NASD Notice to Members 98-096 - December 1998

NASD Elaborates on Member Firms’ Supervision Responsibilities for Trade Reporting and Market-Making Activities

Executive Summary

During the last two years, NASD Regulation, Inc. (NASD RegulationSM) has imposed numerous and significant disciplinary actions against member firms for supervisory deficiencies, particularly in the areas of trade reporting and market-making activities. Indeed, much of the recent focus in the area of written supervisory procedures has been in the context of NASD Regulation’s Trading and Market Maker Surveillance (TMMS) examination process. Accordingly, the purpose of this Notice is to reiterate for members in the context of trading and market-making activities the requirements of National Association of Securities Dealers, Inc. (NASD®) Rule 3010, the supervision rule, concerning a member firm’s obligation to establish, maintain, and enforce a supervisory system and written supervisory procedures which reflect that system.  For additional guidance concerning NASD Rule 3010, see Notices to Members 88-84 and 89-34.