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Regulatory Notice 21-45

FINRA Announces Update of the Interpretations of Financial and Operational Rules

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 Securities and Exchange Commission (SEC) adopted1. The updated imbedded text relates to SEA Rules 15c3-1, 15c3-1a, 15c3-1b, 15c3-1d, 15c3-1e, 15c3-3, 15Fi-1 through 15Fi-5, 17a-3, 17a-4, 17a-5, 17a-11 and 18a-3. FINRA is also making available related updates of the Interpretations of Financial and Operational Rules that have been communicated to FINRA by the staff of the SEC’s Division of Trading and Markets (SEC staff). The updated interpretations relate to SEA Rules 15c3-1, 17a-3, 17a-4 and 17a-5.

Questions concerning this Notice should be directed to:

  • Yui Chan, Senior Director, Office of Financial & Operational Risk Policy (OFORP), at (646) 315-8426 or email;
  • Ann Duguid, Senior Director, OFORP, at (646) 315-7260 or email; or
  • Kathryn Mahoney, Senior Director, OFORP, at (646) 315-8428 or email.

Background & Discussion

FINRA is updating the imbedded SEA rule text in the Interpretations of Financial and Operational Rules to reflect amendments adopted by the SEC that relate to SEA Rules 15c3-1, 15c3-1a, 15c3-1b, 15c3-1d, 15c3-1e, 15c3-3, 15Fi-1 through 15Fi-5, 17a-3, 17a-4, 17a-5, 17a-11 and 18a-32. Revisions and redesignations of the interpretations that are updates in connection with the SEC’s amendments to SEA Rules 15c3-1, 17a-3, 17a-4 and 17a-5 are set forth below. Page references are to the hardcopy version.

The following interpretation has been revised:

  • SEA Rule 17a-4(b)(5)/01 (15c3-3 Reserve Computations) on page 3103

The following interpretations have been redesignated:

  • SEA Rule 15c3-1(c)(2)(xii)/01 (Reverse Repurchase Agreements—Rescinded) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/01 on page 721
  • SEA Rule 15c3-1(c)(2)(xii)/011 (Reverse Repurchase Agreements) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/011 on page 721
  • SEA Rule 15c3-1(c)(2)(xii)/02 (Government National Mortgage Association (GNMA)) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/02 on page 722
  • SEA Rule 15c3-1(c)(2)(xii)/03 (Regulation T Calls for Margin) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/03 on page 722
  • SEA Rule 15c3-1(c)(2)(xii)/04 (Non‑Purpose Loans Collateralized by Certificates of Deposit) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/04 on page 722
  • SEA Rule 15c3-1(c)(2)(xii)/05 (Credit Extended Upon Exercise of Employee Stock Option) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/05 on page 723
  • SEA Rule 15c3-1(c)(2)(xii)/06 (Credit Extended to Customers on Control or Restricted Stock) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/06 on page 723
  • SEA Rule 15c3-1(c)(2)(xii)/061 (Customers Foreign Currency Options Collateralized by Letters of Credit) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/061 on page 723
  • SEA Rule 15c3-1(c)(2)(xii)/07 (Maintenance Requirement for Proprietary Accounts Carried for Joint Back Office Broker‑Dealers) redesignated to SEA Rule 15c3-1(c)(2)(xii)(A)/07 on page 724
  • SEA Rule 17a-3(a)(5)/01 (OCC Daily Position Report in Lieu of Securities Position Record) redesignated to SEA Rule 17a-3(a)(5)(i)/01 on page 3005
  • SEA Rule 17a-3(a)(5)/02 (Loanet Reports in Lieu of Stock Record) redesignated to SEA Rule 17a-3(a)(5)(i)/02 on page 3005
  • SEA Rule 17a-3(a)(8)/01 (DTC Institutional Delivery (ID) System Confirmations) redesignated to SEA Rule 17a-3(a)(8)(i)/01 on page 3013
  • SEA Rule 17a-3(b)(1)/01 (Floor Broker Requirements) redesignated to SEA Rule 17a-3(c)/01 on page 3061
  • SEA Rule 17a-5(a)(2)(i)/01 (NYSE Monthly Part II Requirement) redesignated to SEA Rule 17a-5(a)(1)(i)/01 on page 3201
  • SEA Rule 17a-5(a)(2)(i)/02 (NYSE Requirements for Guaranteed Subsidiary/Associated Partnership) redesignated to SEA Rule 17a-5(a)(1)(i)/02 on page 3201
  • SEA Rule 17a-5(a)(2)(i)/03 (Retroactive Application of Changes in Accounting Principles) redesignated to SEA Rule 17a-5(a)(1)(i)/03 on page 3202
  • SEA Rule 17a-5(a)(2)(ii)/01 (NYSE FOCUS Filing Due Dates) redesignated to SEA Rule 17a-5(a)(1)(ii)/01 on page 3203
  • SEA Rule 17a-5(a)(2)(iii)/01 (NYSE FOCUS Filing Due Dates) redesignated to SEA Rule 17a-5(a)(1)(iii)/01 on page 3203
  • SEA Rule 17a-5(a)(7)/01 (FOCUS Extension Request) redesignated to SEA Rule 17a-5(a)(6)/01 on page 3207
  • SEA Rule 17a-5(e)(4)(ii)/01 (Supplemental SIPC Report Exemption) redesignated to SEA Rule 17a-5(e)(4)/01 on page 3242
  • SEA Rule 17a-5(e)(4)(ii)/02 (SIPC Reports Exemption for Guaranteed Subsidiary) redesignated to SEA Rule 17a-5(e)(4)/02 on page 3242

