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

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.

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: 
DateCommenterFormat - Size
4/7/2011Centennial Securities Company, LLCPDF - 14.83 KB
4/5/2011Sutter Securities Inc.PDF - 67.57 KB
5/2/2011Crowell & Moring LPPDF - 508.49 KB
5/9/2011Suzanne ShattoPDF - 20.53 KB
5/10/2011Cornell University Law SchoolPDF - 164.5 KB
5/12/2011Daniel RobertsPDF - 12.11 KB
5/12/2011Cedric SwirskyPDF - 11.07 KB
5/12/2011Integrated Management Solutions USA LLCPDF - 110.81 KB
5/13/2011Arnold & Porter LLPPDF - 598.12 KB
5/13/2011NSCPPDF - 55.16 KB
5/13/2011Wells Fargo AdvisorsPDF - 54.74 KB
5/13/2011Accenture LLPPDF - 418.99 KB
5/13/2011BOK Financial Corp.PDF - 160.15 KB
5/13/2011Financial Services Institute, Inc.PDF - 659.48 KB
5/13/2011Sutherland Asbill & Brennan LLPPDF - 128.04 KB
5/18/2011Charles Schwab & Co., Inc.PDF - 201.51 KB
5/19/2011SIFMAPDF - 242.19 KB
5/20/2011Ridge Clearing & Outsourcing Solutions, Inc.PDF - 849.51 KB