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Artis forex agen member definition. A strategi trading yang menang Nah, itulah yang pertama datang Salah satu kebutuhan untuk memiliki strategi menang sebelum melakukan usaha untuk trading di pasar Forex Itu Jika mereka ingin sukses, tentu saja Definisi strategi kemenangan sangat sederhana sehingga perlu membawa keuntungan lebih dari kerugian Bila Anda membagi keuntungan bersih dengan rugi bersih Anda mendapatkan apa yang disebut faktor keuntungan dan jika lebih banyak Dari 1 00 itu berarti strategi tersebut menghasilkan keuntungan lebih banyak daripada kerugian Semakin tinggi faktor keuntungan, semakin baik, karena kerugian semakin jarang terjadi dan pedagang dapat mulai menggunakan alat lain yang berguna sebagai tambahan strategi, yang dalam situasi lain mungkin terjadi. Sangat berbahaya bagi keseimbangan kami Kami memiliki strategi trading populer yang digunakan dalam BORN Night Owl Forex EA Robot, namun dengan cara yang menjamin profitabilitas mantap Statistik menunjukkan bahwa ada tiga differen Kondisi pasar Tren Kami memiliki tingkat tertinggi dan terendah saat ini seiring berjalannya waktu, jadi secara umum, logika menunjukkan bahwa kita perlu membeli saat tren naik, dan kita perlu menjual saat tren turun. Pasar sedang dalam tren. Pola sekitar 30 dari waktu Counter trend saat pasar i. Guide ke Broker-Dealer Registration. Division of Trading and Markets 1 Komisi Sekuritas dan Bursa AS April 2008.Table of Contents. Who Apakah Diperlukan untuk Register. Who adalah Broker. Who Adalah Dealer. What To Do Jika Anda Pikirkan Anda Mungkin Broker atau Dealer. Broker dan Dealer Umumnya Harus Mendaftar dengan SEC. Orang Terkait dari Pedagang Pialang. Pedagang Pialang Inti. Broker-Dealer yang Membatasi Bisnis mereka dengan Efek yang Dikecualikan dan Dikecualikan. Dealer Bomker Harus Mendaftar Sebelum Menjual Efek yang Tidak terdaftar - Termasuk Penawaran Penempatan Pribadi atau Regulasi. Pengecualian Pelamar. Foreign Broker - Dealer Pembebasan. Persyaratan Mengenai Pialang dan Dealer Efek Pemerintah dan Kotamadya, termasuk Kesepakatan Repurchase. Aturan Khusus Yang Berlaku untuk Bank dan Lembaga Keuangan Lainnya. Jaringan Asuransi Reksa Dana. Agen Efek dan Real Estat Broker Efek. Hubungan Dealer dengan Grup Affinity. Bagaimana Daftar sebagai Perantara Pedagang. Keanggotaan SE. SIPC Keanggotaan. Negara Persyaratan. Associated Persons. Successor Broker-Dealer Pendaftaran Withdrawal dari Pendaftaran Pembatalan Pendaftaran. Security Futures. Conduct Peraturan Broker-Dealer. Antifraud Provisions. Duty of Fair Dealing. Suitability Requirements. Duty of Best Execution. Customer Confirmation Rule. Pengungkapan Ketentuan Kredit. Restrictions on Short Sales Regulation SHO. Trading Selama Peraturan Penawaran M. Restrictions on Insider Trading. Restrictions on Private Securities Transactions. Analis dan Regulasi AC. Trading oleh Anggota Bursa, Pialang dan Dealer. Extending Credit on New Issues. Regulasi Kewajiban Eksekusi NMS. Order. Regulasi ATS Broker-Dealer Trading Systems. Penny Stock Rules. Privacy of Consumer Financial Information Regulation SP. Investment Adviser Registration. Finance Tanggung Jawab Broker-Dealer Capital Rule. Uns of Customer Balances. Customer Protection. Required Buku, Rekaman dan Laporan. Ketentuan Pengecualian. Kebutuhan Lain. Pemeriksaan dan Pemeriksaan. Lost dan Program Efek yang Dicuri. Fingerprinting Requirement. Gunakan Media Elektronik oleh Broker-Dealer. Electronic Signatures. Anti-Program Pencucian Uang. Office of Foreign Assets Control. Business Continuity Plans. Where untuk Mendapatkan Informasi lebih lanjut. PENDAHULUAN. Securities Exchange Act Dari 1934 Exchange Act atau Act mengatur jalan di mana pasar sekuritas dan broker dan dealer negara beroperasi Kami telah menyiapkan panduan ini untuk meringkas beberapa ketentuan penting dalam Undang-Undang dan peraturannya Anda akan menemukan informasi tentang apakah Anda perlu mendaftar Sebagai agen broker dan bagaimana Anda bisa mendaftar, serta standar perilaku dan peraturan tanggung jawab keuangan yang harus diikuti oleh broker broker. PERUSAHAAN MEMASTIKAN ANDA MENGIKUTI SEMUA HUKUM DAN PERATURAN. Meskipun panduan ini menyoroti beberapa ketentuan dalam Undang-undang dan Peraturan kami, bukan pialang dan dealer yang komprehensif, dan orang-orang yang terkait, harus mematuhi semua persyaratan yang berlaku, termasuk Komisi Sekuritas dan Komisi SEC atau Komisi AS, serta persyaratan dari setiap organisasi pengaturan sendiri Broker dan dealer milik, dan bukan hanya mereka yang diringkas di sini. Staf SEC siap menjawab pertanyaan Anda dan membantu Anda mematuhi peraturan kami Setelah rea Panduan ini, jika Anda memiliki pertanyaan, silakan hubungi Kantor Interpretasi dan Bimbingan di 202 551-5777 e-mail atau Kantor Wilayah SEC di wilayah Anda Anda akan menemukan daftar nomor telepon yang berguna pada akhir Dari panduan ini, atau di situs web SEC. Anda mungkin ingin berkonsultasi dengan pengacara pribadi yang mengetahui undang-undang sekuritas federal, untuk memastikan bahwa Anda mematuhi semua undang-undang dan peraturan Staf SEC tidak dapat bertindak sebagai individu atau Pengacara broker-dealer Sementara staf mencoba memberikan panduan melalui telepon kepada orang-orang yang mengajukan pertanyaan, panduannya bersifat informal dan tidak mengikat. Petunjuk formal dapat dicari melalui penyelidikan tertulis yang konsisten dengan pedoman SEC untuk tidak bertindak, Penafsiran, dan permintaan pengecualian. II YANG DIPERLUKAN KEPADA REGISTRASI. Kebanyakan broker dan dealer harus mendaftar ke SEC dan bergabung dengan organisasi pengaturan mandiri, atau SRO Bagian ini mencakup faktor-faktor yang menentukan apakah seseorang adalah broker Atau dealer Ini juga menjelaskan jenis broker dan dealer yang tidak perlu mendaftar ke SEC Self-regulatory organization dijelaskan pada Bagian III, di bawah ini. Catatan tentang bank Undang-Undang Bursa juga berisi ketentuan khusus yang berkaitan dengan aktivitas perantara perdagangan dan transaksi. Bank Silakan lihat Bagian 3 a 4 B dan 3 a 5 C dan ketentuan terkait, dan konsultasikan dengan penasihat Aspek aktivitas agen bank didiskusikan dalam publikasi yang dikeluarkan oleh Divisi Perdagangan dan Pasar SEC, yang berjudul Panduan Kepatuhan Pegawai untuk Bank pada Dealer Pengecualian dan Aturan Wajib Minimum, yang tersedia di situs web SEC di kegiatan pialang Bank dibahas dalam Peraturan R, yang diadopsi secara bersama oleh Komisi dan Dewan Gubernur Sistem Federal Reserve Lihat Exchange Act Release No 56501 24 September 2007 . Siapa Broker. Section 3 a 4 A dari Undang-undang umumnya mendefinisikan broker secara luas seperti halnya. orang yang terlibat dalam bisnis yang mempengaruhi transaksi sekuritas untuk accoun T orang lain. Kadang-kadang Anda dapat dengan mudah menentukan apakah seseorang broker Misalnya, orang yang melakukan transaksi untuk orang lain di bursa efek jelas adalah broker Namun, situasi lain kurang jelas Misalnya, masing-masing individu dan bisnis berikut mungkin Perlu mendaftar sebagai broker, tergantung dari sejumlah faktor. Pencari, pialang bisnis, dan individu atau entitas lain yang terlibat dalam aktivitas berikut. Membagi investor atau pelanggan untuk, membuat rujukan, atau membelah komisi dengan broker-dealer terdaftar, perusahaan investasi atau reksa dana, termasuk hedge fund atau perantara sekuritas lainnya. Menemukan klien perbankan investasi untuk broker-dealer terdaftar. Membahas investor untuk entitas emiten yang menerbitkan sekuritas, bahkan dalam kapasitas konsultan. Memperkenalkan, atau mencari investor untuk, modal ventura atau pembiayaan malaikat, termasuk penempatan pribadi. Menemukan pembeli dan penjual bisnis, yaitu kegiatan Berkaitan dengan merger dan akuisisi di mana sekuritas dilibatkan. Penasihat investasi dan konsultan keuangan. keragang broker asing yang tidak dapat bergantung pada Peraturan 15a-6 berdasarkan Undang-undang yang didiskusikan di bawah ini: perusahaan yang mengoperasikan atau mengendalikan platform elektronik atau platform lainnya untuk memperdagangkan efek. Kepentingan investasi real estat, seperti hak sewa-dalam-kepentingan bersama, itu Adalah sekuritas. persons yang bertindak sebagai agen penempatan untuk penempatan efek pribadi. Pihak yang memasarkan atau mempengaruhi transaksi produk asuransi yang merupakan sekuritas, seperti anuitas variabel, atau produk investasi lainnya yang bersifat sekuritas. Efek yang mempengaruhi transaksi efek untuk akun Yang lain untuk biaya, bahkan ketika orang lain itu adalah teman atau anggota keluarga. Mereka yang memberikan layanan dukungan kepada pialang dan agen perantara yang terdaftar sebagai kontraktor independen, namun bukan merupakan agen perantara untuk mendapatkan informasi tentang orang-orang yang terkait. , Lihat di bawah ini. Untuk menentukan apakah ada orang atau orang atau bisnis ini adalah broker, kami melihat aktivitas yang benar-benar dilakukan orang atau bisnis Anda dapat menemukan analisis berbagai aktivitas dalam keputusan pengadilan federal dan kami Tidak ada tindakan dan surat penafsiran Berikut adalah beberapa pertanyaan yang harus Anda tanyakan untuk menentukan apakah Anda bertindak sebagai br Oker. Do Anda berpartisipasi dalam bagian penting dari transaksi sekuritas, termasuk permintaan, negosiasi, atau pelaksanaan transaksi. Apakah kompensasi Anda untuk berpartisipasi dalam transaksi bergantung pada, atau terkait dengan, hasil atau ukuran transaksi atau kesepakatan Apakah Anda menerima komisi tambahan, seperti biaya 12b-1 Apakah Anda menerima kompensasi terkait transaksi lainnya. Apakah Anda terlibat dalam bisnis yang mempengaruhi atau memfasilitasi transaksi efek. Apakah Anda menangani sekuritas atau dana pihak lain sehubungan dengan transaksi efek?.Apakah ya jawaban atas pertanyaan-pertanyaan ini menunjukkan bahwa Anda mungkin perlu mendaftar sebagai broker. B Siapa Dealernya. Tidak seperti broker, yang bertindak sebagai agen, agen bertindak sebagai principal Bagian 3 a 5 A dari Undang-undang tersebut pada umumnya mendefinisikan Dealer sama seperti setiap orang yang berkecimpung dalam bisnis jual beli sekuritas untuk rekeningnya sendiri, melalui broker atau sebaliknya. Definisi dealer tidak termasuk trader, yaitu seseorang Siapa yang membeli dan menjual sekuritas untuk rekeningnya sendiri, baik secara individu maupun secara fidusia, tapi bukan sebagai bagian dari usaha reguler. Individu yang membeli dan menjual sekuritas untuk mereka umumnya dianggap sebagai pedagang dan bukan dealer. Kadang Anda dapat dengan mudah mengetahui apakah Seseorang adalah dealer Misalnya, perusahaan yang mengiklankan secara terbuka bahwa hal itu membuat pasar sekuritas jelas merupakan agen Situasi lain dapat menjadi kurang jelas. Misalnya, masing-masing individu dan bisnis berikut mungkin perlu mendaftar sebagai dealer, tergantung pada Jumlah faktor. Seseorang yang memegang dirinya sebagai bersedia untuk membeli dan menjual keamanan tertentu secara terus menerus. Seseorang yang mengelola buku perjanjian pembelian kembali yang sesuai atau orang yang menerbitkan atau mendapatkan sekuritas yang juga dia beli dan jual Berikut adalah beberapa pertanyaan yang harus Anda tanyakan untuk menentukan apakah Anda bertindak sebagai dealer. Apakah Anda mengiklankan atau membiarkan orang lain tahu bahwa Anda berada dalam bisnis pembelian dan selli Jika Anda melakukan bisnis dengan publik baik ritel maupun institusional. Apakah Anda membuat pasar atau mengutip harga untuk pembelian dan penjualan satu atau lebih sekuritas. Apakah Anda berpartisipasi dalam kelompok penjualan atau memiliki sekuritas yang wajar. Anda memberikan layanan kepada investor, seperti menangani uang dan surat berharga, memperpanjang kredit, atau memberikan nasehat investasi. Anda bisa menulis kontrak derivatif yang bersifat sekuritas. Ya, jawaban atas salah satu dari pertanyaan ini menunjukkan bahwa Anda mungkin perlu mendaftar sebagai dealer. Apa yang Harus Dilakukan Jika Anda Berpikir Anda Mungkin Broker atau