The following interpretations have been revised and redesignated:

  • SEA Rule 17a-3(b)(2)/01 (Exchange Market Maker’s Using Clearance Account as Books and Records) revised and redesignated to SEA Rule 17a-3(c)/02 on page 3061
  • SEA Rule 17a-4(i)/01 (Exchange Market Maker’s Using Clearance Account as Books and Records) revised and redesignated to SEA Rule 17a-4(i)(1)/01 on page 3124

The rule text and related interpretation update is available in portable digital format (pdf) on FINRA’s Interpretations of Financial and Operational Rules page. 

FINRA member firms and others that maintain the hardcopy version of the Interpretations of Financial and Operational Rules may refer to the accompanying updated page, containing the update, which is 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 page(s) are as follows:

 

SEA Rule Remove Old Pages Add New Pages

15c3-1

 1-2

 1-2

15c3-1

 53

 53

15c3-1

 66

 66-67

15c3-1

 84

 84-85

15c3-1

 319

 319

15c3-1

 532

 532-536

15c3-1

 721-725

 721-726

15c3-1

 785

 785 

15c3-1a

 1001

 1001

15c3-1a

 1014

 1014 

15c3-1b

 1111

 1111 

15c3-1b

 1142

 1142-1154

15c3-1d

 1325

 1325

15c3-1d

 1331

 1331 

15c3-1d

 1334

 1334

15c3-1d

 1342

 1342

15c3-1d

 1344

 1344

15c3-1e

 1401

 1401 

15c3-1e

 1411-1412

 1411-1413

15c3-1e

 1431

 1431 

15c3-1e

 1433

 1433

15c3-1e

 1444

 1444 

15c3-3

 2001

 2001

15c3-3

 2582

 2582-2592

15c3-3

 2774

 2774-2806

15c3-4

 2904

 2904

15Fi-1 through 15Fi-5

 N/A

 2951-2995

17a-3

 3001-3062

 3001-3062 

17a-4

 3101-3132

 3101-3132   

17a-5

 3201-3284

 3201-3284 

17a-11

 3301-3304

 3301-3304 

17a-13

 3404

 3404

18a-3

 N/A

 3501-3510

 

Further, the SEC staff continues to communicate and issue written and oral interpretations of the financial responsibility and reporting rules. FINRA will update the Interpretations of Financial and Operational Rules on its website as these written and oral interpretations are issued.

Endnotes


1 See Securities Exchange Act Release No. 78011 (June 8, 2016), 81 FR 39808 (June 17, 2016) (Final Rule: Trade Acknowledgment and Verification of Security-Based Swap Transactions); Securities Exchange Act Release No. 86031 (June 5, 2019), 84 FR 33318 (July 12, 2019) (Final Rule: Regulation Best Interest: The Broker-Dealer Standard of Conduct); Securities Exchange Act Release No. 86032 (June 5, 2019), 84 FR 33492 (July 12, 2019) (Final Rule: Form CRS Relationship Summary; Amendments to Form ADV); Securities Exchange Act Release No. 86175 (June 21, 2019), 84 FR 43872 (August 22, 2019) (Final Rule: Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Security-Based Swap Participants and Capital and Segregation Requirements for Broker-Dealers); Securities Exchange Act Release No. 87005 (September 19, 2019), 84 FR 68550 (December 16, 2019) (Final Rule: Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based Swap Participants, and Broker-Dealers); Securities Exchange Act Release No. 87005B (May 27, 2021), 86 FR 31115 (June 11, 2021) (Final Rule; Correcting Amendment: Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based Swap Participants, and Broker-Dealers; Correction); and, Securities Exchange Act Release No. 87782 (December 18, 2019), 85 FR 6359 (February 4, 2020) (Final Rule: Risk Mitigation Techniques for Uncleared Security-Based Swaps).

2 See note 1.