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Three FINRA rules form a regulatory scheme addressing the supervision of firms and their associated persons.

FINRA Rule 3110 (Supervision)

FINRA Rule 3110 requires a firm to establish and maintain a system to supervise the activities of its associated persons that is reasonably designed to achieve compliance with the applicable securities laws and regulations and FINRA rules.

The rule details requirements for a firm to have reasonably designed written supervisory procedures (WSPs) to supervise the activities of its associated persons and the types of businesses in which it engages. Among other things, a firm's WSPs must address supervision of supervisory personnel and provide for the review of a firm's investment banking and securities business, correspondence and internal communications, and customer complaints. WSPs should describe:

  • the specific individual(s) responsible for each review,
  • the supervisory activities such persons will perform,
  • the frequency of the review, and
  • the manner of documentation.

The rule further sets forth requirements to designate and register branch offices and offices of supervisory jurisdiction (OSJs), conduct internal inspections and review transactions for insider trading.

Firms must also adopt procedures that include a means of customer confirmation for certain transactions such as transmittal of customer funds, changes in address, and changes in investment objectives.

FINRA Rule 3120 (Supervisory Control System)

FINRA Rule 3120 requires a firm to have a system of supervisory control policies and procedures (SCPs) that tests and verifies a firm's supervisory procedures. It is essential for a firm to recognize that FINRA Rule 3120's requirement to have specific SCPs differs from the requirement for WSPs. A firm not only needs to maintain WSPs, but the firm also must have SCPs to test and verify, at least annually, that its WSPs are reasonably designed with respect to the firm's and its associated persons' activities to achieve compliance with applicable securities laws and regulations and FINRA rules, and to create additional or amend WSPs as identified by such testing and verification. Risk-based methodologies and sampling may be used to determine the scope of testing. The testing ensures that a firm's supervisory procedures are reviewed and amended regularly in light of changing business and regulatory environments.

Pursuant to Rule 3120, a firm must designate principal(s) to be responsible for establishing, maintaining and enforcing a firm's SCPs. The designated principal(s) also must prepare, at least annually, a report detailing the firm's supervisory control system and submit it to senior management (Rule 3120 Report). The Rule 3120 Report must include a summary of the test results and significant identified exceptions, and any additional or amended supervisory procedures created in response to the test results.

If a firm has reported $200 million or more in gross revenue on its FOCUS report in the prior calendar year, FINRA Rule 3120 requires that the firm's annual report include specified additional content, to the extent applicable to the firm's business.

FINRA Rule 3130 (Annual Certification of Compliance and Supervisory Processes)

FINRA Rule 3130 requires a firm to designate and identify to FINRA on Schedule A of Form BD one or more principals to serve as a chief compliance officer (CCO). The rule also requires the firm's chief executive officer(s) (CEO(s)) to certify annually that the firm has in place processes to establish, maintain, review, test and modify policies and procedures reasonably designed to achieve compliance with applicable securities laws and regulations and FINRA rules. A firm's processes must be evidenced in a report that must be submitted to the firm's board of directors and audit committee (or equivalent bodies). The CEO(s) must further certify to having met with the CCO(s) in the preceding 12 months to discuss the firm's processes and other specified matters.

The intent of Rule 3130 is to increase attention to firms' compliance programs by requiring substantial and purposeful interaction between business managers and compliance officers throughout the firm.


FINRA is providing two Written Supervisory Procedures Checklists -- one for Capital Acquisition Brokers and one for Broker Dealers -- as optional guides to firms to assist them in fulfilling their obligations under the FINRA Rules. The checklists are outlines of selected key topics representative of the business activities typically engaged in by FINRA members and permissible under FINRA’s Rules. Note that following these WSP Checklist templates do not guarantee compliance with FINRA Supervisory Procedure Rules or provide a safe harbor from regulatory responsibility.


Learn More

Please visit our e-learning courses page to register for one or more of the following courses.

