Sponsored Access

SIFMA provides comments to the Securities and Exchange Commission (SEC) on sponsored access, Exchange Act Release No. 59275; File No. SR-NASDAQ-2008-104. In the Proposal, NASDAQ proposes to define the scope of what it would consider to be a “sponsored access” arrangement. It further proposes to define the relevant parties – thus, the broker-dealer that sponsors a client or other counterparty’s direct access to an exchange would be a “Sponsoring Member,” and the sponsored client/counterparty would the “Sponsored Participant.” In furtherance of a broad obligation that Sponsoring Members be responsible for the conduct of their Sponsored Participants, the Proposal would impose substantive obligations on the Sponsoring Member in three different areas – Contractual Provisions, Financial Controls and Regulatory Controls – as discussed below. SIFMA strongly believes that having a good, consistent, predictable and practical rule is critically important to the industry.