December 2014 Board Update
FINRA Chairman and CEO Rick Ketchum is joined by lead governor Jack Brennan and Finance Committee Chairman Jim Weddle to review rulemaking and other issues discussed at FINRA's December Board of Governors meeting. In addition to the video, a summary of the board actions is also available.
December 4, 2014
Dear Executive Representative:
The FINRA Board of Governors met this week to discuss a number of issues, including several rulemaking items. A summary of the proposals, as approved by the Board, are included below and are available on our website.
In addition to these rule-related activities, the Board approved a discretionary rebate that will be allocated to all active member firms in good standing. You can learn more about the rebate and other issues discussed by the Board in our short video report.
We welcome your comments and thoughts.
Richard G. Ketchum
Chairman and CEO
Rulemaking Items Discussed at the December 2014 Board Meeting
TRACE: Public Dissemination of Additional Securitized Products and Reduced Reporting Timeframe
The Board authorized FINRA to issue a Regulatory Notice soliciting comment on a proposal to amend TRACE rules to: (1) provide for public dissemination of transaction information in additional securitized products in real-time for transactions valued under $1 million, and in aggregate weekly and monthly reports for transactions valued at $1 million or more; (2) to reduce the reporting timeframe for these securities, initially to 45 minutes and, after nine months, to 15 minutes; and (3) change the reporting period for transactions in collateralized mortgage obligations (CMOs) that are executed before the issuance of the security.
TRACE: Indicator When Report Does Not Reflect a Commission, Mark-Up/Down or Other Fee
The Board authorized FINRA to file with the SEC proposed amendments to the TRACE rules to require member firms to identify, and enable FINRA to disseminate a flag identifying, transactions for which a commission or mark-up/down is not reflected in the TRACE trade report.
Arbitration Hearing Cancellation Fees
The Board authorized FINRA to file with the SEC proposed amendments to Rules 12601 and 13601 of the Codes of Arbitration Procedure to increase the late cancellation fees. In FINRA arbitration, parties and arbitrators select hearing dates months in advance, which requires arbitrators to reserve these dates, and, thus, forego other opportunities. The proposed amendments would require the parties to give more advance notice than is currently required before cancelling or postponing a hearing, and would assess a higher cancellation fee if such notice is not provided. Specifically, the proposed amendments would require that if a postponement or cancellation request is made by one or more parties less than 10 days before a scheduled hearing session and granted, the party or parties making the request would pay an additional fee of $600 per arbitrator. The fee would be passed through to the arbitrators. The purpose of the proposal is to encourage parties to provide more advance notice of postponements and settlements, or, in the alternative, to compensate arbitrators more than they are currently paid for lost time and opportunities in the event of a last-minute postponement or cancellation.
Qualification Exam Fees
The Board authorized FINRA to file with the SEC proposed amendments to Schedule A to the FINRA By-Laws to increase qualification examination fees. The amendments would provide for modest fee increases between $5 and $15 for each FINRA and client-sponsored qualification examination, effective April 2015. The proposed fee increases result from FINRA's annual review of the examination fee structure, including the costs of developing, administering and delivering each examination program.