  • AML – Supervisors: Understanding Your Role
  • AML – Supervisors: Understanding Your Role – Vol. 2
  • Annual Compliance Reminders for Supervisors – Vol. 1
  • Customer Information Protection for Supervisors
  • Cybersecurity – Supervisors: Understanding Your Role
  • Electronic Communications: What Supervisors Need to Know
  • Ethical Considerations for Supervisors
  • Gifts: Understanding Supervisory Responsibilities
  • Retail Branch Office Supervision: Compliance with Regulations
  • Retail Branch Office Supervision: Understanding Supervisory Responsibilities
  • Retail Supervision: Sales to Senior Investors
  • Supervision: FINRA Rules 3110, 3120, 3150 and 3170
  • Supervision: Obligations for Firms With Institutional Clients
  • Supervision: Obligations When Monitoring Sales and Trading


FINRA's Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see FINRA OGC Interpretative Guidance for more information.

OGC staff contacts:
Kosha Dalal and Sarah Kwak
1735 K Street, NW
Washington, DC 20006
(202) 728-8000

Guidance on Implementing Effective Heightened Supervisory Procedures for Associated Persons With a History of Past Misconduct
April 30, 2018
FINRA Requests Comment on a Proposal to Amend Rule 3110 (Supervision) to Provide Firms the Option to Conduct Remote Inspections of Offices and Locations That Meet Specified Criteria
November 13, 2017
Guidance on Social Networking Websites and Business Communications
April 25, 2017
FINRA Filing Requirements and Review of Regulation A Offerings
September 8, 2015
SEC Approves New Supervision Rules
March 19, 2014
FINRA and the SEC Issue Joint Guidance on Effective Policies and Procedures for Broker-Dealer Branch Inspections
November 30, 2011
FINRA Reminds Firms of Their Obligations Regarding the Supervision of Registered Persons Using Senior Designations
November 11, 2011
Guidance on Social Networking Websites and Business Communications
August 18, 2011
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
March 29, 2011
FINRA Reminds Firms of Responsibilities When Providing Customers with Consolidated Financial Account Reports
April 8, 2010
Guidance on Blogs and Social Networking Web Sites
January 25, 2010
FINRA Requests Comments on Proposed New Rules Governing Communications with the Public
September 21, 2009
SEC Approval and Effective Date for New Consolidated FINRA Rules
August 17, 2009
FINRA Requests Comment on Proposed Consolidated FINRA Rule Governing Investment Company Securities
June 17, 2009
SEC Approves Rule Relating to Supervision of Market Letters
February 5, 2009
The Obligation of Firms When Supervising their Registered Representatives' Use of Marketing Materials to Establish Expertise
May 20, 2008
Proposed Consolidated FINRA Rules Governing Supervision and Supervisory Controls
May 14, 2008
Sound Practices for Preventing and Detecting Unauthorized Proprietary Trading
April 8, 2008
Annual Certification of Compliance
July 25, 2007
NASD and NYSE Request Comment on Proposed Joint Guidance Regarding the Review and Supervision of Electronic Communications;
June 14, 2007
NASD Requests Comment on Proposed Amendments to Rules 3010(g) and 2711 in Connection with the Rule Harmonization Project with the NYSE
February 22, 2007
Special Considerations When Supervising Recommendations of Newly Associated Registered Representatives to Replace Mutual Funds and Variable Products
February 13, 2007
SEC Approves Amendment to NASD Interpretive Material 3013 Regarding Timing of Submission of Report that Evidences Processes to a Member's Board of Directors and Audit Committee
March 21, 2006
SEC Approves Amendments to NASD Rule 3012 to Require Members Relying on Rule 3012's "Limited Size and Resources" Exception to Notify NASD of their Reliance
January 13, 2006
Amendments Regarding Deadlines for Submission of Initial Annual Report under Rule 3012 and Execution of the Initial Annual Certification under Rule 3013 and IM-3013
November 2, 2005
SEC Approves Uniform Branch Office Definition and Related Interpretive Material
October 6, 2005
Member Responsibilities for Supervising Sales of Unregistered Equity-Indexed Annuities
August 8, 2005
Members' Responsibilities When Outsourcing Activities to Third-Party Service Providers
July 22, 2005
Guidance Regarding Rule 3012(a)(1) Requirement to Test and Verify a Member's Supervisory Policies and Procedures
April 14, 2005
NASD Issues Guidance on Section 1031 Tax-Deferred Exchanges of Real Property for Certain Tenants-in-Common Interests in Real Property Offerings
March 2, 2005
