Guidance

Short sales by options professionals established during the course of bona fide market making activities are exempt from the affirmative determination requirements, regardless of whether the short sales constitute a permitted offset under Regulation T.

Requirements under NASD Rule 3030 (formerly Article III, Section 43) for investment seminar activities conducted by dually registered persons that charge fees from participants.

Clarification of NASD Notice to Members 94-44 to situations in which a dually registered person maintains discretionary trading authority, determines portfolio changes, and prepares trade instructions for customer accounts and charges the accounts an asset-based fee.

Whether a proposed standby purchase agreement entered into between affiliate of a member and an issuer in connection with a public offering of the issuer's common stock could constitute an option.

Cash rebates issued to pension plan customers with respect to secondary market transactions in outstanding securities (under former Article III, Section 24, now Rule 2740 and IM-2740).

The Cross-Market Equities Supervision: Auto Execution Manipulation report is a tool designed to provide firms feedback on exceptions that were generated based on the firm’s order entry and trading activity in a given surveillance period. The report covers auto execution manipulation.  This report is produced on a monthly basis.

Summary Report

The table below provides a reference description for all of the elements found for Auto Execution Manipulation exceptions identified during the month.  

Background

FINRA examines broker-dealers on a regular cycle basis, with firms posing greater risk receiving an examination more frequently. In connection with each of these examinations, FINRA prepares a report—which is available only to the relevant firm—addressing certain aspects of the firm's compliance with securities rules and regulations.

The Web CRD Form BD Timeliness Report Card is a monthly analysis of FINRA firms' ability to meet certain filing obligations. In accordance with FINRA rules, firms are required to submit information related to applicant member and/or affiliate(s). This report displays a firm's performance in submitting certain BD amendment filings in the required time frame.

Overview

This guidance is intended to provide direction on key information for a prospective and existing FINRA member firm that is contemplating to engage in activities utilizing an online platform or mobile application.¹ Under Standard 6 of FINRA’s Standards for Admission (Standard), an applicant’s online platform or mobile application that the applicant intends to employ for the purpose of conducting business with customers and other members must be adequate and provide reasonably for business continuity.

Q: Are members that provide FINRA an electronic feed (“eFeed”) of account transaction and position data via secure file transfer protocol (SFTP) for the accounts of FINRA employees also required to send duplicate account statements to FINRA under Rule 2070(a)? NEW