FINRA Announces Updates of the Interpretations of Financial and Operational Rules

SEC Financial Responsibility Rules

Executive Summary

FINRA is updating the imbedded text of Securities Exchange Act (SEA) financial responsibility rules in the Interpretations of Financial and Operational Rules to reflect the effectiveness of amendments the SEC adopted.¹ The updated imbedded text relates to SEA Rules 15c3-1, 15c3-3, 15c3-3a, 17a-3 and 17a-4.

Questions concerning this Notice should be directed to:

Background & Discussion

In July 2013, the SEC adopted amendments to the financial responsibility rules for broker-dealers. FINRA is updating the imbedded SEC rule text in the Interpretations of Financial and Operational Rules to reflect the amendments that became effective on March 3, 2014, pursuant to a temporary exemption granted by the SEC.² The updated imbedded text relates to SEA Rules 15c3-1, 15c3-3, 15c3-3a, 17a-3 and 17a-4. These rule text updates are available in portable digital format (pdf) on FINRA's Interpretations of Financial and Operational Rules page.

Further, SEC staff continues to communicate and issue written and oral interpretations of the financial responsibility and reporting rules including the newly amended sections of such rules. FINRA has previously updated the Interpretations of Financial and Operational Rules on its website in Regulatory Notices 08-56, 13-44 and 14-06. FINRA will publish in a separate Regulatory Notice at a later date interpretation updates in connection with the amendments to the rules that became effective on March 3, 2014.

FINRA member firms and others that maintain the hardcopy version of the Interpretations of Financial and Operational Rules may refer to the accompanying updated pages, containing the aforementioned rule text updates, which are being made available to enable the replacement of existing pages in the hardcopy version of the Interpretations of Financial and Operational Rules. The filing instructions for the new pages are as follows:

¹See Securities Exchange Act Release No. 70072 (July 30, 2013), 78 FR 51824 (August 21, 2013) (Financial Responsibility Rules for Broker-Dealers) (amending SEA Rules 15c3-1, 15c3-1a, 15c3-2, 15c3-3, 15c3-3a, 17a-3, 17a-4 and 17a-11). The SEC subsequently modified the effective date of specified amendments to the rules pursuant to an Exemptive Order. See Securities Exchange Act Release No. 70701 (October 17, 2013), 78 FR 62930 (October 22, 2013) (Order Providing Broker-Dealers a Temporary Exemption from the Requirements of Certain New Amendments to the Financial Responsibility Rules for Broker-Dealers under the Securities Exchange Act of 1934) (granting temporary exemption, until March 3, 2014, from the amendments to: SEA Rule 15c3-3, except paragraph (j)(1); SEA Rule 15c3-3a}; SEA Rule 17a-3; SEA Rule 17a-4; and paragraph (c)(2)(iv)(E)(2) of SEA Rule 15c3-1).

²See note 1.