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CFPR 240

The Code of Federal Regulations Title 17, Part 240 (17 CFR Part 240, commonly abbreviated "CFPR 240") is the section of the SEC's general rules and regulations that governs broker-dealers, exchanges, and alternative trading systems. CFPR 240 contains the implementing rules for the Securities Exchange Act of 1934, including Rules 10b-5, 15c2-11, 15c3-1, 15c3-3 (Customer Protection Rule), and many others. Falcon Veritas Intelligence (FVI) ships a CFPR 240 control framework that documents how FVI features satisfy the most relevant rules for broker-dealer operations.

Scope and applicability​

CFPR 240 applies to:

  • All SEC-registered broker-dealers (Section 15)
  • National securities exchanges
  • Alternative trading systems (ATS)
  • Clearing agencies registered with the SEC

FVI's CFPR 240 module focuses on the rules most relevant to reconciliation, exception management, and audit trail:

  1. Rule 10b-5 — prohibition on insider trading and market manipulation. FVI's trading surveillance flags cross-tenant patterns that could indicate spoofing, layering, or front-running.

  2. Rule 15c2-11 — publication of quotations for OTC securities. FVI's OTC desk module captures the broker-dealer's quote publication evidence.

  3. Rule 15c3-1 — Net Capital Rule. See FINRA 15c3-1.

  4. Rule 15c3-3 — Customer Protection Rule. FVI's segregated account module tracks the customer free credit balance and special reserve bank account.

  5. Rule 17a-3/4 — recordkeeping and electronic storage. See SEC 17a-3/4.

  6. Regulation SHO — short sale reporting. FVI's locate source module captures the broker-dealer's locate evidence.

  7. Regulation SHO Rule 201 — short sale price test. FVI's trading desk module enforces the price test at execution.

  8. Rule 606 — order routing disclosure. FVI's order routing report module produces the quarterly Rule 606 report.

Customer Protection Rule (15c3-3)​

Rule 15c3-3, the Customer Protection Rule, requires broker-dealers to segregate customer funds and securities. The rule's key requirements:

  1. Reserve formula computation — FVI's reserve formula module computes the daily customer reserve requirement and produces the bank notification letter to the carrying broker-dealer's bank.

  2. Customer free credit balance — FVI's segregated account module tracks the customer free credit balance, including cash and margin debit balances, with daily snapshots.

  3. Special reserve bank account — FVI's bank account module manages the special reserve bank account, including the daily deposit notification.

  4. Possession or control — FVI's possession or control module tracks customer fully-paid and excess margin securities, with daily reconciliation against the carrying broker-dealer's possession or control report.

  5. Buy-in procedures — FVI's buy-in module tracks customer margin short positions and triggers buy-in alerts at the SEC-defined threshold.

How FVI supports CFPR 240​

FVI's CFPR 240 control framework documents how FVI features map to the relevant rules. The mapping is documented in the FVI compliance console and exportable as a CSV or PDF for examination readiness.

Step-by-step: enabling CFPR 240 monitoring​

  1. Register the tenant. In FVI, navigate to Settings → Compliance → CFPR 240 and enter the CRD number, the firm classification, and the carrying/non-carrying election.

  2. Configure applicable rules. FVI loads the full CFPR 240 rule list. Toggle the rules applicable to your business (e.g., 10b-5 surveillance, 15c3-3 segregation, 17a-3/4 recordkeeping).

  3. Wire data sources. Connect your trading ledger, customer accounts, and bank accounts to FVI's ingestion pipeline. FVI's broker-dealer integrations are pre-built.

  4. Set alert thresholds. Configure the alert thresholds for each rule (e.g., 110% of reserve formula minimum, 90% of buy-in threshold).

  5. Run a 30-day validation. FVI runs a 30-day dry-run that compares FVI's CFPR 240 monitoring against your existing compliance software.

  6. Enable production. Flip the tenant to live. FVI begins real-time monitoring with alerts.

  7. Examination pack. FVI generates a quarterly examination pack that includes the rule-by-rule mapping, the alert log, and the remediation evidence.

Code samples​

curl​

curl -X POST https://api.falconveritas.com/v1/compliance/cfpr-240/monitor \
  -H "Authorization: Bearer $FVI_JWT" \
  -H "Content-Type: application/json" \
  -d '{
    "tenantId": "'$FVI_TENANT_ID'",
    "crd": "12345",
    "firmType": "carrying",
    "rules": ["15c3-1", "15c3-3", "17a-3", "17a-4"],
    "idempotencyKey": "cfpr-fvi-$RANDOM"
  }'

TypeScript​

import { FVI } from '@falconveritas/sdk';

const fvi = new FVI({
  baseUrl: 'https://api.falconveritas.com',
  bearer: process.env.FVI_JWT!,
  tenantId: process.env.FVI_TENANT_ID!,
});

const monitor = await fvi.compliance.cfpr240.startMonitoring({
  crd: '12345',
  firmType: 'carrying',
  rules: ['15c3-1', '15c3-3', '17a-3', '17a-4'],
});

console.log('Monitor started:', monitor.id);

Python​

from falconveritas import FVI

client = FVI(
  bearer=os.environ["FVI_JWT"],
  tenant_id=os.environ["FVI_TENANT_ID"],
)

monitor = client.compliance.cfpr_240.start_monitoring(
  crd="12345",
  firm_type="carrying",
  rules=["15c3-1", "15c3-3", "17a-3", "17a-4"],
)
print("Monitor started:", monitor.id)

Troubleshooting​

Last updated: 2026-08-22 · Page owner: Documentation · Source: src/lib/compliance/cfpr-240/.