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Firm Gateway Users will be Redirected to FINRA Gateway Starting September 15

September 9, 2020
Volume 36


Upcoming Deadlines and Effective Dates
  • FINRA Requests for Comment
  • SEC Request for Comment on FINRA Rules
  • Upcoming Effective Dates
  • FINRA Elections

Education and Compliance Programs

In response to COVID-19, FINRA has administratively postponed all in-person arbitration and mediation proceedings scheduled through December 4, 2020, unless the parties stipulate to proceed telephonically or by Zoom or the panel orders that the hearings will take place telephonically or by Zoom. For more information, visit FINRA’s website.

Reminder: Firm Gateway users will be redirected to FINRA Gateway starting September 15. Beginning September 15, Firm Gateway member users will automatically be redirected to the FINRA Gateway homepage when logging in to complete their compliance functions, such as research, reporting and responding to requests. For more information, including transition resources, upcoming webinars (scheduled for September 10), webinar recordings and other support materials, visit the FINRA Gateway webpage.

IP Address Update. In order to improve the performance and reliability of FINRA Information Requests and FINRA Forms and Filings systems, FINRA will be upgrading to Cloudflare service on September 12, 2020. To accommodate this change, firms who previously added Information Requests and Forms and Filings as trusted IP addresses will need to update them to ensure continued access to these systems. See Cloudflare’s IP address page for a complete list of Cloudflare IPs. There is no action required for firms who have not added our current IP addresses to their trusted list or have previously entrusted Cloudflare IPs. If your firm uses these systems, check with your IT department or call the FINRA Call Center at (301) 590-6500 with any questions.

This week, the FINRA Board of Governors will meet virtually for its September 2020 meeting—the first Board meeting since Eileen Murray assumed the role of Chairperson last month, and the first for newly elected Governor Wendy Lanton and recently appointed Governors Maureen Jensen and Eric Noll. At the meeting, Board committees will consider several key items, including proposed amendments to FINRA Rule 2165 (Financial Exploitation of Specified Adults) and proposed amendments to permit the use of electronic signatures on Forms U4.

Upcoming Deadlines and Effective Dates

FINRA Requests for Comment

FINRA requests comment in Regulatory Notice 20-24 on two proposed changes to the TRACE reporting rules that were recommended by the Securities and Exchange Commission’s Fixed Income Market Structure Advisory Committee. The proposed changes would require firms to: (1) identify corporate bond trades where the price of the trade is based on a spread to a benchmark Treasury security that was agreed upon earlier in the day (i.e., a “delayed Treasury spot trade”) and report the time at which the spread was agreed upon; and (2) identify corporate bond trades that are a part of a larger portfolio trade. The comment period expires September 14, 2020.

FINRA requests comment in Regulatory Notice 20-29 on the practice of “pennying” in the corporate bond market. Consistent with a recommendation from the SEC’s Fixed Income Market Structure Advisory Committee (FIMSAC) and a similar request for comment published by the Municipal Securities Rulemaking Board (MSRB), FINRA is soliciting comment on how to define or identify pennying, how pennying impacts market quality and whether further regulatory action would be appropriate.
The comment period expires October 16, 2020.

SEC Request for Comment on FINRA Rules

The SEC requests comment on FINRA’s proposal to eliminate the Order Audit Trail System (‘‘OATS’’) rules in the FINRA Rule 7400 Series and FINRA Rule 4554 (Alternative Trading Systems—Recording and Reporting Requirements of Order and Execution Information for NMS Stocks) once members are effectively reporting to the Consolidated Audit Trail (‘‘CAT’’) and the CAT’s accuracy and reliability meet specified standards. The comment period expires September 22, 2020. See the Federal Register notice.

Upcoming Effective Dates

FINRA amended its Membership Application Program (MAP) rules to create further incentives for the timely payment of arbitration awards by preventing an individual from switching firms, or a firm from using asset transfers or similar transactions, to avoid payment of arbitration awards. The amendments will address situations where: (1) a FINRA member firm hires individuals with pending arbitration claims, where there are concerns about the payment of those claims should they go to award or result in a settlement, and the supervision of those individuals; and (2) a member firm with substantial arbitration claims seeks to avoid payment of the claims should they go to award or result in a settlement by shifting its assets, which are typically customer accounts, or its managers and owners, to another firm and closing down. These changes, outlined in Regulatory Notice 20-15, become effective on September 14, 2020.

In Regulatory Notice 20-28, FINRA released an updated Security Futures Risk Disclosure Statement (2020 Statement) to replace the one that was last updated in 2018, and a supplement (2020 Supplement). The 2020 Statement incorporates all cumulative changes made to date, which include, among others, conforming changes for updates to the market-wide circuit breaker benchmark and thresholds, the higher position limits for security futures contracts and changes to the large trader reporting timeframe. The implementation date of the 2020 Statement and 2020 Supplement is September 14, 2020.

FINRA Elections

Election Notice 8/17/2020 notifies members of an upcoming election to fill two large firm seats and one small firm seat on the National Adjudicatory Council (NAC), and to announce the FINRA Nominating & Governance Committee nominees for these vacancies. Eligible individuals not nominated by the Nominating Committee who obtain the requisite number of valid petitions may be included as candidates on the ballot by following the petition procedures described in the Notice. Petitions for candidacy are due October 1, 2020.

Election Notice 9/1/2020 informs small FINRA member firms of the upcoming Small Firm Advisory Committee (SFAC) election. Two seats on the SFAC are up for election, one representing the South region and one representing the Midwest region. Any eligible candidate who wants to be included on the ballot must submit the relevant information via the candidate profile form to FINRA’s Office of the Corporate Secretary by October 1, 2020.

 Education and Compliance Programs

FINRA's virtual conference panels provide a unique opportunity to hear the most up-to-date compliance information directly from industry and regulatory leaders right from the comfort of your home. Watch the latest panel on Retail Communications Concerning Private Placement Offerings. Join panelists as they share helpful tips in identifying red flags in third-party prepared materials, the use of forecasts of issuers operating metrics, and distribution rates. Panelists also explain the process for filing offering documents, including retail communications, with FINRA.

Registration is open for the 2021 FINRA Institute at Georgetown Certified Regulatory and Compliance Professional (CRCP)® Program. Week I takes place on July 18-23, 2021, and Week II takes place on November 14-19, 2021.Take advantage of our new reduced registration rates and gain your CRCP designation.

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