Abstract:
Purpose  This paper sets out to explain the new Securities and Exchange Commission Rule 15c3-5, which will require broker-dealers to adopt and implement risk controls to govern their provision of Âdirect market access (DMA). Design/methodology/approach  The paper explains how the development and use of automated electronic trading processes and systems motivated broker-dealers to offer DMA, Âsponsored access, and Ânaked access. It explains the systems of risk management controls and supervisory procedures a broker-dealer is required to maintain to manage the financial, regulatory, and other risks of sponsored access, including financial and regulatory controls and procedures. Findings  The SEC proposed the Rule to more effectively manage the financial, regulatory, and other risks, such as legal and operational risks, associated with market access. Originality/value  The paper offers practical guidance from expert broker-dealer lawyers.
Purpose  This paper sets out to explain the new Securities and Exchange Commission Rule 15c3-5, which will require broker-dealers to adopt and implement risk controls to govern their provision of Âdirect market access (DMA). Design/methodology/approach  The paper explains how the development and use of automated electronic trading processes and systems motivated broker-dealers to offer DMA, Âsponsored access, and Ânaked access. It explains the systems of risk management controls and supervisory procedures a broker-dealer is required to maintain to manage the financial, regulatory, and other risks of sponsored access, including financial and regulatory controls and procedures. Findings  The SEC proposed the Rule to more effectively manage the financial, regulatory, and other risks, such as legal and operational risks, associated with market access. Originality/value  The paper offers practical guidance from expert broker-dealer lawyers.