Dealer. Jika Anda melakukan, atau mungkin melakukan, aktivitas broker atau dealer, Anda harus mencari tahu apakah Anda perlu untuk mendaftar Informasi tentang registrasi agen broker Proses diberikan di bawah Jika Anda tidak yakin, Anda mungkin ingin meninjau interpretasi SEC, berkonsultasi dengan penasihat pribadi, atau mintalah saran dari Divisi Perdagangan dan Pasar SEC dengan menghubungi 202 551-5777 atau dengan mengirim e-mail ke Pastikan Untuk memasukkan nomor telepon Anda. Catatan Jika Anda akan bertindak sebagai perantara atau agen, Anda tidak boleh melakukan bisnis sekuritas sampai Anda terdaftar dengan benar. Jika Anda sudah berkecimpung dalam bisnis dan belum terdaftar, Anda harus menghentikan semua aktivitas sampai Anda terdaftar dengan benar Untuk informasi lebih lanjut, silakan lihat Bagian II D dan Bagian III, di bawah ini. Pialang dan Dealer Umumnya Harus Mendaftar ke SEC. Section 15 a 1 dari Undang-undang tersebut pada umumnya membuat haram bagi broker atau dealer manapun untuk menggunakan kiriman tersebut. Atau sarana perdagangan interstate lainnya, seperti telepon, faksimili, atau Internet untuk mempengaruhi transaksi apa pun, atau untuk mendorong atau mencoba mendorong pembelian atau penjualan, keamanan apa pun kecuali jika broker atau agen tersebut terdaftar di Komisi dalam Sesuai dengan Bagian 15 b Undang-Undang Ada beberapa pengecualian terhadap peraturan umum ini yang kami diskusikan di bawah ini. Selain itu, kami mendiskusikan persyaratan pendaftaran khusus yang berlaku untuk broker-dealer pemerintah dan Surat berharga kota, termasuk perjanjian pembelian kembali, di bawah ini.1 Orang Terkait dari Perantara Pedagang. Kami memanggil orang-orang yang bekerja untuk orang-orang yang terkait dengan agen perantara yang terdaftar. Inilah kasusnya apakah individu tersebut adalah karyawan, kontraktor independen, atau bekerja dengan Broker-dealer Orang-orang ini mungkin juga disebut broker saham atau perwakilan terdaftar Meskipun orang-orang yang terkait biasanya tidak perlu mendaftar secara terpisah dengan SEC, mereka harus diawasi dengan benar oleh broker-dealer yang saat ini terdaftar Mereka mungkin juga harus mendaftar dengan self - Organisasi pengatur dimana atasan mereka menjadi anggota, misalnya, Otoritas Regulasi Industri Keuangan, Inc FINRA fka Asosiasi Pedagang Efek Nasional, NASD atau bursa efek nasional Sejauh mana orang-orang yang terkait terlibat dalam aktivitas sekuritas di luar pengawasan Pialang broker mereka, mereka harus mendaftar secara terpisah sebagai broker pialang Par T III, di bawah ini, memberikan pembahasan tentang bagaimana mendaftar sebagai agen broker. Kami tidak membedakan antara karyawan dan orang lain yang terkait dengan tujuan hukum efek. Pialang-pedagang harus mengawasi kegiatan sekuritas personil mereka terlepas dari apakah mereka dianggap sebagai pekerja Atau kontraktor independen sebagaimana didefinisikan dalam undang-undang negara bagian Lihat misalnya, Dalam hal William V Giordano Securities Exchange Act Release No 36742 19 Januari 1996. Undang-undang tersebut juga tidak mengizinkan entitas yang tidak terdaftar untuk menerima pendapatan komisi atas nama perwakilan terdaftar Sebagai contoh , Orang-orang yang terkait tidak dapat membuat entitas terpisah untuk menerima cek komisi Entitas yang tidak terdaftar yang menerima pendapatan komisi dalam situasi ini harus mendaftar sebagai agen broker See misalnya, Wolff Juall Investments, LLC, 17 Mei 2005 Dalam keadaan tertentu, entitas yang tidak terdaftar dapat Terlibat dalam layanan administrasi penggajian yang melibatkan pialang perantara Lihat misalnya, surat ADP Tot AlSource, Inc 4 Desember 2007 Dalam situasi seperti itu, pialang broker biasanya mempekerjakan dan mengawasi semua aspek pekerjaan karyawan dan menggunakan administrator penggajian dan tunjangan hanya sebagai sarana untuk memusatkan layanan personalia.2 Pedagang Pialang Pedagang Intrastate. - dealer yang melakukan semua bisnisnya di satu negara tidak harus mendaftar dengan registrasi SEC State adalah masalah lain Lihat Bagian III di bawah Pengecualian yang diberikan untuk aktivitas agen broker intrastate sangat sempit Agar memenuhi syarat, semua aspek dari semua transaksi harus dilakukan. Dilakukan di dalam batas satu negara Ini berarti bahwa, tanpa registrasi SEC, agen broker tidak dapat berpartisipasi dalam transaksi yang dilakukan di bursa efek nasional. Penyalur broker yang memenuhi persyaratan pengecualian agen perantara intrastate tidak akan berhenti. Untuk memenuhi syarat untuk pengecualian broker-dealer intrastate semata-mata karena memiliki situs web yang dapat dilihat oleh orang luar negara, asalkan broker - dealer mengambil tindakan yang dirancang secara wajar untuk memastikan bahwa bisnisnya tetap eksklusif secara keseluruhan Langkah-langkah ini dapat mencakup penggunaan penafian yang secara jelas menunjukkan bahwa bisnis agen broker bersifat eksklusif dan bahwa agen broker hanya dapat bertindak untuk atau dengan, dan memberikan broker - penyediaan layanan untuk, seseorang di negara bagiannya, selama agen broker tidak memberikan layanan broker-dealer kepada orang-orang yang mengindikasikannya, atau bahwa agen broker memiliki alasan untuk percaya, bukan di agen broker Negara tempat tinggal. Tindakan ini tidak dimaksudkan untuk menjadi eksklusif. Pialang broker dapat menerapkan tindakan lain yang dirancang secara wajar untuk memastikan bahwa ia tidak menyediakan layanan perantara agen kepada orang-orang yang tidak berada dalam status yang sama dengan agen broker. Namun, Bisnis perantara tidak akan diagungkan secara eksklusif jika menjual sekuritas atau memberikan layanan perantara agen perantara kepada orang lain yang menunjukkan bahwa itu adalah, atau bahwa agen broker memiliki r Alasan untuk percaya adalah, bukan di dalam wilayah agen broker-residence. Untuk informasi tambahan mengenai penggunaan Internet oleh pedagang perantara intrastate, lihat. Sebuah berita tentang surat berharga pemerintah kota dan pemerintah Tidak ada pengecualian intrastate dari pendaftaran untuk surat berharga kota Dealer atau pialang sekuritas pemerintah dan dealer.3 Broker-Dealer yang Membatasi Bisnis mereka dengan Efek yang Dikecualikan dan Dikecualikan. Pialang perantara yang hanya bertransaksi di surat kabar komersial, menerima bankir, dan tagihan komersial tidak perlu mendaftar ke SEC berdasarkan Bagian 15 b atau bagian lain dari Undang-undang Di sisi lain, orang-orang yang bertransaksi hanya dengan sekuritas tertentu yang dikecualikan, sebagaimana didefinisikan dalam Bagian 3 dari 12 Undang-Undang, tidak harus mendaftar berdasarkan Bagian 15 b, namun mungkin harus mendaftar di bawah Ketentuan lain dari Undang-Undang Sebagai contoh, beberapa broker-dealer sekuritas pemerintah, yang dikecualikan sekuritas, harus mendaftar sebagai broker sekuritas pemerintah atau dealer u Bagian 15C dari Undang-undang, seperti yang dijelaskan pada Bagian II E, di bawah.4 Agenda Broker Harus Mendaftar Sebelum Menjual Efek yang Tidak terdaftar Termasuk Penawaran Penempatan Pribadi atau Regulasi. Sekuritas dijual dalam transaksi yang dibebaskan dari pendaftaran berdasarkan Securities Act of 1933 Undang-undang tahun 1933 belum tentu merupakan jaminan yang dikecualikan berdasarkan Undang-Undang Pertukaran. Misalnya, seseorang yang menjual sekuritas yang dibebaskan dari pendaftaran berdasarkan Peraturan D Undang-Undang 1933 tetap harus mendaftar sebagai agen perantara. Dengan kata lain, agen penempatan tidak Dikecualikan dari registrasi agen broker.5 Pembebasan Emiten dan Orang Terkait Emiten Aturan 3a4-1. Penyesuaian pada umumnya bukan broker karena mereka menjual sekuritas untuk rekening mereka sendiri dan bukan untuk rekening orang lain. Selain itu, emiten umumnya bukan dealer karena mereka Jangan membeli dan menjual sekuritas mereka untuk rekening mereka sendiri sebagai bagian dari Emiten bisnis biasa yang kegiatannya melampaui penjualan sekuritas mereka sendiri, h Bagaimanapun, perlu mempertimbangkan apakah mereka perlu mendaftar sebagai brokerer dealer Ini termasuk penerbit yang membeli sekuritas mereka dari investor, dan juga emiten yang secara efektif mengoperasikan pasar dengan sekuritas atau sekuritas yang memiliki fitur atau persyaratan dapat berubah atau diubah. Apa yang disebut pembebasan emiten tidak berlaku untuk personil perusahaan yang secara rutin melakukan bisnis efek transaksi efek untuk perusahaan atau perusahaan terkait seperti mitra umum yang mencari investor dalam kemitraan terbatas Karyawan dan orang terkait lainnya dari penerbit yang Membantu menjual sekuritasnya mungkin merupakan broker, terutama jika mereka dibayar untuk menjual sekuritas ini dan memiliki beberapa tugas lainnya. Exchange Act Rule 3a4-1 menetapkan bahwa orang atau karyawan terkait dari penerbit yang berpartisipasi dalam penjualan surat berharga emiten Tidak perlu mendaftar sebagai agen broker jika orang itu, pada saat partisipasi 1 tidak tunduk pada undang-undang di Squalifikasi, sebagaimana didefinisikan dalam Bagian 3 a 39 Undang-undang 2 tidak dikompensasikan dengan pembayaran komisi atau imbalan lainnya yang secara langsung atau tidak langsung diperoleh dari transaksi sekuritas 3 bukan merupakan pihak yang terkait dengan pialang atau agen penjual dan 4 membatasi kegiatan penjualannya sebagaimana ditetapkan. Dalam peraturan. Beberapa emiten menawarkan program reinvestasi dan pembelian saham oleh dividen Dalam kondisi tertentu, emiten dapat membeli dan menjual sekuritasnya sendiri melalui program reinvestasi atau pembelian saham dividen tanpa mendaftar sebagai agen broker Kondisi ini, berkenaan dengan permintaan, biaya dan pengeluaran , Dan penanganan dana peserta dan surat berharga, dijelaskan dalam Surat Pernyataan Pelepasan Efek No 35041 1 Desember 1994, 59 FR 63393 1994 Surat STA Meskipun Peraturan M 2 menggantikan Peraturan 10b-6 dan menggantikan STA Letter tahun 1994, jabatan staf yang diambil di Surat ini mengenai penerapan Bagian 15 a Exchange Act tetap berlaku See 17 CFR 242 102 c dan Securities Exchange Ac T Rilis No 38067 20 Desember 1996, 62 FR 520, 532 n 100 3 Januari 1997.6 Aturan Pembebasan Perantara Pedagang Asing 15a-6. SEC umumnya menggunakan pendekatan teritorial dalam mengajukan persyaratan pendaftaran ke operasi pialang internasional di bawah Pendekatan ini, semua broker-dealer yang beroperasi secara fisik di Amerika Serikat yang mendorong atau mencoba untuk menginduksi transaksi efek harus mendaftar ke SEC, walaupun kegiatan mereka ditujukan hanya kepada investor asing di luar Amerika Serikat. Selain itu, pialang asing , Dari luar Amerika Serikat, menginduksi atau mencoba untuk menginduksi transaksi efek oleh orang lain di Amerika Serikat, atau yang menggunakan sarana atau sarana perdagangan interstate Amerika Serikat untuk tujuan ini, juga harus mendaftar Ini termasuk penggunaan Internet untuk menawarkan sekuritas, meminta transaksi efek, atau mengiklankan layanan investasi kepada orang-orang AS Lihat Securities Exchange Act Release No 39779 March 2 3, 1998.Para pedagang pialang elektronik yang membatasi kegiatan mereka kepada pihak-pihak yang diizinkan berdasarkan Peraturan 15a-6 Undang-Undang, bagaimanapun, dapat dibebaskan dari pendaftaran agen perantara AS. Pialang perantara asing yang ingin mengandalkan pengecualian ini harus meninjau Bursa Efek Act Release No 27017 efektif 15 Agustus 1989, 54 FR 30013, untuk menentukan apakah mereka memenuhi persyaratan Peraturan 15a-6 Lihat juga surat-surat Kegiatan Efek dari Dealer Luar Biasa AS-9 April dan 28 April 1997 Selain itu, pada bulan April 2005, Divisi Regulasi Pasar mengeluarkan tanggapan atas pertanyaan yang sering diajukan mengenai Peraturan 15a-6 sehubungan dengan Peraturan AC See Regulation AC yang akan dibahas di Bagian VB, di bawah ini. Persyaratan Mengenai Pialang dan Dealer Efek Pemerintah dan Kota, termasuk Kesepakatan Repurchase Agreement. Broker-dealer yang membatasi aktivitas mereka ke sekuritas pemerintah atau kota memerlukan pendaftaran khusus. Yang membatasi aktivitas mereka terhadap sekuritas