Board of Governors Meeting Update

May 15, 2019
Volume 20
 
 
guidance

Guidance
  • Information Notice
  • UPC Advisory
disciplinary actions

Disciplinary Actions

 
upcoming

Upcoming Deadlines and Effective Dates
  • FINRA Requests for Comment
  • SEC Requests for Comment
education

Education and Compliance Programs


FINRA announced this week that it is launching an initiative to transform the digital platform that firms use to engage with FINRA across several programs. The Digital Experience Transformation, as it is being called, is a wide-ranging, multi-year effort to integrate and simplify brokerage firms’ digital interactions with FINRA, facilitating more efficient and effective compliance programs. The initiative is the latest outgrowth of the ongoing FINRA360 organizational improvement initiative.


Tune in to the FINRA Unscripted podcast to hear FINRA leaders review existing and emerging regulatory topics that impact the broker-dealer industry, as well as other insights into the operations of FINRA. 

On this episode, Jason Foye and Blake Snyder of FINRA’s AML Investigative Unit are back to discuss current priorities and best practices when it comes to anti-money laundering regulation. Listen to the podcast.

 



FINRA’s Board of Governors met for the second time this year. During the meeting, the Board received updates on FINRA’s regulatory operations, including a status report on FINRA’s 529 plan self-reporting initiative and draft guidance around when Enforcement would grant firms credit for extraordinary cooperation during the enforcement process. In addition, the Board’s Audit Committee reviewed a draft of FINRA’s Annual Financial Report. The Board’s Regulatory Policy Committee considered two rule proposals: proposed amendments to the Discovery Guide to require the production of insurance information in arbitration; and modifications to the proposed outside activities requirements rule as the result of a retrospective rule review. The committee directed FINRA staff to gather additional information for its consideration at a future Board meeting. Watch the Board Update video.
 

 Guidance

Understanding Short Sale Volume Data on FINRA’s Website

Information Notice 5/10/19 provides information to assist market participants in understanding the short sale volume data published on FINRA’s website. FINRA is aware that some market participants, including investors, may occasionally perceive the percentage of short sale volume to be unusually high or inconsistent with reported short interest data. This perception may cause market participants to draw inaccurate conclusions about the level or nature of short selling activity in the relevant security. FINRA is issuing this Notice to further explain the published short sale volume data and provide several key points for market participants to consider when evaluating the data.


UPC Advisory

The following UPC Advisory was posted in the past week:

  • UPC #17-19 Katy Industries, Inc. (KATYQ)
 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:

 Upcoming Deadlines and Effective Dates

FINRA Requests for Comment

FINRA has issued Regulatory Notice 19-12 to request comment on a proposed pilot program to study changes to corporate bond block trade dissemination based on recommendations of the SEC Fixed Income Market Structure Advisory Committee (FIMSAC). Specifically, the proposed pilot is designed to study two primary changes recommended by the FIMSAC: an increase to the current dissemination caps for corporate bond trades, and delayed dissemination of any information about trades above the proposed dissemination caps for 48 hours. The proposed pilot incorporates these primary elements of the FIMSAC Recommendation and other features, including a control group, designed to support a meaningful analysis of the pilot’s impact. Comments are due June 11, 2019.

As part of FINRA’s ongoing initiatives to protect investors from misconduct, FINRA has issued Regulatory Notice 19-17 to request comment on proposed new Rule 4111 (Restricted Firm Obligations) that would impose tailored obligations, including possible financial requirements, on designated member firms that cross specified numeric disclosure-event thresholds. These thresholds were developed through a thorough analysis and are based on the number of events at similarly sized peers. The member firms that could be subject to these obligations, while small in number, present heightened risk of harm to investors and their activities may undermine confidence in the securities markets as a whole. The proposal would further promote investor protection and market integrity and give FINRA another tool to incentivize member firms to comply with regulatory requirements and to pay arbitration awards.
Comments are due July 1, 2019.


SEC Requests for Comment on FINRA Rules

The SEC requests comment on FINRA’s proposal to amend FINRA Rule 6730 (Transaction Reporting) to provide members additional time to report to the Transaction Reporting and Compliance Engine (TRACE) transactions in U.S. Treasury Securities executed to hedge a primary market transaction, and to adopt a new modifier to identify such transactions. The comment period expires May 21, 2019. See the Federal Register notice.

The SEC requests comment on FINRA’s proposal to amend FINRA Rule 5110 (Corporate Financing Rule—Underwriting Terms and Arrangements) to make substantive, organizational and terminology changes to the rule. The comment period expires May 22, 2019. See the Federal Register notice.

 

 Education and Compliance Programs

Only one more week left to register for the 2019 Compliance Outreach Program for Municipal Advisors, which takes place Tuesday, May 21, 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.

Space is limited, register today to attend in person or via live video webcast.


FINRA is hosting several upcoming Half-Day Compliance Boot Camps, AML Half-Day Seminars and Cybersecurity Half-Day Seminars across the country.

Half-Day Compliance Boot Camps

  • May 23, 2019 | Dallas, TX
  • June 14, 2019 | Tempe, AZ
  • July 16, 2019 | Boca Raton, FL
  • August 8, 2019 | Del Mar, CA

AML Half-Day Seminar – June 4, 2019 | Costa Mesa, CA

Cybersecurity Half-Day Seminar – July 16, 2019 | Chicago, IL


FINRA's Registration and Disclosure (RAD) training team offers several training solutions designed for those at broker-dealer or joint broker-dealer/investment adviser firms. Training programs include:

  • Foundations of CRD Training (next session offered June 6–7, 2019, in Chicago, IL)
  • Registration and Disclosure Boot Camp (upcoming sessions will be announced soon)
  • Custom Web CRD Training (contact the RAD training team to inquire about a training session that is tailored to the needs of your organization.)

Visit FINRA's Web CRD Training and Support page to learn more. Space is limited, so please register early.


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. Upcoming events will be held in Boston on June 12, 2019 and Los Angeles on August 8, 2019.

Review the compliance calendar to see a complete list of events.


Registration is now open for the 2019 National Compliance Outreach Program for Broker-Dealers. The program, sponsored by FINRA and the SEC, is designed to provide an open forum for regulators and industry professionals to discuss current compliance practices and promote an effective compliance structure for the protection of investors. The event will be held on June 27, 2019, in Chicago, IL. Space is limited, so register early to secure your seat.


Also coming up:

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