FINRA Eyes Simpler Rules

WASHINGTON – The Financial Industry Regulatory Authority (FINRA) wants to simplify its communication with the public by eliminating certain filing requirements that its board decided “present a low risk for investors.”

These include the filing requirements for generic investment company material and investment company shareholder reports. The FINRA board also decided to make other changes aimed at “better aligning the requirements to the relative risks presented by specific types of sales material.”

Specifically, the amendments would narrow the new member firm filing window. They also would simplify filing requirements related to registered investment companies or families of investment companies, investment analysis tools, previously filed templates and bond fund volatility ratings requirements.

The proposed changes stem from the retrospective rule review process FINRA initiated in 2014. These proposals are intended to better align the investor protection benefits and the economic impacts, FINRA officials said.

The FINRA board also said it wants to change its trading activity fee (TAF) policy for firms which have no customers and are engaged solely in proprietary trading activity for their own accounts.

The proposed amendments would exclude from the TAF those transactions executed on an exchange of which the firm is a member (including non-market-maker trades) provided the firm does not have customers and trades only for its own account.

These proposed changes follow the Security and Exchange Commission’s recent proposal to eliminate the registration exemption for proprietary trading firms that are members of exchanges but not FINRA, according to a FINRA statement.

InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at [email protected].