Implementing Practices and Adhering to Regulatory Requirements
The rulebook a supervisor lives in
Options conduct is governed principally by FINRA Rule 2360, which imposes account approval, suitability, position and exercise limit, large-position reporting, communications approval, and records obligations. That rule sits inside a broader framework: FINRA Rule 3110 (written supervisory procedures, designated principal, inspections, annual compliance meeting), Rule 2111 (suitability) and Reg BI (care, disclosure, conflict of interest, and compliance obligations for retail recommendations), Rule 2210 (communications), Rule 4210 and Regulation T (margin), and SEA Rules 17a-3 and 17a-4 (records).
Records and retention
Order tickets, account records, and evidence of options disclosure document delivery must be created and preserved - generally three years for books and records, with the first two years readily accessible. Records of written customer complaints are kept for four years. Your written supervisory procedures must state who reviews what, how often, and where the evidence lives.
Traps
Assuming the ODD delivery needs no proof - the firm must be able to show when and how it was furnished. Assuming a recommendation to a retail customer is judged only by suitability - Reg BI's care obligation requires a reasonable basis for the recommendation and consideration of reasonably available alternatives. Assuming generic procedures satisfy the rule - procedures must be tailored to the firm's actual options business.
Rule of thumb
For any options activity ask three questions: was the account approved for this level, was the customer suitable or was the recommendation in the customer's best interest, and can I produce the record that proves both?