Retrospective Rule Review Report: Membership Application Rules and Processes

FINRA is conducting a retrospective review of the NASD Rule 1010 Series (Membership Proceedings) (collectively, MAP rules), which govern FINRA’s Membership Application Program (MAP).1 The purpose of the review is to assess whether the rules are meeting their intended investor protection objectives by reasonably efficient means and to take steps to maintain or improve the effectiveness of the rules while minimizing negative economic impacts. The review is part of an ongoing initiative launched in April 2014 to periodically look back at significant groups of rules to ensure they remain relevant and appropriately designed to achieve their objectives, particularly in light of industry and market changes.

FINRA has separated the review into an assessment phase and an action phase. During the assessment phase, which is the focus of this report, the staff analyzed the effectiveness and efficiency of the MAP rules as currently implemented. The assessment encompassed not only the substance and application of the rules, but also FINRA’s processes to administer them.

In the ensuing action phase, FINRA staff intends to consider specific rule proposals or other initiatives resulting from the assessment phase. FINRA will engage in its usual rulemaking process to propose any amendments to the rules based on the assessment.