FINRA Board of Governors
Rulemaking Items for Discussion at the December 2011 Meeting
The FINRA Board of Governors will consider the following rulemaking items at its December 2011 meeting. After the December 8 meeting, FINRA will notify firms via email about the Board's actions on these items and anticipated next steps, if any.
Debt Research Conflicts of Interest
The Board will consider a proposed new rule addressing debt research conflicts of interest. The proposal is a modified version of the concept proposal discussed in Regulatory Notice 11-11 that makes certain changes in response to comments.
Expungement for Persons Not Named as Parties in Arbitration Claims
The Board will consider a proposal to amend the Codes of Arbitration Procedure for Customer and Industry Disputes to adopt new rules that would permit persons who are the "subject of" allegations of sales practice violations made in arbitration claims, but who are not named as parties to the arbitration, to seek expungement relief by initiating In re expungement proceedings.
Fee Adjustment Proposals
The Board will consider a proposal to adjust the Trading Activity Fee (TAF) rate structure on covered equity securities to ensure proper funding of FINRA's regulatory program given the continued decline in share volume. The proposed rate adjustment is based on a 2011 rule filing that outlined the future process for establishing the TAF rate.
The Board will also consider proposed changes to the qualification examination fee structure to better align program fees with FINRA's operational costs to develop, administer and deliver examinations.
The Board will consider a proposed amendment to Rule 14107 of the Code of Mediation Procedure to provide the Director of Mediation with discretion to determine whether parties to a FINRA mediation may select a mediator who is not on FINRA's mediator roster. Currently, the Mediation Code permits parties to select a mediator either from a list supplied by FINRA or from a list or other source of the parties' choosing.
Optional TRACE Data Delivery Services and Related Fees
The Board will consider proposed amendments to FINRA Rule 7730 to establish new fees in connection with two new optional Trade Reporting and Compliance Engine (TRACE) data delivery services. Firms that opt to subscribe to the first service, the TRACE Data Delivery Plus service, would be able to request and download transaction data on demand via the FINRA Automated Data Delivery System (FINRA ADDS) for dates prior to the last 30 days. (Currently, FINRA ADDS data is limited to asset-backed securities transaction data; as of February 6, 2012, FINRA ADDS data will include transaction data for all transactions reported to TRACE.) Firms that opt to subscribe to the second service, the TRACE Data Delivery Secure File Transfer Protocol (SFTP) service, would have an automated interface to retrieve the firm's daily TRACE trade journal files. FINRA proposes to charge a monthly access fee per MPID for each service and a one-time set-up fee for the TRACE Data Delivery SFTP service.
Subpoenas and Orders of Production in Arbitrations
The Board will consider proposed amendments to the Customer and Industry Codes of Arbitration Procedure (Rules 12512, 12513, 13512 and 13513) to standardize FINRA practices relating to arbitrator orders or subpoenas to non-party brokerage firms. The proposed amendments provide that a brokerage firm party requesting the appearance of a witness or production of documents, either by subpoena or arbitrator order, would pay the reasonable costs of the appearance and/or production. In addition, the amendments would codify FINRA's current practice of allowing the non-party to raise objections to subpoenas or orders issued by arbitrators.
Threshold for Simplified Arbitration
The Board will consider proposed amendments to Rules 12800 and 13800 of the Customer and Industry Codes of Arbitration Procedure, respectively, to raise the threshold for simplified arbitration from $25,000 to $50,000. Under simplified arbitration procedures, claims are generally decided on the written submissions of the parties and no hearing takes place.