The amendments become effective on May 2, Since the issuance of the SEC's Release the "Adopting Release" concerning the amendments, many questions have been raised. The purpose of this Notice is to address some frequently asked questions about the new SEC requirements. The answers expressed below are staff opinions only and have not been reviewed or endorsed by NASD's Board, nor have they been approved by the SEC. The term "time of entry" means the time when the member, broker or dealer transmits the order or instruction for execution.
If the time of entry is simultaneous or nearly simultaneous with the time that the order is received, does the firm have to create a separate entry for each time?
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In its Adopting Release, the SEC stated that in such situations, it must be clear from the order ticket that the time of receipt was the same as the time of entry. The Commission further stated that the time recorded must be accurate and this should not be construed as an exception to allow firms to use an approximate time for one or both entries.
What must a firm put on the order ticket if an associated person is not assigned to an account? Firms that do not assign associated persons to an account do not have to include the identity of an associated person on the order ticket. Must a firm create an order ticket record when a customer purchases mutual funds or variable annuities?
The amended rule states that a memorandum does not need to be made regarding a purchase, sale or redemption of a security on a "subscription-way basis" directly from or to the issuer such as mutual funds or variable annuitiesif the member, broker or dealer maintains a copy of the subscription agreement regarding a purchase, or a copy of any other document required by the issuer regarding a sale or redemption, instead of making a separate record as to transactions.
These documents generally include information that is important for, and specific to, a particular type of transaction. When an associated person responsible for the account is identified on the order ticket, must the associated person be identified by name?
If a firm chooses this option, it must, if requested by a representative of a securities regulatory authority, provide the actual identity of the person who entered the order. This requirement may be satisfied by a companion record to the order ticket. What records must a firm maintain concerning its associated persons? Rule 17a-3 a 12 requires a firm to make records concerning its associated persons, including information regarding their employment and disciplinary histories.
The amendment to a 12requires that firms create a record listing all of their associated persons that shows, for each associated person, every office where the associated person regularly conducts a securities business, and listing all internal identification numbers or codes and the CRD number assigned to each associated person.
The current or pre-amendment Rule 17a-3 a 12 iidefined "associated person" for purposes of a 12 as: The new definition is much broader. It has been modified to incorporate the definitions set forth in Exchange Act Sections 3 a 18 and 3 a The required information includes: The Adopting Release notes that several commenters suggested that unauthorized access to such information could facilitate the perpetration of fraud against the customer.
What kind of information must be maintained if an account has more than one owner? If an account has more than one owner, the record must include personal information for each owner of the account who is a natural person.
However, as the Adopting Release explains, it is acceptable for firms to combine joint owners' financial information rather than obtaining and maintaining such information separately for each owner.
The Adopting Release also notes that the record should reflect the investment objectives for the account and not the individual investment objectives for each joint owner named on the account. What information must a firm obtain from a customer with a discretionary account? In addition to the aforementioned required information listed in Question 9for discretionary accounts, firms must obtain the dated signature of each customer granting the discretionary authority and the dated signature of each natural person to whom discretionary authority was granted.
What other information must be contained in the customer account records? The account record must indicate whether it has been signed by the associated person responsible for the account, if any, and approved or accepted by a principal of the firm.
In the Adopting Release, the SEC recognized that firms do not always assign an associated person to each account. Accordingly, the SEC added the phrase "if any" to the requirement that the account record state whether it had been signed by an associated person.
Even if no associated person is assigned to an account, the account record must indicate whether a principal has approved it.
Does the amended rule require firms to furnish customers with account record information? The rule also requires that the firm include with the account record or alternate document an explanation of any terms regarding investment objectives.
The following events require the firm to provide the account record information to the customer:. Is a firm required to make a separate mailing when providing customers with the account record information? The new rule does not require a separate mailing. In its Adopting Release, the Commission notes that this mailing pips forex investopedia be combined with other mailings. In addition, a firm may mail the customer a copy of the customer's complete account record reflecting any change of other account record information on or before the 30th day after the date the firm received notice of any change.
