Maintaining Adequate Excess Net Capital

Maintaining Adequate Excess Net Capital

The broker dealer industry operates within a framework of regulations designed to ensure stability, fairness, and investor protection. Of most paramount importance is the Financial Industry Regulatory Authority (“FINRA”) Rule 15c3-1. Often referred to as the Net Capital Rule, this regulation plays a crucial role in maintaining the integrity of the securities market. The Net Capital Rule imposes strict requirements on broker dealers in it pertains to the firm’s capital adequacy and liquidity. FINRA Rule 15c3-1 sets forth the minimum financial requirements that broker dealers must maintain in order to ensure that the broker dealer has sufficient capital to meet Read more about Maintaining Adequate Excess Net Capital[…]

Questions for any Third Party FINOP Service Provider

Questions for any Third Party FINOP Service Provider

Per the National Association of Securities Dealers (“NASD”) Rule 1022, every broker dealer must retain a Series 27/28 Financial and Operations Principal (“FINOP”). A Series 27 FINOP is one who is licensed to be a FINOP of a full service or introducing broker dealer. Whereas a Series 28 FINOP is one who is only licensed to serve an introducing broker dealer. Your broker dealer may have a licensed FINOP on staff. However, many broker dealers retain a third party FINOP service provider which is allowed by the Financial Industry Regulatory Authority (“FINRA”) . If your broker dealer is engaging with Read more about Questions for any Third Party FINOP Service Provider[…]

Audit Preparations for FINOPs

Audit Preparations for FINOPs

For a broker dealer, there’s a single word that is synonymous with death and taxes….Audit. Every broker dealer needs to be prepared for audits. Whether it is the annual independent audit or a regulatory audit, audits will happen. Your broker dealer’s Financial and Operations Principal (“FINOP”) plays a vital role in ensuring compliance with regulatory requirements and maintaining accurate financial records. There are several considerations for your broker dealer’s FINOP as it pertains to audits. Review Regulatory Requirements: A FINOP should do a thorough review of the regulatory requirements that are applicable to your broker dealer. This includes requirements as Read more about Audit Preparations for FINOPs[…]

FINOP Training and Professional Development

FINOP Training and Professional Development

FINOP Training and Professional Development Financial and Operations Principals (“FINOPS”) play a crucial role in managing the financial aspects of a broker dealer. A FINOP’s role encompasses various tasks such as accounting, financial reporting, budgeting, and compliance. For the broker dealer to maintain efficiency and effectiveness in these areas, continuous training and professional development are essential. Included here are several examples explaining why FINOP training and professional development are so important in today’s ever changing broker dealer environment.                Regulatory Changes: The broker dealer landscape is subject to frequent regulatory changes. Training programs keep FINOPS updated on various Financial Industry Read more about FINOP Training and Professional Development[…]

Compliance Challenges for FINOPs

Compliance Challenges for FINOPs

In today’s ever-evolving broker dealer environment, a Financial and Operations Principal (“FINOP”) plays a vital role in ensuring the compliance and financial integrity of the broker dealer(s) that he/she is registered with. Due to constant changes within the regulatory landscape, FINOPs encounter numerous compliance challenges that demand their attention and expertise, and as a result, a FINOP must have the knowledge and experience to suggest strategies to the broker dealer to help effectively address these challenges. Below are a few common compliance challenges that FINOPs face along with strategies to help address them: – Regulatory Complexity: Broker dealers operate in Read more about Compliance Challenges for FINOPs[…]

Regulation Best Interest (“Reg BI”)

Regulation BI and Real-World Enforcement

When the Financial Industry Regulatory Authority (“FINRA”) initially proposed the Regulation Best Interest (“Reg BI”), many professionals within the financial services industry shrugged and treated it as another item that could be added to the daily pile of tasks, documentation, and industry noise. Three years into the practical application and enforcement actions, broker dealers are experiencing the consequences of resistance to change.  Fines, restitution, bans, and overall corrective actions can be significant, especially in respect to the originating event circumstances. Broker dealer responsibilities require establishment, maintenance, and enforcement of a supervisory system reasonably designed to achieve compliance with Reg BI’s Read more about Regulation BI and Real-World Enforcement[…]