pemerintah tidak memiliki t O mendaftar sebagai dealer pialang tujuan umum di bawah Bagian 15 b dari agen broker Tujuan Umum yang melakukan bisnis sekuritas pemerintah, bagaimanapun, harus mencatat kegiatan ini dalam Formulir BD BD mereka dibahas di bawah Semua perusahaan yang merupakan pialang atau Dealer di sekuritas pemerintah harus mematuhi peraturan yang diadopsi oleh Sekretaris Perbendaharaan, serta peraturan SEC. Pengguna yang membatasi bisnis sekuritas mereka untuk membeli dan menjual sekuritas kota untuk rekening mereka sendiri dealer sekuritas kota harus mendaftar sebagai agen broker tujuan umum. Namun, jika entitas tersebut adalah bank atau memenuhi persyaratan pengecualian intrastate yang dibahas di Bagian II D 2 di atas, mereka harus mendaftarkan diri sebagai dealer sekuritas kota Pialang sekuritas kota selain bank harus mendaftar sebagai broker pialang tujuan umum kecuali jika memenuhi syarat untuk Pengecualian intrastate Lihat Bagian II D 2 di atas. Pertama yang menjalankan sebuah buku yang cocok dengan kesepakatan pembelian kembali atau pinjaman saham lainnya dianggap sebagai dealer. Karena dealer yang menjual buku berdiri sendiri karena bersedia membeli dan menjual sekuritas, dan karena itu terlibat dalam bisnis jual beli sekuritas, ia harus mendaftar sebagai agen broker. Aturan Khusus yang Berlaku untuk Bank dan Lembaga Keuangan Sejenisnya Catatan Bank, penghematan, dan lembaga keuangan lainnya harus sadar bahwa Komisi telah menerapkan peraturan yang mungkin mempengaruhi mereka. Lihat Regulasi R, Securities Exchange Act Release No 34-56501 24 September 2007, 72 FR 56514 3 Oktober 2007, dan Sekuritas Exchange Act Release No 34-56502 24 September 2007 72 FR 56562 3 Okt 2007.Banks Sebelum diberlakukannya Gramm-Leach-Bliley Act GLBA pada tahun 1999, bank-bank AS dikecualikan dari definisi broker dan dealer berdasarkan Undang-Undang GLBA mengubah Undang-Undang Pertukaran, dan bank-bank sekarang memiliki pengecualian dan pengecualian tertentu dari registrasi agen broker Saat ini, sebagai hasil dari pembuatan peraturan Komisi, bank-bank tengah menjalani tahap demi tahap untuk mematuhi undang-undang yang baru. Sejak bulan Oktober 1, 2003, bank-bank yang membeli dan menjual sekuritas harus mempertimbangkan apakah mereka adalah dealer berdasarkan undang-undang sekuritas federal Divisi Perdagangan dan Pasar telah mengeluarkan panduan kepatuhan khusus untuk bank yang diberi tahu Panduan Kepatuhan Pegawai kepada Bank mengenai Pelarangan dan Aturan Dealer, yang mana Yang tersedia di situs SEC di kegiatan broker Bank dibahas dalam Peraturan R, yang diadopsi secara bersama oleh Komisi dan Dewan Gubernur Sistem Federal Reserve Lihat Exchange Act Release No 56501 24 September 2007 yang dapat ditemukan di. Pengecualian dan pengecualian bank hanya berlaku untuk bank, dan bukan kepada entitas terkait. Penting untuk dicatat bahwa pengecualian yang berlaku untuk bank berdasarkan Exchange Act, sebagaimana telah diubah oleh GLBA, tidak berlaku untuk entitas lain, termasuk anak perusahaan dan afiliasi bank, yang Bukan bank sendiri. Dengan demikian, anak perusahaan dan afiliasi bank yang terlibat dalam kegiatan agen broker diharuskan mendaftar sebagai broker-dealer di bawah Undang-undang Selain itu, bank-bank yang bertindak sebagai dealer sekuritas kota atau sebagai pialang sekuritas pemerintah atau dealer terus diminta untuk mendaftar berdasarkan Undang-Undang. Kekurangan Berdasarkan undang-undang, asosiasi tabungan hemat memiliki status yang sama dengan bank, dan mungkin memanfaatkan pengecualian yang ditargetkan yang sama. Dan pembebasan dari registrasi agen broker sebagai bank Untuk informasi lebih lanjut, lihat Panduan Kepatuhan Staf kepada Bank pada Pelelangan dan Aturan Pengadaan Pedagang, seperti di atas Seperti halnya bank, penting untuk dicatat bahwa pengecualian dan pengecualian yang berlaku untuk penghematan tidak berlaku untuk yang lain. Entitas, termasuk anak perusahaan dan afiliasinya yang tidak kekurangan Oleh karena itu, anak perusahaan dan afiliasi dari penghematan yang terlibat dalam kegiatan agen broker diminta untuk mendaftar sebagai pialang pialang di bawah Undang-undang. Pengaturan Jaringan Serikat Pekerja dan Lembaga Keuangan Pengecualian dan pengecualian yang berlaku untuk Bank di bawah Exchange Act tidak berlaku untuk jenis lembaga keuangan lainnya, seperti Serikat kredit Staf SEC, bagaimanapun, telah mengizinkan lembaga keuangan tertentu, seperti credit unions, untuk memberikan surat berharga kepada nasabah mereka tanpa mendaftar sebagai broker-dealer. Hal ini dilakukan melalui pengaturan jaringan, dimana agen broker terafiliasi atau pihak ketiga menyediakan Layanan perantara untuk pelanggan lembaga keuangan, sesuai dengan persyaratan yang dinyatakan dalam surat-surat tanpa-tindakan dan Peraturan NASD 2350. Di bawah pengaturan jaringan, lembaga keuangan dapat berbagi dalam komisi yang dihasilkan oleh pelanggan rujukan mereka, dalam kondisi tertentu Lembaga keuangan yang terlibat dalam hal tersebut Jaringan harus sesuai dengan hukum yang berlaku dan petunjuk staf Komisi Lihat contohnya, surat kembali Chubb Securities Corporation 24 November 1993 dan NASD Rule 2350 berlaku untuk broker-dealer yang mengadakan pengaturan jaringan dengan bank, gudang, dan serikat kredit. G Jaringan Agen Asuransi. Staf SEC mengizinkan agen asuransi masuk Produk jaminan yang juga memiliki sekuritas seperti anuitas variabel yang tersedia bagi pelanggan mereka tanpa mendaftar sebagai broker-dealer dalam kondisi tertentu Hal ini dilakukan melalui pengaturan jaringan, dimana agen broker afiliasi atau pihak ketiga menyediakan layanan perantara untuk pelanggan agen asuransi. , Sesuai dengan persyaratan yang dinyatakan dalam huruf no-action Pengaturan ini dirancang untuk mengatasi kesulitan hukum negara bagian ganda dan federal yang berlaku untuk penjualan produk ini Melalui pengaturan jaringan, agen asuransi dapat berbagi dalam komisi yang dihasilkan oleh pelanggan mereka yang dimaksud dalam kondisi tertentu. Agen asuransi yang terlibat dalam jaringan semacam itu harus mematuhi hukum yang berlaku dan petunjuk staf Komisi Perusahaan asuransi harus berkonsultasi dengan surat ulang Layanan Pialang Pertama Amerika, Inc 28 September 1995 Mereka yang tertarik dalam menyusun pengaturan semacam itu harus menghubungi penasihat pribadi atau SEC Staf untuk furth Informasi yang didapat. Not, pengaturan jaringan asuransi terbatas pada produk asuransi yang juga merupakan sekuritas. Mereka tidak mencakup penjualan reksa dana dan sekuritas lainnya yang tidak menunjukkan kesulitan peraturan yang sama. Lihat surat kembali Lincoln Financial Advisors Corp 20 Februari 1998.H Real Efek Perumahan dan Agen Pialang Real Estat. Tawaran real estat seperti itu, tanpa pengaturan jaminan apapun dengan penjual atau pihak lain, tidak melibatkan penawaran keamanan. Bila ditawarkan oleh real estat bersamaan dengan layanan tertentu, constitute an investment contract, and thus, a security See generally Securities Act Release No 5347 Jan 4, 1973 providing guidelines as to the applicability of the federal securities laws to offers and sales of condominiums or units in a real estate development. There is no general exception from the broker-dealer registration requirements for licensed real estate brokers or agents who engage in the business of effect ing transactions in real estate securities In the past, the Division staff has granted no-action relief from the registration requirements to licensed real estate personnel that engage in limited activities with respect to the sale of condominium units coupled with an offer or agreement to perform or arrange certain rental or other services for the purchaser The relief provided in these letters is limited solely to their facts and should not be relied upon for activities relating to sales of other types of real estate securities, including tenants-in-common interests in real property See generally NASD Notice to Members 05-18, addressing tenants-in-common interests in real property. I Broker-Dealer Relationships with Affinity Groups. Broker-dealers may enter into arrangements to offer services to members of certain non-profit groups, including civic organizations, charities, and educational institutions that rely upon private donations These arrangements are subject to certain conditions to ensure that the organizations, or affinity groups, do not develop a salesman s stake with respect to the sale of securities See for example, letter re Attkisson, Carter Akers June 23, 1998.III HOW TO REGISTER AS A BROKER-DEALER. A broker-dealer may not begin business until. it has properly filed Form BD, and the SEC has granted its registration. it has become a member of an SRO. it has become a member of SIPC, the Securities Investor Protection Corporation. it complies with all applicable state requirements and. its associated persons have satisfied applicable qualification requirements. If a broker-dealer does not qualify for any of the exceptions or exemptions outlined in the sections above, it must register with the Commission under Section 15 b of the Act Broker-dealers register by filing an application on Form BD, which you may obtain from the SEC s webpage at or through the SEC s Publications Office at 202 551-4040 You also use Form BD to. apply for membership in an SRO, such as FINR A or a registered national securities exchange. give notice that you conduct government securities activities or. apply for broker-dealer registration with each state in which you plan to do business. Form BD asks questions about the background of the broker-dealer and its principals, controlling persons, and employees The broker-dealer must meet the statutory requirements to engage in a business that involves high professional standards, and quite often includes the more rigorous responsibilities of a fiduciary. To apply for registration, you must file one executed copy of Form BD through the Central Registration Depository CRD , which is operated by FINRA The only exception is for banks registering as municipal securities dealers, which file Form MSD directly with the SEC and with their appropriate banking regulator Form BD contains additional filing instructions The SEC does not charge a filing fee, but the SROs and the states may Applicants that reside outside the U S must also appoint the SEC as agent for service of process using a standard form Incomplete applications are not considered filed and will be returned to the applicant for completion and re-submission. Within 45 days of filing a completed application, the SEC will either grant registration or begin proceedings to determine whether it should deny registration An SEC registration may be granted with the condition that SRO membership must be obtained The SROs have independent membership application procedures and are not required to act within 45 days of the filing of a completed application In addition, state registrations may be required A broker-dealer must comply with relevant state law as well as federal law and applicable SRO rules Timeframes for registration with individual states may differ from the federal and SRO timeframes As such, when deciding to register as a broker-dealer, it is important to plan for the time required for processing Federal, state, and SRO registration or membership applicati ons. Duty to update Form BD A registered broker-dealer must keep its Form BD current Thus, it must promptly update its Form BD by filing amendments whenever the information on file becomes inaccurate or incomplete for any reason. Prohibited Broker-Dealer Names Title 18, Section 709 of the United States Code makes it a criminal offense to use the words National, Federal, United States, Reserve, or Deposit Insurance in the name of a person or organization in the brokerage business, unless otherwise allowed by federal law Further, a broker-dealer name that is otherwise materially misleading would become subject to scrutiny under Exchange Act Section 10 b , and Rule 10b-5 