FINRA Board of Governors
Rulemaking Items for Discussion at the September 2011 Meeting
The FINRA Board of Governors will consider the following rulemaking items at its September 2011 meeting. After the September 22 meeting, FINRA will notify firms via email about the Board's actions on these items and anticipated next steps, if any.
Arbitration Procedures: Whistleblower Claims
The Board will consider a proposed amendment to the Code of Arbitration Procedure for Industry Disputes to provide that a dispute that arises under a whistleblower statute that prohibits the use of predispute arbitration agreements is not required to be arbitrated. Under the proposal, such a dispute may be arbitrated only if the parties agree to arbitrate the dispute after it arises. The proposal amends the required disclosures regarding arbitration procedures provided to associated persons signing or acknowledging Form U4.
Dissemination of Transactions in Agency Pass-Through Mortgage-Backed Securities Traded "To Be Announced" (TBA)
The Board will consider amendments to the Rule 6700 Series (TRACE rules) to disseminate transactions in Agency Pass-Through Mortgage-Backed Securities traded "to be announced" (TBA transactions); to reduce the reporting period for TBA transactions to 45 minutes, then after six months, to 15 minutes; and, to set a $50 million dissemination cap for TBA transactions.
The Board will also consider amendments to Rule 7730 to reduce the TRACE reporting fee for TBA transactions to $1.50/transaction, and to create Asset-Backed Security (ABS) data sets in connection with TBA transaction data; and to extend fees currently in effect for similar TRACE real-time disseminated data and TRACE historic data to ABS data.
Maintenance of Certain Records in a Central Location
The Board will consider a proposed new rule requiring that every carrying or clearing member firm maintain and keep current certain records in a central location that would facilitate a more rapid and orderly transfer of customer accounts to another broker-dealer as well as a more orderly liquidation in the event of failure of the firm. The rule would require that the records be immediately available to and accessible by representatives or designees of FINRA, the SEC and SIPC.
Membership Application Forms
The Board will consider (1) proposed revisions to the standardized electronic Form NMA (for new member applicants); (2) amendments to NASD Rules 1012 (General Provisions) and 1017 (Application for Approval of Change in Ownership, Control, or Business Operations) to require continuing member applicants to file a new standardized electronic Form CMA; and (3) the proposed new standardized electronic Form CMA. The proposed electronic forms are designed to align with the membership standards in NASD Rule 1014 against which they are evaluated and to improve the application process by, among other things, better leveraging information previously provided by applicants to FINRA.
Migration of TRACE-Eligible Securities to the Multi Product Platform
The Board will consider amendments to TRACE Rule 6730 requirements for reporting transactions executed on a non-business day, and size (volume), commission and settlement in connection with the transfer of TRACE-eligible securities, other than Asset-Backed Securities, to the Multi Product Platform (MPP). The proposed amendments simplify reporting and permit FINRA to migrate all TRACE-eligible securities not currently processed on MPP to the enhanced technology platform. Currently, only Asset-Backed Securities are processed on MPP.