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Is there an exemption from the account record information requirements? The Adopting Release notes that many firms argued for an exemption contending that the rule was intended to allow examiners to review for suitability, but how to become a foreign exchange dealer and broker firms are not subject to SRO suitability requirements for all of forex bce accounts. The SEC decided to create an exemption for certain accounts.
The rule states that the account record and furnishing requirements of Rule 17a-3 a 17 will only apply to accounts for which a firm is, or has within the past 36 months been, required to make a suitability determination under the federal securities laws or under the requirements of a self-regulatory organization of which it is a member. The Adopting Release emphasizes, however, that the obligation to collect and record suitability information may arise under SRO rules and interpretations.
If, after the account is opened, the firm or its associated persons engage in conduct that would subject the metatrader 5 historical data download to suitability requirements, the firm must obtain the information before making such a recommendation.
The firm would also have forex rates disclaimer comply thereafter with the requirement to furnish customers with a copy of their account records for verification, under the Rule, but the account could re-qualify for the exemption if suitability determinations were no longer required of the firm.
Firms should look at FINRA Rule and NASD b 16 Bwhich deal with, respectively, making recommendations to customers and member's suitability obligations, and with diligence in opening customer accounts for options trading, where due diligence must be exercised in ascertaining essential facts about a customer, his or her financial status and investment objectives. Firms should also be aware of other SRO rules such as NYSE RuleChicago Board Best guide forex trading platform Exchange Rule 9.
In addition, it is important to note that the term "suitability determination" in this context should be interpreted broadly. A firm may have an obligation to perform a suitability determination under the Exchange Backdating stock options legal like in Sections 10 b and 15 cCommission Rules such as Rules 10b-5 and 15c, 15gg-9SRO Rules or common law.
Must firms create account records under Rule 17a-3 a 17 for all accounts? Rule 17a-3 a 17 requires firms to create an account record for both new and existing accounts.
For accounts opened on or after May 2,the firm must obtain the account record information required under Rule 17a-3 a 17 i A when the account is opened. For accounts existing before May 2,firms will have 36 months to obtain the required information for the account record. A new month furnishing cycle under Rule 17a-3 a 17 will begin when the firm obtains the account record information within the initial month grace period.
Must how to become a foreign exchange dealer and broker provide forex market trading tutorials with copies of written agreements?
This will enable customers to review the terms of agreements to which they are subject, and to better understand their rights and responsibilities under these agreements. Firms should also be stock market after qe2, however, that this provision is limited to the a 17 account record requirement and does not apply to any other federal or SRO rules requiring the collection of information.
Must a firm create a record of customer complaints it receives curso de forex mti associated persons? New Rule 17a-3 a 18 i requires firms to make a record of every written customer complaint they receive about an associated person. This requirement extends to complaints received electronically from customers.
The record must include the following information:. Because firms are already required to keep originals of incoming written complaints, firms have the option to comply with this rule by keeping the original complaint along with a record of the disposition of the complaint, if kept by name of the associated person.
What kind of record is a firm required to create regarding notification to customers of where to file complaints? Under 17a-3 a 18 iifirms are required to make a record indicating that each customer has been provided with a notice of the address and telephone number of the department of the firm to which complaints may be directed.
Must firms maintain records regarding an associated person's compensation? New Rule 17a-3 a 19 i requires currency trading forex trading chennai to make a record concerning each associated person, listing each purchase and sale of a security attributable, for compensation purposes, to that associated person.
The record must include the amount of compensation microsoft abandons stock options monetary and a description of the compensation if non-monetary.
Under this requirement, firms must make records of all commissions, concessions, overrides, and other compensation to the extent they are earned or accrued for transactions. In addition, if the compensation is non-monetary, that description should include an estimate of its value.
