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FINRA Announced Plans to Consolidate Examination and Risk Monitoring Programs

October 3, 2018
Volume 40

  • Notices
  • UPC Advisory

Upcoming Deadlines and Effective Dates
  • FINRA Requests for Comment

Education and Compliance Programs

FINRA and the FINRA Investor Education Foundation (FINRA Foundation) join securities regulators and investor advocates around the globe to raise awareness about the importance of investor education and protection in recognition of the weeklong global World Investor Week 2018 campaign. As part of the international effort, FINRA and the FINRA Foundation, the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the North American Securities Administrators Association (NASAA) issued a joint investor bulletin. The bulletin offers consumers tips to make smarter decisions about their investments, including checking the background of their financial professional and conducting due diligence on any investment offers.

FINRA announced plans to consolidate its Examination and Risk Monitoring Programs, integrating three separate programs into a single, unified program to drive more effective oversight and greater consistency, eliminate duplication and create a single point of accountability for the examination of firms. The effort is a result of FINRA360, the organization’s ongoing comprehensive self-evaluation and improvement initiative. “Implementing a unified program structure will help make us a more agile and risk-focused regulator while focusing on enhanced training and career opportunities for our staff,” said Bari Havlik, Executive Vice President of Member Supervision.


SEC Approves Amendments to the Codes of Arbitration Procedure to Establish a Per-Arbitrator Fee and Honorarium for Late Cancellation of Prehearing Conferences
The Securities and Exchange Commission approved amendments to FINRA’s customer and industry arbitration rules to charge parties who request cancellation of a prehearing conference within three business days a $100 per-arbitrator fee. The amendment also provides for a $100 honorarium to each arbitrator scheduled to attend the cancelled prehearing conference. The amendments, which are described in Regulatory Notice 18-33, are effective for cases filed on or after October 29, 2018.

Administrative Changes to the Continuing Education Regulatory Element Programs
Effective December 8, 2018, the content from the S106 and S901 Regulatory Element Continuing Education (CE) Programs will become part of the S101 Regulatory Element CE Program. The S106 and S901 CE Programs will be retired as stand-alone programs. Individuals who previously completed these programs instead will be required to complete the S101 CE Program. The S101 CE Program will include new personalized modules for each of the following representative categories: Investment Company and Variable Contracts Products, Investment Banking, and Research. See Information Notice 10/2/18 for more information.

Update: FINRA Qualification and Registration Requirements Frequently Asked Questions
FINRA updated the FINRA Qualification and Registration Requirements Frequently Asked Questions.

UPC Advisory
The following UPC Advisory was posted in the past week:

  • UPC #29-18 Nordea Bank ABP American Depository Shares (When Issued) (OTC Symbol: NRDBV)

 Upcoming Deadlines and Effective Dates

FINRA Requests for Comments

FINRA has five open requests for comments.

FINRA seeks comment on proposed amendments to the NASD Rule 1010 Series (Membership Proceedings). The proposal is the result of FINRA’s retrospective review of the MAP rules and processes, and is intended to reduce unnecessary burdens on new and existing firms, while strengthening investor protections. The proposed amendments would replace the NASD Rule 1010 Series with the proposed FINRA Rule 1100 Series (New and Continuing Membership). The proposed amendments would also include additional provisions to address regulatory issues FINRA staff identified and codify existing membership-related interpretations and practices. See Regulatory Notice 18-23 for more information. Comments are due October 5, 2018.

FINRA published a Special Notice seeking comment on how it can support financial technology (fintech) innovation consistent with its mission of investor protection and market integrity. The Notice builds on an initiative FINRA launched last year to improve communication with the securities industry around fintech. In addition, FINRA requests comment on certain fintech areas, including the provision of data aggregation services, supervisory processes concerning the use of artificial intelligence, and the development of a taxonomy-based machine-readable rulebook. The Notice requests comment by October 12, 2018.

FINRA requests comment from member firms and other interested parties on enhancements to the Securities Industry Continuing Education Program (CE Program) under consideration by the Securities Industry/Regulatory Council on Continuing Education (CE Council). These enhancements include the transition of the Regulatory Element program to a more focused and shorter learning requirement administered annually. The CE Council is also gathering feedback on the current Firm Element program and supporting resources as well as on the overlap of the Firm Element program with other firm training requirements. The program enhancements that are under consideration are published on the CE Council’s website and in Regulatory Notice 18-26. Comments are due November 5, 2018.

