disciplines, whereby a Fund Manager will gather and analyse reams of information, produce reports, recommend investments and even execute trades. As above, if you are considering a role in this area it is highly advised you review the material provided by the CFA Society, and study towards an IMC – Investment Management Certificate.
The term Market Maker is used for both the firm and the individual performing the market making function. Market Makers or Flow Traders compete for the flow of orders from their clients by displaying buy and sell quotations for a guaranteed number of shares. The difference between the price at which a market maker is willing to buy, and the price at which the firm is willing to sell it is called the Spread. This spread represents the potential profit a Market Maher can receive on each trade, (both the buy and sell side added together). Once an order is received, the market maker immediately sells from their own inventory or offsets the order with another firm. Market Makers play an important role in the financial markets, acting as catalysts for daily trading and enhancing the liquidity of equities across the market. However, making money from the differences in bid and ask prices is not the only function of market makers. Within their firm, the main priority is to provide liquidity to the firms’ clients, receiving a commission for each trade.