Online Broker Dealer Compliance and Operations

Built for Disrupters in the Digital Space

  • Extensive BD launch expertise in online trading and brick-and-mortar
  • Fast moving go-to-market deployment, while covering all the bases
  • Outsourced staffing at all levels (analyst, manager, CCO and FINOP)
  • Technology neutral
  • Pay-as-you-grow pricing structure leverages short-term and long-term compensation incentives

Well Versed in Online Compliance Complexities

FINRA-Suitability-Rule-GuidelinesInnReg is uniquely positioned to support innovation in the brokerage and online trading space. Since our inception in 2013 we supported the launch of 13 digital broker dealers. In addition, Francesco Matteini, our founder and CEO, helped launch TradeKing and Zecco as their in-house CCO. Under his watch these two companies were successfully launched and then merged into one of the largest online brokers with half a million traders and almost $3 billion in assets.

Online BDs face distinct regulatory challenges compared to traditional brick-and-mortar players. This is not just a different delivery vehicle. The digital trading platform is an integral part of the product that’s as important to the value proposition as the stocks, ETFs and options offered for trading.

At InnReg we work with online broker dealers in three key areas:

  1. We help determine the best regulatory structure based on your business model, technology and user acquisition strategy. And then we take the lead in articulating the unique nature of your business to the regulators.
  2. We develop and manage your compliance and operational workflows to efficiently manage high volumes in user onboarding and transaction processing.
  3. We take ownership of your compliance and back office operations on a fully outsourced basis, allowing you to focus on developing your product and acquiring users.

We can leverage your current platform. Or recommend the best technology stack to fulfill all your compliance and back office needs, both effectively and cost efficiently. The final recommendation often integrates proven third-party solutions into your proprietary technology to achieve the optimal result. All of our systems and databases are cloud-based, so your team has easy access day or night from onsite or remote locations. 

Online Broker Dealer Compliance Services

Outsourced compliance:

  • Executive level: CCO (chief compliance officer) and FINOP (financial operations principal, Series 27 license)
  • Manager level: staff to support in-house CCO
  • Fully managed: complete team provides compliance department in-a-box

Information security procedures:

  • Processes and safeguards
  • Best practices based on regulatory feedback

Suspicious activity detection, monitoring and reporting:

  • PSAR and SAR management and filing
  • AML compliance
  • Fraud prevention
  • Identity theft, including Red Flag programs

Marketing, advertising and content compliance:

  • Marketing plan review resolves any compliance issues prior to execution
  • Content review for all online and offline messages, including social media

FINRA compliance facilitator:

  • New membership application
  • Broker dealer registration
  • FINRA broker check
  • Business expansion (CMA)
  • Exams, audits and regulatory filings
  • Information requests

Vendor compliance:

  • Vendor due diligence
  • Performance monitoring

Suitability reviews:

  • Online recommendations/advice compliance
  • Self-directed trading activity
  • At-risk client profiles

Staffing compliance:

  • Individual registrations
  • Outside business activities

Supervisory System Testing, Business Reviews, and AML Testing

Supervisory requirements are quite intimidating. The stakes are high, and the tasks are complex, especially for busy executives who are not compliance experts. That’s where InnReg comes in. We follow a six-step guide for reviewing and testing a broker dealer supervisory system, conducting business reviews, and testing AML programs.

Download The Guide For Your Future Reference

InnReg handles this six-step process from end-to-end so that our clients’ executive teams can stay focused on their business growth—with the confidence that dedicated experts are handling supervision and compliance.

Operations Services

New client onboarding and application approval:

  • Client identification (CIP/KYC/CDD/AML checks)
  • Exception management and additional due diligence on CIP kick-outs

Account funding and funds transfer supervision:

  • Funding source verifications
  • Withdrawal request processing

Trading supervision and reporting:

  • Trade reporting and monitoring (CAT, TRACE, TRF, etc.)
  • Best Execution reviews

Electronic books and records management:

  • Cloud-based document creation and management
  • Templates and methods based on best practices

How to Become a Self-Clearing Broker Dealer

Becoming a self-clearing broker dealer can be a logical next step for growing online trading platforms. And it’s not as intimidating as it seems.

At one time, only the very largest firms would take this path because of the regulatory and technical complexities. In today’s world, an expert regulatory advisor like InnReg can help guide online broker dealers through the process of preparing for and submitting filings to FINRA

InnReg can also advise you on partner selection and technology integration when it comes to building your clearing capabilities.

When you look at the definition of what a self-clearing broker dealer is, the advantages become clear. Self-clearing delivers four main benefits:

  • Eliminating the dependencies of your core processes on a third-party vendor
  • No longer paying fees to an external clearing house, which lowers the cost of each trade your users make
  • Broader latitude on how to integrate your proprietary UX with mid- and back-office operations 
  • Total control of your user experience
  • More efficient compliance processes

These advantages are within your reach. 

For some broker-dealers, other clearing models can be more appropriate. We can help online broker-dealers find the best clearing model for both their current and future needs. Factors such as trading volume, types of assets and offerings (e.g., fractional shares), and plans for strategic growth all play a part. If other models are a better choice, we are also experts in omnibus and fully-disclosed clearing.

Contact us to find out more about whether the self-clearing model could help you unlock more value and take your growth to the next level.

Case Studies

Retail Trading U.S. Brokerage
Launch a revolutionary new equity stock trading platform Launch a US-based brokerage arm for an established BD in South America

Compliance Regulations Insights for Broker-Dealers

Reach out today for a Complimentary Consultation.

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