Brokers See Challenges Ahead To Meet Sponsored Access Mandates

As reported by Traders Magazine’s Peter Chapman, the industry got some needed breathing room. The Securities and Exchange Commission decided in late June to postpone compliance with a cornerstone of its sponsored-access rule for four months. That gives broker-dealers time to figure out how to build credit checks into their businesses that serve high-frequency traders.

Broker-dealers engaged in a sponsored-access business now have until Nov. 30 to comply with the section of SEC Rule 15c3-5 that requires them to establish credit thresholds for their customers. All other parts of the rule dealing with the trading of equities, ETFs, options and swaps went into effect on July 14.

On that date, brokers became responsible for policing their customers’ activities on an order-by-order basis. Come November, they must be able to set overarching trading limits on a customer-by-customer basis. They must also be able to manage their aggregate customer exposure across the firm.

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