Third-Party Service Providers

FINRA RN 11-14

March 29, 2011

FINRA published a regulatory notice to request comment on proposed FINRA Rule 3190 to govern firms' obligations and supervisory responsibilities regarding outsourcing arrangements. The new rule would state that (1) when a firm outsources a function related to its business as a broker-dealer, it remains obliged to comply with applicable securities laws and SRO rules; and (2) firms may not delegate responsibilities for, or control over, any outsourced functions. In addition, the rule would require firms to have supervisory procedures and due diligence measures to ensure arrangements with third party providers are reasonably designed to achieve compliance with securities laws and SRO rules. Finally, proposed Rule 3190 would not restrict activities performed by firms pursuant to a carrying agreement under FINRA Rule 4311. Comments on the proposal are due by May 13, 2011.

Cross References

FINRA Rule 3190 (proposed)

FINRA Rule 4311