{"id":5084,"date":"2010-11-21T00:00:00","date_gmt":"2010-11-21T06:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2010\/11\/sec_adopts_direct_access_rule"},"modified":"2010-11-21T00:00:00","modified_gmt":"2010-11-21T06:00:00","slug":"sec-adopts-direct-access-rule","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/sec-adopts-direct-access-rule\/","title":{"rendered":"SEC Adopts Direct Access Rule Prohibiting &#8220;Naked&#8221; Access to ATSs or Exchanges"},"content":{"rendered":"<p>The Securities and Commission has adopted a rule that prohibits brokers from having \u201cnaked\u201d access to alternative trading systems (ATS) or exchanges while requiring brokers with market access to put into place supervisory procedures and risk management controls to prevent market errors and other problems. Under the 1934 Securities Exchange Act&#8217;s new Rule 15c3-5, both broker-dealers that belong to an ATS or an exchange and ATS broker-dealer operators that allow direct trading by persons who aren\u2019t dealers or brokers must put into place certain supervisory procedures and controls to effectively get rid of \u201cnaked\u201d access arrangements (also known as \u201cunfiltered\u201d access arrangement) that have allowed customers to bypass broker-dealers and their risk management controls completely while giving them direct electronic access to an ATS or an exchange.<\/p>\n<p>Also per the new rule, new risk management controls must be put into place to stop orders that exceed capital thresholds or pre-set credit, do not comply with regulatory requirements, or appear erroneous in another way. Brokers-dealers also must   implement certain controls before the orders are sent to ATSs or exchanges, set up, document, and maintain procedures to regularly evaluate the risk management controls, and tackle any problems as soon as possible. <\/p>\n<p>The SEC believes that to put into place these new systems will initially cost broker-dealers some $100 million. Maintenance of the systems is expected to cost about $100 million a year.  <\/p>\n<p><strong>Related Web Resources:<\/strong><br \/>\n<a href=\"https:\/\/www.sec.gov\/news\/press\/2010\/2010-210.htm\">SEC Adopts New Rule Preventing Unfiltered Market Access<\/a>, SEC.gov, November 3, 2010<\/p>\n<p><a href=\"https:\/\/www.ft.com\/cms\/s\/0\/e0c644ce-e79f-11df-8ade-00144feab49a,s01=1#axzz161nJRUaS\">SEC rule to clamp down on \u2018naked access,&#8217;<\/a> Financial Times, November 4, 2010<\/p>\n<p> <a href=\"https:\/\/www.investorlawyers.com\/blog\/sec-adopts-direct-access-rule\/#more-5084\" class=\"more-link\">Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Securities and Commission has adopted a rule that prohibits brokers from having \u201cnaked\u201d access to alternative trading systems (ATS) or exchanges while requiring brokers with market access to put into place supervisory procedures and risk management controls to prevent market errors and other problems. Under the 1934 Securities Exchange Act&#8217;s new Rule 15c3-5, both [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3760,3761,3963],"tags":[],"class_list":["post-5084","post","type-post","status-publish","format-standard","hentry","category-sec-enforcement","category-securities-and-exchange-commis","category-securities-law-and-regulations"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>SEC Adopts Direct Access Rule Prohibiting &quot;Naked&quot; Access to ATSs or Exchanges &#8212; Investor Lawyers Blog &#8212; November 21, 2010<\/title>\n<meta name=\"description\" content=\"The Securities and Commission has adopted a rule that prohibits brokers from having \u201cnaked\u201d access to alternative trading systems (ATS) or exchanges while &#8212; November 21, 2010\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/sec-adopts-direct-access-rule\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"SEC Adopts Direct Access Rule Prohibiting &quot;Naked&quot; Access to ATSs or Exchanges &#8212; Investor Lawyers Blog &#8212; November 21, 2010\" \/>\n<meta name=\"twitter:description\" content=\"The Securities and Commission has adopted a rule that prohibits brokers from having \u201cnaked\u201d access to alternative trading systems (ATS) or exchanges while &#8212; November 21, 2010\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards &amp; Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"SEC Adopts Direct Access Rule Prohibiting \"Naked\" Access to ATSs or Exchanges &#8212; 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