Is your home a branch office?

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Oct 5, 2005 9:02 am


NASD will announce the effective date of the amended definition and<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><?:NAMESPACE PREFIX = O />

interpretive material in a Notice to Members to be published shortly.

3010 Supervision

(g) Definitions

(2) (A) A ‘‘branch office’’ is any location where one or more associated persons of a

member regularly conducts the business of effecting any transactions in, or inducing or

attempting to induce the purchase or sale of any security, or is held out as such, excluding:

(i) Any location that is established solely for customer service and/or back office type

functions where no sales activities are conducted and that is not held out to the public as a

branch office;

(ii) Any location that is the associated person’s primary residence; provided that:

a. Only one associated person, or multiple associated persons, who reside at

that location and are members of the same immediate family, conduct business at the


b. The location is not held out to the public as an office and the associated

person does not meet with customers at the location;

c. Neither customer funds nor securities are handled at that location;

d. The associated person is assigned to a designated branch office, and such

designated branch office is reflected on all business cards, stationery, advertisements

and other communications to the public by such associated person;

e. The associated person’s correspondence and communications with the

public are subject to the firm’s supervision in accordance with Rule 3010;

f. Electronic communications (e.g., e-mail) are made through the member’s

electronic system;

g. All orders are entered through the designated branch office or an electronic

system established by the member that is reviewable at the branch office;

h. Written supervisory procedures pertaining to supervision of sales activities

conducted at the residence are maintained by the member; and

i. A list of the residence locations is maintained by the member;

(iii) Any location, other than a primary residence, that is used for securities business

for less than 30 business days in any one calendar year, provided the member complies

with the provisions of paragraph (A)(2)(ii)a. through h. above;

(iv) Any office of convenience, where associated persons occasionally and

exclusively by appointment meet with customers, which is not held out to the public as an


(v) Any location that is used primarily to engage in non-securities activities and from

which the associated person(s) effects no more than 25 securities transactions in any one

calendar year; provided that any advertisement or sales literature identifying such

location also sets forth the address and telephone number of the location from which the

associated person(s) conducting business at the non-branch locations are directly


(vi) The Floor of a registered national securities exchange where a member conducts

a direct access business with public customers; or

(vii) A temporary location established in response to the implementation of a business

continuity plan.

(B) Notwithstanding the exclusions provided in paragraph (2)(A), any location that is

responsible for supervising the activities of persons associated with the member at one or more

non-branch locations of the member is considered to be a branch office.

(C) The term ‘‘business day’’ as used in Rule 3010(g)(2)(A) shall not include any partial

business day provided that the associated person spends at least four hours on such business day

at his or her designated branch office during the hours that such office is normally open for



* Where such office of convenience is located on bank premises, signage necessary to comply

with applicable federal and state laws, rules and regulations and applicable rules and regulations

of the NYSE, other self-regulatory organizations, and securities and banking regulators may be

displayed and shall not be deemed “holding out” for purposes of this section.

* * * * *

IM–3010–1. Standards for Reasonable Review

In fulfilling its obligations pursuant to Rule 3010(c), each member must conduct a

review, at least annually, of the businesses in which it engages, which review must be reasonably

designed to assist in detecting and preventing violations of and achieving compliance with

applicable securities laws and regulations and with NASD Rules. Each member shall establish

and maintain supervisory procedures that must take into consideration, among other things, the

firm’s size, organizational structure, scope of business activities, number and location of offices,

the nature and complexity of products and services offered, the volume of business done, the

number of associated persons assigned to a location, whether a location has a principal on-site,

whether the office is a non-branch location, the disciplinary history of registered representatives

or associated persons, etc. The procedures established and the reviews conducted must provide

that the quality of supervision at remote offices is sufficient to assure compliance with applicable

securities laws and regulations and with NASD Rules. With respect to a non-branch location

where a registered representative engages in securities activities, a member must be especially

diligent in establishing procedures and conducting reasonable reviews. Based on the factors

outlined above, members may need to impose reasonably designed supervisory procedures for

certain locations and/or may need to provide for more frequent reviews of certain locations.

* * * * *

Oct 5, 2005 7:36 pm

if we only didn’t have lawyers, we wouldn’t be putting up with the paperwork we now handle.

Oct 5, 2005 10:55 pm

O.K. I’ll bite, how does this affect Jones ? I know of rep who is still working out of his home after 11 months.

Oct 6, 2005 7:32 am

can you say "fee grab"

Guess which firm of the greatest salepeople in the world is flipping out about this requirement 'cuz all they had were "sub-branches" and the "branch manager" (a.k.a. FSD a.k.a. Field Supervision Director) was located in St.Louis?

Hey Steve do you know if the new classification of "branch" will require a properly qualified Branch Manager at each branch?