Update: FINRA Board of Governors Meeting

The FINRA Board of Governors met recently in Washington, and I am pleased to share some updates. The Board approved:

  • a proposal to amend the Carrying Agreements Rule (Rule 4311), which governs requirements when member firms enter into agreements for the carrying of customer accounts. The proposed amendments, which will be published for comment in a Regulatory Notice, would:
    • provide greater clarity around tri-party arrangements where one introducing firm contracts through another introducing firm to receive carrying and clearing services;
    • clarify the allocation of responsibilities under carrying agreements;
    • address the application of the rule to omnibus carrying arrangements (arrangements where the transactions of multiple customers are aggregated in a single account);
    • streamline requirements relating to the furnishing of reports by carrying firms to introducing firms; and
    • make certain other technical and conforming revisions.
  • a proposal to amend the Communications with the Public Rule (Rule 2210) to allow members to include projections of performance or targeted returns in their written communications with investors. Specifically, the proposal would amend the rule to allow projections to individuals on specific securities, such as target-date funds, subject to several investor-related conditions. The amendments would better align the regulatory requirements related to written communications about performance projections for broker-dealers and investment advisors, thus increasing regulatory harmonization while maintaining investor protection safeguards. The amendments will be filed with the Securities and Exchange Commission (SEC) for approval, and a previously filed proposal currently under review by the SEC would be withdrawn.

As with all of our regulatory proposals, the ones to amend Rule 4311 and Rule 2210 reflect feedback we received from members. They are the most recent in an ongoing series of proposals to further improve our effectiveness and efficiency through our FINRA Forward rule modernization initiative, on which the Board received an update as well.

I encourage you to comment on the proposals. For tips on how to do so, as well as to learn about the impact of comment letters and how they are used, we produced an on-demand webinar that you can access here.

Additionally, the Board:

  • met with SEC Commissioner Mark Uyeda to discuss the SEC and FINRA’s work in fulfilling our common mission of protecting investors and market integrity;
  • continued discussions around FINRA’s long-term financial planning and approved FINRA’s 2024 Annual Financial Report, which we publish in accordance with our Financial Guiding Principles and U.S. generally accepted accounting principles to describe how we manage our finances in support of our mission. Our financial reports will be published later this month;
  • appointed new members to FINRA’s Advisory Committees, effective June 5. We encourage anyone who wishes to be considered for future Advisory Committee vacancies to submit an indication of interest using FINRA’s engagement portal; and
  • received several operational updates, including on FINRA’s enterprise risk management and cybersecurity program.

The next FINRA Board meeting is scheduled for September. More information about the Board’s operations, including membership and responsibilities of its committees, is available here.

Sincerely,

Robert W. Cook
CEO