| Broker-dealer registration, Exchange Act Section 15(a) | Anyone in the business of effecting securities transactions for the account of others | Registration with the SEC, with exceptions; membership of a self-regulatory organization, which means FINRA for any over-the-counter business; and SIPC membership, with narrow exceptions | An app that takes customers' orders runs on a registered broker-dealer, your own or a partner whose API you build on |
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| SEC Rule 15c3-5, market access | Broker-dealers with market access, or that give customers access | Controls that reject orders over preset credit or capital limits, outside price or size bounds, or duplicated; block restricted securities; limit access to approved people; send surveillance staff immediate post-trade reports; annual review and CEO certification | Those controls stay under the broker-dealer's direct and exclusive control, so your app must treat a rejection as normal and show the reason |
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| FINRA Securities Trader registration, Notice 16-21 | Associated persons of FINRA members | Since 30 January 2017, whoever is primarily responsible for designing, developing or significantly changing an algorithmic trading strategy in equity, preferred or convertible debt securities registers as a Securities Trader and passes the Series 57 | Someone at the member firm answers for each strategy; settle with counsel how this applies to code an outside team writes |
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| FINRA Notice 15-09, algorithmic trading supervision | Members using algorithmic strategies (guidance, March 2015) | Significant testing in a development environment kept apart from production, testing for fast or adverse markets, a way to disable an algorithm in a few steps, and tracked changes reviewed with their test results | A separate test environment, a kill switch, and a change log tied to test runs, all from the first release |
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| FINRA Rule 4590, clock synchronization | FINRA members | Computer clocks that record events in NMS securities, listed options and OTC equity securities kept within 50 milliseconds of the NIST atomic clock, others within one second; synchronized each business day before the open; a log of results kept | Servers that stamp order events need synchronized clocks and a record of each synchronization |
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| Consolidated Audit Trail, SEC Rule 613 | FINRA members that receive or originate orders in NMS stocks, OTC equity securities or listed options | Reporting under the FINRA Rule 6800 series to an audit trail that collects every order, cancellation, modification and trade execution; the SEC adopted Rule 613 on 11 July 2012 | Your order event log must hold every event the broker-dealer needs to report, with its time stamp |
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| SEC Rule 17a-4, electronic records | Broker-dealers | Electronic records kept in a non-rewriteable, non-erasable format, or, since amendments effective 3 January 2023, in a system that can recreate an original record after it is modified or deleted | Order history written as new entries, never edited in place, so any earlier state can be rebuilt |
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| Regulation Best Interest | Broker-dealers recommending securities to retail customers (adopted June 2019) | Act in the retail customer's best interest without putting the firm's interests first, and use reasonable diligence, care and skill in each recommendation | A feature that suggests trades or portfolios carries this weight; name it in discovery, not after launch |
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| FINRA Notice 24-09, generative AI | FINRA members using generative AI (June 2024) | A reminder that FINRA rules apply when firms use AI; supervision under Rule 3110 and the communications standards of Rule 2210 cover what an AI tool produces | An AI feature needs a supervisor's view of what it said, and the same review as any customer communication |
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