Recent regulatory developments provide some clarifications regarding the market access rule for broker-dealers

Abstract

Purpose

To provide an overview of recent developments relating to the Securities and Exchange Commission (SEC)’s Market Access Rule, Rule 15c3-5 promulgated under the Securities Exchange Act of 1934.

Design/methodology/approach

Provides a brief overview of the Rule’s requirements; highlights key points of guidance from the Frequently Asked Questions released by the Staff of the SEC’s Division of Trading and Markets in April 2014; and discusses the SEC’s first enforcement actions for alleged violations of the Rule, which include a settlement with Knight Capital Americas, LLC and administrative and cease-and-desist proceedings instituted against Wedbush Securities, Inc.

Findings

The SEC has prioritized its focus on Rule 15c3-5, which has resulted in the issuance of FAQs and enforcement actions against broker-dealers for violations of the Rule. While the FAQs and the Knight Capital settlement provide some insight into the Enforcement Staff’s view of what the Rule requires, there are still areas where the substantive requirements are not entirely clear.

Originality/value

Practical guidance from experienced securities lawyers that consolidates several recent developments in one piece.

Citation

H. Newman, B., Mitchell, E., R. Nicolas, S., Owens, A. and E. Bashur, A. (2014), "Recent regulatory developments provide some clarifications regarding the market access rule for broker-dealers", Journal of Investment Compliance, Vol. 15 No. 3, pp. 10-19. https://doi.org/10.1108/JOIC-08-2014-0034