Alert July 12, 2011

SEC Provides Limited Extension of Compliance Deadlines for New Risk Management Control Requirements Applicable to Broker-Dealers with Market Access

The SEC has extended the July 14, 2011 compliance date for certain provisions of Rule 15c3-5 under the Securities Exchange Act of 1934.  Rule 15c3-5 requires brokers or dealers with access to trading securities directly on an exchange or alternative trading system (“ATS”) and broker‑dealer operators of an ATS that provide access to trading securities directly on their ATS to a person other than a broker-dealer, to establish, document and maintain a system of risk management controls and supervisory procedures.  The new compliance date for (i) all Rule 15c3-5 requirements as they apply with respect to fixed income securities and (ii) the requirements of Rule 15c3-5(c)(1)(i) as it applies with respect to all securities, is November 30, 2011.  (Rule 15c3-5(c)(1)(i) addresses financial risk management controls and supervisory procedures designed to prevent the entry of orders that exceed appropriate pre-set credit or capital thresholds.)  The compliance date for all other provisions of Rule 15c3-5 remains July 14, 2011.  For a more detailed discussion of Rule 15c3-5, see the November 16, 2010 Alert.