FINRA · Rule 3110 & 3120
Supervision Readiness: WSPs That Stay Current
FINRA Rule 3110 requires every member firm to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with applicable rules. It is the backbone obligation that ties every other requirement together: if a firm cannot supervise an activity, it has a Rule 3110 problem regardless of the underlying rule.
For compliance officers, the recurring difficulty is keeping written supervisory procedures current with how the firm actually operates. As firms adopt new technology and AI tools faster than their procedures are updated, examiners increasingly find a gap between what the WSPs describe and what the business does. This page explains the supervision requirements and how to keep them continuously evidenced.
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What the rule requires
Rule 3110 requires a supervisory system with designated supervisors, assigned responsibilities, and written supervisory procedures (WSPs) that describe how the firm supervises its business and personnel. The WSPs must be tailored to the firm's actual activities, kept current, and reasonably designed to achieve compliance, not a generic template.
Rule 3120 complements this by requiring a system of supervisory control policies and procedures, including testing and verification of the firm's supervisory procedures, summarized in an annual report to senior management. Together the rules expect not just that procedures exist, but that the firm periodically tests whether they work and updates them when they do not, including as technology and AI change how the business runs.
- A supervisory system with designated supervisors and clear responsibilities
- Written supervisory procedures tailored to the firm's actual business and kept current
- Rule 3120 supervisory control testing and verification of those procedures
- An annual supervisory-control report to senior management
- Coverage of newer activities, including technology and AI tools
Where firms fall short
The classic finding is stale WSPs. Procedures are written once, adopted from a template, and never revised to reflect new products, new channels, or new tools, so they no longer describe how the firm actually supervises. An examiner comparing the WSPs to real practice quickly sees the mismatch.
The second gap is a missing link between the technology the firm uses and the procedures that are supposed to govern it. When staff adopt AI tools for research, drafting, or client interaction, firms often have no supervisory procedure covering their use, no record of who approved them, and no annual test of whether those controls function.
- WSPs that lag behind current products, channels, and tools
- No supervisory procedures addressing AI or new technology use
- Rule 3120 testing treated as a formality rather than a real control check
- Supervisory responsibilities assigned on paper but not exercised in practice
How Centience helps
Centience keeps supervision continuously governed by tracking whether your written supervisory procedures reflect the technology and activities actually in use, and whether your supervisory controls are being tested rather than assumed. It maintains an evidence trail that connects each procedure to its owner, its last review, and its testing, which is exactly what a supervision review looks for.
Begin with the free Governance Score. It shows where your WSPs may be out of date, where AI and technology use is outrunning your procedures, and where your Rule 3120 testing needs strengthening, so your supervisory program stays exam-ready and continuously evidenced.
FAQ
Frequently Asked Questions
What are written supervisory procedures under Rule 3110?+
WSPs are the firm's documented procedures describing how it supervises its business and personnel to achieve compliance with applicable rules. They must be tailored to the firm's actual activities and kept current, not adopted as a static template.
How is Rule 3120 different from Rule 3110?+
Rule 3110 requires the supervisory system and written procedures. Rule 3120 requires a system of supervisory control policies that tests and verifies those procedures and produces an annual report to senior management on the results.
Do our WSPs need to address AI and new technology?+
If your firm uses AI or new technology in its business, your supervisory procedures should reasonably address that use. A supervisory system that ignores tools employees actually rely on is difficult to defend as reasonably designed.
How often should supervisory procedures be reviewed?+
There is no single fixed frequency for every element, but procedures must be kept current, and Rule 3120 contemplates at least annual testing and reporting. Many firms review WSPs at least annually and whenever the business or rules change materially.
See where your firm stands — in minutes.
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