FINRA requests comment on a proposal to expand the summary firm data relating to over-the-counter (OTC) equity trading that FINRA publishes on its website by (1) publishing on a one-month delayed basis new monthly aggregate block-size trading data for OTC trades in NMS stocks executed outside an alternative trading system (ATS); (2) publishing aggregate non-ATS volume for all firms, by eliminating the existing de minimis exception; and (3) separately identifying firms’ volume of trading on a single dealer platform (SDP), by requiring firms to use a unique market participant identifier (MPID) when reporting their SDP trades to FINRA. The proposal is described in Regulatory Notice 18-28 and comments are due November 12, 2018.

FINRA released a white paper outlining recent regulatory technology (RegTech) developments within the securities industry and potential opportunities and implications these technologies may have for broker-dealers. FINRA highlights five areas where industry participants have most prominently leveraged RegTech innovations: surveillance and monitoring, customer identification and antimoney laundering compliance, regulatory intelligence, reporting and risk management and investor risk assessment. FINRA has requested comments and feedback from interested parties by November 30, 2018.

 Education and Compliance Programs

Register today for FINRA's upcoming AML Half-Day Seminar, which takes place November 6 in Boca Raton. The seminar is designed for AML compliance professionals from firms of all sizes who are new to their role, or who are looking to reinforce their understanding of regulatory requirements and compliance responsibilities.

Visit FINRA's website to learn more and to register.

Register today for an upcoming Member Forum in your region to engage in key discussions with FINRA staff and industry peers around the future landscape of the financial services industry. Both events will feature a fireside chat with FINRA President and CEO Robert Cook and FINRA Senior Vice President of Member Relations and Education Chip Jones.

There is no cost to attend the forums. Register today to attend a forum in your area.

The FINRA Disclosure Reporting, Monitoring and Registration Conference is next week. Register today to stay current on regulatory reporting requirements, get the latest on developments to our registration and disclosure systems and to hear directly from FINRA staff and industry leaders.

The conference brochure is now available for the FINRA Small Firm Conference, which takes place November 7 – 8 in Santa Monica, CA. This year’s conference features a Fireside Chat with FINRA President and CEO Robert Cook, FINRA Executive Vice President of Member Supervision Bari Havlik, and FINRA Senior Vice President of Member Relations Chip Jones.

Download the conference brochure, which includes the full agenda and session descriptions. Register today

Equities & Fixed Income Small Firm Compliance Workshop
Tuesday, October 23, 2018
2 p.m. to 4 p.m. ET

FINRA Market Regulation is hosting a free two-hour compliance workshop to discuss regulatory issues impacting small firms that trade in the equities and fixed income markets. Topics include compliance-related areas of concern within the equities and fixed income industries, and changes in FINRA processes, particularly as they relate to small firms. FINRA Market Regulation staff, representing different practice areas, will be available to answer questions.

Participants can attend in-person at FINRA's office at One Liberty Plaza in New York or participate over the phone. Pre-registration is required. 

Register for the workshop.

Register today for Week I of the 2019 CRCP program—which takes place July 21 – 26, 2019. The FINRA Institute at Georgetown Certified Regulatory and Compliance Professional (CRCP)® Program—provides an executive educational experience that covers the theory and practical application of securities laws and regulation through intensive instruction, discussion and case studies.

Watch our latest video to learn more about the CRCP® program and get answers to the most frequently asked questions about the program. Visit FINRA's website for additional details and registration information.

District compliance events are designed for compliance and legal professionals at FINRA member firms, and offer an opportunity to hear about current regulatory issues while engaging with District Office staff. Review the list of upcoming events being held in the San Francisco, Denver and Kansas City districts.

Review the compliance calendar to see a complete list of events that may be in your area.

FINRA is hosting several upcoming Half-Day Compliance Boot Camps across the country, each with different areas of focus. Visit FINRA's website for more information and to register.

Upcoming Half-Day Compliance Boot Camps:

  • October 18 | Jericho, NY
  • October 24 | New York, NY

Also coming up:

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