Consolidated Audit Trail (CAT) Fees Update

December 18, 2024

Features

  • Consolidated Audit Trail (CAT) Fees Update 
    Starting Jan. 1, the Historical CAT Cost Recovery Assessment 1 and Prospective CAT Cost Recovery Fee 2024-1 will no longer be in effect for transactions in eligible securities executed by FINRA member CAT executing brokers. Specifically: 
     

    • Firms will no longer receive monthly invoices from FINRA for the Historical CAT Cost Recovery Assessment 1 under FINRA Rule 6897(b)(1)(A). The last invoice for Historical CAT Cost Recovery Assessment 1, based on December 2024 transactions, will be sent to member CAT executing brokers in January, with payments due in February. For more information, see Information Notice 12/24/24.
       
    • Additionally, the Prospective CAT Cost Recovery Fee 2024-1 under FINRA Rule 6897(b)(1)(C) will no longer be in effect for transactions in eligible securities executed by FINRA member CAT executing brokers. The last invoice for Prospective CAT Cost Recovery Fee 2024-1 under FINRA Rule 6897(b)(1)(C), based on December 2024 transactions, will be sent to member CAT executing brokers in January, with payments due in February. A new Prospective CAT Cost Recovery Fee—Prospective CAT Cost Recovery Fee 2025-1—will be applied to members executing brokers’ transactions beginning Jan. 1. For more information see Information Notice 12/24/24 and SR-FINRA-2024-024.
       
  • Comment on Proposed Changes to Corporate Financing 
    Members and other stakeholders have until March 20 to comment on proposed amendments to FINRA Rules 5110 (Corporate Financing Rule—Underwriting Terms and Arrangements), 5121 (Public Offerings of Securities With Conflicts of Interest) and 5123 (Private Placements of Securities) that would make substantive, organizational and terminology changes.
     
  • Three Firms Ordered to Pay Customers Over $8.2 Million in Restitution 
    FINRA ordered the restitution to be paid to customers who were harmed by the firms’ failures to provide available mutual fund sales charge waivers and fee rebates on mutual fund purchases. FINRA did not impose any fines in connection with these matters in recognition of each firms’ extraordinary cooperation with FINRA’s investigations. Read the press release.
     
  • ICYMI: FINRA Board Meeting Update 
    During its winter meeting, the FINRA Board of Governors approved FINRA’s 2025 budget and a plan for FINRA staff to solicit comment on a rule proposal related to outside activities requirements. It also appointed new members to the National Adjudicatory Council and Small Firm Advisory Committee.
     
  • Editor’s Note 
    Next week, the Weekly Update will publish on Thursday instead of Wednesday due to the New Year’s Day holiday. We will return to delivering the newsletter on Wednesdays starting Jan. 8.
Guidance, Upcoming Deadlines, Effective Dates
New
  • Consolidated Audit Trail (CAT) Fees: See feature above for details on the changes. Starting Jan. 1, the Historical CAT Cost Recovery Assessment 1 and Prospective CAT Cost Recovery Fee 2024-1 will no longer be in effect for transactions in eligible securities executed by FINRA member CAT executing brokers. At the same time, a new Prospective CAT Cost Recovery Fee—Prospective CAT Cost Recovery Fee 2025-1—will be applied to members executing brokers' transactions beginning Jan. 1.
     
  • Comment on Proposed Changes to Corporate Financing Rules: See feature above for details about new proposed amendments. Members and other stakeholders have until March 20 to comment on proposed amendments to FINRA Rules 5110 (Corporate Financing Rule—Underwriting Terms and Arrangements), 5121 (Public Offerings of Securities With Conflicts of Interest) and 5123 (Private Placements of Securities) that would make substantive, organizational and terminology changes.
     
Reminders
  • 2025 Renewals Program: Preliminary Statement payments were due on Dec. 9. As a reminder, the CRD/IARD system shuts down for the year at 6 p.m. ET tonight (Thurs., Dec. 26). Before the shutdown occurs, firms should submit their registration filings, finalize any E-Bill renewal payments or transactions, and print and/or save renewal reports in CRD/IARD. Final statements will become available on Jan. 2.
     
  • Identify RSLs on Form U4: FINRA recently published three new video guides to assist firms with responses to the Residential Supervisory Location (RSL) question on Form U4 for all associated persons with an office-of-employment address reported as both a ”non-registered” (i.e., non-branch) location and a private residence for all locations established before Nov. 26 of this year. As a reminder, the due date for those firms to respond is today (Thurs., Dec. 26). Visit the RSL Guidance page to watch the videos and for other resources.
     
  • Remote Inspections Pilot Program Year Two : Firms have until Dec. 27 to opt in to participate in the second year of the Remote Inspections Pilot Program, which runs Jan. 1 to Dec. 31. For more information, read Regulatory Notice 24-02 and the frequently asked questions.
     
  • FDIC Rule Amendments: Any member that markets or offers a bank sweep program, sells certificates of deposit, or otherwise makes statements about FDIC insurance should review the FDIC’s amended rules about false advertising, misrepresentation of insured status, and misuse of the FDIC's name or logo, and make any adjustments to materials by the Jan. 1 compliance date. See the Code of Federal Regulations and the Federal Register for more information.
     
  • 2025 and Q1 2026 Reports Filing Due Dates: Upcoming due dates have been announced for filings related to the Annual Report, Financial and Operational Combined Uniform Single (FOCUS), Form Custody and supplemental FOCUS Report The first is Jan. 27. These filings must be submitted electronically through FINRA Gateway.
     
  • Comment on FINRA Requirements Governing Day Trading: FINRA is requesting comments from registered representatives, investors and other stakeholders on its requirements related to day trading. The request is part of FINRA's retrospective rule review to assess the effectiveness and efficiency of those requirements. The comment period ends Jan. 28.
     
  • Rule Amendments Regarding Arbitration Document Production Lists: FINRA amended its Code of Arbitration Procedure for Customer Disputes to allow customers to decide whether to use Document Production Lists in “paper cases” (i.e., those without a hearing) and special proceedings. The amendments go into effect for arbitration cases filed on or after March 3, 2025.
     
  • Amendments to FINRA Rule 3240: Updates to FINRA’s Borrowing From or Lending to Customers Rule go into effect April 28 to strengthen the general prohibition against borrowing and lending arrangements between registered representatives and their customers, narrow some exceptions, modernize the “immediate family” definition, and more.
Disciplinary Actions
  • See the feature above regarding three firms FINRA ordered to pay restitution to customers who were harmed by the firms’ failures to provide available mutual fund sales charge waivers and fee rebates on mutual fund purchases.
     
  • FINRA publishes disciplinary actions to remind members of specific conduct that violates FINRA rules and may result in disciplinary action. The December 2024 Monthly Disciplinary Actions are available here.
Education and Compliance Programs      
2025 FINRA Annual Conference | May 13-15 | Washington, DC | Hybrid Event
 
Small Firm Conference | Oct. 9-10 | Dallas, TX | Hybrid Event
Resources
Member Firm Hub – The latest guidance, resources, educational opportunities and more.
 
Membership Application Program (MAP) Tools – Guidance and other resources to help current members prepare for their continuing membership application (CMA) and new applicants prepare for a new member application (NMA).
 
FINRA101 – An investor-focused video series firms can leverage to help customers avoid scams, understand trusted contacts and more.
 
FINRA Unscripted – A biweekly podcast that discusses a range of topics important to the securities industry.
 
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Firms wishing to change the name or email address of their executive representative or designated assistant should use the FINRA Contact System: http://www.finra.org/FCS.
 
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