The term "non-monetary compensation" includes compensation such as sales incentives, gifts, or trips that would be provided to associated persons if certain sales goals were achieved. Such non-monetary compensation should be recorded if directly related to sales.
Non-monetary compensation does not include items of little value distributed by the firm. Must firms maintain records of their agreements with associated persons under the amended rules? What records must the firm keep regarding communications with the public? New Rule 17a-3 a 20 requires each firm to make a record documenting that the firm has complied with, or adopted policies and procedures reasonably designed to establish compliance with, applicable federal regulations and SRO rules, which require that a principal approve any advertisements, sales literature, or other communications with the public.
What records are required to be maintained regarding the identification of firm personnel that can explain customer records? The Commission noted that firms may identify more than one person and list the records each person is able to explain. Is there a requirement for a record listing the principals of the firm? Rule 17a-3 a 22 requires firms to make a record listing each principal of the firm responsible for establishing policies and procedures that are reasonably designed to ensure compliance with any applicable federal requirements or rules of a SRO of which the firm is a member that require acceptance or approval of a record by a principal.
How is "office" defined? The amended rules define "office" as any location where an associated person regularly conducts business. However, an office would not include a customer's office that an associated person visits on a regular basis.
New Rule 17a-3 g requires firms to make and keep current, separately for each office, certain books and records that reflect the activities of the office. The requirement to maintain certain records at office locations is two years. In the Adopting Release, the Commission states that the word "promptly" has deliberately not been defined in the rule.
If a request is unusually large or complex, then the firm should discuss with the regulator a mutually agreeable time frame for production.
See NASD Rules b 16 and h. Most firms already collect this information to assist them in assessing customers' suitability or to comply with other rules. Please note that the Adopting Release does not address this issue with regard to single stock futures or appropriate determinations under day trading rules.
The Commission's release indicates that, to the extent not otherwise required, this should be a matter of negotiation between the introducing firm and the clearing firm. If contact information is provided for both firms, the notification should clearly indicate which firm the customer should contact and for what purposes. The Commission also indicated that firms have flexibility to determine how this notice can be delivered to the customers—and inserting the notice on a customer statement is one option.
See also NASD Rule It would not relate to personal relationships unrelated to the firm's business. FINRA Home About FINRA Newsroom Compliance Tools Contact Firm Gateway Sign In. Order Tickets Question 1: What are the new requirements for order tickets? The final rules require that a brokerage order ticket: What is meant by the "time of entry"? How is "associated person" defined? What account records must be kept regarding a customer?
What if no one is assigned to the account? What triggers this requirement? The following events require the firm to provide the account record information to the customer: The record must include the following information: How is "non-monetary compensation" defined?What the brokers don't tell you - Forex Trading for Beginners
What records must be created and kept current as to each office? How long must firms maintain records at office locations? How is "promptly" defined? What if the firm has a foreign office?
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What records must be retained under the amendments? Retain originals of all communications received and copies of all communications sent and any approvals thereof by the firm including interoffice memoranda and communications relating to its business including all communications which are subject to the rules of a self regulatory organization of which the firm is a member regarding communications with the public.
Note that the term "communication" includes sales scripts. Preserve for a period of not less than 6 years after the closing of any customer's account, any account cards or records which relate to the terms and conditions with respect to the opening and maintenance of the account.
Retain copies of certain organizational documents for the life of the entity such as partnership articles or articles of incorporation or charter books. Maintain, for three years after the date of the report, all reports which a securities regulatory authority has requested or required a firm to make and furnish to it pursuant to an order or settlement, and each securities regulatory authority examination report.
Maintain, for three years after the termination of use, all compliance, supervisory, and procedure manuals including any updates, modifications, and revisions to the manual describing the firm's policies and practices with respect to compliance and supervision. Maintain, for 18 months after the date the report was generated, all reports created to review unusual activity in customer accounts. Office of the Ombudsman.
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