An Office of Supervisory Jurisdiction (OSJ) is an office identified by the broker-dealer as having supervisory responsibilities for agents and branch offices within its region. The OSJ has final approval of new accounts, and retail communication. The OSJ may also make markets or structure offerings
Functions of an OSJ
Each member must identify to FINRA which of its offices have been designated as OSJs. An OSJ is any office at which one or more of the following functions take place:
- Order execution or market making
- Formation or structuring of public offerings or private placements
- Custody of customer funds or securities
- Final approval by a principal of new accounts on behalf of the member
- Review and endorsement of customer orders
- Final approval of retail communications, except for an office that solely conducts final approval of research reports
- Supervision of activities of persons at one or more of the member’s branch offices
Considerations for Determining an OSJ
FINRA requires members to identify other offices as OSJs, if needed, to properly supervise the activities of their registered representatives. In making this determination, the member should consider:
- Whether registered persons at the location engage in retail sales or other activities involving regular contact with public customers;
- The number of registered persons at a location;
- Whether the location is geographically distant from another OSJ of the firm;
- Whether the securities activities at a location are diverse and/or complex; and
- Whether the member’s registered persons are geographically dispersed (working remotely).
The significance of an OSJ is that the office is responsible for the activities of registered representatives and other associated persons housed not only in that office, but in other offices usually located within the same region.
Responsibilities of an OSJ
The responsibilities of an OSJ, which must be managed by at least one resident general securities principal, are to:
- Enforce the written supervisory procedures of the firm;
- Periodically review customer accounts;
- Maintain copies of customer records (new account forms signed by a principal, order tickets, confirmations, etc.), including customer complaints; and
- Periodically inspect the branch offices beneath it.
For more information on Office of Supervisory Jurisdiction, check out FINRA Rule 3110.
MasterCompliance provides expert consulting, outsourcing, and implementation tools in planning and budgeting for your firm’s compliance responsibilities. If there are any areas where you would like to explore additional assistance or services, please contact us.