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The Securities and Exchange Commission is seeking comments on a Financial Industry Regulatory Authority (FINRA) proposal to adopt a Supplemental Liquidity Schedule (SLS), and instructions thereto, pursuant to FINRA Rule 4524. FINRA Rule 4524 provides in part that each member, as FINRA shall designate, shall file as a supplement to FOCUS Reports such additional financial or operational schedules or reports as FINRA may deem necessary. The proposed SLS, which would be filed as a supplement to the FOCUS Report, would be required to be filed by (1) each carrying member with at least $25 million in free credit balances, as outlined under Securities Exchange Act of 1934 (SEA) Rule 15c3-3(a)(8); and (2) any member with at least $1 billion in aggregate outstanding repurchase agreements, securities loan contracts and bank loans, as reported on their most recent FOCUS Report.
Continue Reading Notice of Filing of a Proposed Rule Change to Adopt a Supplemental Liquidity Schedule

In response to a recent request by the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission has issued an order (the Order) designed to ease potential burdens that smaller broker-dealers may face in obtaining audit services. Rule 17a-5(d)(1)(i) of the Securities Exchange Act of 1934 (Exchange Act) requires that, unless a broker meets…

On July 22, the Commodity Futures Trading Commission adopted rules (Final Rules) that set minimum financial capital requirements for swap dealers (SDs) and major swap participants (MSPs) that are not subject to prudential regulation (each, a “Covered Swap Entity” or CSE). The capital requirements were originally proposed in 2016, as explained in more detail here.

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Continue Reading CFTC Adopts Final Capital Requirements for Swap Dealers

On March 19, the Financial Industry Regulatory Authority, Inc. (FINRA) released Regulatory Notice 19-08 to provide guidance to members for reporting lease assets and liabilities on their FOCUS reports. FINRA’s notice follows an October 2018 No-Action Letter (the No-Action Letter) in which the staff of the Securities and Exchange Commission’s Division of Trading and Markets (the Staff) addressed the treatment of operating leases under Securities Exchange Act Rule 15c3-1 in connection with the Financial Accounting Standards Board’s Accounting Standards Update for Leases.
Continue Reading FINRA Issues Guidance on FOCUS Reporting for Operating Leases

On January 8, the Financial Industry Regulatory Authority (FINRA) requested comment on proposed amendments to FINRA Rule 4521. Currently, Rule 4521(c) requires each carrying or clearing firm to notify FINRA after tentative net capital has declined 20 percent or more from the amount reported on the most recent Financial and Operational Combined Uniform Single (FOCUS) Report or notification filed with FINRA. The proposed amendments would also require certain firms (i.e., carrying or clearing firms with $25 million or more in total credits as determined by the customer reserve formula computation, and each firm whose aggregate amount outstanding under repurchase agreements, securities loan contracts and bank loans is equal to or greater than $1 billion) to notify FINRA within 48 hours after the occurrence of various events that signal an adverse change in liquidity risk. Such events include certain losses of access to secured funding, counterparty increases in collateral haircuts and early terminations of outstanding repurchase contracts.
Continue Reading FINRA Requests Comment on Proposed Amendments to FINRA Rule 4521 and New Supplemental Liquidity Schedule