Supervisory Logs and the Enforcement of Written Supervisory Procedures

February 10, 2004

 

NASD member firms reporting to OATS are required under NASD Conduct Rule 3010 to maintain and enforce written supervisory procedures related to OATS.

 

NASD has published articles in the December 2000, February 2001 and January 2004 OATS Reports to provide guidance on what member firms should include in written supervisory procedures.

 

Member firms are still required to have written supervisory procedures to ensure compliance with the OATS rules even when another party records and transmits OATS data on the firm's behalf behalf. A contractual arrangement, no matter how comprehensive, will not relieve a member of its responsibilities under the OATS Rules.

 

To ensure that all written supervisory procedures are enforced, NASD recommends that firms develop and maintain OATS supervisory logs. These logs should list in detail the types of reviews conducted, the individual that conducted the reviews and the frequency with which said reviews are conducted. These logs should also bear the signature of the personnel that conducted the review(s) and that of the Compliance Director to evidence that the process was reviewed and signed by such person. Supervisory logs are not substitutes for written supervisory procedures. They are accessories to good procedures.

 

A sample Supervisory Log is below:

 

Date of Review:
Type of Review Review By Action Taken Resolution Resolved Date Resolved By
FORE Status Notification          
Firm Reporting Statistics          
Order Trade Matching Statistics          
Route/NES Order Match Statistics          
ROE Rejections          
Late Reports          
Reviewed by: Director of Compliance/Designated Principal Signature          



These supervisory logs should be maintained by the firm and included with the firm's written supervisory procedures as evidence that the written supervisory procedures are being enforced. Notations from the member's Books and Records pertaining to OATS events such as data sent erroneously, unrepairable rejects, calls to the OATS Help desk, transmission difficulties, system outages among others should also be included with the Supervisory Logs.

 

Should you have any questions about this or other OATS matters, you may contact the OATS Business Help Desk by calling (800) 321-NASD or by sending an e-mail.

Last Updated: 2/10/2004