thereunder, the general antifraud rules, and any other applicable provisions. B SRO Membership Section 15 b 8 and Rule 15b9-1.Before it begins doing business, a broker-dealer must become a member of an SRO SROs assist the SEC in regulating the activities of broker-dealers FINRA and the national securities exchanges are all S ROs If a broker-dealer restricts its transactions to the national securities exchanges of which it is a member and meets certain other conditions, it may be required only to be a member of those exchanges If a broker-dealer effects securities transactions other than on a national securities exchange of which it is a member, however, including any over-the-counter business, it must become a member of FINRA, unless it qualifies for the exemption in Rule 15b9-1 FINRA s webpage at provides detailed information on the FINRA membership process You may also wish to consult the web pages of the individual exchanges for additional information. Firms that engage in transactions in municipal securities must also comply with the rules of the Municipal Securities Rulemaking Board, or MSRB The MSRB is an SRO that makes rules governing transactions in municipal securities, but, unlike other SROs, it does not enforce compliance with its rules Compliance with MSRB rules is monitored and enforced by FINR A and the SEC in the case of broker-dealers , and the Federal bank regulators and the SEC in the case of banks You may wish to consult the MSRB s website at for additional information, or you can call the MSRB at 703 797-6600.C SIPC Membership. Every registered broker-dealer must be a member of the Securities Investor Protection Corporation, or SIPC, unless its principal business is conducted outside of the United States or consists exclusively of the sale or distribution of investment company shares, variable annuities, or insurance Each SIPC member must pay an annual fee to SIPC SIPC insures that its members customers receive back their cash and securities in the event of a member s liquidation, up to 500,000 per customer for cash and securities Claims for cash are limited to 100,000 For further information, contact SIPC, 805 15th St NW, Suite 800, Washington, DC 20005 Telephone 202 371-8300, fax 202 371-6728, or visit SIPC s website at. D State Requirements. Every state has its own req uirements for a person conducting business as a broker-dealer within that state Each state s securities regulator can provide you with information about that state s requirements You can obtain contact information for these regulators from the North American Securities Administrators Association, Inc NASAA , 750 First Street, NE, Suite 1140, Washington, DC 20002 Telephone 202 737-0900, or visit NASAA s website at. E Associated Persons Section 3 a 18 Rule 15b7-1.The Act defines an associated person of a broker-dealer as any partner, officer, director, branch manager, or employee of the broker-dealer, any person performing similar functions, or any person controlling, controlled by, or under common control with, the broker-dealer A broker-dealer must file a Form U-4 with the applicable SRO for each associated person who will effect transactions in securities when that person is hired or otherwise becomes associated Form U-4 is used to register individuals and to record these individuals prior employment and disciplinary history. An associated person who effects or is involved in effecting securities transactions also must meet qualification requirements These include passing an SRO securities qualification examination Many individuals take the comprehensive Series 7 exam If individuals engage only in activities involving sales of particular types of securities, such as municipal securities, direct participation programs limited partnerships or mutual funds, they may wish to take a specialized examination focused on that type of security, instead of the general securities examination There is also a special exam for assistant representatives, whose activities are limited to accepting unsolicited customer orders for execution by the firm Supervisory personnel, and those who engage in specialized activities such as options trading, must take additional exams that cover those areas These examinations require the Series 7 exam as a prerequisite. You can obtain copies of Form U-4, as well as information on securities qualification examinations, from an SRO FINRA s website at contains detailed information and guidance for individuals who wish to obtain a series license through FINRA Also note that individual states have their own licensing and registration requirements, so you should consult with the applicable state securities regulators for further information. Note If you hold a series license, you must be properly associated with a registered broker-dealer to effect securities transactions It is not sufficient merely to hold a series license when engaging in securities business If you hold a series license and wish to start an independent securities business, or otherwise wish to effect securities transactions outside of an associated person relationship, you would first need to register as a broker-dealer. F Successor Broker-Dealer Registration Rules 15b1-3, 15Ba2-4, and 15Ca2-3.A successor broker-dealer assumes substantially all of the assets and liabil ities, and continues the business, of a registered predecessor broker-dealer A successor broker-dealer must file a new Form BD or, in special instances, amend the predecessor broker-dealer s Form BD within 30 days after such succession The filing should indicate that the applicant is a successor See Securities Exchange Act Release No 31661 December 28, 1992 , 58 FR 7, which is available on the SEC s website at See also, the instructions to Form BD. G Withdrawal from Registration Rule 15b6-1 Cancellation of Registration. When a registered broker-dealer stops doing business, it must file a Form BDW to withdraw its registration with the SEC and with the states and SROs of which it is a member This form requires the broker-dealer to disclose the amount of any funds or securities it owes customers, and whether it is the subject of any proceedings, unsatisfied judgments, liens, or customer claims These disclosures help to ensure that a broker-dealer s business is concluded in an orderly manne r and that customers funds and securities are protected In most cases, a broker-dealer must also file a final FOCUS report Form BDW may also be used by a broker-dealer to withdraw from membership with particular SROs, or to withdraw from registration with particular states, without withdrawing all of its registrations and memberships. Form BDW is not considered filed unless it is deemed complete by the SEC and the SRO that reviews the filing The SEC may also cancel a broker-dealer s registration if it finds that the firm is no longer in existence or has ceased doing business as a broker-dealer. IV SECURITY FUTURES. Security futures, which are contracts of sale for future delivery of a single security or a narrow-based security index, are regulated as both securities by the SEC and as futures by the Commodity Futures Trading Commission CFTC As a result, firms that conduct business in security futures must be registered with both the SEC and the CFTC Federal law permits firms already regist ered with either the SEC or the CFTC to register with the other agency, for the limited purpose of trading security futures, by filing a notice Specifically, firms registered as general purpose broker-dealers under Section 15 b of the Act may notice register with the CFTC Likewise, futures commission merchants and introducing brokers registered with the CFTC may notice register with the SEC Section 15 b 12 of the Act provides a limited exception to this notice registration requirement for certain natural persons who are members of security futures exchanges However, futures commission merchants or introducing brokers that conduct a business in securities other than security futures must be registered as general-purpose broker-dealers For more information on this topic, See Exchange Act Release No 44730 effective August 27, 2001 , 66 FR 45138, and 66 FR 43080 effective September 17, 2001.V CONDUCT REGULATION OF BROKER-DEALERS. Broker-dealers, like other securities market participants, mu st comply with the general antifraud provisions of the federal securities laws Broker-dealers must also comply with many requirements that are designed to maintain high industry standards We discuss some of these provisions below. A Antifraud Provisions Sections 9 a , 10 b , and 15 c 1 and 2.The antifraud provisions prohibit misstatements or misleading omissions of material facts, and fraudulent or manipulative acts and practices, in connection with the purchase or sale of securities 3 While these provisions are very broad, the Commission has adopted rules, issued interpretations, and brought enforcement actions that define some of the activities we consider manipulative, deceptive, fraudulent, or otherwise unlawful 4 Broker-dealers must conduct their activities so as to avoid these kinds of practices.1 Duty of Fair Dealing. Broker-dealers owe their customers a duty of fair dealing This fundamental duty derives from the Act s antifraud provisions mentioned above Under the so-called shing le theory, by virtue of engaging in the brokerage profession e g hanging out the broker-dealer s business sign, or shingle , a broker-dealer represents to its customers that it will deal fairly with them, consistent with the standards of the profession Based on this important representation, the SEC, through interpretive statements and enforcement actions, and the courts, through case law, have set forth over time certain duties for broker-dealers These include the duties to execute orders promptly, disclose certain material information i e information the customer would consider important as an investor , charge prices reasonably related to the prevailing market, and fully disclose any conflict of interest. SRO rules also reflect the importance of fair dealing For example, FINRA members must comply with NASD s Rules of Fair Practice These rules generally require broker-dealers to observe high standards of commercial honor and just and equitable principles of trade in conducting their b usiness The exchanges and the MSRB have similar rules.2 Suitability Requirements. 