Regulatory Notice 11-14

FINRA Requests Comment on Proposed New FINRA Rule 3190 to Clarify the Scope of a Firm’s Obligations and Supervisory Responsibilities for Functions or Activities Outsourced to a Third-Party Service Provider

 

Comment Period Expired: May 13, 2011
 

Executive Summary

FINRA is requesting comment on a proposed new rule to clarify a member firm’s obligations and supervisory responsibilities regarding outsourcing arrangements. Specifically, proposed FINRA Rule 3190 (Use of Third-Party Service Providers) makes clear that:

  • when a member firm outsources a function or activity related to its business as a regulated broker-dealer to a third-party service provider, it does not relieve the firm of its obligation to comply with applicable securities laws and regulations and FINRA and Municipal Securities Rulemaking Board (MSRB) rules; and
  • the firm cannot delegate its responsibilities for, or control over, any outsourced functions or activities. The proposal also requires a member firm to have supervisory procedures, including due diligence measures, to ensure that its arrangements with third-party service providers are reasonably designed to achieve compliance with applicable securities laws and regulations and FINRA and MSRB rules. Further, the proposed rule imposes additional restrictions and obligations that apply solely to a clearing and carrying member firm and its third-party service provider arrangements.

 

The text of the proposed rule is set forth in Attachment A.

 

Questions concerning this Notice should be directed to Patricia Albrecht, Associate General Counsel, Office of General Counsel, at (202) 728-8026.

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The views, expressions, findings and opinions expressed in the comments on this Web page are solely those of the author(s) and FINRA accepts no responsibility for the content of the comments.


Comments By Date Received
Sutter Securities Inc. (PDF 68 KB) 4/5/2011
Centennial Securities Company, LLC (PDF 15 KB) 4/7/2011
Crowell & Moring LP (PDF 508 KB) 5/2/2011
Suzanne Shatto (PDF 21 KB) 5/9/2011
Cornell University Law School (PDF 165 KB) 5/10/2011
Integrated Management Solutions USA LLC (PDF 111 KB) 5/12/2011
Cedric Swirsky (PDF 11 KB) 5/12/2011
Daniel Roberts (PDF 12 KB) 5/12/2011
Sutherland Asbill & Brennan LLP (PDF 128 KB) 5/13/2011
Financial Services Institute, Inc. (PDF 660 KB) 5/13/2011
Accenture LLP (PDF 419 KB) 5/13/2011
Wells Fargo Advisors (PDF 55 KB) 5/13/2011
NSCP (PDF 55 KB) 5/13/2011
Arnold & Porter LLP (PDF 598 KB) 5/13/2011
BOK Financial Corp. (PDF 160 KB) 5/13/2011
Charles Schwab & Co., Inc. (PDF 202 KB) 5/18/2011
SIFMA (PDF 242 KB) 5/19/2011
Ridge Clearing & Outsourcing Solutions, Inc. (PDF 850 KB) 5/20/2011