Brokerage Dealers Laws and Regulations

Know about laws and regulations for brokerage houses

Brokerage companies provide financial services for clients. An independent broker or brokerage service can assist in finding and obtaining investments including stocks, mutual funds and other securities. Brokers work on commission, earning a specific percentage every time a client makes a trade. Because brokers deal with financial assets, they are subject to rules and regulations from state, national and international agencies that look out for consumers.

Brokerage dealers laws and regulations will vary depending on the type of client the dealer works with as well as the location of the financial assets. Independent brokerage firms should learn about the law and regulations from all sources, including:

1. State regulations for brokerage firms;

2. All federal regulations that apply;

3. Any regulations for brokers that work with international banks.

Consider FDIC rules and regulations for brokerage dealers

If a brokerage dealer works on the premises of an FDIC insured institution, the Federal Deposit Insurance Corporation (FDIC) provides specific regulations the brokerage dealer must follow. These regulations can also be stat-specific, depending on the type of financial institution working with the brokerage firm.
Federal Deposit Insurance Corporation provides the rules and regulations for brokerage dealers working on the premises of state-chartered banks. American Banker lists many FDIC regulations being proposed that could affect brokerage dealers working with banks or on the premises of a bank.

Know the federal laws and regulations for stock brokerage firms

There are many federal regulations for stock brokerage firms in the United States. These regulations are meant to keep the brokerage and its clients safe from fraud. The regulations require brokerage firms to register with the Securities and Exchange Commission, be subject to inspections and provide some standard for consumer protection.
Securities and Exchange Commission (SEC) provides regulations for registration of a broker-dealer and other requirements for any stock brokerage firms after registration is complete.

Explore international rules and regulations for brokerage dealer companies

International regulations often come into play with brokerage firms when clients hold money or other financial assets in another country. There are many international regulatory agencies that work with brokerage firms in the U.S. to protect countries from money laundering practices.
Committee of European Securities Regulators provides a number of regulations that assist with keeping fair international trading practices. The Financial Action Task Force (FATF) is an international governing body that combines policies from several countries to reduce money laundering practices with its 40+9 recommendations. Its main purpose is to curb financing for terrorist groups and criminal activities.