May 2018 Board Update

From the CEO

FINRA’s Board of Governors met last week for the second time in 2018, and I am writing to share with you some updates from our discussions.

During the meeting, the Board approved two new rule proposals—listed below—and also previewed a draft of FINRA’s 2017 Annual Financial Report, which we will publish in June. Throughout the two-day meeting, FINRA staff provided the Board with various operational updates, including progress reports on the ongoing FINRA360 organizational improvement initiative and the consolidation of FINRA’s Enforcement Department, and updates on FINRA’s high-risk registered representative examination program and cross-market surveillance program. In addition, the Board discussed the regulatory landscape, including the SEC’s proposed Regulation Best Interest. The Board also heard a report regarding the work of the Consolidated Audit Trail (CAT) consortium, of which FINRA is a member.

The Nominating and Governance Committee of the FINRA Board also held several discussions related to our governance and advisory committees. The committee discussed nominations to fill upcoming Board vacancies, with plans for an announcement of its nominees for the upcoming Board election in the coming weeks. In addition, the committee conducted its annual review of the membership of FINRA’s advisory committees, and selected new advisory committee members to begin terms on June 1. The Board is impressed by the wide range of talented people who participate on the committees, and our staff looks forward to working with the new members.

Every Board meeting since last December, we have hosted officials from the Securities and Exchange Commission (SEC) to discuss the ongoing relationship between the SEC and FINRA. At the May meeting, we were joined by Pete Driscoll, Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE); Kevin Goodman, Associate Director of OCIE’s FINRA and Securities Industry Oversight (FSIO) group; and Helene McGee, Deputy Associate Director of FSIO. We had a great discussion, and appreciate that Pete, Kevin and Helene took the time to visit with us.

For more information about the discussions that took place during the May 2018 FINRA Board of Governors meeting, watch the May 2018 Board Report video. Our next meeting is in mid-July, and I will preview with you highlights of that meeting’s agenda once details are available.

Sincerely,

Robert W. Cook
President and CEO

Rulemaking Items Approved at the May 2018 Board Meeting

Discovery of Insurance Information in Arbitration
The Board approved the publication of a Regulatory Notice seeking comment on proposed amendments to the Discovery Guide’s Firm/Associated Persons Document Production List to require firms and associated persons, upon request, to produce documents concerning third-party insurance coverage. The proposal seeks to address firms’ concerns about prejudice by limiting the circumstances under which insurance coverage information could be presented to arbitrators.

TRACE Dissemination of Agency Debt Securities
The Board also approved proposed amendments to Trade Reporting and Compliance Engine (TRACE) rules to expand the definition of Agency Debt Security to address a new issuance structure by government-sponsored enterprises and modify dissemination protocols to apply the $5 million volume dissemination cap to all Agency Debt Securities.