Wednesday, May 20, 2015
Options Regulatory Alert #2015 - 17
Sponsored Access Compliance
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The Exchange is issuing this as a reminder to all market participants of their obligations pursuant to PHLX Rule 1094, Nasdaq Rule 4615, and BX Rule 4615 to inform the respective exchange of any sponsored relationships. Sponsoring Members are required to enter into a Sponsored Participant Access Agreement, with the respective exchange, wherein it is authorizing access to the exchange to a Sponsored Participant for the entry and execution of orders. Such access must be authorized in advance by the Sponsoring Member. Sponsoring Members are required to enter into and maintain participant agreements with its Sponsored Participants and to establish a proper relationship and account through which the Sponsored Participant may trade on the Exchange.
Sponsoring Members shall agree to various obligations with respect to the Sponsored Participant, included but not limited to:
The Exchange’s Sponsored Access forms for each respective exchange may be found on the memberships page of each market. Pursuant to §240.15c3-5, concerning risk management controls for brokers or dealers with market access. “A broker or dealer with market access, or that provides a customer or any other person with access to an exchange or alternative trading system through use of its market participant identifier or otherwise, shall establish, document, and maintain a system of risk management controls and supervisory procedures reasonably designed to manage the financial, regulatory, and other risks of this business activity. Such broker or dealer shall preserve a copy of its supervisory procedures and a written description of its risk management controls as part of its books and records in a manner consistent with §240.17a-4(e)(7). A broker-dealer that routes orders on behalf of an exchange or alternative trading system for the purpose of accessing other trading centers with protected quotations in compliance with Rule 611 of Regulation NMS (§242.611) for NMS stocks, or in compliance with a national market system plan for listed options, shall not be required to comply with this rule with regard to such routing services, except with regard to paragraph (c)(1)(ii) of this section.” Please see the Responses to Frequently Asked Questions Concerning Risk Management Controls for Brokers or Dealers with Market Access for additional information. |
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