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Securities Trading Standards and Compliance Framework

The Cross-Border Financial Commission establishes comprehensive standards governing securities trading activities to maintain market integrity, ensure fair treatment of market participants, and mitigate systemic risks. All registered entities must maintain demonstrable compliance with these standards as a condition of continued authorization.

Fundamental Trading Standards

Registered entities must implement robust systems and controls to prevent, detect, and deter market abuse, including but not limited to market manipulation, insider dealing, and false or misleading statements. Specific requirements include:

  • Algorithmic trading controls and circuit breakers
  • Transaction monitoring systems calibrated to entity trading volume
  • Suspicious transaction reporting mechanisms
  • Staff training on market abuse identification
  • Regular testing of market abuse scenarios
  • Documentation of implemented safeguards

When executing client orders, registered entities must take all sufficient steps to obtain the best possible result for clients, taking into account price, costs, speed, likelihood of execution and settlement, size, nature, and any other relevant consideration. Compliance requires:

  • Documented best execution policy
  • Regular analysis of execution quality
  • Client disclosure of execution arrangements
  • Independent verification of execution quality
  • Venue selection justification
  • Execution factor prioritization documentation

Registered entities holding client assets must maintain robust segregation of such assets from firm assets, implement appropriate reconciliation procedures, and maintain adequate records. Requirements include:

  • Daily reconciliation of client asset accounts
  • External audit of client asset controls
  • Clear designation of client assets in all records
  • Due diligence on third-party custodians
  • Client asset risk assessment framework
  • Client money distribution rules

Registered entities must maintain capital resources appropriate to the nature, scale, and complexity of their activities, calculated according to the prescribed methodology relevant to their classification. Entities must:

  • Calculate capital requirements daily
  • Maintain buffer above minimum requirements
  • Report capital positions quarterly
  • Conduct stress testing of capital adequacy
  • Implement early warning indicators
  • Maintain capital restoration plans

Comprehensive risk management frameworks must be established, documented, and effectively implemented, encompassing all material risks to the entity’s operations. Required elements include:

  • Risk appetite statement approved by governing body
  • Independent risk management function
  • Regular risk assessment processes
  • Risk mitigation strategies
  • Risk reporting procedures
  • Risk management policy review mechanism