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New MSRB Markup/Markdown Analysis Report Available

December 19, 2018
Volume 51

  • Regulatory Notices
  • Disciplinary Actions

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

Education and Compliance Programs

As announced in Regulatory Notice 18-14, FINRA is conducting a retrospective review of the rules governing annual compliance meetings to assess their effectiveness and efficiency. In addition to the feedback we received during the comment process and subsequent subject matter expert interviews, FINRA is seeking information from all firms through a survey about their experience with and views of the rule set. FINRA is therefore asking firms to complete a voluntary survey. Executive representatives received a unique URL to the survey last week and we ask that you complete both surveys by Friday, December 21, 2018.

Richard W. Berry, FINRA Executive Vice President of Dispute Resolution, provided a statement before the SEC Investor Advisory Committee on customer recovery in the financial services industry, including unpaid arbitration awards. Read the statement.

The recording of FINRA's November 27 Small Firm Report, a conference call series dedicated to the unique regulatory challenges faced by small firms, is now available. If you were unable to join the live event, or would like to listen again, you can register for access to a recording of the call.

FINRA has made available a new MSRB Markup/Markdown Analysis Report in the Report Center. The MSRB Markup/Markdown Analysis Report is built on logic developed to pair purchase transactions and sales transactions reported to RTRS. It calculates markups and markdowns and allows firms to refine the analysis based on a number of filters, including rating and length to maturity. 

The report, a monthly compliance tool, provides an analysis of the markup, markdown and customer-to-customer pairs identified during the month. This report and supporting transaction details are designed to support firms' fair pricing and disclosure compliance procedures and reviews. The report mirrors the TRACE Markup/Markdown Analysis Report launched earlier this year.



FINRA Announces Updates of the Interpretations of Financial and Operational Rules

Regulatory Notice 18-42 describes updates to the imbedded text of Securities Exchange Act (SEA) financial responsibility and reporting rules in the Interpretations of Financial and Operational Rules to reflect the effectiveness of certain amendments the Securities and Exchange Commission (SEC) adopted. The updated imbedded text relates to SEA Rules 15c3-1g and 17a-5.

Optional One-Day Extension for Customer and PAB Reserve Formula Computations and Required Deposits Around the December 2018 Month-End Holidays

FINRA published Regulatory Notice 18-41 to notify member firms of an optional one-day extension for making the deposit of amounts required to be reserved pursuant to SEA Rule 15c3-3, based on the customer and PAB reserve formula computations required under SEA Rule 15c3-3(e)(3) and computed by firms as of Friday, December 21 and Friday, December 28, 2018. The extension is based upon discussions with staff of the SEC Division of Trading and Markets and is similar to extensions previously announced in 2007 and 2012.

 Disciplinary Actions

FINRA publishes disciplinary actions to remind registered representatives and firms of specific conduct that violates FINRA rules and may result in disciplinary action. FINRA posted the following disciplinary item on the website this week:

  • FINRA fined UBS Financial Services Inc. $4.5 million and UBS Securities LLC $500,000 for failing to establish and implement anti-money laundering programs reasonably designed to monitor certain high-risk transactions in customer accounts. The high-risk transactions included foreign currency wire transfers at UBSFS, and transactions in low-priced equity securities, or “penny stocks,” at UBSS.
  • Monthly Disciplinary Actions - December 2018

 Upcoming Deadlines and Effective Dates

SEC Requests for Comment on FINRA Rules

The SEC requests comment on FINRA’s proposal to amend FINRA Rule 4570 (Custodian of Books and Records) to: (1) provide a member that is filing a Form BDW (Uniform Request for Broker-Dealer Withdrawal) the option of designating another FINRA member as the custodian of its books and records on the form; (2) clarify the obligations of the designated custodian; and (3) require the designated custodian to consent to act in such a capacity. The comment period expires December 21, 2018. See the Federal Register notice.

The SEC requests comment on FINRA’s proposal to amend paragraph (a)(3) of FINRA Rule 4512 (Customer Account Information) to permit the use of electronic signatures and to clarify the scope of the rule. The comment period expires January 9, 2019. See the Federal Register notice.


 Education and Compliance Programs

Registration is now open for the Compliance Outreach Program for Municipal Advisors—which takes place February 7, 2019, in San Francisco, CA. This free one-day program is designed to provide an open forum for municipal advisory industry professionals to discuss current compliance practices with regulators and promote a more effective compliance structure for regulatory obligations of municipal advisors. The program is sponsored by the SEC's Office of Compliance Inspections and Examinations (OCIE), in coordination with the SEC's Office of Municipal Securities, FINRA and the MSRB.

Register today to attend in person or via live audio webcast.

Register today for the FINRA RegTech Conference—a forum for regulators, thought leaders and industry practitioners to learn more about the use of RegTech tools, and related opportunities and challenges.

The conference takes place January 17 in New York City. Download the conference brochure, which includes the full agenda and session descriptions.

Register early for the Annual Conference, which takes place May 15-17, 2019, in Washington, DC. Reduced rates are available for the first 500 in-person registrants before March 29, 2019. Register today.

Mark your calendar as FINRA’s Small Firm Conference returns October 23 – 24, 2019 in Santa Monica, CA. This conference features in-depth discussion on small firms’ practices and tips for complying with FINRA rules.

Discounted rates available—register early to secure your seat

Register today for the 2019 FINRA Institute at Georgetown Certified Regulatory and Compliance Professional (CRCP)® program— comprised of two weeklong residential courses, which are delivered at Georgetown University's McDonough School of Business in Washington, DC. This 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.

  • Week I • July 21 – 26, 2019
  • Week II • November 17 – 22, 2019

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.

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