Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

Tag Archives: Broker-Dealer

FINRA Publishes Regulatory Notice Regarding Sales Practice Obligations for Volatility-Linked Exchange-Traded Products

Posted in Broker-Dealer
On October 16, the Financial Industry Regulatory Authority (FINRA) published Regulatory Notice 17-32 (Notice), which reminds FINRA member firms of their sale practice obligations related to the sale of volatility-linked exchange-traded products (ETPs), which are designed to track Chicago Board Options Exchange Volatility Index (VIX) futures. Based on the high likelihood that such instruments may… Continue Reading

SEC Approves FINRA Registration, Qualification and Continuing Education Rules

Posted in Broker-Dealer
The Securities and Exchange Commission has approved the Financial Industry Regulatory Authority rules that (1) consolidate the National Association of Securities Dealers (NASD) and Incorporated New York Stock Exchange registration rules, as well as existing FINRA rules; (2) restructure the representative-level qualification examination requirements; and (3) amend continuing education requirements. The rules will become effective… Continue Reading

FINRA Board of Governors Authorizes Rule Proposals at September Meeting

Posted in Broker-Dealer
Last week, the Financial Industry Regulatory Authority Board of Governors (Board) had its September meeting. Among other things, the Board approved the publication of two rule proposals. In particular, the Board authorized the publication of a proposed rule that would allow firms to use technology to conduct remote inspections of certain qualifying offices that have… Continue Reading

SEC Approves FINRA Rule Change to Subject Capital Acquisition Brokers to Pay-to-Play Rules

Posted in Broker-Dealer
On September 29, the Securities and Exchange Commission approved the rule proposal of the Financial Industry Regulatory Authority to subject capital acquisition brokers (CABs) to the same pay-to-play restrictions already applicable to non-CAB member firms. As explained in more detail in this Katten advisory, CABs are FINRA members that are engaged in a limited range… Continue Reading

FINRA Delays Rule 4210 Margining of Covered Agency Transactions to June 2018

Posted in Broker-Dealer
On September 19, the Financial Industry Regulatory Authority (FINRA) took action to delay until June 25, 2018, the implementation of margin requirements for Covered Agency Transactions under FINRA Rule 4210. As defined in the amendments to FINRA Rule 4210, adopted in 2016, Covered Agency Transactions include (1) To Be Announced (TBA) transactions, inclusive of adjustable… Continue Reading

FINRA Proposes Rule Change to Subject Capital Acquisition Brokers to Pay-to-Play Rules

Posted in Broker-Dealer
On August 17, the Financial Industry Regulatory Authority (FINRA) proposed rule amendments to apply its established “pay-to-play” rules to capital acquisition brokers (CABs) that engage in distribution to, or solicitation of, government entities on behalf of investment advisers for compensation. CABs are FINRA members that are engaged in a limited range of broker-dealer activities, such… Continue Reading

FINRA and SIPC Agree To Streamline the Annual Report Filing Process for Broker-Dealers

Posted in Broker-Dealer
On August 1, the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation (SIPC) announced a services agreement designed to streamline the annual report filing process for member firms. Effective September 1, member firms that currently file separate annual reports with SIPC and FINRA will be able to make a single filing using FINRA’s… Continue Reading

SEC Cautions Securities Laws May Apply to Interests in Virtual Organizations

Posted in Broker-Dealer, CFTC
On July 25, the Securities and Exchange Commission issued a Report of Investigation cautioning that certain offers and sales of digital assets of virtual organizations (e.g., “coin offerings” or “token sales”) could be deemed securities offerings and therefore subject to the federal securities laws. More details relating to the Report of Investigation are available in… Continue Reading

FINRA Releases Additional Guidance With Respect To Enhanced Disclosure Requirements for Corporate and Agency Debt Securities Transactions

Posted in Broker-Dealer
The Financial Industry Regulatory Authority, Inc. has released frequently asked questions (FAQs) related to the enhanced confirmation disclosure requirements for certain corporate and agency debt securities transactions pursuant to recently approved amendments to FINRA Rule 2232. The new requirements obligate FINRA members to disclose additional transaction-related information to retail customers for trades in corporate or… Continue Reading

Proposed Rule Change Relating To Revisions To the Definition of Non-public Arbitrator

Posted in Broker-Dealer
On July 11, the Financial Industry Regulatory Authority filed a proposed rule amendment to change the definition of a non-public arbitrator under the Code of Arbitration Procedure for Customer Disputes and the Code of Arbitration Procedure for Industry Disputes (collectively, the Codes), to a person who is otherwise qualified to serve as an arbitrator, and… Continue Reading

SEC’s Recent Order Approving FINRA Rule Change Relating To Qualification and Registration Requirements