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. A broker-dealer also has an obligation to determine customer-specific suitability In particular, a broker-dealer must make recommendations based on a customer s financial situation, needs, and oth er security holdings This requirement has been construed to impose a duty of inquiry on broker-dealers to obtain relevant information from customers relating to their financial situations and to keep such information current SROs consider recommendations to be unsuitable when they are inconsistent with the customer s investment objectives.3 Duty of Best Execution. The duty of best execution, which also stems from the Act s antifraud provisions, requires a broker-dealer to seek to obtain the most favorable terms available under the circumstances for its customer orders This applies whether the broker-dealer is acting as agent or as principal. The SRO rules also include a duty of best execution For example, FINRA members must use reasonable diligence to determine the best market for a security and buy or sell the security in that market, so that the price to the customer is as favorable as possible under prevailing market conditions.4 Customer Confirmation Rule Rule 10b-10 and MSRB rule G - 15.A broker-dealer must provide its customers, at or before the completion of a transaction, with certain information, including. the date, time, identity, price, and number of shares involved. its capacity agent or principal and its compensation for agency trades, compensation includes its commission and whether it receives payment for order flow 5 and for principal trades, mark-up disclosure may be required. the source and amount of any third party remuneration it has received or will receive 6.other information, both general such as, if the broker-dealer is not a SIPC member and transaction-specific such as the yield, in most transactions involving debt securities. A broker-dealer may also be obligated under the antifraud provisions of the Act to disclose additional information to the customer at the time of his or her investment decision.5 Disclosure of Credit Terms Rule 10b-16.Broker-dealers must notify customers purchasing securities on credit about the credit terms and the status of their accounts A broker-dealer must establish procedures for disclosing this information before it extends credit to a customer for the purchase of securities A broker-dealer must give the customer this information at the time the account is opened, and must also provide credit customers with account statements at least quarterly.6 Restrictions on Short Sales Regulation SHO. A short sale is generally a sale of a security that the seller doesn t own or for which the seller delivers borrowed shares Regulation SHO was adopted in 2004 to update short sale regulation in light of numerous market developments since short sale regulation was first adopted in 1938 Compliance with Regulation SHO began on January 3, 2005 Some of the goals of Regulation SHO include. Establishing uniform locate and close-out requirements in order to address problems associated with failures to deliver, including potentially abusive naked short selling. Locate Requirement Regulation SHO requires a broker-dealer to hav e reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due before effecting a short sale order in any equity security This locate must be made and documented prior to effecting the short sale Market makers engaged in bona fide market making are exempted from the locate requirement. Close-out Requirement Regulation SHO imposes additional delivery requirements on broker-dealers for securities in which there are a relatively substantial number of extended delivery failures at a registered clearing agency threshold securities For instance, with limited exception, Regulation SHO requires brokers and dealers that are participants of a registered clearing agency to take action to close-out failure-to-deliver positions open fails in threshold securities that have persisted for 13 consecutive settlement days Closing out requires the broker or dealer to purchase securities of like kind and quantity Until the position is closed out, the broker or dealer and any broker or dealer for which it clears transactions for example, an introducing broker may not effect further short sales in that threshold security without borrowing or entering into a bona fide agreement to borrow the security known as the pre-borrowing requirement. Creating uniform order marking requirements for sale s of all equity securities This means that a broker-dealer must mark orders as long or short. For further information, please see the adopting release for Regulation SHO, as well as Frequently Asked Questions, Key Points, and other related materials at.7 Trading During an Offering Regulation M. Regulation M is designed to protect the integrity of the securities trading market as an independent pricing mechanism by governing the activities of underwriters, issuers, selling security holders, and other participants in connection with a securities offering These rules are aimed at preventing persons having an interest in an offering from influencing the market price for the offered security in order to facilitate a distribution The adopting release for Regulation M is available at. Rule 101 of Regulation M generally prohibits underwriters, broker-dealers and other distribution participants from bidding for, purchasing, or attempting to induce any person to bid for or purchase, any security wh ich is the subject of a distribution until the applicable restricted period has ended An offering s restricted period begins either one or five business days depending on the trading volume value of the offered security and the public float value of the issuer before the day of the offering s pricing and ends upon completion of the distribution. Rule 101 contains various exceptions that are designed to permit an orderly distribution of securities and limit disruption in the market for the securities being distributed For example, underwriters can continue to trade in actively-traded securities of larger issuers securities with an average daily trading volume, or ADTV, value of 1 million or more and whose issuers have a public float value of at least 150 million In addition, the following activities, among others, may be excepted from Rule 101, if they meet specified conditions. disseminating research reports. making unsolicited purchases. purchasing a group, or basket of 20 or more securit ies. exercising options, warrants, rights, and convertible securities. effecting transactions that total less than 2 of the security s ADTV and. effecting transactions in securities sold to qualified institutional buyers. Rule 102 of Regulation M prohibits issuers, selling security holders, and their affiliated purchasers from bidding for, purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of a distribution until after the applicable restricted period. Rule 103 of Regulation M governs passive market making by broker-dealers participating in an offering of a Nasdaq security. Rule 104 of Regulation M governs stabilization transactions, syndicate short covering activity, and penalty bids. Rule 105 of Regulation M prevents manipulative short sales prior to pricing an offering by prohibiting the purchase of offering securities if a person sold short the security that is the subject of the offering during the Rule 105 restricted period The rule contains exceptions for bona fide purchases, separate accounts, and investment companies. For frequently asked questions about Regulation M, see Staff Legal Bulletin No 9 at.8 Restrictions on Insider Trading. The SEC and the courts interpret Section 10 b and Rule 10b-5 under the Act to bar the use by any person of material non-public information in the purchase or sale of securities, whenever that use violates a duty of trust and confidence owed to a third party Section 15 f of the Act specifically requires broker-dealers to have and enforce written policies and procedures reasonably designed to prevent their employees from misusing material non-public information Because employees in the investment banking operations of broker-dealers frequently have access to material non-public information, firms need to create procedures designed to limit the flow of this information so that their employees cannot use the information in the trading of securities Broker-dealers can use these informati on barriers as a defense to a claim of insider trading Such procedures typically include. training to make employees aware of these restrictions. employee trading restrictions. physical barriers. isolation of certain departments and. limitations on investment bank proprietary trading 7.9 Restrictions on Private Securities Transactions. NASD Rule 3040 provides that no person associated with a member shall participate in any manner in a private securities transaction except in accordance with the provisions of the rule To the extent that any such transactions are permitted under the rule, prior to participating in any private securities transaction, the associated person must provide written notice to the member firm as described in the rule If compensation is involved, the member firm must approve or disapprove the proposed transaction, record it in its books and records, and supervise the transaction as if it were executed on behalf of the member firm Other conditions may also apply In addit ion, private securities transactions of an associated person may be subject to an analysis under Exchange Act Section 10 b and Rule 10b-5, as well as the broker-dealer supervisory provisions of Section 15 f described in Part V A 8, above and Section 15 b 4 E , and other relevant statutory or regulatory provisions. B Analysts and Regulation AC. Regulation AC or Regulation Analyst Certification requires brokers, dealers, and persons associated with brokers or dealers that publish, distribute, or circulate research reports to include in those reports a certification that the views expressed in the report accurately reflect the analyst s personal views The report must also disclose whether the analyst received compensation for the views expressed in the report If the analyst has received related compensation, the broker, dealer, or associated person must disclose its amount, source, and purpose Regulation AC applies to all brokers and dealers, as well as to those persons associated with a br oker or dealer that fall within the definition of covered person Regulation AC also requires that broker-dealers keep records of analyst certifications relating to public appearances. In addition to Commission rules, analyst conduct is governed by SRO rules, such as NASD Rule 2711 and NYSE Rule 472 The SRO rules impose restrictions on analyst compensation, personal trading activities, and involvement in investment banking activities The SRO rules also include disclosure requirements for research reports and public appearances. For further information, including investor guidance, SEC releases, and SRO rules, see In addition, staff responses to frequently asked questions are available at. C Trading by Members of Exchanges, Brokers and Dealers Section 11 a. Broker-dealers that are members of national securities exchanges are subject to additional regulations regarding transactions they effect on exchanges For example, except under certain conditions, they generally cannot effect transactions on exchanges for their own accounts, the accounts of their associated persons, or accounts that they or their associated persons manage Exceptions from this general rule include transactions by market makers, transactions routed through other members, and transactions that yield to other orders Exchange members may wish to seek guidance from their exchange regarding these provisions. D Extending Credit on New Issues Disclosure of Capacity as Broker or Dealer Section 11 d. Section 11 d 1 of the Act generally prohibits a broker-dealer that participates in the distribution of a new issue of securities from extending credit to customers in connection with the new issue during the distribution period and for 30 days thereafter Sales by a broker-dealer of mutual fund shares and variable insurance product units are deemed to constitute participation in the distribution of a new issue Therefore, purchase of mutual fund shares or variable product units using credit extended or arranged by the br oker-dealer during the distribution period is a violation of Section 11 d 1 However, Exchange Act Rule 11d1-2 permits a broker-dealer to extend credit to a customer on newly sold mutual fund shares and variable insurance product units after the customer has owned the shares or units for 30 days. Section 11 d 2 of the Act requires a broker-dealer to disclose in writing, at or before the completion of each transaction with a customer, whether the broker-dealer is acting in the capacity of broker or dealer with regard to the transaction. E Regulation NMS. Regulation NMS addresses four interrelated topics that are designed to modernize the regulatory structure of the U S equity markets 1 order protection, 2 intermarket access, 3 sub-penny pricing, and 4 market data. The Order Protection Rule requires trading centers to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the execution of trades at prices inferior to protected quotations displayed by o ther trading centers, subject to an applicable exception To be protected, a quotation must be immediately and automatically accessible. The