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GAO-11-221R 1 (2010-11-23)

handle is hein.gao/gaobadxdg0001 and id is 1 raw text is: I GA0 T I M Accountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 B-321201 November 23, 2010 The Honorable Christopher J. Dodd Chairman The Honorable Richard C. Shelby Ranking Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Barney Frank Chairman The Honorable Spencer Bachus Ranking Member Committee on Financial Services House of Representatives Subject: Securities and Exchange Commission: Risk Management Controls for Brokers or Dealers With Market Access Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Securities and Exchange Commission (Commission), entitled Risk Management Controls for Brokers or Dealers With Market Access (RIN: 3235-AK53). We received the rule on November 5, 2010. It was published in the Federal Register as a final rule on November 15, 2010, with a stated effective date of January 14, 2011. 75 Fed. Reg. 69,792. The final rule will require brokers or dealers trading securities directly on an exchange or on an alternative trading system (ATS) to establish, document, and maintain a system of risk management controls and supervisory procedures. These procedures are, among other things, to be reasonably designed to systematically limit the financial exposure of the broker or dealer that could arise as a result of market access, and ensure compliance with all regulatory requirements that are applicable in connection with market access. The required financial risk management controls and supervisory procedures must be reasonably designed to prevent the entry of orders that exceed appropriate pre-set credit or capital thresholds, or that appear to be erroneous. The regulatory risk management controls and supervisory procedures must also be reasonably designed to prevent the entry of orders unless there has been compliance with all regulatory requirements that must be satisfied on a pre-order entry basis, prevent the entry of GAO-11-221R

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