Posted in Broker-Dealer
On July 7, the Securities and Exchange Commission issued an order adopting the Financial Industry Regulatory Authority’s proposed rule amending the qualification and registration requirements for associated persons. The new rule restructures the current qualification examinations, creates a general knowledge examination called Securities Industry Essentials (SIE) and specialized knowledge examinations, and revises the continuing education… Continue Reading

FINRA Proposes to Make New TRACE Security Activity Reports Available

Posted in Broker-Dealer
On June 19, the Financial Industry Regulatory Authority filed a proposed rule amendment that would make new Trade Reporting and Compliance Engine (TRACE) Security Activity Reports available. Currently, FINRA Rule 7730 enumerates the TRACE data products that FINRA offers in connection with TRACE-Eligible Securities (i.e., certain debt and US Treasury securities). Under the amendment, Rule… Continue Reading

FINRA Proposes Rule Change Regarding Trade Modifiers and the Reporting of Transactions in US Treasury Securities

Posted in Broker-Dealer
On June 12, the Financial Industry Regulatory Authority filed with the Securities and Exchange Commission a proposed rule change establishing February 5, 2018, as the date when member firms must begin using new transaction modifiers in connection with reporting transactions in certain US Treasury securities. In October 2016 the SEC approved changes to the FINRA… Continue Reading

FINRA Issues Interpretive Letter Regarding Related Performance Information in Institutional Communications

Posted in Broker-Dealer
On June 12, staff of the Financial Industry Regulatory Authority published an interpretive letter (Letter) regarding the inclusion of certain related performance information in a FINRA member firm’s “institutional communications” (as such term is defined in FINRA Rule 2210 (Communications with the Public)) regarding a continuously offered closed-end fund. Rule 2210 subjects institutional communications to… Continue Reading

FINRA Issues Notice Regarding Disruptive Quoting and Trading Activity Rule Changes

Posted in Broker-Dealer
On June 7, the Financial Industry Regulatory Authority published Regulatory Notice 17-22, which addresses two rule changes implemented in December 2016 regarding disruptive quoting and trading activity. The first rule change adopts new Supplementary Material .03 to Rule 5210, which defines two types of prohibited activities and states that a “frequent pattern or practice” of… Continue Reading

SEC Issues Risk Alert in Response to WannaCry Ransomware Attack

Posted in Broker-Dealer, Investment Advisers, Investment Companies and Investment Advisers
On May 17, the Securities and Exchange Commission Office of Compliance Inspections and Examinations (OCIE), issued a Risk Alert in response to the widespread ransomware attack known as WannaCry, WCry, or Wanna Decryptor that started on May 12. The attack infected computers and servers of various organizations in more than 100 countries. The Risk Alert… Continue Reading

SEC Grants No-Action Relief Regarding Created ETF Shares and Failure to Close Transactions

Posted in Broker-Dealer
In a letter dated April 26, the Division of Trading and Markets of the Securities and Exchange Commission granted no-action relief to Latour Trading LLC (Latour Trading) in connection with its proposed use of newly created exchange traded fund (ETF) shares to comply with the requirements set forth in Rule 204 (Close-Out Requirement) of Regulation… Continue Reading

SEC and FINRA Announce 2017 National Compliance Outreach Program for Broker-Dealers

Posted in Broker-Dealer
On May 3, the Securities and Exchange Commission and Financial Industry Regulatory Authority opened registration for the 2017 National Compliance Outreach Program for Broker-Dealers, which will be held in Washington, DC on July 27. Topics to be discussed will include cybersecurity and investing by seniors. Registration information is available here.  … Continue Reading

FINRA Amends Rule Regarding the Online Publication of Data Related to the Regulation NMS Plan to Implement a Tick Size Pilot Program

Posted in Broker-Dealer
On April 28, the Financial Industry Regulatory Authority filed with the Securities and Exchange Commission an amendment to Rule 6191 (Compliance with Regulation NMS Plan to Implement a Tick Size Pilot Program), which modifies the publication date for Appendix B website data related to the Regulation NMS Plan to Implement a Tick Size Pilot Program… Continue Reading

National Adjudicatory Council Revises Sanction Guidelines

Posted in Broker-Dealer
The Financial Industry Regulatory Authority, through the National Adjudicatory Council (NAC), has revised the FINRA Sanction Guidelines that hearing panels and the NAC use in determining appropriate remedial sanctions for FINRA members in disciplinary proceedings. Among other changes, the revised Sanction Guidelines include the following additions: three new guidelines: Supervision—Systemic Supervisory Failures, Borrowing From or… Continue Reading

FINRA Issues Regulatory Notice on GASB Accounting Support Fee

Posted in Broker-Dealer
The Financial Industry Regulatory Authority announced that it will collect a total of $8,309,000 in 2017 from its member firms as part of the Government Accounting Standards Board (GASB) Accounting Support Fee. FINRA will collect $2,077,250 each calendar quarter beginning in April 2017 from its member firms that report trades to the Municipal Securities Rulemaking Board… Continue Reading