Access Rule requires fair and non-discriminatory access to quotations, establishes a limit on access fees to harmonize the pricing of quotations across different trading centers, and requires each national securities exchange and national securities association to adopt, maintain, and enforce written rules that prohibit their members from engaging in a pattern or practice of displaying quotations that lock or cross automated quotations. The Sub-Penny Rule prohibits market participants from accepting, ranking, or displaying orders, quotations, or indications of interest in a pricing increment smaller than a penny, except for orders, quotations, or indications of interest that are priced at less than 1 00 per share. The Market Data Rules update the requirements for consolidating, distributing, and displaying market information In addition, amendments to the joint industry plans for disseminating market information modify the formulas for allocating plan revenues among the self-regulatory organizations and broaden participation in plan governance. Regulation NMS also updates and streamlines the existing Exchange Act rules governing the national market system previously adopted under Section 11A of the Exchange Act, and consolidates them into a single regulation. F Order Execution Obligations Rules 602-604 of Regulation NMS. Broker-dealers that are exchange specialists or Nasdaq market makers must comply with particular rules regarding publishing quotes and handling customer orders These two types of broker-dealers have special functions in the securities markets, particularly because they trade for their own accounts while also handling orders for customers These rules, which include the Quote Rule and the Limit Order Display Rule, increase the information that is publicly available concerning the prices at which investors may buy and se ll exchange-listed and Nasdaq National Market System securities. 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 the lowest price the dealer will accept from a customer to sell the securities and the highest price the dealer will pay a customer to purchase the securities 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 is true only when the ECN itself publishes the improved prices and makes those prices available to the investing public Thus, the Quote Rule ensures that the public has access to the best prices at which specialists and market makers are willing to trade even if those prices are in private trading s ystems. Limit orders are orders to buy or sell securities at a specified price The Limit Order Display Rule requires that specialists and market makers publicly display certain limit orders they receive from customers If the limit order is for a price that is better than the specialist s or market maker s quote, the specialist or market maker must publicly display it The rule benefits investors because the publication of trading interest at prices that improve specialists and market makers quotes present investors with improved pricing opportunities. G Regulation ATS Broker-Dealer Trading Systems. Regulation ATS 17 CFR 242 300 et seq provides a means for broker-dealers to operate automated trading platforms, to collect and execute orders in securities electronically, without registering as a national securities exchange under Section 6 of the Exchange Act or as an exempt exchange pursuant to Section 5 of the Act For purposes of the regulation, an alternative trading system or ATS is any o rganization, association, person, group of persons, or system that constitutes, maintains, or provides a marketplace or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as defined in Rule 3b-16 under the Exchange Act See 17 CFR 242 300 Further, for purposes of the regulation, an ATS may not set rules governing the conduct of subscribers other than with respect to the use of the particular trading system , or discipline subscribers other than by exclusion from trading To the extent that an ATS or the sponsoring broker-dealer seeks to establish conduct or disciplinary rules, the entity may be required to register as a national securities exchange or obtain a Commission exemption from exchange registration based on limited trading volume. In order to acquire the status of an ATS, a firm must first be registered as a broker-dealer, and it must file an initial oper ation report with respect to the trading system on Form ATS at least 20 days before commencing operation The initial operation report must be accurate and kept current The Commission does not issue approval orders for Form ATS filings however, the Form ATS is not considered filed unless it complies with all applicable requirements under the Regulation Regulation ATS contains provisions concerning the system s operations, including fair access to the trading system fees charged the display of orders and the ability to execute orders system capacity, integrity and security record keeping and reporting and procedures to ensure the confidential treatment of trading information. An ATS must file with the Division of Trading and Markets quarterly reports regarding its operations on Form ATS-R An ATS must also comply with any applicable SRO rules and with state laws relating to alternative trading systems and relating to the offer or sale of securities or the registration or regulation of pers ons or entities effecting securities transactions. Finally, an ATS may not use in its name the word exchange, or terms similar to the word exchange, such as the term stock market See 17 CFR 242 301 For further information on the operation and regulation of alternative trading systems, see the adopting release for Regulation ATS at. H Penny Stock Rules Rules 15g-2 through 15g-9, Schedule 15G. Most broker-dealers that effect transactions in penny stocks have certain enhanced suitability and disclosure obligations to their customers 8 A penny stock is generally defined as any equity security other than a security that a is an NMS stock See Rule 600 b 47 listed on a grandfathered national securities exchange, b is an NMS stock listed on a national securities exchange or an automated quotation system sponsored by a registered national securities association including Nasdaq that satisfies certain minimum quantitative listing standards, c has a transaction price of five dollars or more, d is is sued by a registered investment company or by the Options Clearing Corporation, e is a listed security futures product, or f is a security whose issuer has met certain net tangible assets or average revenues See Rule 3a51-1 Penny stocks include the equity securities of private companies with no active trading market if they do not qualify for one of the exclusions from the definition of penny stock. Before a broker-dealer that does not qualify for an exemption 9 may effect a solicited transaction in a penny stock for or with the account of a customer it must 1 provide the customer with a risk disclosure document, as set forth in Schedule 15G, and receive a signed and dated acknowledgement of receipt of that document from the customer See Rule 15g-2 2 approve the customer s account for transactions in penny stocks, provide the customer with a suitability statement, and receive a signed a dated copy of that statement from the customer and 3 receive the customer s written agreement to the transaction See Rule 15g-9 The broker-dealer also must wait at least two business days after sending the customer the risk disclosure document and the suitability statement before effecting the transaction In addition, Exchange Act Rules 15g-3 through 15g-6 generally require a broker-dealer to give each penny stock customer. information on market quotations and, where appropriate, offer and bid prices. the aggregate amount of any compensation received by the broker-dealer in connection with such transaction. the aggregate amount of cash compensation that any associated person of the broker-dealer, who is a natural person and who has communicated with the customer concerning the transaction at or prior to the customer s transaction order, other than a person whose function is solely clerical or ministerial, has received or will receive from any source in connection with the transaction and. monthly account statements showing the market value of each penny stock held in the customer s accou nt. I Privacy of Consumer Financial Information Regulation S-P. Broker-dealers, including foreign broker-dealers registered with the Commission and unregistered broker-dealers in the United States, must comply with Regulation S-P, See 17 CFR Part 248 even if their consumers are non-U S persons or if they conduct their activities through non-U S offices or branches. Regulation S P generally requires a broker-dealer to provide its customers with initial, annual and revised notices containing specified information about the broker-dealer s privacy policies and practices These notices must be clear and conspicuous, and must accurately reflect the broker-dealer s policies and practices See 17 CFR 248 4, 248 5, 248 6 and 248 8 Before disclosing nonpublic personal information about a consumer to a nonaffiliated third party, a broker-dealer must first give a consumer an opt-out notice and a reasonable opportunity to opt out of the disclosure See 17 CFR 248 7 and 248 10 There are exceptions from t hese notice and opt-out requirements for disclosures to other financial institutions under joint marketing agreements and to certain service providers See 17 CFR 248 13 There also are exceptions for disclosures made for purposes such as maintaining or servicing accounts, and disclosures made with the consent or at the direction of a consumer, or for purposes such as protecting against fraud, reporting to consumer reporting agencies, and providing information to law enforcement agencies See 17 CFR 248 14 and 248 15.Regulation S P also imposes limits on the re-disclosure and re-use of information, and on sharing account number information with nonaffiliated third parties for use in telemarketing, direct mail marketing and email marketing See 17 CFR 248 11 and 248 12 In addition, it includes a safeguards rule that requires a broker-dealer to adopt written policies and procedures for administrative, technical, and physical safeguards to protect customer records and information See 17 CFR 2 48 30 a Further, it includes a disposal rule that requires a broker-dealer other than a broker-dealer registered by notice with the Commission to engage solely in transactions in securities futures that maintains or possesses consumer report information for a business purpose to take reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal See 17 CFR 248 30 b. Recently proposed amendments which would further strengthen the privacy protections under Regulation S-P are available at. J Investment Adviser Registration. Broker-dealers offering certain types of accounts and services may also be subject to regulation under the Investment Advisers Act 10 An investment adviser is defined as a person who receives compensation for providing advice about securities as part of a regular business See Section 202 a 11 of the Investment Advisers Act In general, a broker-dealer whose performance of advisory services is solely incidental to the conduct of its business as a broker-dealer and that receives no special compensation is excepted from the definition of investment adviser Thus, for example, a broker-dealer that provides advice and offers fee-based accounts i e accounts that charge an asset-based or fixed fee rather than a commission, mark-up, or mark-down must treat those accounts as advisory because an asset-based fee is considered special compensation Also, under a recently proposed rule, a broker-dealer would be required to treat 1 each account over which it exercises investment discretion as an advisory account, unless the investment discretion is granted by a customer on a temporary or limited basis and 2 an account as advisory if the broker-dealer charges a separate fee for, or separately contracts to provide, advisory services See Finally, under the same proposed rule, a broker-dealer that is registered under the Exchange Act and registered under the Investment Advisers Act would be an investment adviser sole ly with respect to those accounts for which it provides services that subject the broker-dealer to the Investment Advisers Act. VI ARBITRATION. 