NSCP Currents National Society of Compliance Professionals Financial Services Compliance Membership Nonprofit NSCP National Conference

The consolidated audit trail is intended to enhance regulators’ ability to monitor and analyze trading activity. FINRA has stated its examination process is “risk-based,” both in terms of how frequently a firm is examined and the focus of each examination. To understand which business areas are most likely to be assessed, broker-dealers should have strong internal risk assessment and management systems in place. Following our reviews of the businesses, structure and compliance culture at a broker-dealer organization, we assess the structure and coverage of the compliance program.

The Quote Rule requires specialists and market makers to provide quotation information to their self-regulatory organization for dissemination to the public. The quote information that the specialist or market maker provides must reflect the best prices at which he is willing to trade . A specialist or market maker may still trade at better prices in certain private trading systems, called electronic communications networks, or “ECNs,” without publishing an improved quote.

  • This directory allows firms to search for vendors offering compliance-related services, such as consulting and surveillance.
  • Our clients range from financial holding companies to multi-service investment banks, Nasdaq market makers, trade associations, national and regional brokerage houses, exchanges and other market venues.
  • Our experts will discuss how the recently released 2022 examination priorities may impact you and your compliance program.

A banking organization may structure and manage the BSA/AML compliance program or some parts of the program within a legal entity; with some degree of consolidation across entities within an organization; or as part of a comprehensive enterprise risk management framework. The 2015National Compliance Outreach Program for Broker-Dealersis a one-day program intended for compliance, audit, and risk officers of broker-dealer firms and branch offices. The program provides an open forum for regulators and industry professionals to share strong compliance practices and promote the exchange of ideas to develop an effective compliance structure.

Building A Broker Dealer Compliance Program

After we have undertaken representation of you concerning a matter, you will be our client, and we may thereafter exchange confidential information freely. WilmerHale has a record of success at all stages of enforcement proceedings—from informal inquiries to litigation. We help companies protect data, comply with evolving regulations, and respond to investigations and litigation. We work with clients through every step of their restructuring, no matter the complexity, size, or industry.

In addition, the designated executive officer can appoint in writing up to three specialists to assist in fulfilling the executive officer’s obligations. – WORM compliance requires broker-dealers to store a duplicate copy of records separately from the original. This requirement is designed to ensure that regulators can access and examine a firm’s records even if the primary electronic recordkeeping system is disrupted, malfunctions, or otherwise becomes inaccessible. The SEC does not specify how the backup electronic recordkeeping system must achieve redundancy.

What is Compliance for brokers

Optimize operations, connect with external partners, create reports and keep inventory accurate. Westlaw Conduct legal research efficiently and confidently using trusted content, proprietary editorial enhancements, and advanced technology.

Our proprietary governance, risk and compliance software, Oyster Solutions, takes the worry out of managing your compliance requirements. With consolidated dashboards, customizable workflows and user profiles designed for your business model, you have a bird’s eye view of your firm’s compliance program. This group of designated brokers experiences a higher level of scrutiny and headache when it comes time for a regulatory investigation or audit. And unlike the first group of designated brokers that I described, Group B has a much tougher time evidencing that they are really doing their jobs. In my line of work, I interact with and evaluate the performance of, designated brokers all of the time. Content is essential to your business, which is why we want to help you put it to work.

Building a Broker Dealer Compliance Program Thomson Reuters

Broker-dealers generally have an obligation to recommend only those specific investments or overall investment strategies that are suitable for their customers. The concept of suitability appears in specific SRO rules such as NASD Rule 2310 and has been interpreted as an obligation under the antifraud provisions of the federal securities laws. Under suitability requirements, a broker-dealer must have an “adequate and reasonable basis” for any recommendation that it makes. Reasonable basis suitability, or the reasonable basis test, relates to the particular security or strategy recommended. Therefore, the broker-dealer has an obligation to investigate and obtain adequate information about the security it is recommending.

Building a broker-dealer compliance program

Our team performs independent AML testing as a qualified outside party to assess the effectiveness of a broker-dealer’s AML program. During our review, we work closely with clients to tailor our in-depth testing to each firm’s business model. Our customized approach identifies potential gaps in your firm’s AML program and provides practical solutions to address them. Our team reviews and tests broker-dealer compliance programs in accordance with FINRA Rules 3110 and 3120 requirements. It would come as no surprise to see the SEC staff issue additional guidance to the industry as nuanced questions arise.


Broker-dealers have an obligation to comply with the sanctions programs administered by the Department of Treasury’s Office of Foreign Assets Control . This information is designed to permit the SEC to assess the impact these entities may have on the broker-dealer. Pursuant to the rules of self-regulatory organizations, broker-dealers are required to arbitrate disputes with their customers, if the customer chooses to arbitrate. See e.g., NASD Code of Arbitration Procedure for Customer Disputes, Rule 12200; American Stock Exchange, Rule 600; and Chicago Board of Options Exchange, Rule 18.1. Broker-dealers must notify customers purchasing securities on credit about the credit terms and the status of their accounts.

Also, banks that act as municipal securities dealers or as government securities brokers or dealers continue to be required to register under the Act. In addition, we discuss the special registration requirements that apply to broker-dealers of government and municipal securities, including repurchase agreements, below. The result of all these different regulations is a spider’s web of requirements that broker-dealers must adhere to strictly.

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