Transform your broker-dealer compliance program with the first compliance OS.

Broker dealer compliance encompasses the systems and controls that firms need to conduct business under the Securities Exchange Act and Financial Industry Regulatory Authority (FINRA) oversight. This requires firms to develop written supervisory procedures that address all relevant regulations governing their specific business activities and services.

Most broker dealers utilize compliance consultants and advanced algorithms to strengthen their compliance programs through automation, helping them mitigate risk and prevent market manipulation. These experts assist firms in developing tailored approaches to meet their unique regulatory requirements based on firm size and business model.

A robust compliance program plays a vital role in protecting investors while ensuring the firm meets its regulatory obligations across various domains including trade execution, customer protection, and anti-money laundering initiatives. Effective compliance requires continuous monitoring of regulatory developments and periodic assessment of compliance procedures to identify potential risks.

The Securities and Exchange Commission mandates that broker dealers navigate extensive record keeping requirements, including the need to store data related to client assets, transactions, and communications. These records must be maintained in a readily accessible format for specified retention periods depending on the type of information.

Written supervisory procedures must document how firms maintain and supervise necessary documentation, including the designation of responsible personnel, verification methods, and escalation protocols for addressing potential discrepancies or suspicious activity. Broker dealers must establish systems to ensure the integrity of data while maintaining accessibility for regulatory examinations.

Modern compliance software helps securities firms meet these requirements by providing sophisticated tools to manage internal investigations and track potential risks. These platforms often include features for data encryption, access controls, and automated retention management to reduce compliance risks while supporting firms in meeting their regulatory obligations.

Regulatory bodies overseeing broker dealers include both the SEC and FINRA rules enforcers, with additional supervision from state securities regulators and other specialized entities depending on business activities. This multi-layered oversight framework requires firms to maintain comprehensive compliance programs that address the full spectrum of applicable regulations.

These regulatory requirements extend to a broad range of activities, from sales practices to anti-money laundering protocols and financial reporting obligations. Each regulatory body maintains its own examination priorities, requiring broker dealers to stay informed about evolving focus areas and adapt their compliance procedures accordingly.

Firms must implement comprehensive supervisory procedures to ensure they’re staying compliant with global regulations while protecting against compliance violations that could lead to significant consequences including financial penalties and reputational damage. Compliance software plays a crucial role in helping broker dealers manage this complexity by centralizing regulatory requirements and tracking examination findings.

Customer Identification Program requirements mandate that firms establish firm’s policies for verifying customer identities and monitoring transactions as part of their broader anti-money laundering compliance obligations. These requirements obligate broker dealers to collect and verify specific identifying information from customers before establishing accounts.

Investment advisers and broker-dealers must maintain extensive documentation of their verification methods and screening procedures, including risk-based approaches for enhanced due diligence on certain high-risk customers or transactions that may trigger suspicious activity reports. This documentation must demonstrate consistency with the firm’s written supervisory procedures.

Compliance professionals need robust systems to manage these obligations effectively while ensuring they can demonstrate adherence to all applicable FINRA rules governing customer identification. Many broker dealers leverage specialized compliance software to streamline CIP processes while maintaining complete documentation of all verification steps to satisfy regulatory requirements during examinations.

Broker-dealer regulation comprises the comprehensive framework established by the Securities Exchange Commission and Industry Regulatory Authority (FINRA). This includes registration requirements, financial responsibility rules, and reporting obligations designed to promote market transparency and investor protection.

The regulatory framework continues to evolve in response to market developments, technological innovations, and emerging risks within the financial services industry. Firms must establish written procedures, implement surveillance systems, and maintain evidence of their commitment to regulatory compliance across all business activities and services.

Effective compliance requires firms to invest in both human capital and technological resources. Compliance software platforms help broker dealers navigate this complex landscape by centralizing regulatory requirements and automating routine compliance activities. Compliance consultants provide additional expertise in interpreting regulatory expectations and developing tailored approaches to meeting obligations while supporting business objectives.

Regulation Best Interest establishes four core obligations:

Disclosure Obligation:

Provide comprehensive disclosure management of material facts about relationships and recommendations, including capacity, fees, and conflicts of interest. Compliance software can help firms manage disclosure content, track delivery to customers, and document investor acknowledgment of receipt to satisfy regulatory requirements.

Care Obligation:

Exercise reasonable diligence when making recommendations, demonstrating a clear understanding of potential risks and their appropriateness for specific investors. This requires broker dealers to establish detailed protocols for product due diligence and customer profiling. Compliance activities must include surveillance for recommendations that might not align with customer profiles.

Conflict of Interest Obligation:

Establish and enforce procedures to identify and mitigate conflicts that might incentivize representatives to place their interests ahead of retail customers. This requires comprehensive mapping of potential conflicts across all business activities and services, with compliance personnel maintaining detailed documentation of mitigation measures.

Compliance Obligation:

Maintain robust systems and procedures to achieve ongoing compliance with all aspects of the regulation. This obligation necessitates regular training of representatives, supervisory reviews, and documented assessments of compliance effectiveness that regulatory bodies will expect to see during examinations.

Modern platforms help services providers manage these obligations through automated workflows and comprehensive documentation capabilities designed to identify potential violations before they impact investors while maintaining the detailed records needed to demonstrate compliance with each obligation.