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.VII FINANCIAL RESPONSIBILITY OF BROKER-DEALERS. Broker-dealers must meet certain financial responsibility requirements, including. maintaining minimum amounts of liquid assets, or net capital. taking certain steps to safeguard the customer funds and securities and. making and preserving accurate books and records. A Net Capital Rule Rule 15c3-1.The purpose of this rule is to require a broker-dealer to have at all times enough liquid assets to promptly satisfy the claims of customers if the broker-dealer goes out of business Under th is rule, broker-dealers must maintain minimum net capital levels based upon the type of securities activities they conduct and based on certain financial ratios For example, broker-dealers that clear and carry customer accounts generally must maintain net capital equal to the greater of 250,000 or two percent of aggregate debit items Broker-dealers that do not clear and carry customer accounts can operate with lower levels of net capital. B Use of Customer Balances Rule 15c3-2.Broker-dealers that use customers free credit balances in their business must establish procedures to provide specified information to those customers, including. the amount due to those customers. the fact that such funds are not segregated and may be used by the broker-dealer in its business and. the fact that such funds are payable on demand of the customer. C Customer Protection Rule Rule 15c3-3.This rule protects customer funds and securities held by broker-dealers Under the rule, a broker-dealer must have posses sion or control of all fully-paid or excess margin securities held for the account of customers, and determine daily that it is in compliance with this requirement The broker-dealer must also make periodic computations to determine how much money it is holding that is either customer money or obtained from the use of customer securities If this amount exceeds the amount that it is owed by customers or by other broker-dealers relating to customer transactions, the broker-dealer must deposit the excess into a special reserve bank account for the exclusive benefit of customers This rule thus prevents a broker-dealer from using customer funds to finance its business. D Required Books, Records, and Reports Rules 17a-3, 17a-4, 17a-5, 17a-11 11.Broker-dealers must make and keep current books and records detailing, among other things, securities transactions, money balances, and securities positions They also must keep records for required periods and furnish copies of those records to the SEC on request These records include e-mail Broker-dealers also must file with the SEC periodic reports, including quarterly and annual financial statements The annual statements generally must be certified by an independent public accountant In addition, broker-dealers must notify the SEC and the appropriate SRO 12 regarding net capital, recordkeeping, and other operational problems, and in some cases file reports regarding those problems, within certain time periods This gives us and the SROs early warning of these problems. E Risk Assessment Requirements Rules 17h-1T and 17h-2T. Certain broker-dealers must maintain and preserve certain information regarding those affiliates, subsidiaries and holding companies whose business activities are reasonably likely to have a material impact on their own financial and operating condition including the broker-dealer s net capital, liquidity, or ability to conduct or finance operations Broker-dealers must also file a quarterly summary of this informa tion This information is designed to permit the SEC to assess the impact these entities may have on the broker-dealer. VIII OTHER REQUIREMENTS. In addition to the provisions discussed above, broker-dealers must comply with other requirements These include. submitting to Commission and SRO examinations. participating in the lost and stolen securities programplying with the fingerprinting requirement. maintaining and reporting information regarding their affiliates. following certain guidelines when using electronic media to deliver information and. maintaining an anti-money laundering program. A Examinations and Inspections Rules 15b2-2 and 17d-1.Broker-dealers are subject to examination by the SEC and the SROs The appropriate SRO generally inspects newly-registered broker-dealers for compliance with applicable financial responsibility rules within six months of registration, and for compliance with all other regulatory requirements within twelve months of registration A broker-dealer must perm it the SEC to inspect its books and records at any reasonable time. B Lost and Stolen Securities Program Rule 17f-1.In general, all broker-dealers must register in the lost and stolen securities program The limited exceptions include broker-dealers that effect securities transactions exclusively on the floor of a national securities exchange solely for other exchange members and do not receive or hold customer securities, and broker-dealers whose business does not involve handling securities certificates Broker-dealers must report losses, thefts, and instances of counterfeiting of securities certificates on Form X-17F-1A, and, in some cases, broker-dealers must make inquiries regarding securities certificates coming into their possession Broker-dealers must file these reports and inquiries with the Securities Information Center SIC , which operates the program for the SEC A registration form can be obtained from Securities Information Center, P O Box 55151, Boston, MA 02205-5151 For reg istration and additional information, see the SIC s website at. C Fingerprinting Requirement Rule 17f-2.Generally, every partner, officer, director, or employee of a broker-dealer must be fingerprinted and submit his or her fingerprints to the U S Attorney General This requirement does not apply, however, to broker-dealers that sell only certain securities that are not ordinarily evidenced by certificates such as mutual funds and variable annuities or to persons who do not sell securities, have access to securities, money or original books and records, and do not supervise persons engaged in such activities A broker-dealer claiming an exemption must comply with the notice requirements of Rule 17f-2 Broker-dealers may obtain fingerprint cards from their SRO and should submit completed fingerprint cards to the SRO for forwarding to the FBI on behalf of the Attorney General. D Use of Electronic Media by Broker-Dealers. The Commission has issued two interpretive releases discussing the issues that broker-dealers should consider in using electronic media for delivering information to customers These issues include the following. Will the customer have notice of and access to the communication. Will there be evidence of delivery. Did the broker-dealer take reasonable precautions to ensure the integrity, confidentiality, and security of any personal financial information. See Securities Exchange Act Release No 37182 May 15, 1996 , 61 FR 24644 See also Securities Exchange Act Release No 39779 March 23, 1998 , 63 FR 14806.E Electronic Signatures E-SIGN. Broker-dealers should also consider the impact, if any, that the Electronic Signatures in Global and National Commerce Act commonly known as E-SIGN , Pub L No 106-229, 114 Stat 464 2000 15 U S C 7001 , has on their ability to deliver information to customers electronically. F Anti-Money Laundering Program. Broker-dealers have broad obligations under the Bank Secrecy Act BSA 13 to guard against money laundering and terrorist financing t hrough their firms The BSA, its implementing regulations, and Rule 17a-8 under the Exchange Act require broker-dealers to file reports or retain records relating to suspicious transactions, customer identity, large cash transactions, cross-border currency movement, foreign bank accounts and wire transfers, among other things. The BSA, as amended by the USA PATRIOT Act, as well as SRO rules e g NASD Rule 3011 and NYSE Rule 445 , also requires all broker-dealers to have anti-money laundering compliance programs in place Firms must develop and implement a written anti-money laundering compliance program, approved in writing by a member of senior management, which is reasonably designed to achieve and monitor the member s ongoing compliance with the requirements of the BSA and its implementing regulations Under this obligation, firms must. establish and implement policies and procedures that can be reasonably expected to detect and cause the reporting of suspicious transactions. establish and implement policies, procedures, and internal controls reasonably designed to achieve compliance with the BSA and implementing regulations. provide for independent testing for compliance, to be conducted by member personnel or by a qualified outside party. designate and identify to the SROs an individual or individuals responsible for implementing and monitoring the day-to-day operations and internal controls of the program and provide prompt notification regarding any change in such designation s and. provide ongoing training for appropriate personnel. For a compilation of key anti-money laundering laws, rules and guidance applicable to broker-dealers, see Anti-Money Laundering Source Tool see also, FINRA Anti-Money Laundering Issue Center In addition, the Financial Crimes Enforcement Network FinCEN , the division within the Department of the Treasury that administers the BSA, provides useful information for helping financial institutions, including broker-dealers, meet their BSA obliga tions See FinCEN Web site. G Office of Foreign Assets Control. Broker-dealers have an obligation to comply with the sanctions programs administered by the Department of Treasury s Office of Foreign Assets Control OFAC OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction 14 OFAC acts under Presidential wartime and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze foreign assets under US jurisdiction. OFAC s sanctions programs are separate and distinct from, and in addition to, the anti-money laundering requirements imposed under the BSA on broker-dealers 15 Unlike the BSA, OFAC programs apply to all U S persons and are applicable across business lines OFAC programs are also strict liability programs there are no safe harbors and no de minimis standards, although having a comprehensive compliance program in place could act as a mitigating factor in any enforcement action OFAC publishes regulations implementing each of its programs, which include trade restrictions and asset blockings against particular countries and parties tied to terrorism, narcotics trafficking, proliferation of weapons of mass destruction, as well as a number of programs targeting members of certain foreign jurisdictions As part of its efforts to implement these programs, OFAC publishes a list of Specially Designated Nationals, which is frequently updated on an as-needed basis 16 In general, OFAC regulations require you to do the following. block accounts and other property of specified countries, entities, and individuals. prohibit or reject unlicensed trade and financial transactions with specified countries, entities, and individuals and. report all blockings and rejections of prohibited tra nsactions to OFAC within ten days of the occurrence and annually 17.OFAC has the authority to impose civil penalties of over 1,000,000 per count for violations of its sanctions programs OFAC has stated that it will take into account the adequacy of your