The U.S.-based National Association of Securities Dealers has filed a proposed rule amendment with the Securities and Exchange Commission that would require the CEO and chief compliance officer of each securities firm to certify jointly each year that the firm has processes in place to ensure compliance with securities rules and federal securities laws.

The rule would require that the firm’s processes be set forth in a report reviewed by the CEO, CCO and other compliance officers designated by the firm. Its board of directors and audit committee would also need to review the report as part of their functions. Once approved by the SEC, a firm would be required to designate a chief compliance officer if one does not already exist.

The proposed certification is intended to enhance investor protection by ensuring that senior management focuses increased attention on their firm’s compliance and supervisory systems and by fostering regular interaction between business and compliance officers.

“With so many regulatory challenges facing the securities industry today, it’s time for senior management to pay more attention to the compliance function,” said Robert Glauber, NASD chairman and CEO. “A joint certification by the CEO and chief compliance officer will demand increased interaction between business and compliance officers throughout the firm and should promote a more effective culture of compliance.”

The NASD says the intent of this proposal is not to make the CEO and chief compliance officer personally liable for every compliance or supervisory failure a firm might experience. Rather, the proposal seeks to promote an enduring compliance culture within firms by elevating the status of the chief compliance officer and by compelling periodic consultation between senior business and compliance personnel.