Guidance Regarding the Application of the Supervisory Control Amendments to Members' Securities Activities, Including Members' Institutional Securities Activities
January 28, 2005
SEC Approves New Chief Executive Officer Compliance Certification and Chief Compliance Officer Designation Requirements
October 31, 2004
SEC Approves New Rules and Rule SEC Approves New Rules and Rule Amendments Concerning Supervision and Supervisory Controls
October 4, 2004
NASD Seeks Comment on Proposed Rule to Impose Specific Sales Practice Standards and Supervisory Requirements on Members for Transactions in Deferred Variable Annuities
June 9, 2004
NASD Requests Comment on Proposed Amendments to Rule 3010 to Require Heightened Supervision Plans for Associated Persons with a Specified Threshold of Industry/Regulatory-Related Events
September 5, 2003
Clarification for Members Regarding Supervisory Obligations and Recordkeeping Requirements for Instant Messaging
June 18, 2003
Certification by Chief Executive Officer and Chief Compliance Officer: NASD Requests Comment on Proposal to Amend Rule 3010 and Adopt Interpretive Material 3010-1
June 4, 2003
NASD Reminds Members of Their Responsibilities Regarding Private Securities Transactions Involving Notes and Other Securities and Outside Business Activities
December 10, 2001
NASD Regulation Reminds Firms of CRD Continuing Education Notification Method and Informs Firms to Review Written Supervisory Procedures
June 12, 2000
NASD Provides Guidance on Supervisory Responsibilities
June 1, 1999
NASD Elaborates on Member Firms -- Supervision Responsibilities for Trade Reporting and Market-Making Activities
December 1, 1998
SEC Approves Taping Rule; Effective August 17, 1998
July 1, 1998
NASD Reminds Members of Supervisory and Inspection Obligations
May 1, 1998
SEC Approves Rules Regarding Supervision, Review, and Record Retention of Correspondence
January 1, 1998
NASD Regulation and New York Stock Exchange Memorandum Discusses Sweep Report and Provides Guidance on Heightened Supervision Recommendations
April 1, 1997
NASD Solicits Comment on Proposed Rules Governing Supervision, Review, and Record Retention of Correspondence
December 1, 1996
Clarification of Members' Suitability Responsibilities Under NASD Rules with Special Emphasis on Member Activities in Speculative and Low-Priced Securities
September 1, 1996
A Few Minutes With FINRA
In a follow up to a recent episode of A Few Minutes With FINRA, FINRA Executive Vice President of Enforcement Susan Schroeder answers questions FINRA has received from firms in response to its 529 Plan Share Class Initiative. (11 min. 58 sec.)
February 27, 2019
A Few Minutes With FINRA
Chip Jones and Susan Schroeder discuss the 529 Plan Share Class Initiative. Under the program, firms can self-report to FINRA by April 1, 2019, supervisory violations related to 529 plan share-class recommendations and include a plan to remediate the issue; and in response, FINRA Enforcement will recommend that FINRA accept a settlement that includes restitution for the impact on affected customers and a censure, but no fine. (7 min. 33 sec.)
January 28, 2019
Targeted Examination Letter
FINRA’s Member Regulation department is conducting a review with respect to products linked to the CBOE’s Volatility Index (VIX). The review will focus on the supervisory processes followed by firms to identify and mitigate sales practice risks associated with recommendations to non-institutional purchasers of VIX-linked products.
April 9, 2018
Frequently asked questions regarding FINRA Rules 3110, 3120, and 3130
December 1, 2014
Interpretive Letter
A Member's Responsibilities Regarding the Outsourcing of Certain Activities
August 15, 2006
Interpretive Letter

Applicability of NASD rules to a member's use of a translator for group retirement plan enrollment presentations.

November 26, 2001
Interpretive Letter

The limited supervisory functions that can be properly delegated to registered representatives also may be assigned to persons registered as Foreign Associates under NASD Rule 1100. Foreign Associates, however, may not perform the functions that require a principal registration.

June 4, 2001
Interpretive Letter

A broker/dealer is not required to register as branch offices under Rule 3010(g) non-public office locations where existing customers can use computer terminals to access their accounts and enter orders.

March 16, 1998
Interpretive Letter

Staff interpretation on the use of electronic signatures under NASD Rules 3110(c)(1)(C) and 3010(d).

November 26, 1997