On Mar. 11, NYSE memo on post-trade review for possible fraud.
- Under CEA Rule 15c3-5 on market access, members must review trades for
potentially manipulative, disruptive, and/or other improper conduct on them. - Follows guidance by exchange, new guide is read in conjunction.
Risk Management Guide
- On post-trade reviews, use third-party risk management technology, software.
- Also investigation and follow up, allocating post-trade reviews to broker-dealers.
Post Trade Reviews
- Member must have policies unless allocated to individual broker-dealers per rules.
- Based on facts and circumstances need supervisory systems, internal controls
specifically tailored to business model tailored supervisory, surveillance procedures. - If third-party used, can rely on it but must do due diligence ensure appropriate.
Investigation and Follow Up, Allocation
- Gathering information not sufficient, should do their own investigations, follow-up into why exceptions are taking place, reach out to customers may be necessary.
- Not at face value, may need documentation, other evidence to support or refute.
- Could allocated to registered dealer client some functions, including reviews, but
need do due diligence and see it has better access, be specific about allocation.
