FOCUS Reporting Support - Waystone

      FOCUS Reporting Support

      All broker-dealers registered with the Securities & Exchange Commission (“SEC” or “the Commission”) must file SEC Form X-17A-5. This form is referred to as the Financial and Operation Combined Uniform Single (“FOCUS”) report. 

      What is the FOCUS Report?

      The Commission, along with each firm’s designated Self-Regulatory Organization (“SRO”), uses the FINRA FOCUS report to monitor the financial and operational health of registered broker-dealers on a monthly and/or quarterly basis.  Specifically, the FOCUS filing is used by the SEC and SROs to confirm each BD’s net capital position, calculated under SEC Rule 15c3-1 (the “Net Capital Rule”).

      What are the different types of FOCUS reports?

      Depending on your firm, there are different types of FOCUS reports you must submit. Types include:

      • Part I: used by fully disclosed introducing broker-dealers (i.e. firms that introduce customer accounts to a clearing firm but do not carry customer accounts themselves).
      • Part II: used by clearing firms (i.e. firms that execute, clear, and settle securities transactions for other broker-dealers and may also maintain customer accounts).
      • Part IIA: Used by firms that are both introducing broker-dealers and clearing firms.

      What are the Net Capital Rule requirements? 

      The Net Capital Rule requires that broker-dealers, have and maintain liquid assets or net capital, at specified levels, at all times, to protect customers and creditors from financial losses if the broker-dealer were to fail.  The Net Capital Rule requires that BDs have sufficient capital at all times including intraday.  Under Rule 17a-11 of the Exchange Act of 1934, broker-dealers must inform FINRA of any event when their net capital falls below the minimum amount required under the act.

      Who is responsible for filing the FOCUS Report?

      FINRA rules require each broker-dealer to have a designated Financial & Operations Principal (“FINOP”) that is responsible for filing these reports, which are typically due within 17 business days of month end.  To be a FINOP, one must be associated with a broker-dealer and pass the Series 27 examination.

      How Waystone Compliance Solutions can help 

      Our US Compliance Solutions team provides its clients with a qualified, outsourced FINOP and files their required FOCUS reports and other required broker-dealer reporting (e.g., SIPC, Supplemental Schedules of Income (SSOI), Form Custody, Schedule I, etc.).  In a typical arrangement, the firm provides Waystone Compliance Solutions with its respective financial data (e.g., balance sheet, income statement, etc.), which enables us to draft and file each firm’s FOCUS report on a monthly and/or quarterly basis. Our experience across its diverse broker-dealer client base has made it an industry expert and trusted advisor in this area.

      If you need help with your FOCUS Reporting obligations, please reach out to our team today. 

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