Also known as: Market Access Rules · MAR
Written by attorneys · grounded in primary & secondary sources — see below
A regulatory requirement imposed on brokers and dealers that provide electronic access to trading venues. It mandates implementation of risk management controls and supervisory procedures reasonably designed to manage the financial, regulatory, and other risks of providing market access.
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Magnolia Foods, a broker, allowed a client to submit orders directly to an exchange without pre-trade risk filters. The client placed erroneous trades that caused massive losses before controls could intervene. The SEC found the firm violated the Market Access Rule by failing to maintain adequate risk management systems.
Matrix Technologies routed orders for Millennium Media without real-time credit checks or position limits. A fat-finger order triggered rapid executions that exceeded the firm's capital. Regulators determined the absence of required pre-trade controls breached the Market Access Rule.
It requires brokers and dealers with market access to establish and maintain risk management controls and supervisory procedures reasonably designed to manage risks.