Investor Insights on Direct Indexing and the Risks of Auto-Trading

July 30, 2025

Features

  • Investor Insights on Direct Indexing and the Risks of Auto-Trading 
    Here are two new Investor Insights on timely topics. Firms are welcome to share them and others with customers.  
    • Direct indexing may appeal to investors seeking direct ownership of the securities that are held in an index, the flexibility to customize holdings, and the potential for greater control over tax impacts. This Investor Insight covers the basics of the investment strategy. 
       
    • Advertisements for unregistered auto-trading services can be enticing but this type of investing carries unique risks. This article discusses how investors can identify red flags in these ads and take steps to protect themselves. 
       
  • ICYMI: FINRA Annual Meeting Aug. 18 to Elect Governors 
    The 2025 Annual Meeting of FINRA member firms will take place on Aug. 18 to elect one small firm and one large firm representative on the FINRA Board of Governors. These Governors play a crucial role in providing the industry’s perspective on important issues before the Board, and we encourage member firms to cast their vote. FINRA published a Notice with details on the candidates and the election process. Firms eligible to vote should have also received an email from FINRA’s Election Agent containing specific voting instructions.
Regulatory Information, Upcoming Deadlines, Effective Dates
New
  • No new guidance, upcoming deadlines or effective dates have been announced since the last edition of the Weekly Update.
Reminders
  • Microsoft SharePoint Critical Vulnerability: A recent Cybersecurity Alert warned member firms of a critical vulnerability that affects certain versions of Microsoft SharePoint. 
     
  • Business Development Companies: FINRA has adopted amendments, effective July 23, that exempt business development companies from FINRA Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) and from paragraph (b) (Spinning) of FINRA Rule 5131 (New Issue Allocations and Distributions). 
     
  • Time Stamp Granularity: FINRA proposed an amendment to Rule 6860(a)(2) governing time stamps in CAT to comply with recent exemptive relief to the CAT National Market System Plan from the SEC. 
     
  • CRCP Small Firm Scholarship: FINRA is offering five scholarships to industry professionals from small firms to attend the FINRA Institute at Georgetown Certified Regulatory and Compliance Professional (CRCP)® program. Applications due by Aug. 25. 
     
  • FinCEN Money Laundering Alert: FinCEN updated its June 25 orders prohibiting covered financial institutions from transmitting funds from three Mexico-based entities—CIBanco S.A., Intercam Banco S.A., and Vector Casa de Bolsa, S.A. de C.V. Firms now have until Sept. 4 to implement the orders. 
     
  • The Modern Workplace: Regulatory Notice 25-07 requested comment on further evolving FINRA’s rules, guidance, and processes to reflect modern business practices and markets; support innovation; promote efficiency; and eliminate unnecessary regulatory burdens. The comment period has closed, but we still welcome feedback. 
     
  • Rule Modernization: Regulatory Notice 25-04 requested comment in connection with a broad review of FINRA’s regulatory requirements applicable to member firms and associated persons. The comment period has closed, but we still welcome feedback. 
     
  • Capital Formation: Regulatory Notice 25-06 requested comment on modernizing FINRA rules, guidance, and processes to further facilitate capital formation and reduce unnecessary regulatory costs and burdens impacting the capital raising process. The comment period has closed, but we still welcome feedback.
Disciplinary Actions
FINRA publishes disciplinary actions to remind members of specific conduct that violates FINRA rules and may result in disciplinary action. The July 2025 Monthly Disciplinary Actions are available here.
Education and Compliance Programs

Registration Systems Foundation | Aug. 19-20 and Oct. 28-29 | Virtual Event

Registration Systems Foundation | Sept. 16 | Rockville, MD | In-Person Event  

Disclosure Reporting Boot Camp | Sept. 17-18 | Rockville, MD | In-Person Event

Cyber Tabletop Exercise | Oct. 8 | Dallas, TX | In-Person Event  

Senior Investor Financial Exploitation Case Study Workshop | Oct. 8 | Dallas, TX | In-Person Event  

Small Firm Conference | Oct. 9-10 | Dallas, TX | Hybrid Event

Cyber Tabletop Exercise | Oct. 27 | Santa Monica, CA | In-Person Event  

Elder Cyber Fraud Case Study Workshop | Oct. 27 | Santa Monica, CA | In-Person Event  

Cyber Crimes Conference | Oct. 28 | Santa Monica, CA | Hybrid Event

Joint Compliance Outreach Program for Municipal Advisors, Dealers, and Other Market Professionals | Hosted by FINRA, the SEC and the MSRB | Nov. 18-19 | Virtual Event

Resources

Member Firm Hub – Latest guidance, resources, educational opportunities and more.

Comment Process – On-demand webinar on how to provide comments on FINRA Forward proposals, as well as the impact of comment letters and how they are used.

Involvement and Election Process – How to engage with FINRA to help carry out our mission of protecting investors and safeguarding market integrity. Members can contribute their unique perspectives and skillsets with rotating terms on FINRA committees and other opportunities. Submit an indication of interest to be considered to join a FINRA advisory committee or speak at a FINRA event by clicking here.

Membership Application Program (MAP) Tools – Guidance and other resources to help current members prepare for their continuing membership application (CMA) and new applicants prepare for a new member application (NMA).

FINRA Unscripted – Monthly podcast on a range of topics important to FINRA members and other stakeholders.

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About FINRA
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. FINRA regulates one critical part of the securities industry—member brokerage firms doing business with the public in the U.S. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.
Regulatory Contacts
FINRA By-Laws require member firms to maintain an email account on behalf of their executive representatives, to facilitate firm notification of important information. In light of this, requests from executive representatives to be removed from this email list cannot be honored.
 
Firms wishing to change the name or email address of their executive representative or designated assistant should use the FINRA Contact System: http://www.finra.org/FCS.
 
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