Changes to FINRA Advisory Committees

Background

In March 2017, FINRA issued a Special Notice on its engagement programs as part of FINRA360. Based on comments and suggestions regarding the usefulness of some advisory committees, their membership and their effectiveness as a vehicle for dialogue between FINRA and member firms, FINRA is making several changes.

Operational Impact of Rule Changes

Rather than establishing a new committee for the specific purpose of providing insight on operational and technology implications of rule changes—as proposed by several commenters—FINRA broadened the authority and membership of the existing Operations Advisory Committee (OAC) specifically to provide such feedback. Existing OAC members are senior operational and compliance staff from a broad spectrum of firms, and can provide substantive input on the impact of FINRA proposals on the middle and back office functions of firms.

“These enhancements to the advisory committees and the introduction of the Engagement Portal will ensure that FINRA continues to benefit from industry, investor, and other stakeholder expertise and perspectives on critical issues.”

— Marcia E. Asquith, FINRA Executive Vice President of Board and External Relations, FINRA News Release, February 1, 2018

Addressing Issues of Interest to Firms

FINRA received recommendations to establish new committees to address specific topics, including annuity products, private placements and municipal advisor issues. To address this feedback, FINRA has updated the enabling resolutions and public descriptions of certain advisory committees on its website to clarify which committees are available as forums to discuss these issues.

FINRA also established two additional advisory committees. The Clearing Firm Advisory Committee serves as a forum for clearing firms to advise and make recommendations on issues arising from member firm activities relating to the clearance, carrying and settlement of securities, including issues, practices and activities affecting or relating to small member firms, such as their access to clearing services. The Capital Acquisition and Placement Broker Committee advises FINRA on regulatory and public policy issues arising from the activities of member firms that have elected or are considering electing to be capital acquisition brokers (CABs), as well as member firms that have not elected CAB status but have similar business models.

Committee Transparency

FINRA has published the name and affiliation of each advisory committee member on its website. Interested parties also may contact the individual staff committee liaisons via the contact information provided.

Committee Participation

FINRA maintains an Engagement Portal on finra.org to provide an avenue for individuals to inquire about serving on advisory and ad hoc committees, the National Adjudicatory Council, the Board of Governors of FINRA, or the Board of Directors of the FINRA Investor Education Foundation (Foundation). We also enhanced the information currently provided on the Get Involved and FINRA Committee pages on finra.org to include more information on the selection process for appointed seats on various committees and issue an annual Involvement and Election Process Overview notice on the selection process for interested individuals to be considered for vacancies. In addition, we are widening the distribution list for election-related Notices to include each firm's Chief Executive Officer, Chief Compliance Officer and Chief Operating Officer. Finally, we reorganized District Committees into Regional Committees that mirror the regions in which FINRA's 11 Districts are administratively grouped as an additional way of enhancing engagement.

FINRA received several comments indicating that FINRA should seek input from member firms’ registered representatives, either via a standalone advisory committee or by inviting registered persons of all levels of seniority to existing committees.  In response, FINRA created a working group of 10 to 12 registered representatives who work directly with the investing public (RR Working Group).  The group’s members are selected from FINRA firms of varying sizes and business models to provide geographic and compositional diversity and provide feedback from the individual registered representative perspective on FINRA initiatives, policies and programs and issues relevant to the registered representative population.  The RR Working Group meets in person twice a year in Washington, D.C. 

Summary of Actions

  • Expanded the charter of the Operations Advisory Committee to provide a venue to obtain important insights regarding rule implementation from a people, process, and technology perspective.
  • Amended the enabling resolutions of several other advisory committees to clarify, among other things, the scope of the subject matter reviewed by the committees.
  • Updated the public descriptions of certain advisory committees on FINRA's website to clarify which committees are available as forums for discussion of specific issues.
  • Published rosters of each advisory committee, listing the name and affiliation of each advisory committee member on the new Governance page on finra.org.
  • Published the descriptions and staff liaison contacts for ad hoc committees.
  • Emailing Election Notices to a broader distribution group, including each firm's Chief Executive Officer, Chief Compliance Officer and Chief Operating Officer.
  • Published a Special Notice informing firms and other interested parties about the process for filling vacancies on various FINRA advisory and ad hoc committees, as well as the National Adjudicatory Council, Regional Committees, the FINRA Board of Governors and the FINRA Investor Education Foundation Board of Directors.
  • Established two additional committees, the Capital Acquisition and Placement Broker Committee and the Clearing Firm Advisory Committee, focused on the specialized issues surrounding capital acquisition brokers and clearing firms.
  • Created a working group of registered representatives (RR Working Group) who work directly with the investing public to provide feedback on FINRA initiatives, policies and programs and issues relevant to the registered representative population.
  • Introduced an Engagement Portal, an online portal that provides interested parties a more streamlined way to express interest in FINRA service.

Reorganized District Committees into Regional Committees that mirror the regions in which FINRA's 11 Districts are administratively grouped.