FINRA Announces Update of the Interpretations of Financial and Operational Rules

Summary

FINRA is updating the imbedded text of Securities Exchange Act (SEA) financial responsibility rules in the Interpretations of Financial and Operational Rules to reflect the effectiveness of amendments the Securities and Exchange Commission (SEC) adopted¹. The updated imbedded text relates to SEA Rules 15c3-1, 15c3-1a, 15c3-1b, 15c3-1d, 15c3-1e, 15c3-3, 15Fi-1 through 15Fi-5, 17a-3, 17a-4, 17a-5, 17a-11 and 18a-3. FINRA is also making available related updates of the Interpretations of Financial and Operational Rules that have been communicated to FINRA by the staff of the SEC’s Division of Trading and Markets (SEC staff). The updated interpretations relate to SEA Rules 15c3-1, 17a-3, 17a-4 and 17a-5.

Questions concerning this Notice should be directed to:

• Yui Chan, Senior Director, Office of Financial & Operational Risk Policy (OFORP), at (646) 315-8426 or email;
• Ann Duguid, Senior Director, OFORP, at (646) 315-7260 or email; or
• Kathryn Mahoney, Senior Director, OFORP, at (646) 315-8428 or email.

Background & Discussion

FINRA is updating the imbedded SEA rule text in the Interpretations of Financial and Operational Rules to reflect amendments adopted by the SEC that relate to SEA Rules 15c3-1, 15c3-1a, 15c3-1b, 15c3-1d, 15c3-1e, 15c3-3, 15Fi-1 through 15Fi-5, 17a-3, 17a-4, 17a-5, 17a-11 and 18a-3². Revisions and redesignations of the interpretations that are updates in connection with the SEC’s amendments to SEA Rules 15c3-1, 17a-3, 17a-4 and 17a-5 are set forth below. Page references are to the hardcopy version.

The following interpretation has been revised:

• SEA Rule 17a-4(b)(5)/01 (15c3-3 Reserve Computations) on page 3103

The following interpretations have been redesignated:

• SEA Rule 15c3-1(c)(2)(xii)/01 (Reverse Repurchase Agreements—Rescinded) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/01 on page 721
• SEA Rule 15c3-1(c)(2)(xii)/011 (Reverse Repurchase Agreements) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/011 on page 721
• SEA Rule 15c3-1(c)(2)(xii)/02 (Government National Mortgage Association (GNMA)) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/02 on page 722
• SEA Rule 15c3-1(c)(2)(xii)/03 (Regulation T Calls for Margin) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/03 on page 722
• SEA Rule 15c3-1(c)(2)(xii)/04 (Non‑Purpose Loans Collateralized by Certificates of Deposit) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/04 on page 722
• SEA Rule 15c3-1(c)(2)(xii)/05 (Credit Extended Upon Exercise of Employee Stock Option) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/05 on page 723
• SEA Rule 15c3-1(c)(2)(xii)/06 (Credit Extended to Customers on Control or Restricted Stock) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/06 on page 723
• SEA Rule 15c3-1(c)(2)(xii)/061 (Customers Foreign Currency Options Collateralized by Letters of Credit) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/061 on page 723
• SEA Rule 15c3-1(c)(2)(xii)/07 (Maintenance Requirement for Proprietary Accounts Carried for Joint Back Office Broker‑Dealers) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/07 on page 724
• SEA Rule 17a-3(a)(5)/01 (OCC Daily Position Report in Lieu of Securities Position Record) redesignated to SEA Rule 17a-3(a)(5)(i)/01 on page 3005
• SEA Rule 17a-3(a)(5)/02 (Loanet Reports in Lieu of Stock Record) redesignated to SEA Rule 17a-3(a)(5)(i)/02 on page 3005
• SEA Rule 17a-3(a)(8)/01 (DTC Institutional Delivery (ID) System Confirmations) redesignated to SEA Rule 17a-3(a)(8)(i)/01 on page 3013
• SEA Rule 17a-3(b)(1)/01 (Floor Broker Requirements) redesignated to SEA Rule 17a-3(c)/01 on page 3061
• SEA Rule 17a-5(a)(2)(i)/01 (NYSE Monthly Part II Requirement) redesignated to SEA Rule 17a-5(a)(1)(i)/01 on page 3201
• SEA Rule 17a-5(a)(2)(i)/02 (NYSE Requirements for Guaranteed Subsidiary/Associated Partnership) redesignated to SEA Rule 17a-5(a)(1)(i)/02 on page 3201
• SEA Rule 17a-5(a)(2)(i)/03 (Retroactive Application of Changes in Accounting Principles) redesignated to SEA Rule 17a-5(a)(1)(i)/03 on page 3202
• SEA Rule 17a-5(a)(2)(ii)/01 (NYSE FOCUS Filing Due Dates) redesignated to SEA Rule 17a-5(a)(1)(ii)/01 on page 3203
• SEA Rule 17a-5(a)(2)(iii)/01 (NYSE FOCUS Filing Due Dates) redesignated to SEA Rule 17a-5(a)(1)(iii)/01 on page 3203
• SEA Rule 17a-5(a)(7)/01 (FOCUS Extension Request) redesignated to SEA Rule 17a-5(a)(6)/01 on page 3207
• SEA Rule 17a-5(e)(4)(ii)/01 (Supplemental SIPC Report Exemption) redesignated to SEA Rule 17a-5(e)(4)/01 on page 3242
• SEA Rule 17a-5(e)(4)(ii)/02 (SIPC Reports Exemption for Guaranteed Subsidiary) redesignated to SEA Rule 17a-5(e)(4)/02 on page 3242

The following interpretations have been revised and redesignated:

• SEA Rule 17a-3(b)(2)/01 (Exchange Market Maker’s Using Clearance Account as Books and Records) revised and redesignated to SEA Rule 17a-3(c)/02 on page 3061
• SEA Rule 17a-4(i)/01 (Exchange Market Maker’s Using Clearance Account as Books and Records) revised and redesignated to SEA Rule 17a-4(i)(1)/01 on page 3124

The rule text and related interpretation update is available in portable digital format (pdf) on FINRA’s Interpretations of Financial and Operational Rules page. 

FINRA member firms and others that maintain the hardcopy version of the Interpretations of Financial and Operational Rules may refer to the accompanying updated page, containing the update, which is being made available to enable the replacement of existing pages in the hardcopy version of the Interpretations of Financial and Operational Rules. The filing instructions for the new page(s) are as follows:

Further, the SEC staff continues to communicate and issue written and oral interpretations of the financial responsibility and reporting rules. FINRA will update the Interpretations of Financial and Operational Rules on its website as these written and oral interpretations are issued.

Endnotes