OFAC compliance program when it evaluates whether to impose a penalty if an OFAC violation occurs To guard against engaging in OFAC prohibited transactions, you should generally follow a best practice of screening against the OFAC lists 18 Consistent with this best practice, you should take care to screen all new accounts, existing accounts, customers and relationships against the OFAC lists, including any updates to the lists This screening should include originators or recipients of wire and securities transfers 19.H Business Continuity Planning. The Commission, Federal Reserve Board, and Comptroller of the Currency published an interagency White Paper emphasizing the importance of core clearing and settlement organizations and establi shing guidelines for their capacity and ability to restore operations within a short time of a wide-scale disruption 20 Separately, the Commission also published a Policy Statement urging the organized securities markets to improve their business continuity arrangements, 21 and encouraging SRO-operated markets and electronic communications networks, or ECNs to establish plans to enable the restoration of trading no later than the business day following a wide-scale disruption. In 2004, NASD and the NYSE adopted rules requiring every member to establish and maintain a business continuity plan, with elements as specified in the rules, and to provide the respective SROs with emergency contact information See NASD Rule 3510 and NYSE Rule 446 See also. IX WHERE TO GET FURTHER INFORMATION. For general questions regarding broker-dealer registration and regulation. Office of Interpretation and Guidance Division of Trading and Markets U S Securities and Exchange Commission 100 F Street, NE Washingt on, DC 20549 202 551-5777 e-mail. For additional information about how to obtain official publications of SEC rules and regulations, and for on-line access to SEC rules. Superintendent of Documents Government Printing Office Washington, DC 20402-9325.For copies of SEC forms and recent SEC releases. Publications Section U S Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 202 551-4040.Other useful addresses, telephone numbers, and websites. SEC s website The SEC s website contains contact numbers for SEC offices in Washington and for the SEC s regional offices. Financial Industry Regulatory Authority 9509 Key West Avenue Rockville, MD 20850 301 590-6500 call center 800 289-9999 to check on the registration status of a firm or individual. New York Stock Exchange, Inc 20 Broad Street New York, NY 10005 212 656-3000.North American Securities Administrators Association, Inc 750 First Street, NE, Suite 1140 Washington, DC 20002 202 737-0900.Municipal Securities Rulemaking B oard 1900 Duke Street, Suite 600 Alexandria, VA 22314 703 797-6600.Securities Investor Protection Corporation 805 15th Street, N W Suite 800 Washington, D C 20005-2215 202 371-8300 e-mail. We wish to stress that we have published this guide as an introduction to the federal securities laws that apply to brokers and dealers It only highlights and summarizes certain provisions, and does not relieve anyone from complying with all applicable regulatory requirements You should not rely on this guide without referring to the actual statutes, rules, regulations, and interpretations.1 The Division of Trading and Markets was known as the Division of Market Regulation from August 7, 1972, until November 14, 2007.2 The treatment of dividend or interest reinvestment and stock purchase plans is addressed in Rule 102 c of Regulation M See Part V A 7.3 Section 9 a prohibits particular manipulative practices regarding securities registered on a national securities exchange Section 10 b is a broad catch - all provision that prohibits the use of any manipulative or deceptive device or contrivance in connection with the purchase or sale of any security Sections 15 c 1 and 15 c 2 apply to the over-the-counter markets Section 15 c 1 prohibits broker-dealers from effecting transactions in, or inducing the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device, and Section 15 c 2 prohibits a broker-dealer from making fictitious quotes.4 These include Rules 10b-1 through 10b-18, 15c1-1 through 15c1-9, 15c2-1 through 15c2-11, and Regulation M.5 In addition, Rule 11Ac1-3 requires broker-dealers to inform their customers, upon opening a new account and annually thereafter, of their policies regarding payment for order flow and for determining where to route a customer s order.6 The purpose of this disclosure is to inform the customer of the nature and extent of a broker-dealer s conflict of interest Broker-dealers are neither required to disclose the precise amount of these payments nor any formula that would allow a customer to calculate this amount Nevertheless, Rule 10b-10 is not a safe harbor from the anti-fraud provisions Recent enforcement actions have indicated that failures to disclose the nature and extent of the conflict of interest may violate Section 17 a 2 of the 1933 Act See Edward D Jones Co L P Securities Exchange Act Release No 50910 Dec 22, 2004 Morgan Stanley DW, Inc Securities Exchange Act Release No 48789 Nov 17, 2003.7 SEC, Report by Division of Market Regulation, Broker-Dealer Policies and Procedures Designed to Segment the Flow and Prevent the Misuse of Material Non-Public Information, 1989-1990 Transfer Binder Fed Sec L Rep CCH 84,520 at p 80, 620-25 March, 1990.8 Rule 15g-1 a 1 establishes a transaction exemption for brokers or dealers whose commission equivalents, mark-ups, and mark-downs from transactions in penny stocks during each of the immediately preceding three months and during eleven or more of the preceding twelve months, or during the immediately preceding six months, did not exceed five percent of its total commissions, commission equivalents, mark-ups, and mark-downs from transactions in securities during those months.9 Exemptions from the requirements of Exchange Act Rules 15g-2 through 15g-6 are provided for non-recommended transactions, broker-dealers doing a minimal business in penny stocks, trades with institutional investors, and private placements See Rule 15g-1 Rule 15g-9 c exempts certain transactions from the requirements of Rule 15g-9.10 See Certain Broker-Dealers Deemed Not To Be Investment Advisers, Exchange Act Release No 51523 April 12, 2005.11 Rules 17a-2, 17a-7, 17a-8, 17a-10 and 17a-13 contain additional recordkeeping and reporting requirements that apply to broker-dealers.12 When a broker-dealer is a member of more than one SRO, the SEC designates the SRO responsible for examining such broker-dealer for compliance with financial responsibility rules th e designated examining authority.13 The Currency and Foreign Transactions Reporting Act of 1970 commonly referred to as the Bank Secrecy Act is codified at 31 U S C 5311, et seq The regulations implementing the Bank Secrecy Act are located at 31 CFR Part 103.14 A list of countries subject to OFAC sanctions, as well as a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted counties collectively called Specially Designated Nationals SDNs , is available on the OFAC website. A summary of OFAC regulations as they apply to the securities industry can be found at the following link. See also Federal Financial Institutions Examination Council Bank Secrecy Act Anti-Money Laundering Examination Manual FFIEC Manual , at pages 137-145 8 24 2007 The FFIEC Manual contains an entire section outlining best practices for OFAC Compliance, including risk matrices Although that manual is written for the banking community, it provides information which may be usef ul to broker-dealers.15 See also FinCEN Interpretive Release No 2004-02 Unitary Filing of Suspicious Activity and Blocking Reports, 69 Fed Reg 76847 Dec 23, 2004.16 OFAC offers a RISS feed service as well as an email notice system which pushes out digital information about its programs, including updates to its SDN List See These may be especially helpful to smaller firms whose OFAC compliance programs are more manual in nature.17 You will find forms for blocking and rejection reports on OFAC s website using the following links.18 The Financial Industry Regulatory Authority FINRA offers a tool that assists firms to search for names on OFAC lists.19 See also FFIEC Manual at 140 t he extent to which the bank includes account parties other than accountholders e g beneficiaries, guarantors, principals, beneficial owners, nominee shareholders, directors, signatories, and powers of attorney in the initial OFAC review during the account opening process, and during subsequent database reviews of existing accounts, will depend on the bank s risk profile and available technology.20 Interagency Paper on Sound Practices to Strengthen the Resilience of the U S Financial Systems, Securities Exchange Act Release No 47638 April 7, 2003 , 68 FR 17809 April 11, 2003.21 Policy Statement Business Continuity Planning for Trading Markets, Securities Exchange Act Release No 48545 September 25, 2003 , 68 FR 56656 October 1, 2003.DEFINITION of Member. A member is a brokerage firm or broker holding membership on an organized stock or commodities exchange For the New York Stock Exchange NYSE , a member is one of more than 1,300 individuals or firms owning a seat on the exchange For the Financial Institution Regulatory Authority FINRA , any broker-dealer admitted to membership in the association is a member. BREAKING DOWN Member. A broker-dealer or broker becomes a member of the NYSE or Nasdaq by filling out the appropriate forms and sending a check to the organization. NYSE Member. Any registered and new U S - based broker-dealer that is a member of a self-regulatory organization SRO and has an established connection to a clearing firm may become a NYSE member The broker-dealer fills out and emails the membership application, agreements and other appropriate forms to client relationship services, purchases a trading license, and mails a signed copy of the applicant firm acknowledgment and the application fee to the NYSE A broker becomes a member by filling out the appropriate NYSE form, such as a securities lending representative agreement, an equity trading license application or a one-day equity trading license application, and mailing it with a check to the NYSE. Nasdaq Member. A firm that is a FINRA Philadelphia Stock Exchange PHLX or Bernie Exchange BX member becomes a Nasdaq member by completing the Nasdaq waive-in membership application and agreement along with the Nasdaq services agreement and submitting both with a 2,000 check Proprietary trading firms that are members of another SRO submit a full Nasdaq membership application and agreement along with a supplemental information document, Nasdaq services agreement and written supervisory procedures checklist All documents are submitted with a 2,000 check to the Nasdaq. Pros and Cons of NYSE and Nasdaq Membership. Due to increasing globalization of financial markets both the Nasdaq and NYSE are establishing partnerships with other stock exchanges the Nasdaq with the London Stock Exchange LSE and the Nasdaq OMX 100 Index the NYSE with the Tokyo Stock Exchange and Euronext. Since a Nasdaq member has lower minimum requirements to qualify for a listing, smaller companies are listed on a major exchange, adding credibility to their products and services The Nasdaq also has lower listing fees For example, the Nasdaq listing fee for an initial public offering IPO is half that of the NYSE In addition, the Nasdaq features all-electronic trading with faster execution, which is becoming the norm on worldwide trading ex changes The NYSE still uses specialists working on the floor buying and selling stocks. However, traders view Nasdaq members as less financially sound and established Since the NYSE is 200 years older and considered more prestigious, companies such as Nortel and E Trade have moved from the Nasdaq to the NYSE.
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