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USA PATRIOT Act

Broker Dealer Compliance

by Jill Morrison

Broker dealer compliance is required in order to prevent cases of terrorism and fraud in the financial system. Financial institutions are constantly bombarded with new and changing regulations. Careful steps must be taken to ensure compliance with all regulatory mandates.

Brokers and dealers are crucial in the act of buying and selling securities or other products. A broker is defined as an individual or firm that acts as an intermediary between a buyer and a seller, usually charging a commission. A dealer is defined as an individual or firm that buys and sells products and holds an inventory. Therefore, a broker dealer is known as an individual or firm in the business of buying and selling securities for itself and others.

Achieving Broker Dealer Compliance

Both brokers and dealers are required to register with the NASD and the SEC. NASD stands for the National Association of Securities Dealers. The NASD is a self-regulatory organization and it was established by the SEC. SEC stands for the Securities and Exchange Commission. For broker dealer compliance, all rules of the NASD and SEC must be followed carefully.

To achieve broker dealer compliance with NASD, SEC, and other regulations, broker dealers must have a complete knowledge of current regulations. Many firms will use technology solutions such as software programs and web-based services to help them in complying with regulatory mandates. These solutions can often be found online and will provide beneficial services such as data organization and access to records, lists, and other official documents.

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