Overview

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In working with clients in these two separate but closely linked areas, CCL identifies from the outset the distinct regulatory demands for a Broker and a Dealer.

A Broker’s regulatory responsibilities are closely subject to Conduct of Business rules and specifically those rules that apply to the execution of client orders – quality of execution and information for the client. Most firms in the pure broker market now use electronic order capture, transmission and execution processes, which meet regulatory requirements. There is still a substantial body of OTC trading in bond markets, foreign exchange markets and their non-exchange traded derivatives. Compliance with the regulators rules in these areas is more complicated although the principles are the same.

We define “Dealers” as those firms which facilitate the execution of customer orders by dealing as principal regardless of whether such principal positions are held for minutes or days. Dealing as principal introduces new areas of compliance risk and our focus is on middle office risk management, trading exposure limits and counterparty risk exposures.

Both types of business require strong corporate governance, risk management and management information procedures, which should be in place as much to ensure the continued economic value of the firm as well as compliance with regulatory requirements. Meeting the first objective should ensure meeting the second.

CCL works with a wide variety of clients in this area and has successfully installed management systems and controls, typically during the authorisation process, which meet regulatory standards and best practice for market risk control and regulatory compliance requirements.

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