FINRA Rule 3110 Explained

Known as the "Supervision Rule," FINRA Rule 3110 requires brokerage firms to establish, maintain, and enforce a system to supervise the activities of their associated persons.

The rule stipulates that the system of supervision should be reasonably designed to achieve compliance with all applicable regulations established by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).

Compliance with FINRA Rule 3110 is critical for brokerage firms to effectively manage risk and avoid costly liability. Establishing a robust supervisory system, however, is not only a key regulatory obligation but also helps broker-dealers build trust with investors and strengthen their business practices.