Guidance
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Regulatory Obligations
FINRA Rule 2090 (Know Your Customer) requires member firms and their associated persons to use reasonable diligence to determine the “essential facts” about every customer and “the authority of each person acting on behalf of such customer.” Regulatory Notice 11-02 (SEC Approves Consolidated FINRA Rules Governing Know-Your-Customer and Suitability Obligations) advised that firms verify the essential facts about a customer “at intervals reasonably cal
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.
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
Background
In March 2017, FINRA's Board of Governors established a new standing committee, the Regulatory Operations Oversight Committee (ROOC), to advise and assist the Board in providing oversight on FINRA's regulatory operations, and supplementing FINRA's broader self-evaluation through FINRA360. This includes providing guidance on the full breadth of FINRA's regulatory operations, including Member Supervision, Market Regulation and Enforcement, among others. The ROOC does not engage in discussions regarding individual enforcement matters.
Regulatory Obligations
Regulation SHO Rules 200 to 204 require firms to address risks relating to market manipulation, market liquidity and investor confidence by regulating excessive and “naked” short sales so that purchasers of securities from short sellers receive their securities positions in a timely manner. Regulation SHO requires firms to appropriately mark their securities orders; confirm that they have deliverable securities to complete short sale transactions; and have a process to close-out fails to deliver within the required timeframes.
The Executing Firm 10 Second Compliance Report Card is a monthly status report for trades that another firm reported on behalf of the market participant. The report contains counts of properly modified late trades, late trades that were not modified, and improperly modified trades.
FINRA Rule 3170 (Tape Recording of Registered Persons by Certain Firms)—commonly referred to as the “Taping Rule”— requires certain firms to install taping systems to record all telephone conversations between their registered persons and existing and potential customers, review those recordings and file reports with FINRA.
Overview – FINRA’s Funding Portal Rules (FP Rules) apply to firms that register with the U.S. Securities and Exchange Commission (SEC) as funding portals pursuant to the SEC’s Regulation Crowdfunding (Reg CF) and that become FINRA FP members.
FINRA has made a number of changes in the area of regulatory policy to improve the policy development process and better ensure that our rules reflect current industry dynamics.
Regulatory Obligations
Exchange Act Rule 15c3-1 (Net Capital Rule) requires firms to maintain net capital at specific levels to protect customers and creditors from monetary losses that can occur when firms fail.
The Contra Executing Firm 20 Minute Compliance report card is a monthly status report that provides information on transactions in which a firm failed, as the Contra Firm to accept / decline / compare trades within 20 minutes after execution, in apparent violation of FINRA Rules 7230A(b) and/or 7330(b).
Background
FINRA promotes the capital-raising process through appropriately tailored rules that are designed to promote transparency and to establish important standards of conduct for the benefit of all market participants, including investors and issuers participating in offerings.
To assist firms in complying with SEC Rules regarding financial and operational matters, FINRA has published and will periodically update certain interpretations provided by the staff of the SEC's Division of Trading and Markets.
The Market Order Timeliness (MOT) Report Card is a monthly status report based upon data reported to OATS detailing the number of customer market orders executed by your firm in NMS securities that were delayed in receiving a full execution in possible violation of both rules regarding full and prompt execution of customer market orders and the Best Execution rule. If non-compliance with these rules is found to exist, your firm may be found to be in violation of FINRA Rules 5310 and 5320.