February 2015 Board Update
FINRA Chairman and CEO Rick Ketchum is joined by lead governor Jack Brennan to review rulemaking and other issues discussed at FINRA's February Board of Governors meeting. In addition to the video, a summary of the board actions is also available.
February 12, 2015
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 rule proposals, as approved by the Board, is included below.
You can hear more about these rulemaking items—and other actions by the Board, including a significant contribution to the FINRA Investor Education Foundation—in our video report.
As usual, your comments are welcome.
Richard G. Ketchum
Chairman and CEO
Rulemaking Items Discussed at the February 2015 Board Meeting
The Board authorized FINRA to file with the SEC proposed amendments to Rule 8312 (FINRA BrokerCheck Disclosure) to reduce from 15 days to three business days the waiting period for the release of Form U5 information disclosed through BrokerCheck.
Discretionary Accounts and Transactions
The Board authorized FINRA to publish a Regulatory Notice seeking comment on a revised proposal to adopt a consolidated FINRA rule regarding discretionary accounts and transactions. The revised proposal would address: (1) requirements applicable to firms and their associated persons that have discretionary authority over a customer’s account and exceptions to the requirements, including exceptions relating to the treatment of customers’ free credit balances, sweep programs and bulk transfers of customers’ accounts; and (2) obligations of firms and associated persons when accepting a discretionary, or non-discretionary, order for a customer’s account from someone other than the customer.
Regulatory Element Continuing Education
The Board authorized FINRA to file with the SEC a proposal to provide a cost-efficient, Web-based method for completing the Regulatory Element of Continuing Education. The Web-based delivery method will give registered persons the flexibility to complete the Regulatory Element at a location of their choosing.
Sales of Securities on Military Installations
The Board authorized FINRA to file with the SEC a proposed rule to govern offers and sales of securities on the premises of any military installation. FINRA is required by the Exchange Act to adopt a rule requiring: (1) broker-dealers performing brokerage services to clearly and conspicuously disclose to potential investors (a) that the securities offered are not offered or provided on behalf of, or recommended, sanctioned or encouraged by the federal government, and (b) the identity of the broker-dealer offering the securities; (2) broker-dealers to perform an appropriate suitability determination prior to making a recommendation; and (3) that no person receive any referral fee or incentive compensation in connection with an offer or sale of securities, unless such person is an associated person of a registered broker-dealer and is qualified pursuant to FINRA rules.
TRACE Transaction Reporting and Historic Data Sets
The Board authorized FINRA to file with the SEC proposed amendments to Rule 6730 (Transaction Reporting) to require that firms report transactions in TRACE-eligible securities as soon as practicable, but no later than the outer timeframe provided in the rule. The Board also authorized the publication of a Regulatory Notice soliciting comment on amendments to Rule 7730 (Trade Reporting and Compliance Engine) to shorten the delay for the Historic TRACE Data Sets to six months from 18 months, and to create a new Academic TRACE Data Set.