The Financial Industry Regulatory Authority’s Board of Governors took several actions at last month’s meeting, including the approval of two rule proposals involving carrying agreements and communicating with the public.
In a news release, FINRA said the board approved issuing a Regulatory Notice to solicit comment on proposed amendments to Rule 4311. The rule governs requirements when member firms enter into agreements for the carrying of customer accounts, and the amendments are aimed at clarifying tri-party arrangements. According to FINRA, the proposals would “provide greater clarity around tri-party arrangements where one introducing firm contracts through another introducing firm to receive carrying and clearing services; clarify the allocation of responsibilities under carrying agreements; address the application of the rule to omnibus carrying arrangements; and streamline requirements relating to the furnishing of reports by carrying firms to introducing firm.”
The other rule proposal pertains to FINRA Rule 2210, which involves communications with the public. Amendments were approved “to allow members to include projections of performance or targeted returns in their written communications with investors,” said FINRA CEO Robert Cook. “The proposal would amend the rule to allow projections to individuals on specific securities, such as target-date funds, subject to several investor-related conditions. The amendments would better align the regulatory requirements related to written communications about performance projections for broker-dealers and investment advisors, thus increasing regulatory harmonization while maintaining investor protection safeguards.”
These amendments will be filed with the Securities and Exchange Commission (SEC) for approval.
In other matters, the Board of Governors appointed new members to FINRA’s Advisory Committees. The authority has 12 advisory committees that provide feedback on rule proposals, regulatory initiatives and industry issues.
“We are excited to welcome the new members of the Advisory Committees. Participation and engagement in the Advisory Committees leads to meaningful feedback on a variety of regulatory matters. The Board values that input as we work to provide strategic guidance for FINRA’s vital work of protecting investors and maintaining market integrity,” said FINRA Board Chair Scott Curtis.
The Board also discussed FINRA’s long-term financial planning, approved its 2024 Annual Financial Report, met with Securities and Exchange Commission Commissioner Mark Uyeda, and received several operational updates, including on FINRA’s enterprise risk management and cybersecurity program.
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