SEC Imposes Pretrade Verification Rules

Law360, New York (November 15, 2010, 7:06 PM EST) -- The U.S. Securities and Exchange Commission on Monday announced the final adoption of a rule requiring brokers to verify that all automated trades entered under their authority are compliant with securities laws and regulations before those trades hit the open market.

SEC Rule 15c3-5 will put an end to so-called unfiltered or naked access, in which clients are allowed to trade online using a broker’s “market participant identifier” without the broker ever reviewing the trades, the SEC said.

Naked access accounts for at least 38 percent...
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