Dos and Don’ts for Exempt Market Dealers – Part 3
Over the past few weeks, we have talked about the challenges facing exempt market dealers. If you’ve tried to keep your firm compliant on your own, you know how daunting that can be. Many firms think that they can buy an off-the-shelf policies and procedures manual to ensure they remain compliant.
In truth, there are rules and regulations about what the policies and procedures must include. It’s not enough to just have a policies and procedures manual, those policies and procedures must be updated and adhered to as they change. They must also contain certain information, such as duties, training, complaint handling, and custody of client assets.
With respect to conflicts of interest, your policies and procedures must include the following:
- A broad definition of conflicts, which would enable the firm to understand and identify conflicts
- A defined escalation procedure for when a conflict is identified
- A clear distinction between the firm’s responsibilities and the dealing representative’s responsibilities related to identifying and addressing conflicts
- Appropriate resources, authority, and independence for the CCO
- Regular reports of material conflicts from the CCO to the UDP
- Periodic testing of the conflicts management framework
A proper compliance system would be customized to your firm, including identifying specific risks—and risk management.
Adequate training is also vital to compliance, but many firms fail to implement sufficient training programs. They also fail to ensure that individuals update their knowledge and training. That would be where a company like ours would come in.
On top of all of it, you must keep records to prove your compliance—and those records must be accessible. Lots to consider and do to stay current.
Compliance involves a lot of complex pieces, and it’s easy to think that doing the minimum is enough. Unfortunately, too many firms aim for doing the minimum and fall short, which could result in them being no longer compliant.
Regulators investigate firms regularly, and if they find significant deficiencies or criminal issues, firms can face hefty fines, sanctions and penalties, as well as the imposition of a compliance monitor or even loss of registration.
Looking for more information on compliance or on the regulations governing exempt market dealers? We’ve developed a short, easy-to-understand 10-part webinar series that covers the ins and outs in plain language. You’ll come away with a better understanding of what’s required of you, and how you can remain compliant.
If you’d like to learn more about the course, please click here. Contact us through our website if you’d like to learn more about our firm, our people, and our services.
