The new supervisory rules regime: a practical look at areas of exposure for broker‐dealers and senior personnel

Abstract

Purpose

The purpose of this paper is to describe the exposure and the responsibilities of a broker‐dealer's senior management under NASD's and the NYSE's new rules, emphasizing a regular review of supervisory and compliance systems.

Design/methodology/approach

Describes new rules, contained primarily in NASD Rules 3010, 3012, and 3013 and amendments to NYSE Rule 342, and the SROs' intentions underlying those rules; provides additional regulatory guidance on privilege issues related to CEO/CCO meetings and reports, documentation of compliance with the new rules, periodic review of office category designations, specific requirements for “offices of convenience,” and procedures to ensure up‐to‐date identification of producing managers; assesses the potential increase in exposure for CEOs, CCOs, and others under the new rules.

Findings

Both the NASD and the NYSE have made clear by their establishment of the new supervisory framework and in guidance to members that they expect increased attention to maintaining adequate compliance and supervisory systems at the highest levels of their member organizations.

Originality/value

Conveys an important message concerning the need for CEOs and CCOs to become increasingly involved in compliance reviews and knowledgeable about supervisory systems.

Citation

Hiler, B., Kuczajda, T. and Rabie, A. (2006), "The new supervisory rules regime: a practical look at areas of exposure for broker‐dealers and senior personnel", Journal of Investment Compliance, Vol. 7 No. 1, pp. 34-42. https://doi.org/10.1108/15285810610690233