Establishing a new broker dealer involves multiple operational and regulatory requirements that necessitate engaging with various vendors. These vendors provide essential services ranging from technological infrastructure to compliance expertise. Having proficient vendors allows the broker dealer to operate efficiently and stay in compliance with regulatory standards.  

In this blog, we will discuss technology providers and financial services providers. In a later blog, we will discuss compliance/legal advisors and risk management/insurance providers.  

Technology Providers

There are several categories of technology providers that a broker dealer should consider. These include (but are not limited to): 

  • Trading Platforms: For broker dealers involved in trading, engaging in a trading platform contract will allow for swift and secure trading. 
  • Data Providers: This is also for broker dealers who trade; data providers supply market data feeds and analytic tools for making informed trading decisions. 
  • Cybersecurity Firms: These firms offer solutions to ensure the protection of client information and compliance with regulations.  
  • IT Infrastructure Providers: IT Infrastructure vendors manage hardware, networking, and other cloud services that support the broker dealer’s operations. 

Financial Services Providers

Financial services providers are essential financial services that support the broker dealer’s core activities: 

  • Clearing and Settlement Services: For broker dealers involved in trading, these vendors handle the processing and settlement of trades. 
  • Custodian Services: These vendors safeguard client assets and facilitate the transfer of assets. 
  • PCAOB (“Public Company Accounting Oversight Board”) Auditor: To meet regulatory requirements, a PCAOB audit must be conducted annually (independent of a broker dealer’s CPA and/or bookkeeper). 
  • CPA (“Certified Public Accountant”)/Bookkeeper: Engaging a CPA and/or a bookkeeper who specializes in accrual-based broker dealer accounting is pertinent to maintaining a broker dealer’s financials in the most accurate manner. 

Establishing a broker dealer in today’s highly regulated environment requires careful selection and collaboration with multiple reputable vendors. If you are opening a broker dealer or purchasing one and would like to speak to someone regarding your vendor needs, please contact Securities Compliance Management here to discuss how our firm can support your broker dealer’s various needs.