Know your client surveillance systems required to verify clients and detect fraud, with documented controls and reporting obligations.

Regulation 18G requires stock brokers to establish and maintain know your client surveillance systems and proportionate surveillance and internal control procedures to verify client identities, monitor orders and trades, set documented alert thresholds with rationale, and record roles, corrective actions and reporting guidelines. Boards or equivalent management must review and update systems at least annually, ensure proprietary accounts and trading terminals are used appropriately, maintain processes to detect mule or suspicious accounts, and require employees to promptly report knowledge of fraud, market abuse or suspicious activity to senior management.

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