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Standard Forms / Documentation / Guidelines

SIFMA Drafts Model Agreement for Firms Providing Customers with Access to Electronic Trading Services

In order to reduce the time and expense associated with negotiating electronic access agreements, SIFMAhas drafted a model Electronic Access and Trading Agreement ("Agreement") for broker-dealers providing customers with access to electronic trading services. Broker-dealer members of SIFMA increasingly utilize this type of an agreement to govern the provision of, and their customers' access to, electronic trading services. The Agreement is intended to set out model contract language that fairly and accurately accounts for, and balances the risks associated with, electronic access, from the perspectives of the broker-dealers as well as their customers.

SIFMA intends that the Agreement will be used in conjunction with existing client agreements (including securities customer or derivatives master agreements) that govern the underlying transactions that occur through the use of electronic trading services. As such, the Agreement is not intended to govern the substantive terms and conditions applicable to any resulting transactions that are entered into through the use of such electronic trading services. The Agreement covers common issues that arise in the provision of electronic trading services by broker-dealers to customers, such as a requirement that electronic trading services be accessed only through specified access methods by the customer or certain authorized users.

The Agreement has been developed through a careful consideration of the types of businesses conducted electronically by broker-dealers and their affiliates with their customers, and on an analysis of the common risks and issues presented by these businesses. SIFMA has sought the assistance of and input from many of its member firms in the preparation of this model form agreement. In addition, SIFMA believes that market participants generally will find the Agreement beneficial and that it will significantly enhance the ability of market participants to operate and utilize electronic trading systems. Of course, certain broker-dealers or their customers may need to modify the proposed form of Agreement in some instances, in order to accommodate their particular business activities. This could be accomplished through the use of annexes, separately negotiated addenda or schedules that add to or modify the Agreement. However, SIFMA anticipates that broker-dealers and their customers will generally be able to utilize the Agreement in substantially the form proposed.

If you have any questions regarding this letter, please contact Melissa MacGregor, Assistant Vice President & Associate General Counsel, SIFMA, at 202-216-2000.