Registration and Conduct of Market Intermediaries and Authorized Representatives
Who must register, and what conduct is required
Intermediaries - broker-dealers, merchant bankers, portfolio managers, underwriters, credit rating agencies, asset managers, trustees and depository participants - must be registered with BSEC and, where relevant, hold exchange or depository membership. Registration is conditional and continuing: fit-and-proper criteria, minimum capital (risk-based capital adequacy), qualified personnel, adequate systems and record-keeping, and ongoing reporting. A registered intermediary must notify BSEC of material changes - change of control, directors, address, or business scope - and must renew or seek fresh approval where the rules require.
Authorized representatives act for an intermediary. The core principles are: they may only act within the scope authorized, they must be properly trained and certified, they must disclose conflicts, they must not handle client assets outside approved channels, and they must obtain and record client instructions (know-your-client, suitability, order records, and segregation of client money from firm money). Conduct rules also cover fair dealing, prohibition of misleading marketing, confidentiality, complaint handling, and anti-money-laundering obligations.
Traps
Examiners love the scope-of-authority question: an authorized representative who exceeds the mandate binds nobody and exposes both the representative and the firm to sanction. Another trap is client money segregation - commingling is a violation even if no loss occurs. Distinguish registration (the firm) from authorization/certification (the individual). Beware questions implying a representative can give investment guarantees or share in client profits - both are prohibited. Also note that a change of control usually requires prior approval, not merely later notification.
Rule of thumb
Map every scenario to three questions: Is the firm registered for this activity? Is the individual authorized for it? Was the client instructed, recorded and treated fairly? A "yes" to all three is the compliance baseline.
Worked example: A representative accepts cash from a client for safekeeping. Even without loss, this breaches segregation and scope rules; the correct path is to route funds through the firm's designated client account with documentation.