December 2019 Board Update

December 13, 2019

FINRA’s Board of Governors met last week in New York for the final time this year, and I am pleased to share some updates from our discussions.

FINRA staff presented several operational updates, including the progress of the Examination and Risk Monitoring Program Transformation. Staff of FINRA CAT—the Consolidated Audit Trail plan processor—provided a project update. In addition, the Board approved two rulemaking items, listed below.

As is customary for the last meeting of the year, the Board spent a significant portion of the meeting discussing FINRA’s finances and other long-term planning. The Board approved FINRA’s 2020 proposed budget and reaffirmed our Financial Guiding Principles that were first implemented in January 2018. As we have the previous two years, we will release more details regarding the upcoming year’s budget within the Budget Summary early next year.

For more information about the discussions that took place during the December FINRA Board of Governors meeting, please watch the December 2019 Board Report video. Our next meeting is March 11-12. More information regarding the Board's operations, including the membership and responsibilities of its committees, is available at www.finra.org/governance.

Sincerely,

Robert W. Cook
President and CEO

Rulemaking Items Approved at the December 2019 Board Meeting

Proposed Rule Changes Related to Firms with a Significant History of Misconduct
The Board approved a proposed Restricted Firm Obligations Rule that would require member firms that are identified as Restricted Firms to maintain a deposit in a segregated account from which withdrawals would be restricted, adhere to specified conditions or restrictions, or comply with a combination of such obligations.

Proposed Amendments to FINRA’s Suitability and Non-Cash Compensation Rules to Align with Securities and Exchange Commission (SEC) Regulation Best Interest
The Board approved proposed amendments to the rules governing suitability and non-cash compensation to address inconsistencies with SEC Regulation Best Interest and to mitigate potential confusion over which standards will apply with respect to recommendations to retail customers.

The Board approved both rule proposals to be filed with the Securities and Exchange Commission (SEC), where they will be published for public comment and must be approved by the SEC before becoming effective. Visit FINRA’s website for more information about FINRA’s rulemaking process.