Market Access Rule (SEA Rule 15c3-5)

Overview

The SEC's "Market Access Rule" (or "sponsored access rule"), SEA Rule 15c3-5, requires a broker-dealer to institute technology controls to prevent customers (including other broker-dealers for this purpose) that trade through the broker-dealer's execution pipes from trading in a manner that will damage the market. While the Rule was largely adopted on the basis that it would require a broker-dealer to institute procedures that would prevent "fat finger" and other inadvertent trading errors, or trades that were excessive from a credit standpoint, enforcement of the Rule has greatly expanded in scope. Broker-dealers providing market access are also effectively required to monitor for a good range of improper trading activities, such as spoofing, by their customers. Firms also should be mindful that the various securities exchanges also have adopted their own sponsored access rules, and that many of the enforcement actions have been brought by the exchanges rather than by the SEC.

See also the topic page on Regulation Systems, Compliance and Integrity (Regulation SCI).

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