All Things FinReg

The die is cast: FINRA has published Regulatory Notice 24-02 (RN 24-02) announcing the effective dates and other key dates and considerations for its recently adopted Residential Supervisory Location (RSL) and Remote Inspection Pilot Program (Pilot Program) rulemakings, to be codified as FINRA Rules 3110.19 and 3110.18, respectively. Together, these rules will offer FINRA member firms additional flexibility in how they structure certain aspects of their supervisory system following the sunsetting of related COVID-19 relief.

On October 13, 2023, the US Securities and Exchange Commission (SEC) adopted Rule 10c-1a requiring the reporting and dissemination of certain details regarding securities lending transactions.

The House Committee on Financial Services passed the Improving Disclosure for Investors Bill of 2023 on April 26, 2023 with bipartisan support. If passed by Congress and signed into law, the bill could alter the regulatory landscape for electronic delivery (e-delivery) by US Securities and Exchange Commission (SEC) registrants by eliminating the requirement to obtain an investor’s affirmative consent for e-delivery and allowing firms to implement a notice and optout approach to implementing e-delivery.

On December 14, 2022, the US Securities and Exchange Commission (SEC) proposed a fundamental restructuring of the US equity markets in the form of two rule amendments and one new rule proposal (the Equity Market Proposals). In addition, the SEC proposed new Regulation Best Execution (Proposed Regulation Best Ex) under the Securities Exchange Act of 1934 (Exchange Act). The comment period for each rule proposal will remain open until the later of March 31, 2023, or 60 days after the applicable proposing release is published in the Federal Register.

FINRA has announced that it is conducting a targeted examination of broker-dealer practices related to retail communications about “crypto asset” products and services. As part of this sweep, FINRA is asking broker-dealers for all retail communications that were distributed or made available by a broker-dealer or its affiliates on behalf of the broker-dealer that refer or relate to crypto assets or services involving crypto transactions or the holding of cryptocurrency during the period of July 1, 2022, to September 30, 2022.

FINRA recently filed a proposed rule change with the US Securities and Exchange Commission (SEC) on November 12, 2021 that would seek to once again delay the effective date of changes to FINRA Rule 4210 that were previously implemented on December 15, 2016. The amendments were supposed to become effective on January 26, 2022 and the proposed changes would move the effective date to April 26, 2022.

FINRA is proposing to extend the ability of firms to have remote inspections until June 30, 2022. As discussed in the rule filing, FINRA Rule 3110.17 provide firms the option of satisfying their inspection obligations under Rule 3110(c) remotely for calendar years 2020 and 2021, subject to specified conditions. The rule was to automatically sunset on December 31, 2021. FINRA has extended the rule in light of the COVID-19 delta variant, inconsistent vaccination rates, and an uptick in infections. The filing includes a request for immediate effectiveness, with the rule change being operative on January 1, 2022.

FINRA filed a proposed rule change with the US Securities and Exchange Commission (SEC) on August 26, 2021 to delay the effective date of changes to FINRA Rule 4210 that were previously implemented on December 15, 2016.

In its continued efforts to learn what broker-dealers and their employees are doing in the digital asset space, FINRA has effectively reissued a regulatory notice requesting that broker-dealers keep FINRA apprised of their digital asset activities.

On July 8, the staffs of the Division of Trading and Markets (TM) of the US Securities and Exchange Commission and of the Office of General Counsel of the Financial Industry Regulatory Authority, Inc. issued a joint statement on broker-dealer custody of digital assets that are also securities (Joint Statement).