The US Securities and Exchange Commission (SEC) has adopted rule amendments – designed to enhance oversight – that narrow the exemptions around broker-dealer national securities association registrations.
The exemption applies to Section 15(b)(8) of the Securities Exchange Act of 1934, which requires any broker or dealer registered with the SEC to become a member of a national securities association unless the broker or dealer effects transactions in securities solely on an exchange of which it is a member. The Financial Industry Regulatory Authority (FINRA) is currently the only registered national securities association.
SEC chair Gary Gensler said: “Some of today’s broker-dealers continue to rely on an exemption from national securities association registration that’s older than the cell phone era.
“This has led to a regulatory gap whereby a number of firms that have cross-market, monthly trading volume valued in the hundreds of billions of dollars are exempt from national securities association oversight.
“These amendments update and narrow the circumstances in which broker-dealers do not need to register with a national securities association. National securities association membership will help enhance robust and consistent oversight, particularly with regard to cross-market and off-exchange oversight.”
The narrower exemptions will apply when a broker or dealer that does not carry customer accounts and is a member of at least one exchange effects off-member-exchange securities transactions that result solely from orders that are routed by a national securities exchange of which it is a member to comply with order protection regulatory requirements; or are solely for the purpose of executing the stock leg of a stock-option order.
©Markets Media Europe 2023
