Rules – Table of Contents

April 12, 2018

• RULE NO. 1 – BUSINESS STRUCTURES AND QUALIFICATIONS
  • 1.1 BUSINESS STRUCTURES
    • 1.1.1 Members
    • 1.1.2 Compliance by Approved Persons
    • 1.1.3 Service Arrangements
    • 1.1.4 Employees
    • 1.1.5 Agents
    • 1.1.6 Introducing and Carrying Arrangement
    • 1.1.7 Business Names, Styles, Etc.
  • 1.2 INDIVIDUAL QUALIFICATIONS
    • 1.2.1 Compliance with MFDA Requirements
    • 1.2.2 Registration
    • 1.2.3 Education, Training and Experience
    • 1.2.4 Training and Supervision
    • 1.2.5 Misleading Business Titles Prohibited
  • 1.3 OUTSIDE ACTIVITY
    • 1.3.1 Definition
    • 1.3.2 Requirements for Outside Activity
  • 1.4 REPORTING REQUIREMENTS
    • (a) Member Reporting
    • (b) Approved Person Reporting
    • (c) Failure to Report

• RULE NO. 2 – BUSINESS CONDUCT
  • 2.1 GENERAL
    • 2.1.1 Standard of Conduct
    • 2.1.2 Member Responsible
    • 2.1.3 Confidential Information
    • 2.1.4 Conflicts of Interest
  • 2.2 CLIENT ACCOUNTS
    • 2.2.1 Know-Your-Client
    • 2.2.2 New Accounts
    • 2.2.3 New Account Approval
    • 2.2.4 Updating Client Information
    • 2.2.5 Relationship Disclosure
  • 2.3 CONTROL OR AUTHORITY
    • 2.3.1 (a) Control or Authority
       (b) Discretionary Trading
       (c) Exception
    • 2.3.2 Limited Trading Authorization
    • 2.3.3 Designation
  • 2.4 REMUNERATION, COMMISSIONS AND FEES
    • 2.4.1 (a) Payable by Member Only
       (b) Payment of Commissions to Unregistered Corporation
       (c) Arrangements Prohibited
    • 2.4.2 Referral Arrangements
    • 2.4.3 Operating Charges
    • 2.4.4 Transaction Fees or Charges
  • 2.5 MINIMUM STANDARDS OF SUPERVISION
    • 2.5.1 Member Responsibilities
    • 2.5.2 Ultimate Designated Person
    • 2.5.3 Chief Compliance Officer
    • 2.5.4 Access to Board
    • 2.5.5. Branch Manager
    • 2.5.6 Currency of Examination
    • 2.5.7 Maintenance of Supervisory Review Documentation
    • 2.5.8 No Delegation
  • 2.6 BORROWING FOR SECURITIES PURCHASES
  • 2.7 ADVERTISING AND SALES COMMUNICATIONS
    • 2.7.1 Definitions
    • 2.7.2 General Restrictions
    • 2.7.3 Review Requirements
  • 2.8 CLIENT COMMUNICATIONS
    • 2.8.1 Definition
    • 2.8.2 General Restrictions
    • 2.8.3 Rates of Return
  • 2.9 INTERNAL CONTROLS
  • 2.10 POLICIES AND PROCEDURES MANUAL
  • 2.11 COMPLAINTS
  • 2.12 TRANSFERS OF ACCOUNT
    • 2.12.1 Definitions
    • 2.12.2 Transfers
  • 2.13 DISCLOSURE OF MFDA MEMBERSHIP
    • 2.13.1 Definition
    • 2.13.2 Account Statement
    • 2.13.3 Member Website

• RULE NO. 3 – FINANCIAL AND OPERATIONS REQUIREMENTS
  • 3.1 CAPITAL
    • 3.1.1 Minimum Levels
    • 3.1.2 Notice
  • 3.2 CAPITAL AND MARGIN
    • 3.2.1 Client Lending and Margin
    • 3.2.2 Member Capital
    • 3.2.3 Advancing Mutual Fund Redemption Proceeds
    • 3.2.4 Related Member Guarantees
    • 3.2.5 Notice Regarding Accelerated Payment of Long Term Debt
  • 3.3 SEGREGATION OF CLIENT PROPERTY
    • 3.3.1 General
    • 3.3.2 Cash
    • 3.3.3 Securities
  • 3.4 EARLY WARNING
    • 3.4.1 Definitions
    • 3.4.2 (a) Designation
                (b) Requirements
                (c) Prohibited Transactions
    • 3.4.3 Restrictions
    • 3.4.4 Duration
  • 3.5 FILING REQUIREMENTS
    • 3.5.1 Monthly and Annual
    • 3.5.2 Combined Financial Statements
    • 3.5.3 Members’ Auditors
    • 3.5.4 Assessments
  • 3.6 AUDIT REQUIREMENTS
    • 3.6.1 Standards
    • 3.6.2 Scope
    • 3.6.3 Additional Reporting
    • 3.6.4 Systems Review
    • 3.6.5 Retention
    • 3.6.6 Report to Corporation
    • 3.6.7 Reliance
    • 3.6.8 Qualification

• RULE NO. 4 – INSURANCE
  • 4.1 FINANCIAL INSTITUTION BOND
  • 4.2 NOTICE OF TERMINATION
  • 4.3 TERMINATION OR CANCELLATION
  • 4.4 AMOUNTS REQUIRED
    • 4.4.1 Minimum
    • 4.4.2 Base Amount
  • 4.5 PROVISOS
  • 4.6 QUALIFIED CARRIERS
  • 4.7 GLOBAL FINANCIAL INSTITUTION BONDS

• RULE NO. 5 – BOOKS, RECORDS & REPORTING
  • 5.1 REQUIREMENTS FOR RECORDS
  • 5.2 STORAGE MEDIUM
  • 5.3 CLIENT REPORTING
    • (1) Definitions
    • 5.3.1 Delivery of Account Statement
    • 5.3.2 Content of Account Statement
    • 5.3.3 Report on Charges and Other Compensation
    • 5.3.4 Performance Report
    • 5.3.5 Delivery of Report on Charges and Other Compensation and Performance Report
    • 5.3.6 Exempt Market Dealers and Scholarship Plan Dealers – Client Reporting
  • 5.4 TRADE CONFIRMATIONS
    • 5.4.1 Delivery of Confirmations
    • 5.4.2 Automatic Payment Plans
    • 5.4.3 Content
  • 5.5 ACCESS TO BOOKS AND RECORDS
  • 5.6 RECORD RETENTION